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Bellatrix Exploration Ltd. announces third quarter 2009 financial results


View All News Releases November 5, 2009

TSX: BXE

CALGARY, Nov. 5 /CNW/ - (TSX: BXE) Bellatrix Exploration Ltd. ("Bellatrix," or the "Company") announces the financial and operating results of True Energy Trust ("True" or the "Trust") for the three and nine months ended September 30, 2009. Effective November 1, 2009, the Trust, True Energy Inc. and holders of trust units and exchangeable shares of the Trust completed a plan of arrangement (the "Arrangement") which resulted in the reorganization of the Trust into the Company. As a result of the Arrangement, the Trust was dissolved, and the Company assumed all of the liabilities and acquired all of the assets of the Trust. The Arrangement was effective November 1, 2009 and as at September 30, 2009, the Trust continued to exist and was a reporting issuer, and accordingly, prepared financial statements and accompanying management's discussion and analysis for the periods then ended. All future financial statements and management's discussion and analysis of the continuing legal entity will be in the name of Bellatrix Exploration Ltd.

Bellatrix common shares and debentures are listed on the Toronto Stock Exchange and trade under the symbols BXE and BXE.DB, respectively.

HIGHLIGHTS
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    FINANCIAL (unaudited)
    (CDN$000s except unit
     and per unit amounts)
    Revenue (before
     royalties and
     hedging(1))               23,860       72,225       85,010      224,332
    Funds flow from
     operations(2)             11,090       21,491       28,344       72,028
      Per basic trust unit      $0.14        $0.27        $0.36        $0.91
      Per diluted trust
       unit(6)                  $0.14        $0.27        $0.36        $0.91
    Net income (loss)          (9,633)      29,939     (118,404)     (10,056)
      Per basic trust unit     $(0.12)       $0.38       $(1.51)      $(0.13)
      Per diluted trust
       unit(6)                 $(0.12)       $0.38       $(1.51)      $(0.13)
    Distributions declared          -        9,474        1,570       28,486
      Per unit                      -        $0.12        $0.02        $0.36
    -------------------------------------------------------------------------
    Exploration and
     development                2,682       14,097        6,238       26,204
    Corporate and property
     acquisitions                  28         (286)         379          337
    -------------------------------------------------------------------------
    Capital expenditures
     - cash                     2,710       13,811        6,617       26,541
    Property dispositions
     - cash                   (84,696)         (32)     (92,977)     (44,350)
    Other - non-cash              178         (144)      (1,043)      (2,858)
    -------------------------------------------------------------------------
    Total capital
     expenditures - net       (81,808)     (13,635)     (87,403)     (20,667)
    -------------------------------------------------------------------------
    Long-term debt             26,485      116,591       26,485      116,591
    Convertible debentures(3)  82,549       80,693       82,549       80,693
    Working capital excess     (4,701)      (3,511)      (4,701)      (3,511)
    -------------------------------------------------------------------------
    Total net debt(3)         104,333      193,773      104,333      193,773
    -------------------------------------------------------------------------
    Total assets              443,115      752,030      443,115      752,030
    Unitholders' equity       286,841      424,121      286,841      424,121
    -------------------------------------------------------------------------

    OPERATING
    Daily sales
     volumes
      Crude oil,
       condensate
       and NGLs      (bbls/d)   2,253        3,977        3,292        4,329
      Natural gas     (mcf/d)  31,075       43,715       34,547       47,480
      Total oil
       equivalent     (boe/d)   7,432       11,263        9,050       12,242
    Average prices
      Crude oil,
       condensate
       and NGLs       ($/bbl)   57.77        96.89        48.07        89.49
      Crude oil,
       condensate
       and NGLs
       (including
       hedging(1)     ($/bbl)   57.77        77.39        48.07        73.32
      Natural gas     ($/mcf)    3.89         8.97         4.26         8.92
      Natural gas
       (including
       hedging(1))    ($/mcf)    5.84         7.80         5.74         8.20
      Total oil
       equivalent     ($/boe)   33.79        69.03        33.74        66.24
      Total oil
       equivalent
       (including
       hedging(1))    ($/boe)   41.94        57.61        39.40        57.71
    -------------------------------------------------------------------------

    Statistics
      Operating
      netback(4)      ($/boe)   16.24        38.31        12.56        36.39
      Operating
       netback(4)
       (including
       hedging(1))    ($/boe)   24.39        26.90        18.23        27.87
      Transportation  ($/boe)    0.50         2.45         1.28         1.75
      Production
       expenses       ($/boe)   13.29        14.95        14.15        14.51
      General &
       administrative ($/boe)    4.75         3.48         3.51         3.54
      Royalties as a
       % of sales
       after
       Transportation              11%          20%          18%          21%
    -------------------------------------------------------------------------
    TRUST UNITS
    Trust units
     outstanding           78,496,581   78,862,690   78,496,581   78,862,690
    Trust unit
     incentive rights
     outstanding            4,039,229    2,539,166    4,039,229    2,539,166
    Units issuable
     for exchangeable
     shares                   312,467      340,642      312,467      340,642
    Units issuable for
     convertible
     debentures(5)          5,390,625    5,390,625    5,390,625    5,390,625
    -------------------------------------------------------------------------
    Diluted trust units
     outstanding           88,238,902   87,133,123   88,238,902   87,133,123
    Diluted weighted
     average trust
     units(6)              78,496,581   78,996,154   78,496,581   79,140,544

    -------------------------------------------------------------------------
    TRUST UNIT TRADING STATISTICS

    (CDN$, except volumes) based
     on intra-day trading
    High                         1.13         4.45         1.56         4.69
    Low                          0.67         2.74         0.48         2.74
    Close                        1.07         3.03         1.07         3.03
    Average daily volume      203,568      257,512      166,148      260,393
    -------------------------------------------------------------------------
    (1) The Trust has entered into various commodity risk management
        contracts which are considered to be economic hedges. Per unit
        metrics after hedging includes only the realized portion of gains or
        losses on commodity contracts.

        The Trust does not apply hedge accounting to these contracts. As
        such, these contracts are revalued to fair value at the end of each
        reporting date. This results in recognition of unrealized gains or
        losses over the term of these contracts which is reflected each
        reporting period until these contracts are settled, at which time
        realized gains or losses are recorded. These unrealized gains or
        losses on commodity contracts are not included for purposes of per
        unit metrics calculations disclosed.

    (2) The highlights section contains the term "funds flow from
        operations" (or as commonly referred to as "cash flow from
        operations"), which should not be considered an alternative to, or
        more meaningful than cash flow from operating activities as
        determined in accordance with Canadian generally accepted accounting
        principles ("GAAP") as an indicator of the Trust's performance.
        Therefore reference to diluted funds flow from operations or funds
        flow from operations per trust unit may not be comparable with the
        calculation of similar measures for other entities. Management uses
        funds flow from operations to analyze operating performance and
        leverage and considers funds flow from operations to be a key measure
        as it demonstrates the Trust's ability to generate the cash necessary
        to fund future capital investments and to repay debt. The
        reconciliation between cash flow from operating activities and funds
        flow from operations can be found in the Management Discussion and
        Analysis ("MD&A"). Funds flow from operations per trust unit is
        calculated using the weighted average number of trust units for the
        period.

    (3) Net debt and total net debt are considered non-GAAP terms. The
        Trust's calculation of net debt includes the net working capital
        deficiency (excess) before short-term commodity contract assets and
        liabilities, current portion of long-term debt and short-term future
        income tax assets and liabilities. Total net debt also includes the
        liability component of convertible debentures and excludes asset
        retirement obligations and the future income tax liability. A
        reconciliation between total liabilities under GAAP and total net
        debt as calculated by the Trust is found in the MD&A.

    (4) Operating netbacks are a non-GAAP term. Operating netbacks are
        calculated by subtracting royalties, transportation, and operating
        costs from revenues.

    (5) Units issuable for convertible debentures are calculated as the
        $86.25 million principal amount of the convertible debentures divided
        by the conversion price of $16.00 per unit available to debenture
        holders.

    (6) In computing weighted average diluted earnings per trust unit and
        weighted average diluted funds flow from operations for both the
        three and nine month periods ended September 30, 2009 a total of
        4,039,229 (2008: 2,539,166) trust incentive units, 312,467 (2008:
        340,642) exchangeable shares and 5,390,625 (2008: 5,390,625) trust
        units issuable pursuant to the conversion of convertible debentures
        were excluded from the calculation of diluted earnings per trust unit
        and weighted average diluted funds flow from operations as they were
        not dilutive.

                           REPORT TO SHAREHOLDERS

On August 19, 2009, we announced that our Board of Directors had approved the conversion from a trust structure to a growth oriented, public exploration and production company pursuant to the terms of a plan of arrangement (the "Arrangement"). We are pleased to report that on October 28, 2009, securityholders of the Trust voted 97.8% in favour of the reorganization of the Trust under the Arrangement at the special meeting of the Trust, with subsequent approval by the Court. The reorganization of the Trust was completed with an effective date of November 1, 2009 and the Company now operates under the name of Bellatrix Exploration Ltd. Strategically, the Arrangement has re-positioned the Company, allowing Bellatrix to move forward with a corporate organic growth model and a strong balance sheet.

We accomplished significant steps in the restructuring of the Trust through the first nine months of 2009. Following changes to the senior management team earlier in the year, the Trust's restructuring efforts were consistent with a number of objectives including:

-   Operating within cash flow: targeted reductions in G&A, operating
        costs and staffing levels in early 2009; maintaining an active
        hedging program to mitigate vulnerability to negative commodity price
        fluctuations.

    -   Controlled capital program: a total capital program for 2009
        initially budgeted at $15 million, but recently increased to $19
        million.

    -   Production base focus: continued optimization, maintenance and
        production tie-ins.

    -   Continued debt management: Reduced net debt by $61 million over the
        2007 and 2008 fiscal years while paying distributions; net debt was
        further reduced $111 million for the first nine months of 2009 due in
        large part to strategic dispositions completed in the year. On August
        17, 2009, new total $85 million bank syndicate credit facilities were
        entered into, with a total of $26.5 million drawn under the
        facilities as of September 30, 2009. On November 1, 2009, Bellatrix
        confirmed its $85 million facilities with existing lenders on
        substantially the same terms and conditions.
    -   Corporate conversion completed effective November 1, 2009

Following these restructuring efforts and our substantially improved financial flexibility, we are well positioned to focus on the balance of our 2009 drilling program currently underway.

Production levels have been maintained by diligent field optimization programs designed to arrest decline. Sales volumes averaged 7,432 boe/d in the third quarter in spite of plant turnarounds and the sale of the majority of the Trust's Saskatchewan production closing July 30, 2009. For the first nine months of 2009 sales volumes averaged 9,050 boe/d.

As of September 30, 2009, year to date capital expenditures totalled $6.6 million. Our 2009 capital program was initially set at $15 million and subsequent to board approval has been increased to $19 million.

On July 8, 2009, True announced the divestiture of a majority of its oil and natural gas assets in Saskatchewan for gross proceeds of $93 million effective May 1, 2009 (the "Divestiture"). On July 30, 2009 True closed the Divestiture for net proceeds, after purchase adjustments, of approximately $86 million. The purchase adjustments of approximately $7 million include net operating income, prepaid and other items for the interim period from May 1, 2009 to July 30, 2009. The Divestiture excluded the Saskatchewan properties of Cypress and Mantario. True's interest to the base Belly River in three sections in the Ferrier area of West Central Alberta were also disposed of in the transaction. The assets sold included production estimated to average 3,000 boe/d in Q3 and Q4 in 2009, including 5.3 mmcf/d of natural gas, 128 km(2) of 3D proprietary seismic with 389.7 km of 2D proprietary seismic, and 63,333 net acres of undeveloped mineral leases.

Operating results

    -   During the third quarter of 2009, True drilled, completed and placed
        on production its first 100% interest well in September 2009 at
        Willesden Green in West Central Alberta. To date including the
        aforementioned well, True has drilled or participated in 8 wells (7.5
        net) at Willesden Green, Pembina, Irvine and Mantario; True operated
        7 of 8 wells drilled. True had 100% success rate in the eight wells
        drilled, all of the wells have been completed, tested and are
        currently on production or being tied in.

    -   True expects to drill four additional gross wells (3.35 net) prior to
        year end; three horizontal wells (two Notikewin and one Cardium) at
        Ferrier and Pembina and one vertical test at West Pembina. True is
        currently drilling the first of four wells, a 3,178 meter Notikewin
        horizontal test at Ferrier with an 85% WI. Bellatrix's total capital
        expenditure program for the 4th quarter is anticipated to be
        approximately $12.4 million. The Alberta wells drilled by Bellatrix
        take advantage of the Alberta Government Royalty incentive program.

    -   58% of True's natural gas production for Q4 2009 is forward sold at
        an average price of $7.75 CAD/mcf, and approximately 29% of its
        natural gas production for 2010 is hedged at an average of price
        $7.01 CAD/mcf. These conversions to "mcf" are based on True's
        corporate average heat content factor of 39 Mj/m3. In addition, 500
        bbl/d of oil for Q4 is hedged by way of a costless collar of $52.30
        CAD x $80.70 CAD.

    -   On August 17, 2009, True finalized new syndicated credit facilities
        to replace its then existing bank facilities. The new facilities
        consist of a $10 million demand operating facility provided by one
        Canadian bank and a $75 million extendible revolving term credit
        facility provided by one Canadian bank and one Canadian financial
        institution. As of September 30, 2009 there was approximately $26.5
        million drawn on True's existing facilities.

    The third quarter of 2009 featured continued erosion of natural gas
pricing primarily as a result of the supply and demand imbalance associated
with the persistent global economic recession. Third quarter financial results
include:

    -   2009 third quarter sales volumes averaged 7,432 boe/d compared to
        9,767 boe/d in the second quarter of 2009. The decrease in production
        is a result of the divestitures completed at the end of the second
        quarter and first part of the third quarter of 2009. True initiated a
        production optimization and maintenance program at the beginning of
        the year. This program has not only arrested True's production
        decline through the first three quarters, but also increased overall
        deliverability without drilling or recompleting wells.

    -   Cash flow from operating activities and funds flow from operations
        for the third quarter of 2009 was $12.2 million and $11.1 million,
        respectively, on gross sales of $23.9 million compared to cash flow
        from operating activities and funds flow from operations for the
        second quarter of 2009 of $6.5 million and $10.8 million,
        respectively, on gross sales of $29.8 million.

    -   The net loss for the third quarter of 2009 was $9.6 million compared
        to a net income of $29.9 million for the same period in 2008 and a
        net loss of $99.7 million in the second quarter of 2009. The net loss
        for Q2 2009 was primarily the result of a non-cash accounting loss on
        petroleum and natural gas properties held for sale of $114.2 million.
        This amount was calculated as the excess of the historical net book
        value allocated to Saskatchewan oil and gas property assets sold as
        compared to the estimated total net proceeds received on closing.

    -   True's total net debt as of September 30, 2009, excluding a net
        unrealized commodity contract asset of $5.0 million, future income
        taxes and asset retirement obligations is approximately $104.3
        million, represented by $26.5 million outstanding on the credit
        facilities, $82.5 million in convertible debentures (liability
        component), and the net balance of a working capital surplus. Funds
        from strategic divestitures executed in the second and third quarters
        of 2009 have been used to reduce True's net debt.

    -   True's natural gas price for the third quarter of 2009, after
        including hedging, was $5.84/mcf compared to $7.80/mcf for the same
        period in 2008.

    -   Capital expenditures for the third quarter of 2009 were $2.7 million
        which were funded by available cash flow.

    -   As of September 30, 2009, the Trust had approximately $384 million in
        tax pools for deduction against future income.

Bellatrix's production guidance remains unchanged. Fourth quarter production is anticipated to be approximately 6,500 boe/d, comprised of 31.7 mmcf/d of natural gas and 1,230 bbls/d of light/medium oil. Bellatrix anticipates 2009 average production rate of 8,100 boe/d and a 2009 production exit rate of 7,000 boe/d based on normal decline rates and risked production adds from Bellatrix's capital program.

Bellatrix has approximately 268,000 net acres of undeveloped land with in excess of 300 exploitation drilling opportunities identified representing over 5 years of drilling inventory.

2010 Outlook

Bellatrix is well positioned following a stressful year of reorganization to move forward with a corporate organic growth model, coupled with a mandate to seek opportunities that will complement our assets or through future development potential. An initial capital budget of $40 million has been set for fiscal 2010. The Company will be active throughout 2010 drilling our 2 resource plays, the Cardium and Notikewin utilizing horizontal drilling multi fracturing technology, that will provide the engine for our growth.

Bellatrix is a company dedicated to "the pursuit of sustainable growth" for its stakeholders.

Raymond G. Smith, P. Eng.
    President and CEO
    November 5, 2009


                     MANAGEMENT'S DISCUSSION AND ANALYSIS

November 5, 2009 - The following Management's Discussion and Analysis of financial results as provided by the management of True Energy Trust ("True" or the "Trust") should be read in conjunction with the unaudited interim consolidated financial statements and selected notes for the three and nine months ended September 30, 2009 and the audited consolidated financial statements of the Trust for the years ended December 31, 2008 and 2007 and the related Management's Discussion and Analysis of financial results. This commentary is based on information available to, and is dated as of, November 5, 2009. The financial data presented is in accordance with Canadian generally accepted accounting principles ("GAAP") in Canadian dollars, except where indicated otherwise.

CONVERSION: The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.

NON-GAAP MEASURES: This Management's Discussion and Analysis contains the term "funds flow from operations" (or also commonly referred to as "cash flow from operations"), which should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with Canadian GAAP as an indicator of the Trust's performance. Therefore reference to funds flow from operations or funds flow from operations per unit may not be comparable with the calculation of similar measures for other entities. Management uses funds flow from operations to analyze operating performance and leverage and considers funds flow from operations to be a key measure as it demonstrates the Trust's ability to generate the cash necessary to fund future capital investments and to repay debt. The reconciliation between cash flow from operating activities and funds flow from operations can be found in the Management's Discussion and Analysis. Funds flow from operations per unit is calculated using the weighted average number of units for the period.

This Management's Discussion and Analysis also contains other terms such as total net debt and operating netbacks, which are not recognized measures under Canadian GAAP. Total net debt is calculated as long-term debt plus the liability component of the convertible debentures and the net working capital deficiency (excess) before short-term commodity contract assets and liabilities, current portion of long-term debt and short-term future income tax assets and liabilities. Operating netbacks are calculated by subtracting royalties, transportation, and operating expenses from revenues. The reconciliation between total liabilities and net debt is contained in the Management's Discussion and Analysis. Management believes these measures are useful supplemental measures of firstly, the total amount of current and long-term debt and secondly, the amount of revenues received after transportation, royalties and operating expenses. Readers are cautioned, however, that these measures should not be construed as an alternative to other terms such as current and long-term debt or net income determined in accordance with GAAP as measures of performance. True's method of calculating these measures may differ from other entities, and accordingly, may not be comparable to measures used by other trusts or companies.

Additional information relating to the Trust, including the Trust's Annual Information Form, is available on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS: Certain information contained herein may contain forward looking statements including management's assessment of future plans and operations, drilling and tie-in plans and the timing thereof, expected or anticipated average and exit production rates, hedging strategies, anticipated liquidity of the Trust and various matters that may impact such liquidity, planned reductions in operating expenses in 2009 and expected operating expenses, expected royalty rates and administrative expenses, expected levels of revenues and operating expenses and operating netbacks in 2009 compared to 2008, the expected effect of dispositions on debt to funds flow ratios, the use of forecast funds flow from operations, expected cost of drilling commitments, the proportion of distributions anticipated to be taxable, maintenance of productive capacity and capital expenditures and the nature of capital expenditures and the timing and method of financing thereof, and the expectation that no dividends will be payable by Bellatrix following completion of the Reorganization may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, 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. The recovery and reserve estimates of True's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of True. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information in order to provide shareholders with a more complete perspective on Bellatrix's future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. Although the Trust believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Trust can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Trust operates; the timely receipt of any required regulatory approvals; the ability of the Trust to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Trust has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Trust to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Trust to secure adequate product transportation; future commodity gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Trust operates; and the ability of the Trust to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Additional information on these and other factors that could effect True's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at Bellatrix's website (www.bellatrixexploration.com). Furthermore, the forward-looking statements contained herein are made as at the date hereof and True does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The reader is further cautioned that the preparation of financial statements in accordance with GAAP requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Overview and Description of the Business

True Energy Trust is a Canadian trust, formed in 2005 via the reverse takeover of TKE Energy Trust. The Trust is involved in the exploration, development and production of petroleum and natural gas in western Canada. The Trust has a significant multi-year inventory of drilling locations in Alberta, Saskatchewan and British Columbia.

On August 19, 2009, the Trust announced that its Board of Directors had approved the conversion from a trust structure to a growth oriented, public exploration and production company pursuant to the terms of a plan of arrangement (the "Arrangement"). The reorganization of the Trust (the "Reorganization") under the Arrangement was approved by the Trust's securityholders at the special meeting on October 28, 2009, and received customary court and regulatory approvals. The reorganization of the Trust was completed with an effective date of November 1, 2009 and now operates under the name of Bellatrix Exploration Ltd. ("Bellatrix" or the "Company"). Unitholders of the Trust received an equal number of common shares of Bellatrix which holds the assets and liabilities previously held, directly or indirectly, by the Trust. Exchangeable shares of the Trust were exchanged for common shares of Bellatrix at the current exchange ratio in effect on the effective date. The outstanding convertible debentures of the Trust were assumed by the Company as a result of the Arrangement and are now convertible into common shares of Bellatrix, rather than trust units of the Trust, at a conversion price of $16.00 per share. Strategically, the Arrangement has re-positioned the Company, allowing Bellatrix to move forward with a corporate organic growth model and a strong balance sheet.

Pursuant to the Arrangement, the Unitholders' Capital of the Trust Units as of the effective date of November 1, 2009 shall be reduced by the amount of the deficit of the Trust on October 31, 2009.

The Reorganization will be accounted for on a continuity of interest basis and accordingly, the consolidated financial statements for periods prior to the effective date of the Reorganization will reflect the financial position, results of operations and cash flows as if the Company had always carried on the business formerly carried on by the Trust.

Bellatrix common shares and debentures are listed on the Toronto Stock Exchange and trade under the symbols BXE and BXE.DB, respectively.

Third Quarter 2009 Financial and Operational Results

    Dispositions

The Trust's focus in 2009 has been on the restructuring and strengthening of its balance sheet. The Trust had two minor dispositions in the second quarter and successfully completed the divestiture of the majority of its petroleum and natural gas properties in Saskatchewan in the third quarter. Net proceeds from the dispositions were used to reduce the Trust's bank indebtedness; these strategic accomplishments will allow the Company to progress forward with substantially improved financial flexibility.

On June 30, 2009, True sold 145 boe/d, including 0.63 mmcf/d of natural gas, in the Penhold Area of Central Alberta for $4.7 million, after purchase adjustments and closing costs. In addition, in June 2009, True completed a disposition of certain royalty interests for approximately $3.7 million, after purchase adjustments and closing costs. The proceeds from these two dispositions were used to reduce True's bank indebtedness.

On July 30, 2009, the Trust successfully completed the divestiture of a majority of its oil and natural gas assets in Saskatchewan for net proceeds of $86 million (the "Saskatchewan Divestiture"). The Saskatchewan Divestiture excludes the Saskatchewan properties of Mantario and Cypress. True's interest to the base Belly River in three sections in the Ferrier area of West Central Alberta were also included in the divestiture package. The disposition was accounted for under the guidance of Accounting Guideline 16 - "Oil and Gas Accounting - Full Cost". Under full cost accounting, if crediting the proceeds from disposition to costs results in a change of 20 percent or more to the DD&A rate then a gain or loss should be recognized. When a gain or loss is to be recognized the total net book value of capitalized costs should be allocated between the properties sold and the properties retained. The assets sold were an allocation of the Trust's historical full cost pool based on a pro-rata ratio of future cash flows of proved reserves associated with the assets sold, discounted at 10%, as compared to all oil and gas assets as of June 30, 2009. In the second quarter of 2009, the Trust recorded a $114.2 million non-cash loss on the assets sold being the excess of the allocated net book value to these assets, compared to the total estimated net proceeds, after purchase adjustments and estimated closing costs.

Sales Volumes

Sales volumes for the three months ended September 30, 2009 averaged 7,432 boe/d compared to 11,263 boe/d for the same period in 2008, representing a 34% decrease. In comparison, sales volumes for the second quarter of 2009 averaged 9,767 boe/d; the decrease in volumes from the second quarter to the third quarter of 2009 is primarily due to the Saskatchewan Divestiture closing on July 30, 2009. Sales volumes for the nine months ended September 30, 2009 averaged 9,050 boe/d as compared to 12,242 boe/d for the same period in 2008, representing a 26% decrease.

The decrease in average sales volumes from third quarter 2008 to 2009 is a result of natural production decline, minimal 2009 capital spending and dispositions during 2009 totaling approximately 3,000 boe/d and dispositions totaling approximately 1,000 boe/d that were closed during the second quarter of 2008, partially offset by tuck-in acquisitions completed in the fourth quarter of 2008 that added approximately 250 boe/d. During the first quarter of 2009, True implemented a full scale field optimization and maintenance program throughout True's operated properties. The field optimization programs were designed to arrest production declines and increase overall deliverability without drilling or recompleting wells.

Sales Volumes
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Natural gas    (mcf/d)     31,075       43,715       34,547       47,480
    -------------------------------------------------------------------------

    Heavy oil     (bbls/d)      1,300        2,820        2,191        2,789
    Light oil and
     condensate   (bbls/d)        662          760          766        1,088
    NGLs          (bbls/d)        291          397          335          452
    -------------------------------------------------------------------------
    Total crude
     oil and NGLs (bbls/d)      2,253        3,977        3,292        4,329
    -------------------------------------------------------------------------
    Total boe/d      (6:1)      7,432       11,263        9,050       12,242
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

During the third quarter of 2009, True drilled, completed and placed on production its first 100% working interest well at Willesden Green in West Central Alberta.

For the three months ended September 30, 2009, the weighting towards natural gas sales averaged 70% compared to 65% in the same period in 2008. Similarly, for the nine month period ended September 30, 2009, the weighting towards natural gas sales averaged 64% compared to 65% for the same period in 2008. Heavy oil sales made up 17% of total production for the 2009 third quarter compared to 25% in the 2008 third quarter. In comparison, heavy oil sales made up 28% of total production for the 2009 second quarter. The increase in the natural gas weighting is largely due to the July 30, 2009 sale of Saskatchewan production which was primarily heavy oil.

Sales of natural gas averaged 31.1 Mmcf/d for the third quarter of 2009, compared to 43.7 Mmcf/d in the same 2008 period, a decrease of 29%. Crude oil and NGL sales for the 2009 third quarter decreased 15% averaging 2,253 bbls/d compared to the 2008 third quarter average sales of 3,977 bbls/d.

For the fourth quarter of 2009, production volumes are anticipated to average approximately 6,500 boe/d and a 2009 production exit rate of 7,000 boe/d. The forecast of 2009 production volumes has been updated from the 10,000 boe/d forecast previously reported to include the recent disposition activity. The forecast is based on assumptions, including normal production declines and expenditures under the current updated planned capital budget for 2009 of $19 million.

Commodity Prices

    Average Commodity Prices
    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30,           September 30,
                                                   %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Exchange rate (US$/Cdn$)  0.9108  1.0000      (9) 0.8839  0.9980     (11)

    Natural gas:
    NYMEX (US$/mmbtu)           3.44    8.99     (62)   3.62    9.67     (63)
    AECO daily index
     (CDN$/Mcf)                 2.94    7.74     (62)   3.19    8.61     (63)
    AECO monthly index
     (CDN$/Mcf)                 3.02    9.24     (67)   3.34    8.57     (61)
    True's average price
     ($/mcf)                    3.89    8.97     (57)   4.26    8.92     (52)
    True's average price
     (including hedging(1))
     ($/mcf)                    5.84    7.80     (25)   5.74    8.20     (30)

    Crude oil:
    WTI (US$/bbl)              68.22  118.28     (42)  64.17  113.43     (43)
    Edmonton par -
     light oil ($/bbl)         71.71  122.61     (42)  62.68  115.85     (46)
    Bow River - medium/heavy
     oil ($/bbl)               64.97  104.95     (38)  56.81   95.53     (41)
    Hardisty Heavy - heavy
     oil ($/bbl)               61.11   98.07     (38)  52.85   88.23     (40)
    True's average prices
     ($/bbl)
      Light crude oil,
       condensate, and NGLs    56.23  107.55     (48)  48.19   98.85     (51)
      Heavy crude oil          58.89   92.51     (36)  48.01   84.32     (43)
      Total crude oil and
       NGLs                    57.77   96.89     (40)  48.07   89.49     (46)
      Total crude oil and
       NGLs (including
       hedging(1))             57.77   77.39     (25)  48.07   73.32     (34)
    -------------------------------------------------------------------------
    (1) Per unit metrics including hedging include realized gains or losses
        on commodity contracts and exclude unrealized gains or losses on
        commodity contracts.

True's natural gas sales are priced with reference to the daily or monthly AECO indices. During the 2009 third quarter, the AECO daily and monthly reference price decreased by 62% and 67%, respectively, compared to the same period in 2008. True's average sales price before hedging for the 2009 third quarter decreased by 25% compared to the same period in 2008. The Trust's natural gas physical sales contract to deliver 5,275 GJ/day at a fixed price of $7.29/GJ contributed to higher pricing experienced for the 2009 third quarter relative to AECO indices. True's natural gas price after including hedging for the third quarter of 2009 was $5.84/mcf compared to $7.80/mcf for the same period in 2008.

The Company has entered into a natural gas physical delivery sales contract to sell 5,275 GJ/day at a fixed price of $7.90/GJ for the fourth quarter of 2009.

For heavy crude oil, True received an average price before transportation of $58.89/bbl in the 2009 third quarter, a decrease of 36% over prices in the same period in 2008. The Bow River reference price and the Hardisty Heavy reference price both decreased approximately 38% from the 2008 third quarter to the 2009 third quarter. The majority of True's heavy crude oil density ranges between 11 and 16 degrees API consistent with the Hardisty Heavy reference price, although all of True's heavy oil production is sold at Saskatchewan delivery points.

For light oil, condensate and NGLs, True recorded an average $56.23/bbl before hedging in the 2009 third quarter, 48% lower than the average price of $107.55/bbl received in the same period in 2008. In comparison, the Edmonton par price decreased by 42% over the same period. The average WTI crude oil US dollar based price decreased 42% from the third quarter of 2008 to that in 2009. The average US$/Cdn$ foreign exchange rate was 0.9108 for the 2009 third quarter compared to 1.00 during the same period in 2008. The negative correlation between the Canadian dollar and U.S. dollar denominated WTI oil prices has softened the impact on the Trust of lower US$ WTI prices.

WTI crude oil prices varied greatly throughout 2008, increasing significantly to a high of US$147/bbl in July and dramatically falling during the fourth quarter of 2008 with December 2008 prices of under US$40/bbl and averaging over US$60/bbl through the nine months of 2009. The pricing outlook in 2009 for crude oil and natural gas remains uncertain given the current global economic environment.

Revenue

Revenue before other income and hedging for the three month period ended September 30, 2009 was $23.1 million, 68% lower than the $71.5 million in the same period in 2008. The decrease in revenue for the 2009 period was the result of lower sales volumes in conjunction with significantly lower commodity prices.

-------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Light crude oil,
     condensate and NGLs        4,930       11,455       14,478       41,717
    Heavy oil                   7,040       23,999       28,729       64,425
    -------------------------------------------------------------------------
    Crude oil and NGLs         11,970       35,454       43,207      106,142
    Natural gas                11,133       36,073       40,159      116,034
    -------------------------------------------------------------------------
    Total revenue before
     other                     23,103       71,527       83,366      222,176
    Other(1)                      757          698        1,644        2,156
    -------------------------------------------------------------------------
    Total revenue before
     royalties and hedging     23,860       72,225       85,010      224,332
    -------------------------------------------------------------------------
    (1) Other revenue primarily consists of processing and other third party
        income.

Revenues for the remainder of 2009 are currently expected to be lower than 2008 due to lower commodity prices and average estimated 2009 year production of approximately 8,100 boe/d, after adjusting for divestitures that closed during the year.

Commodity Price Risk Management

The Trust has a formal risk management policy which permits management to use specified price risk management strategies as determined by the board of directors including fixed price contracts, collars and the purchase of floor price options and other derivative financial instruments and physical delivery sales contracts to reduce the impact of price volatility and ensure minimum prices for a maximum of eighteen months beyond the current date. The program is designed to provide price protection on a portion of the Trust's future production in the event of adverse commodity price movement, while retaining significant exposure to upside price movements. By doing this, the Trust seeks to provide a measure of stability to funds flow from operations, as well as, to ensure True realizes positive economic returns from its capital development and acquisition activities. The Company will continue its hedging strategies focusing on maintaining sufficient cash flow to fund the Company's operations. Any remaining unhedged production is realized at market prices.

A summary of the financial commodity price risk management volumes and average prices by quarter currently outstanding as of November 5, 2009 is shown in the following tables:

Natural gas
    Average Volumes (GJ/d)
    -------------------------------------------------------------------------

                                                                     Q4 2009
    -------------------------------------------------------------------------
    Fixed                                                             15,000
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                              Q1 2010      Q2 2010      Q3 2010      Q4 2010
    -------------------------------------------------------------------------
    Fixed                      10,000       10,000       10,000       10,000
    Call option (ceiling
     price)                     5,000        5,000        5,000        5,000
    -------------------------------------------------------------------------
    Total GJ/d                 15,000       15,000       15,000       15,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average Price ($/GJ AECO C)
    -------------------------------------------------------------------------

                                                                     Q4 2009
    -------------------------------------------------------------------------
    Fixed                                                               6.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

                              Q1 2010      Q2 2010      Q3 2010      Q4 2010
    -------------------------------------------------------------------------
    Fixed                        7.58         6.06         5.66         6.25
    Call option (ceiling
     price)                      8.05         8.05         8.05         8.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Crude oil and liquids

    Average Volumes (bbls/d)
    -------------------------------------------------------------------------

                                                                     Q4 2009
    -------------------------------------------------------------------------
    Costless collars                                                     500
    -------------------------------------------------------------------------
    Total bbls/d                                                         500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average Price (CDN$/bbl WTI)
    -------------------------------------------------------------------------

                                                                     Q4 2009
    -------------------------------------------------------------------------
    Collar ceiling price                                               80.70
    Collar floor price                                                 52.30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Included in the above natural gas table is a fixed price contract of $5.90/GJ at 5,000 GJ/d from the second quarter 2009 to fourth quarter 2009 periods which was funded by selling a call option of 5,000 GJ/d at $8.05 for the 2010 year.

As of September 30, 2009, the fair value of True's outstanding commodity contracts is a net unrealized asset of $5.0 million as reflected in the financial statements. The fair value or mark-to-market value of these contracts is based on the estimated amount that would have been received or paid to settle the contracts as at September 30, 2009 and may be different from what will eventually be realized. Changes in the fair value of the commodity contracts are recognized in the Consolidated Statements of Loss within the financial statements.

The following is a summary of the gain (loss) on commodity contracts for the three and nine months ended September 30, 2009 and 2008 as reflected in the Consolidated Statements of Loss in the financial statements:

Commodity contracts
    -------------------------------------------------------------------------
                            Crude Oil      Natural      Q3 2009      Q3 2008
    ($000s)                 & Liquids          Gas        Total        Total
    -------------------------------------------------------------------------
    Realized cash gain
     (loss) on contracts            -        5,572        5,572      (11,831)
    Unrealized gain (loss)
     on contracts(1)              594       (4,445)      (3,851)      49,911
    -------------------------------------------------------------------------
    Total gain (loss) on
     commodity contracts          594        1,127        1,721       38,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                            Crude Oil      Natural     YTD 2009     YTD 2008
    ($000s)                 & Liquids          Gas        Total        Total
    -------------------------------------------------------------------------
    Realized cash gain
     (loss) on contracts            -       13,992       13,992      (28,592)
    Unrealized gain (loss)
     on contracts(1)             (111)       1,400        1,289        6,674
    -------------------------------------------------------------------------
    Total gain (loss) on
     commodity contracts         (111)      15,392       15,281      (21,918)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Unrealized gain (loss) commodity contracts represent non-cash
        adjustments for changes in the fair value of these contracts during
        the period.

Royalties

For the three months ended September 30, 2009, total royalties were $2.6 million, compared to $13.8 million incurred in the same period in 2008. Overall royalties as a percentage of revenue (after transportation costs) in the third quarter of 2009 were 11%, compared with 20% over the same period in 2008 and 19% for the second quarter of 2009. Royalties for the nine months ended September 30, 2009 were $14.2 million compared to $45.6 million for the same period in 2008. The reduction in royalty percentages experienced for the third quarter was primarily due to several factors: the sale of Saskatchewan properties (primarily heavy oil) with higher royalty rates and lower natural gas royalties in Alberta due to the impact of lower natural gas pricing under the new Alberta Government Royalty Program, including approximately $0.8 million over accrued in the first six months of 2009. The average corporate royalty rate for the fourth quarter of 2009, based on an updated analysis of company properties after dispositions, is currently estimated at 14%.

-------------------------------------------------------------------------
    Royalties by
     Commodity Type             Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Light crude oil,
     condensate and NGLs        1,369        2,893        3,952        9,556
      $/bbl                     15.62        27.16        13.16        22.64
      Average light crude
       oil, condensate and
       NGLs royalty rate (%)       27           26           27           23

    Heavy Oil                     689        4,174        5,183       11,806
      $/bbl                      5.77        16.09         8.66        15.45
      Average heavy oil
       royalty rate (%)            10           18           19           19

    Natural Gas                   512        6,732        5,067       24,226
      $/mcf                      0.18         1.67         0.54         1.86
      Average natural gas
       royalty rate (%)             5           19           13           21

    -------------------------------------------------------------------------
      Total                     2,570       13,799       14,202       45,588
    -------------------------------------------------------------------------
      $/boe                      3.76        13.32         5.75        13.59
    -------------------------------------------------------------------------
      Average total royalty
       rate (%)                    11           20           18           21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Royalties, by Type
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Crown royalties               609        6,931        6,700       25,474
    Freehold & GORR             1,314        4,837        4,392       14,548
    Indian Oil and Gas
     Canada royalties             515        2,031        2,488        5,566
    Saskatchewan resource
     surcharge                    132            -          622            -
    -------------------------------------------------------------------------
    Total                       2,570       13,799       14,202       45,588
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Expenses
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Production                  9,089       15,494       34,951       48,660
    Transportation                340        2,534        3,170        5,855
    General and
     administrative             3,244        3,610        8,667       11,872
    Interest and financing
     charges                    3,573        3,318       11,093       11,321
    Unit-based compensation        (3)         660         (363)       1,089
    -------------------------------------------------------------------------


    Expenses per boe
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($ per boe)                  2009         2008         2009         2008
    -------------------------------------------------------------------------
    Production                  13.29        14.95        14.15        14.51
    Transportation               0.50         2.45         1.28         1.75
    General and administrative   4.75         3.48         3.51         3.54
    Interest and financing
     charges                     5.22         3.20         4.49         3.37
    Unit-based compensation     (0.01)        0.64        (0.15)        0.72
    -------------------------------------------------------------------------

Production Expenses

For the three months ended September 30, 2009, production expenses totaled $9.1 million ($13.29/boe), compared to $15.5 million ($14.95/boe) recorded in the same 2008 period. In comparison, production expenses were $11.9 million ($13.41/boe) in the second quarter of 2009 and $66.6 million ($15.33/boe) for the 2008 annual period. For the nine month period ended September 30, 2009, production expenses totaled $35.0 million ($14.15/boe) compared to $48.7 million ($14.51/boe) for the same period in 2008. Reductions in production expenses between comparable periods is consistent with dispositions and planned cost reduction initiatives.

Bellatrix is targeting operating costs of approximately $42 million ($14.21/boe) in 2009 which is based on assumptions of estimated 2009 annualized production of approximately 8,100 boe/d, after considering completed divestitures, planned cost reductions, and cost reductions due to disposition of high operating cost properties. Forecasted cost reductions are on track through the third quarter of 2009.

Production Expenses, by Commodity Type
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Light crude oil,
     condensate and NGLs        2,074        2,974        6,701        8,248
    $/bbl                       23.65        27.92        22.30        19.55

    Heavy oil                   1,780        6,612        9,928       17,455
    $/bbl                       14.89        25.49        16.59        22.85

    Natural gas                 5,235        5,908       18,322       22,957
    $/mcf                        1.83         1.47         1.94         1.76

    -------------------------------------------------------------------------
    Total                       9,089       15,494       34,951       48,660
    -------------------------------------------------------------------------
    $/boe                       13.29        14.95        14.15        14.51
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total                       9,089       15,494       34,951       48,660
    -------------------------------------------------------------------------
    Processing and other
     third party income(1)       (757)        (698)      (1,644)      (2,156)
    -------------------------------------------------------------------------
    Total after deducting
     processing and other
     third party income         8,332       14,796       33,307       46,504
    -------------------------------------------------------------------------
    $/boe                       12.19        14.28        13.48        13.86
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Processing and other third party income is included within petroleum
        and natural gas sales on the statement of income.

Transportation

Transportation expenses for the three month period ended September 30, 2009 were $0.3 million ($0.50/boe) compared to $2.5 million ($2.45/boe) in the same 2008 period. In comparison, transportation was $1.3 million ($1.42/boe) in the second quarter of 2009 and $7.0 million ($1.62/boe) 2008 annual periods, respectively. The reduction in transportation expenses from the second quarter to the third quarter of 2009 was due to significantly less heavy oil hauling costs following sale of Saskatchewan properties in July 2009.

Operating Netback

    Field Operating Netback - Corporate (before hedging)
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($/boe)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                       33.79        69.03        33.74        66.24
    Transportation              (0.50)       (2.45)       (1.28)       (1.75)
    Royalties                   (3.76)      (13.32)       (5.75)      (13.59)
    Production expense         (13.29)      (14.95)      (14.15)      (14.51)
    -------------------------------------------------------------------------
    Field operating netback     16.24        38.31        12.56        36.39
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

For the third quarter of 2009, corporate field operating netback (before hedging) was $16.24/boe compared to $38.31/boe in the same period in 2008. This was the result of decreased overall commodity prices, offset by lower transportation, royalties and operating expenses. By comparison, corporate field operating netback (before hedging) for the second quarter of 2009 was $12.52/boe. After including hedging activities, the corporate field operating netback for the third quarter of 2009 was $24.39/boe compared to $26.90/boe in the same 2008 period.

Overall, corporate operating netbacks for 2009 are currently expected to be lower than 2008 due to anticipated lower commodity prices.

Field Operating Netback - Natural Gas (before hedging)
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($/mcf)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                        3.89         8.97         4.26         8.92
    Transportation              (0.20)       (0.33)       (0.20)       (0.18)
    Royalties                   (0.18)       (1.67)       (0.54)       (1.86)
    Production expense          (1.83)       (1.47)       (1.94)       (1.76)
    -------------------------------------------------------------------------
    Field operating netback      1.68         5.50         1.58         5.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Field operating netback for natural gas in the third quarter of 2009
decreased 69% to $1.68/mcf, compared to $5.50/mcf in the same 2008 period,
primarily reflecting weakening natural gas prices experienced. After including
hedging activities, field operating netback for natural gas in the three
months ended September 30, 2009 was $3.63/mcf compared to $4.33/mcf in the
same period in 2008.

    Field Operating Netback - Crude Oil, Condensate and NGLs (before hedging)
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($/bbl)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                       57.77        96.89        48.07        89.49
    Transportation               1.15        (3.31)       (1.39)       (2.98)
    Royalties                   (9.94)      (19.31)      (10.16)      (18.01)
    Production expense         (18.60)      (26.20)      (18.50)      (21.67)
    -------------------------------------------------------------------------
    Field operating netback     30.38        48.07        18.02        46.83
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Field operating netback for crude oil, condensate and NGLs averaged $30.38/bbl in the third quarter of 2009, representing a 37% decrease from the third quarter 2008 operating netback of $48.07/bbl. This compares to a 40% decrease in the crude oil, condensate and NGLs sales price. After including hedging activities, field operating netback for crude oil and NGLs in the 2009 third quarter was $30.38/boe compared to $28.58/boe in the same period in 2008.

General and Administrative

Total general and administrative ("G&A") expenses for the three and nine months ended September 30, 2009 were $3.2 million and $8.7 million, respectively, compared to $3.6 million and $11.9 million, respectively for the same period in 2008. The decrease in the G&A expense for the 2009 periods compared to the 2008 periods is primarily due to targeted G&A reductions completed in January 2009. True streamlined its operations and reduced head office staffing levels by one third in January 2009. The reduction in amounts of capitalized G&A for 2009 is consistent with a lower capital program. On a per boe basis, G&A expenses for the three and nine months ended September 30, 2009 were $4.75/boe and $3.51/boe, respectively, compared to $3.48/boe and $3.54/boe, respectively, for the same period in 2008. In comparison, G&A expenses were $2.6 million or $2.90/boe for the second quarter of 2009. Included in G&A expenses for the third quarter of 2009 is an increase in the allowance for doubtful accounts of $0.5 million (2008 - nil).

General and Administrative Expenses
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Gross expenses              3,618        4,690       10,182       15,077
    Capitalized                  (106)        (664)        (318)      (1,863)
    Recoveries                   (268)        (416)      (1,197)      (1,342)
    -------------------------------------------------------------------------
    Total G&A expenses          3,244        3,610        8,667       11,872
    -------------------------------------------------------------------------
    Total G&A expenses,
     per unit ($/boe)            4.75         3.48         3.51         3.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Interest and Financing Charges

True recorded $3.6 million of interest and financing charges for the three months ended September 30, 2009 compared to $3.3 million in the same period in 2008. For the nine months ended September 30, 2009, interest and financing charges totaled $11.1 million compared to $11.3 million for the same period in 2008. True's total net debt at September 30, 2009 of $104.3 million includes the $82.5 million liability portion of convertible debentures, $26.5 million of bank debt and the net balance of a working capital surplus. The convertible debentures have a maturity date of June 30, 2011.

Interest and Financing Charges
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Interest and financing
     charges                    3,573        3,318       11,093       11,321
    Interest and financing
     charges ($/boe)             5.22         3.20         4.49         3.37

    Debt to funds flow from
     operations ratio
     (annualized)(2)
    Total net debt(1) at
     quarter end              104,333      193,773      104,333      193,773
    Total net debt to
     periods funds flow
     from operations ratio
     (annualized)                2.4x         2.3x         2.8x         2.0x

    Net debt(1) (excluding
     convertible debentures)
     at quarter end            21,784      113,080       21,784      113,080
    Net debt to periods
     funds flow from
     operations ratio
     (annualized)(2)             0.5x         1.3x         0.6x         1.2x

    Debt to funds flow from
     operations ratio
     (trailing)(3)
    Total net debt to
     periods funds flow
     from operations ratio
     (trailing)                  2.0x         2.1x         2.0x         2.1x
    Net debt to periods
     funds flow from
     operations ratio
     (trailing)                  0.4x         2.1x         0.4x         2.1x
    -------------------------------------------------------------------------
    (1) Net debt includes the net working capital deficiency (excess) before
        short-term commodity contract assets and liabilities, current portion
        of long-term debt and short-term future tax assets and liabilities.
        Total net debt also includes the liability component of convertible
        debentures and excludes asset retirement obligations and the future
        income tax liability. Total net debt is a non-GAAP measure; refer to
        the following reconciliation of total liabilities to total net debt.
    (2) Total net debt and net debt to periods funds flow from operations
        ratio (annualized) is calculated based upon annualizing funds flow
        from operations for the three and nine month periods ended September
        30, 2009, respectively.
    (3) Trailing periods funds flow from operations is based on the trailing
        twelve month period ended September 30, 2009 and 2008.


    Reconciliation of Total Liabilities to Total Net Debt
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Total liabilities per
     financial statements     153,861      324,371      153,861      324,371
      Current liabilities
       included within
       working capital
      calculation             (19,084)     (48,059)     (19,084)     (48,059)
      Asset retirement
       obligations            (24,776)     (26,702)     (24,776)     (26,702)
      Future income taxes
       - long-term               (967)     (52,326)        (967)     (52,326)

    Working Capital
      Current assets          (27,327)     (49,001)     (27,327)     (49,001)
      Current liabilities      19,084       48,059       19,084       48,059
      Net commodity contract
       asset                    5,015       (3,669)       5,015       (3,669)
      Net future income taxes
       - current               (1,473)       1,100       (1,473)       1,100
    -------------------------------------------------------------------------
                               (4,701)      (3,511)      (4,701)      (3,511)
    -------------------------------------------------------------------------
    Total net debt            104,333      193,773      104,333      193,773
    -------------------------------------------------------------------------

Unit-Based Compensation

Non-cash unit-based compensation expense for the nine month period ended September 30, 2009 was a recovery of $0.4 million compared to expense of $1.1 million in 2008. The decrease in the expense for the nine month period ended September 30, 2009 reflects a reduction in the estimated weighted average fair value of incentive rights granted for more recent incentive units, and a reduction to the 2009 expense of $0.8 million for a reversal of prior year unit-based compensation expense for 2009 forfeitures of unvested incentive rights.

Depletion, Depreciation and Accretion

Depletion, depreciation and accretion expense for the three months ended September 30, 2009 was $19.7 million ($28.79/boe), compared to the $30.0 million ($28.94/boe) in the same period in 2008, which reflects lower production volumes combined with reduced carrying costs in the 2009 period as compared to 2008.

For the three months ended September 30, 2009, True has included $39.4 million for future development costs in the depletion calculation and excluded from the depletion calculation $22.6 million for undeveloped land and $27.8 million for estimated salvage.

Depletion, Depreciation and Accretion Costs

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Depletion and
     Depreciation              19,193       29,446       72,500       97,890
    Accretion                     490          539        1,812        1,607
    -------------------------------------------------------------------------
      Total                    19,683       29,985       74,312       99,497
    -------------------------------------------------------------------------
    Per unit ($/boe)            28.79        28.94        30.08        29.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Income Taxes

For the nine months ended September 30, 2009, the Trust has recorded no capital tax expense compared to $1.7 million expensed in the same period in 2008. Prior to January 1, 2009, capital taxes were based on a combination of debt and equity levels of the Trust at the end of the year in addition to a resource surcharge component of Saskatchewan provincial taxes calculated as a percentage of revenues. Effective for True's 2009 taxation year, this Saskatchewan tax has been changed such that it is calculated solely as a percentage of revenues. Accordingly, this Saskatchewan tax is grouped with royalties on a prospective basis.

Future income taxes arise from differences between the accounting and tax bases of the Trust's assets and liabilities. For the nine months ended September 30, 2009, the Trust recognized a future income tax recovery of $41.5 million compared to a recovery of $13.1 million in the same period in 2008.

As at September 30, 2009, the operating subsidiaries and the Trust itself have a total net future income tax liability balance of $2.4 million. Canadian GAAP requires that a future income tax liability be recorded when the book value of assets exceeds the balance of tax pools.

At September 30, 2009, the Trust and operating subsidiaries of the Trust had approximately $384 million in tax pools available for deduction against future income as follows:

-------------------------------------------------------------------------
                                                      Operating
    ($000s)                                 Trust  subsidiaries        Total
    -------------------------------------------------------------------------
    Intangible resource pools              15,105       246,222      261,327
    Undepreciated capital cost                  -       100,434      100,434
    Loss carryforwards (expire
     through 2027)                              -        19,834       19,834
    Unit issue costs                        1,741           207        1,948
    -------------------------------------------------------------------------
                                           16,846       366,697      383,543
    -------------------------------------------------------------------------

    Following the Reorganization from a Trust to a corporation, Bellaxtrix is
expected to have approximately $382 million in tax pools for deduction against
future income. As a result of the Reorganization, $1.7 million of tax pools
related to unit issue costs were eliminated.

    Net Loss, Cash Flow from Operating Activities and Funds Flow from
    Operations

    As detailed previously in this Management's Discussion and Analysis, funds
flow from operations is a term that does not have any standardized meaning
under GAAP. Funds flow from operations is calculated as cash flow from
operating activities before asset retirement costs incurred and changes in
non-cash working capital incurred.

    Reconciliation of Cash Flow from Operating Activities and Funds Flow from
    Operations
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     per unit amounts)           2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash flow from operating
     activities                12,150       29,406       27,928       67,141

    Asset retirement costs
     incurred                     218          893        1,269        1,605

    Change in non-cash
     working capital           (1,278)      (8,808)        (853)       3,282
    -------------------------------------------------------------------------

    Funds flow from
     operations                11,090       21,491       28,344       72,028
    -------------------------------------------------------------------------

True's cash flow from operating activities of $12.2 million ($0.15 per diluted unit) for the three month period ended September 30, 2009 decreased approximately 59% from the $29.4 million ($0.37 per diluted unit) generated in the third quarter of 2008. True generated funds flow from operations of $11.1 million ($0.14 per diluted unit) for the three month period ended September 30, 2009, down 48% from $21.5 million ($0.27 per diluted unit) for the third quarter of 2008. The decrease in cash flow from operating activities and funds flow for the 2009 period compared to the same period in 2008 was primarily the result of a significant decrease in commodity prices, in combination with lower sales volumes. Cash flow from operating activities for the nine month period ended September 30, 2009 was $27.9 million ($0.36 per diluted unit), down from the $67.1 million ($0.85 per diluted unit) for the same period in 2008. Funds flow from operations for the third quarter of 2009 increased 3% from second quarter 2009 funds flow from operations of $10.8 million. Cash flow from operating activities and funds flow from operations for the nine month period ended September 30, 2009 were $27.9 million and $28.3 million, respectively, down from the $67.1 million and $72.0 million, respectively, for the same period in 2008.

True maintains a commodity price risk management program to provide a measure of stability to cash flow from operating activities and funds flow from operations. Unrealized mark-to-market gains or losses are non-cash adjustments to the current fair market value of the contract over its entire term and are included in the calculation of net loss.

True generated a net loss of $9.6 million ($0.12 per diluted unit) in the third quarter of 2009 compared to net income of $29.9 million ($0.38 per diluted unit) in 2008. The net loss in the 2009 quarter when compared to the 2008 net income is a result of lower commodity prices in conjunction with decreased production volumes, and lower commodity contract gains.

Cash Flow from Operating Activities, Funds Flow from Operations and Net
    Income (Loss)
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except                    September 30,             September 30,
     per unit amounts)           2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash flow from
     operating activities      12,150       29,406       27,928       67,141
      Basic ($/unit)             0.15         0.37         0.36         0.85
      Diluted ($/unit)           0.15         0.37         0.36         0.85

    Funds flow from
     operations                11,090       21,491       28,344       72,028
      Basic ($/unit)             0.14         0.27         0.36         0.91
      Diluted ($/unit)           0.14         0.27         0.36         0.91

    Net income (loss)          (9,633)      29,939     (118,878)     (10,056)
      Basic ($/unit)            (0.12)        0.38        (1.51)       (0.13)
      Diluted ($/unit)          (0.12)        0.38        (1.51)       (0.13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital Expenditures

    True planned for a very modest capital program for the first three
quarters of 2009. Third quarter 2009 capital spending was $2.7 million, as
compared to $13.8 million for the same period in 2008.

    Capital Expenditures
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Lease acquisitions
     and retention                170          136          478        1,101
    Geological and geophysical     80          322          131          334
    Drilling and completion
     costs                      1,570        5,696        3,017       15,200
    Facilities and equipment      862        7,943        2,612        9,569
    -------------------------------------------------------------------------
      Exploration and
       development(1)           2,682       14,097        6,238       26,204
    Corporate and
     property acquisitions         28         (286)         379          337
    -------------------------------------------------------------------------
      Total capital
       expenditures - cash      2,710       13,811        6,617       26,541
    Property dispositions
     - cash                   (84,696)         (32)     (92,977)     (44,350)
    -------------------------------------------------------------------------
      Total net capital
       expenditures - cash    (81,986)      13,779      (86,360)     (17,809)
    -------------------------------------------------------------------------
    Other - non-cash(2)           178         (144)      (1,043)      (2,858)
    -------------------------------------------------------------------------
      Total net capital
       expenditures(1)        (81,808)      13,635      (87,403)     (20,667)
    -------------------------------------------------------------------------

    (1) Excludes capitalized costs related to asset retirement obligation
        expenditures incurred during the year.
    (2) Other includes non-cash adjustments for current period's asset
        retirement obligations and unit based compensation capitalized.

The $2.7 million capital program for the three months ended September 30, 2009, was financed entirely with funds flow from operations.

Based on the current economic conditions and Bellatrix's operating forecast for the remainder of 2009, the Company has updated its budgeted 2009 capital program to $19 million and is anticipating capital expenditures of approximately $12.4 million for the remainder of 2009.

During the third quarter of 2009, True drilled, completed and placed on production 1 (1.0 net) well at Willesden Green in West Central Alberta. Bellatrix's drilling program for the fourth quarter is in progress with 7(6.5 net) wells currently drilled, consisting of 1 (0.5 net) Pembina Alberta Cardium oil well, 2 (2.0 net) Mantario Saskatchewan oil wells, and 4 (4.0 net) Irvine Alberta natural gas wells. We plan to drill a further 4 (3.35 net) wells for the balance of 2009 concentrating on the Ferrier and Pembina areas. The Alberta wells drilled by Bellatrix take advantage of the Alberta Government Royalty incentive program.

Land

True's net mineral leases in Alberta, British Columbia and Saskatchewan as of September 30, 2009 decreased to approximately 268,000 net acres from 338,000 net acres established on June 30, 2009. The majority of the decrease in net acres of undeveloped land is the result of the divestitures completed in the quarter. The Company has in excess of 300 exploitation drilling opportunities identified representing over 5 years of drilling inventory.

Ceiling Test

The Trust calculates a ceiling test quarterly and annually to place a limit on the aggregate carrying value of its capitalized costs, which may be amortized against revenues of future periods. The ceiling test is performed in accordance with the requirements of the Canadian Institute of Chartered Accountants ("CICA") AcG-16 "Oil and Gas Accounting - Full Cost", a two step process.

The Trust performed a ceiling test calculation at September 30, 2009 resulting in undiscounted cash flows from proved reserves and the undeveloped properties not exceeding the carrying value of oil and gas assets. Consequently, True performed stage two of the ceiling test assessing whether discounted future cash flows from production of proved plus probable reserves plus the carrying cost of undeveloped properties, net of any impairment allowance, exceeds the carrying value of its petroleum and natural gas properties. No impairment in oil and gas assets was identified as at September 30, 2009.

The ceiling test calculation is updated in 2009 on a quarterly and annual basis based upon the latest available data, including but not limited to an updated annual external reserve engineering report which incorporates a full evaluation of reserves or internal reserve updates at quarterly periods, and the latest commodity pricing deck. Estimating reserves is very complex, requiring many judgments based on available geological, geophysical, engineering and economic data. Changes in these judgments could have a material impact on the estimated reserves. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available and as the economic environment changes.

Asset Retirement Obligations

As at September 30, 2009, the Trust has recorded an Asset Retirement Obligation ("ARO") of $24.8 million, compared to $33.7 million at December 31, 2008 for future abandonment and reclamation of the Trust's properties. For the nine months ended September 30, 2009, the overall ARO balance decreased by $8.9 million as a result of $10.9 million of liabilities released on dispositions and $1.3 million of liabilities settled, offset by accretion expense of $1.8 million, $1.5 million net changes in estimates and liabilities incurred on development activities

Distributions

    For the nine months ended September 30, 2009 Trust declared distributions
as follows:

    -------------------------------------------------------------------------
    ($000s, except per unit amount)                Distribution
    Nine months ended September 30, 2009               Per Unit        Total
    -------------------------------------------------------------------------
    Distributions declared                                $0.02       $1,570
    -------------------------------------------------------------------------

    Distribution Paid History(1)

    Distributions comprise a taxable portion and a return of capital portion
(tax deferred). The return of capital component reduces the cost basis of the
trust units held, as described below. For additional information, please see
our website at www.bellatrixexploration.com

    -------------------------------------------------------------------------
                                     Distributions      Taxable    Return of
    Calendar Year                         per unit      Portion      Capital
    -------------------------------------------------------------------------
    2005 (two months)(2)                   $ 0.480      $ 0.456      $ 0.024
    2006                                   $ 2.640      $ 2.033      $ 0.607
    -------------------------------------------------------------------------
    Cumulative to Dec. 31, 2006            $ 3.120      $ 2.489      $ 0.631
    -------------------------------------------------------------------------
    2007 year                              $ 0.960      $ 0.960            -
    -------------------------------------------------------------------------
    Cumulative to Dec. 31, 2007            $ 4.080      $ 3.449      $ 0.631
    -------------------------------------------------------------------------
    2008 year                              $ 0.460      $ 0.460            -
    -------------------------------------------------------------------------
    Cumulative to December 31, 2008        $ 4.540      $ 3.909      $ 0.631
    -------------------------------------------------------------------------
    2009 year to date (one month)(3)       $ 0.020
    -----------------------------------------------
    Cumulative to September 30, 2009       $ 4.560
    -----------------------------------------------

    (1) Applies to unitholders who are residents of Canada and hold their
        trust units as capital property.
    (2) Based upon the distributions paid in the 2005 calendar year, after
        the November 2, 2005 Arrangement with TKE Energy Trust.
    (3) It is currently estimated that the approximate taxable portion of the
        January 2009 distribution to Canadian unitholders will be 100%.

        In consultation with its U.S. tax advisors, True believes that its
        Trust units should be "qualified dividends" for U.S. federal
        purposes. As such, the portion of distributions made during 2009 that
        are considered dividends for U.S. federal purposes should qualify for
        the reduced rate of tax applicable to long-term capital gains.
        Unitholders or potential unitholders should consult their own legal
        or tax advisors as to their particular income tax consequences of
        holding True units. Please review our February 19, 2009 press release
        addressing this.

    Monthly Distributions

    Actual distributions paid and declared per Trust unit along with relevant
payment dates for 2009 to date are as follows:

    -------------------------------------------------------------------------
                                                                Distribution
    Ex-distribution Date   Record Date          Payment Date        per unit
    -------------------------------------------------------------------------
    December 29, 2008      December 31, 2008    January 15, 2009        0.02
    January 28, 2009       January 30, 2009     February 17, 2009       0.02
    -------------------------------------------------------------------------

During the first nine months of 2009, funding requirements for distributions declared was 1% of funds flow from operations.

As announced on March 17, 2009, due to the continued deterioration in economic conditions, including the significant decline in crude oil and natural gas prices, a weakening outlook for natural gas demand and heightened risk in the credit markets, the Trust deemed it prudent to suspend distributions. Pursuant to True's credit facilities, the Trust was permitted to pay the semi-annual interest payments on the Debentures, cash distributions in connection with redemption of trust units and payments by the Trust to unitholders and debenture holders in relation to the normal course issuer bids approved by the TSX on August 17, 2009 and monthly distributions to unitholders, provided that distributions in a fiscal year did not exceed $10 million.

Subsequent to the Reorganization from a trust structure to corporate structure, it is currently not anticipated that Bellatrix will pay dividends to common shareholders.

Foreign Ownership Update

Based on information from Trust records and information provided by intermediaries holding Trust units for others, the Trust estimates that, as of October 23, 2009 approximately 25 percent of unitholders are non-Canadian residents with the remaining 75 percent being Canadian residents.

Liquidity and Capital Resources

As an oil and gas business, Bellatrix has a declining asset base and therefore relies on ongoing development and acquisitions to replace production and add additional reserves. Future oil and natural gas production and reserves are highly dependent on the success of exploiting the Trust's existing asset base and in acquiring additional reserves. To the extent Bellatrix is successful or unsuccessful in these activities; cash flow could be increased or reduced.

Global financial markets continued to remain fragile during the first nine months of 2009. The economic crisis continues to put a strain on credit and equity markets as characterized by a decline in liquidity and higher borrowing costs. Access to capital markets has become constrained and significantly more expensive for the Trust along with other oil and gas entities. The current global economic environment has continued to create volatility in commodity prices, tempered somewhat by the growing Canadian to US dollar exchange rate. Given the continuing uncertain economic conditions, Bellatrix has maintained a modest 2009 capital program, although it was recently increased to $19 million, and in February 2009 had suspended distributions until further notice. Bellatrix continues to monitor forecasted debt levels to manage its operations within forecasted cash flow. In addition, Bellatrix will continue to monitor developments within the global economic environment to consider the impacts on current or future lending arrangements.

Liquidity risk is the risk that Bellatrix will not be able to meet its financial obligations as they fall due. Bellatrix actively manages its liquidity through daily and longer-term cash, debt and equity management strategies. Such strategies encompass, among other factors: having adequate sources of financing available through its bank credit facilities, estimating future cash generated from operations based on reasonable production and pricing assumptions, analysis of economic hedging opportunities, and maintaining sufficient cash flows for compliance with debt covenants. Bellatrix is fully compliant with all of its debt covenants.

Bellatrix generally relies on operating cash flows and its credit facilities to fund capital requirements and provide liquidity. Future liquidity depends primarily on cash flow generated from operations, existing credit facilities and the ability to access debt and equity markets. From time to time, the Company accesses capital markets to meet its additional financing needs and to maintain flexibility in funding its capital programs. There can be no assurance that debt or equity financing, or cash generated by operations will be available or sufficient to meet these requirements or for other corporate purposes or, if debt or equity financing is available, that it will be on terms acceptable to Bellatrix. The inability of Bellatrix to access sufficient capital for its operations could have a material adverse effect on Bellatrix's business financial condition, results of operations and prospects.

Credit risk is the risk of financial loss to Bellatrix if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from Bellatrix's trade receivables from joint venture partners, petroleum and natural gas marketers, and financial derivative counterparties.

A substantial portion of Bellatrix's accounts receivable are with customers and joint interest partners in the petroleum and natural gas industry and are subject to normal industry credit risks. Bellatrix sells substantially all of its production to eight primary purchasers under standard industry sale and payment terms. Purchasers of Bellatrix's natural gas, crude oil and natural gas liquids are subject to a periodic internal credit review to minimize the risk of non-payment. Bellatrix has continued to closely monitor and reassess the creditworthiness of its counterparties, including financial institutions. This has resulted in Bellatrix reducing or mitigating its exposures to certain counterparties where it is deemed warranted and permitted under contractual terms.

Bellatrix may be exposed to third party credit risk through its contractual arrangements with its current or future joint venture partners, marketers of its petroleum and natural gas production and other parties. In the event such entities fail to meet their contractual obligations to Bellatrix, such failures may have a material adverse effect on the Trust's business, financial condition, results of operations and prospects. In addition, poor credit conditions in the industry and of joint venture partners may impact a joint venture partner's willingness to participate in Bellatrix's ongoing capital program, potentially delaying the program and the results of such program until Bellatrix finds a suitable alternative partner.

During 2009, the Trust has been executing several strategies for dealing with these uncertain times.

Bellatrix's corporate thrust in 2009 has been to continue to improve Bellatrix's balance sheet by reducing total outstanding debt and streamlining its operating cost structure. In 2009, Bellatrix has limited its capital program to $19 million in an effort to maintain production and increase financial flexibility to fund operations. This compares to the $43 million capital program employed in 2008. As a consequence of a reduced capital program and strategic divestitures completed in 2008 and 2009, total net debt levels decreased by $135 million from $239.4 million at March 31, 2008 to $104.3 million at September 30, 2009. Total net debt excludes unrealized commodity contract assets and liabilities, future income taxes and asset retirement obligations.

On July 30, 2009, the Trust successfully completed the divestiture of the majority of its Saskatchewan assets for net proceeds, after purchase adjustments of approximately $86 million. The proceeds were used to reduce the Trust's bank indebtedness.

On August 17, 2009, True finalized new syndicated credit facilities to replace its then existing bank facilities. The new facilities consisted of a $10 million demand operating facility provided by one Canadian bank and a $75 million extendible revolving term credit facility provided by one Canadian bank and one Canadian financial institution. Amounts borrowed under the credit facilities bear interest at a floating rate based on the applicable Canadian prime rate, U.S. base rate or LIBOR rate, plus between 1.50% and 4.50%, depending on the type of borrowing and the Trust's debt to cash flow ratio. The credit facilities were guaranteed by the Trust and all material subsidiaries by a $400 million debenture containing a first ranking charge and security interest. True provided a negative pledge and undertaking to provide fixed charges over major petroleum and natural gas reserves in certain circumstances. A standby fee is charged of between 0.60% and 1.12% on the undrawn portion of the credit facilities, depending on the Trust's debt to cash flow ratio. The revolving period for the revolving term credit facility will end on June 29, 2010, unless extended for a further 364-day period. Should the facility not be extended it will convert to a non-revolving term facility with the full amount outstanding due 366 days after the last day of the revolving period of June 29, 2010. The borrowing base will be subject to re-determination on March 31, 2010. Thereafter, a semi-annual re-determination of the borrowing base will occur, with the first such re-determination occurring on November 30, 2010 and each subsequent re-determination on May 30 and November 30 in each year prior to the maturity date.

On November 1, 2009, following the Reorganization, Bellatrix has confirmed its $85 million credit facilities with its existing lenders on substantially the same terms and conditions.

The strategic dispositions accomplished in the year allow the Company to progress forward with substantially improved financial flexibility.

Combined funding requirements for the January distribution declared and True's capital expenditures represented 24% and 29% of funds flow from operations in the three and nine months ended September 30, 2009, respectively.

As a result of the continued deterioration in economic conditions, including the significant decline in crude oil prices seen earlier in 2009, a weakening outlook for natural gas demand and a heightened risk in the credit markets, True deemed it prudent to suspend distributions in February 2009 to maintain corporate liquidity during the current financial turmoil and prevailing commodity price environment. Distributions remained suspended, at the discretion of the Board of Directors, through to the conversion to a corporation. Pursuant to True's credit facilities, the Trust was permitted to pay the semi-annual interest payments on the Debentures, cash distributions in connection with redemption of trust units and payments by the Trust to unitholders and debenture holders in relation to the normal course issuer bids approved by the TSX on August 17, 2009 and monthly distributions to unitholders, provided that distributions in a fiscal year did not exceed $10 million. Bellatrix currently does not expect to pay dividends.

True continues to tighten its cost structure in the current economically challenging climate with forecasted cuts from 2008 levels of 30% to total operating expenses which includes G&A and lease operating costs in 2009. The results year to date are on track.

For the nine month period ended September 30, 2009, capital expenditures of $6.6 million and distributions of $1.6 million utilized approximately 29% of funds flow from operations.

As an added layer of protection of its cash flow forecast, upon completion of the divestitures, Bellatrix's hedging represents approximately 58% of its natural gas production for Q4 2009 that is forward sold at an average price of $7.75 CAD/mcf, and approximately 29% of its natural gas production for 2010 is hedged at an average price of $7.01 CAD/mcf. In addition, 500 bbl/d of oil for Q4 is hedged by way of a costless collar of $52.30 CAD x $80.70 CAD. Bellatrix maintains an active commodity price risk management program focused on maintaining sufficient cash flow to fund its operations.

Pursuant to True's existing credit facility, the Trust was only permitted to receive amounts from True Energy and its subsidiaries for the sole purpose of permitting the Trust to pay: (i) distributions by True Energy to the Trust to permit the regular semi-annual interest payments by the Trust on June 30 and December 31 in each year with respect to the convertible debentures issued by the Trust on or before April 1, 2009; (ii) distributions from True Energy to the Trust to permit cash distributions in respect of Trust unit redemptions, if and only if and to the extent that the total cash amount payable in respect of all unit redemptions in a month did not exceed $250,000; (iii) amounts required to be paid by the Trust to the unitholders and debenture holders to permit the completion of normal course issuer bids approved by the TSX as at August 17, 2009 and those additional normal course issuer bids that the lenders thereafter approve; or (iv) monthly distributions to the Unitholders in the ordinary course of business of True, provided that the aggregate of all such monthly ordinary course distributions in a fiscal year did not exceed $10 million and provided in each case that the foregoing distributions shall not be permitted if a borrowing base shortfall has occurred and is continuing, a demand for payment has been made and remains outstanding, a default or an event of default is then in existence or could reasonably be expected to result from such distribution, or the distribution could impair the ability of True Energy to satisfy its covenants and obligations to the lenders under the credit facility. On November 1, 2009, following the Reorganization, Bellatrix confirmed its $85 million credit facilities with its existing lenders on substantially the same terms and conditions.

There are currently no commitments, other than those associated with the Bellatrix's credit facilities outlined above, its 2009 capital program of $12.4 million for the remaining 2009, and the off-balance sheet arrangements outlined below. Bellatrix continually monitors its capital spending program in light of the recent volatility with respect to commodity prices and Canadian dollar exchange rates with the aim of ensuring the Trust will be able to meet future anticipated obligations incurred from normal ongoing operations with funds flow from operations and draws on Bellatrix's syndicated facility, as necessary.

On June 15, 2006 the Trust completed a bought deal public offering of 86,250 7.5% convertible unsecured subordinated debentures at a price of $1,000 per debenture for aggregate gross proceeds of $86,250,000. The debentures have a face value of $1,000 per debenture and a maturity date of June 30, 2011. The debentures bear interest at an annual rate of 7.50% payable semi-annually on June 30 and December 31 in each year commencing December 31, 2006. Pursuant to the Reorganization, the debentures were assumed by Bellatrix and are now convertible at anytime at the option of the holders into common shares of Bellatrix at a conversion price of $16.00 per share, subject to adjustment in certain events. Bellatrix has the right to redeem all or a portion of the debentures at a price of $1,050 per debenture after June 30, 2009 and on or before June 30, 2010 and at a price of $1,025 per debenture after June 30, 2010 and before the maturity date. Upon maturity or redemption of the debentures, Bellatrix may, subject to notice and regulatory approval, pay the outstanding principal and premium (if any) on the debentures in cash or through the issue of additional common shares at 95% of the 20 day weighted average trading price for the common shares for the period ending the fifth trading day preceding the redemption date.

As at November 1, 2009, Bellatrix had outstanding a total of 4,067,733 options exercisable at an average exercise price of $2.05 per share, $85.68 million principal amount of debentures convertible into common shares (at a conversion price of $16.00 per share) and 78,809,039 common shares.

Commitments

As at September 30, 2009, the Trust had committed to drill a total of 5 wells in Alberta pursuant to various farm-in agreements with oil and gas companies. Bellatrix expects to satisfy these various drilling commitments at an estimated cost of approximately $5.7 million.

The following are the contractual maturities of financial liabilities as at September 30, 2009:

-------------------------------------------------------------------------

    Financial liability    (less than)
     ($000s)                   1 Year    1-2 Years    2-5 Years   Thereafter
    -------------------------------------------------------------------------

    Accounts payable and
     accrued liabilities(1)    17,500            -            -            -

    Commodity contract
     liability                    111

    Bank debt - principal(2)        -       26,485            -            -

    Convertible debentures
     - principal                    -       86,250

    Convertible debentures
     - interest(3)              4,839        6,469            -            -
    -------------------------------------------------------------------------

    Total                      22,450      119,204            -            -
    -------------------------------------------------------------------------
    (1) As at September 30, 2009, $1.6 million of accrued coupon interest
        payable in relation to the convertible debentures is included in
        Accounts Payable and Accrued Liabilities.
    (2) Bank debt is based on a revolving term which is reviewed at least
        annually and converts to a 366 day non-revolving facility if not
        renewed after the last day of the revolving period of June 29, 2010.
    (3) Convertible debentures outstanding at September 30, 2009 bear
        interest at a coupon rate of 7.5%, which currently requires total
        annual interest payments of $6.5 million.

Interest due on the bank credit facility is calculated based upon floating rates.

Off-Balance Sheet Arrangements

The Trust has certain lease agreements, including primarily fixed term office space leases, which were entered into in the normal course of operations. All leases have been treated as operating leases whereby the lease payments are included in operating expenses or G&A expenses depending on the nature of the lease. The lease agreements do not currently provide for early termination. No asset or liability value has been assigned to these leases in the balance sheet as of September 30, 2009.

Business Prospects and 2009 and 2010 Year Outlook

As of November 1, 2009, the Trust was converted to a growth oriented, public exploration and production company. The Company will continue to develop its core assets and conduct some exploration programs utilizing its large inventory of geological prospects. In addition, the Company will continue to explore potential acquisition opportunities. Currently, the Company's producing properties are located in Saskatchewan, Alberta and British Columbia.

Bellatrix has approximately 268,000 net acres of undeveloped land with in excess of 300 exploitation drilling opportunities identified representing over 5 years of drilling inventory.

Bellatrix continues to monitor its cost structure in the current economically challenging climate and as a result, completed G&A reductions in January 2009. True streamlined its operations and reduced head office staffing levels by one third compared to 2008 levels. Bellatrix's capital program for 2009 has been increased to $19 million. 2009 production volumes are estimated to average 8,100 boe/d.

As an added layer of protection of its cash flows, upon completion of divestitures, Bellatrix's hedging represents approximately 58% of its estimated natural gas production for the fourth quarter of 2009 that is forward sold at an average price of $7.75 CAD/mcf, and approximately 29% of its natural gas production for 2010 is hedged at an average price of $7.01 CAD/mcf. In addition, 500 bbl/d of oil for Q4 is hedged by way of a costless collar of $52.30 CAD x $80.70 CAD.

Bellatrix's 2010 capital program is currently not expected to exceed $40 million. Bellatrix will continue to focus on opportunities to increase its farm-out activity in non-core areas.

On August 17, 2009 True finalized new credit facilities to replace its then existing banking facilities. The new facilities consist of a $10 million demand operating facility provided by one Canadian bank and a $75 million extendible revolving term credit facility provided by one Canadian bank and one Canadian financial institution with a revolving period of June 29, 2010, unless extended for a further 364-day period. The next borrowing base review under the new facility will be scheduled for March 31, 2010.

On November 1, 2009, Bellatrix confirmed its $85 million facilities with existing lenders on substantially the same terms and conditions.

Financial Reporting Update

Goodwill and intangible assets

In February 2008, the CICA issued a new accounting standard, Section 3064 - Goodwill and Intangible Assets, which replaces Section 3062 - Goodwill and Other Intangible Assets, and Section 3450 - Research and Development costs. The new section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The section was effective for the Trust beginning January 1, 2009. Application of the new section does not currently have any impact on the Trust's financial statements.

International Financial Reporting Standards ("IFRS")

On February 13, 2008 the CICA Accounting Standards Board announced that Canadian public reporting issuers will be required to report under International Financial Reporting Standards ("IFRS"), which will replace Canadian generally accepted accounting principles ("GAAP") for years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require restatement for comparative purposes, of amounts reported by the Company for its year ended December 31, 2010, and of the opening balance sheet as at January 1, 2010. The objective is to improve financial reporting by having one single set of accounting standards that are comparable with other entities on an international basis.

An internal project team has been set up to manage this transition and to ensure successful implementation within the required time frame. Current economic conditions may require re-allocation of resources available for the IFRS conversion project.

The Company has completed a high level analysis to determine the areas impacted by the conversion and is assessing the financial reporting impacts on the adoption of IFRS. The assessment provided insight as to the most significant areas of GAAP differences applicable to Bellatrix and include treatment of exploration and evaluation costs, depreciation and depletion of property, plant and equipment, and impairment of assets, as well as more extensive presentation and disclosure requirements under IFRS. During the nine months ended September 30, 2009, IFRS in-depth reviews have been concentrated on cash generating units, options available under IFRS for modified full cost accounting, and a preliminary analysis of the impact on our data gathering and reporting systems. As we are still assessing the impact of IFRS and have not yet selected or finalized our accounting policy choices and IFRS 1 exemptions, we are unable to quantify the impact of IFRS on the Company's future financial position and results of operations.

On July 23, 2009 the IASB published amendments to IFRS 1 - "First-time Adoption of International Financial Reporting Standards" which will allow an election to measure oil and gas assets at the date of transition to IFRS at the amount determined under Canadian GAAP. It is anticipated that Bellatrix will make this election available under IFRS 1.

We will continue to monitor standards development as issued by the International Accounting Standards Board and the AcSB, as well as regulatory developments as issued by the Canadian Securities Administrators (CSA), which may affect the timing, nature or disclosure of our adoption of IFRS.

Business Risks and Uncertainties

The reader is advised that Bellatrix continues to be subject to various types of business risks and uncertainties as described in the Trust's Management, Discussion and Analysis for the year ended December 31, 2008 and the Trust's Annual Information Form for the year ended December 31, 2008.

Critical Accounting Estimates

The reader is advised that the critical accounting estimates, policies, and practices as described in the Trust's Management's Discussion and Analysis for the year ended December 31, 2008 continue to be critical in determining True's unaudited financial results as at September 30, 2009. There were no changes in accounting policies for the six month period ended September 30, 2009, except for the adoption of a new accounting standard, Section 3064 - Goodwill and Intangible Assets, which does not have any impact on the Trust's financial statements.

Legal, Environmental Remediation and Other Contingent Matters

The Trust reviews legal, environmental remediation and other contingent matters to both determine whether a loss is probable based on judgment and interpretation of laws and regulations and determine that the loss can reasonably be estimated. When the loss is determined, it is charged to earnings. The Company's management monitor known and potential contingent matters and make appropriate provisions by charges to earnings when warranted by the circumstances.

Controls and Procedures

Disclosure Controls and Procedures

The Trust's Chief Executive Officer and Chief Financial Officer designed, or caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that: (i) material information relating to the Trust is made known to the Trust's Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Trust in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time period specified in securities legislation.

Internal Control over Financial Reporting

The Trust's Chief Executive Officer and Chief Financial Officer designed, or caused to be designed under their supervision, internal control over financial reporting to provide reasonable assurance regarding the reliability of the Trust's financial reporting and the preparation of financial statements for external purposes in accordance with the Canadian GAAP.

Bellatrix is required to disclose herein any change in the Trust's internal control over financial reporting that occurred during the period beginning on July 1, 2009 and ended on September 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting. No material changes in the Trust's internal control over financial reporting were identified during such period, that has materially affected, or are reasonably likely to materially affect, the Trust's internal control over financial reporting.

It should be noted that a control system, including the Trust's disclosure and internal controls and procedures, no matter how well conceived, can provide only reasonable, but not absolute, assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.

Standardized Distributable Cash

The Canadian Securities Administrators revised and re-issued in July 2007 National Policy 41-201 "Income Trusts and Other Indirect Offerings", which includes disclosures regarding distributable cash for Income Trusts. Further, the Canadian Institute of Chartered Accountants ("CICA") issued the Interpretive Release "Standardized Distributable Cash in Income Trusts and Other Flow-Through Entities: Guidance on Preparation and Disclosure" (the "Release"). In this guidance, sustainability concepts are discussed and standardized distributable cash is defined as cash flow from operating activities less adjustments for productive capacity maintenance, long-term unfunded contractual obligations and the effect of any foreseeable financing matters, related to debt covenants, which could impair True's ability to pay distributions or maintain productive capacity. This Management Discussion and Analysis is in all material respects in accordance with the recommendations provided in CICA's Release and NP 41-201.

-------------------------------------------------------------------------
                                Three months ended         Nine months ended
    ($000s, except per unit           September 30,             September 30,
     amounts and ratios)         2009         2008         2009         2008
    -------------------------------------------------------------------------

    Net income (loss)          (9,633)      29,939     (118,404)     (10,056)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flow from
     operating activities      12,150       29,406       27,928       67,141
    Productive capacity
     maintenance(1)            (2,682)     (14,097)      (6,238)     (26,204)
    -------------------------------------------------------------------------
    Standardized
     distributable cash         9,468       15,309       21,690       40,937
    Proceeds on sale of
     property, plant and
     equipment                 84,696           32       92,977       44,350

    Corporate and property
     acquisition and other
     capital expenditures         (28)         286         (379)        (337)
    Repurchase of trust
     units under normal
     course issuer bid              -         (944)           -       (1,540)

    Bank borrowings (debt
     repayment) and working
     capital changes and
     other                    (94,136)      (5,209)    (112,718)     (54,924)
    -------------------------------------------------------------------------
    Cash Distributions
     declared                       -        9,474        1,570       28,486
    Accumulated
     distributions,
     beginning of period       253,071     234,179      251,501      215,167
    -------------------------------------------------------------------------
    Accumulated
     distributions, end of
     period                    253,071     243,653      253,071      243,653
    -------------------------------------------------------------------------
    Standardized
     distributable cash
     per unit - basic           $0.12        $0.19        $0.28        $0.52
    Standardized
     distributable cash
     per unit - diluted         $0.12        $0.19        $0.28        $0.52
    -------------------------------------------------------------------------
    Standardized
     distributable cash
     payout ratio(2)              N/A         0.62         0.07         0.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributions declared
     per unit for
     outstanding units in
     the period                     -         0.12        $0.02         0.36

    Accumulated
     distributions per unit,
     beginning of period         4.56         4.32         4.54         4.08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated
     distributions per unit,
     end of period              $4.56         4.44        $4.56         4.44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Excess (shortfall) of
     net income over cash
     distributions declared    (9,633)      20,465     (119,974)     (38,542)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Excess of cash flow from
     operating activities
     over cash distributions
     declared                  12,150       19,932       26,358       38,655
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Please refer to the discussion of productive capacity maintenance
        below
    (2) Represents cash distributions declared divided by standardized
        distributable cash

While a Trust, True attempted to fund both distributions (if any) and maintenance capital primarily from funds flow from operations.

Productive capacity is the amount of capital funds required in a period for an enterprise to maintain its ability to generate future cash flow from operating activities at a constant level. As commodity prices can be volatile and short-term variations in production levels are often experienced in the oil and gas industry, True defined production capacity as production on a barrel of oil equivalent basis. A quantifiable measure for these short-term variations is not objectively determinable or verifiable due to various factors including the inability to distinguish natural production declines from the effect of production additions resulting from capital and optimization programs, and the effect of temporary production interruptions. As a result, the adjustment for productive capacity maintenance in True's calculation of standardized distributable cash is True's capital expenditures excluding the cost of any asset acquisition, corporate asset acquisitions or proceeds of any asset disposition. True believed that its capital programs based on 40% to 60% of forecasted funds flow including its view of True's assets and opportunities and True's outlook for commodity prices and industry conditions in the medium term, should have been sufficient to maintain True's productive capacity in the medium term. True set its hurdle rates for evaluating potential development and optimization projects according to these parameters. Due to the risks inherent in the oil and natural gas industry, particularly True's exploration and development activities and inherent variations in commodity prices, there could be no assurance that capital programs, whether limited to excess of cash flow over distributions or not, will be sufficient to maintain or increase True's production levels or cash flow from operating activities. True's capital expenditures and production could have been impacted by the timing of the capital program and spring break up associated with certain operating areas of its properties. As True attempted to maintain sufficient credit facilities and appropriate levels of bank debt, this seasonality was not expected to influence True's distribution policies.

True's calculation of standardized distributable cash has no adjustment for long-term unfunded contractual obligations. True's only material long-term unfunded contractual obligation at this time was for asset retirement obligations. True's abandonment obligations were being funded on an annual basis with cash flow from operating activities. Cash flow from operating activities, used in our standardized distributable cash calculation, includes a deduction for abandonment expenditures incurred in the year. True regularly monitored its current forecast debt levels to ensure debt covenants are not exceeded.

Distributions, if paid, typically exceeded net income as a result of non-cash items such as unit-based compensation, depletion, depreciation and accretion, unrealized loss (gain) on commodity contracts, and future income tax expense (recovery). These non-cash items generally result in a reduction to net income, with no impact to cash flow from operating activities. Therefore, distributions, if paid, exceeded net income in most periods. In the event distributions exceeded cash flow from operating activities and the requirements of True's capital program, the shortfall was typically funded by a combination of available bank facilities, equity or debt issues, or the sale proceeds from non-core assets.

The Board of Directors and management regularly reviewed the level of distributions. The board considered a number of factors, including expectations of future current commodity prices, hedge positions, production volumes, capital expenditure requirements, market conditions, the availability of debt and equity capital and other factors. As announced on March 17, 2009, as a result of the continued deterioration in economic conditions, including the significant decline in crude oil and natural gas prices and heightened risk in the credit markets, the Trust has suspended its distributions until further notice. Pursuant to True's credit facilities, the Trust was permitted to pay the semi-annual interest payments on the Debentures, cash distributions in connection with redemption of trust units and payments by the Trust to unitholders and debenture holders in relation to the normal course issuer bids approved by the TSX on August 17, 2009 and monthly distributions to unitholders, provided that distributions in a fiscal year did not exceed $10 million.

Following the Reorganization effective November 1, 2009, the standardized distributable cash disclosures will no longer be applicable and Bellatrix currently does not anticipate paying dividends.

-------------------------------------------------------------------------

    ($000s, except ratios)                             To September 30, 2009
    -------------------------------------------------------------------------
    Cumulative distributable cash from operations (1)                 88,122
    Proceeds on sale of property, plant and equipment                193,639
    Corporate and property acquisitions and other
     capital expenditures                                            (26,564)
    Net proceeds from issue of trust units                            54,375
    Proceeds from issue of convertible debentures, net of
     issue costs                                                      82,261
    Repurchase of trust units under normal course issuer bid          (4,194)
    Funding from DRIP                                                 42,909
    Bank borrowings (debt repayment) and working capital
     changes and other                                              (177,477)
    -------------------------------------------------------------------------

    Cumulative cash distributions declared (1)                       253,071
    -------------------------------------------------------------------------

    Standardized distributable cash payout ratio (2)                    2.87
    -------------------------------------------------------------------------
    (1) Subsequent to the November 2, 2005 reverse takeover of TKE Energy
        Trust
    (2) Represents cumulative distributions declared divided by cumulative
        standardized distributable cash

Sensitivity Analysis

The table below shows sensitivities to funds flow as a result of product price and operational changes. This is based on actual average prices received for the third quarter of 2009 and average production volumes of 7,432 boe/d during that period, as well as the same level of debt outstanding at September 30, 2009. Diluted weighted average Trust units is based upon the third quarter of 2009. These sensitivities are approximations only, and not necessarily valid under other significantly different production levels or product mixes. Hedging activities can significantly affect these sensitivities. Changes in any of these parameters will affect funds flow as shown in the table below:

-------------------------------------------------------------------------
                                                                  Funds Flow
                                                     Funds Flow         from
                                                           from   Operations
                                                     Operations  Per Diluted
                                                    (annualized)        Unit
    -------------------------------------------------------------------------
    Sensitivity Analysis                                 ($000s)          ($)
    -------------------------------------------------------------------------
    Change of US $1/bbl WTI                                 748         0.01
    Change of $0.10/ mcf                                  1,078         0.01
    Change of US $0.01 Cdn/ US exchange rate                429         0.01
    Change in prime of 1%                                   265            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Selected Quarterly Consolidated Information

The following table sets forth selected consolidated financial information of the Trust for the most recently completed quarters ending at September 30, 2009.

-------------------------------------------------------------------------
    2009 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30     Sept. 30
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     31,345       29,805       23,860
    Cash flow from
     operating activities       9,311        6,467       12,150
    Cash flow from
     operating activities
     per unit
       Basic and Diluted        $0.12        $0.08        $0.15
    Funds flow from
     operations(1)              6,489       10,765       11,090
    Funds flow from
     operations per unit(1)
       Basic and Diluted        $0.08        $0.14        $0.14
    Net income (loss)          (9,056)     (99,715)      (9,363)
    Net income (loss)
     per unit
       Basic and Diluted       $(0.12)      $(1.27)      $(0.12)
    Net capital
     expenditures (cash)        2,764       (7,138)     (81,986)
    Distributions declared      1,570            -            -
    Distributions per unit      $0.02            -            -
    -------------------------------------------------------------------------
    2008 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30     Sept. 30      Dec. 31
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     70,033       82,074       72,225       41,053
    Cash flow from
     operating activities      17,843       19,892       29,406       11,643
    Cash flow from
     operating activities
     per unit
       Basic and Diluted        $0.23        $0.25        $0.37        $0.15
    Funds flow from
     operations(1)             24,233       26,304       21,491        5,865
    Funds flow from
     operations per unit(1)
       Basic and Diluted        $0.31        $0.33        $0.27        $0.07
    Net income (loss)         (18,621)     (21,374)      29,939       (9,534)
    Net income (loss) per
     unit
       Basic and Diluted       $(0.24)      $(0.27)       $0.38       $(0.12)
    Net capital expenditures
     (cash)                     2,862      (34,450)      13,779       16,471
    Distributions declared      9,507        9,505        9,474        7,848
    Distributions per unit      $0.12        $0.12        $0.12        $0.10
    -------------------------------------------------------------------------
    2007 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30     Sept. 30      Dec. 31
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     71,196       74,991       50,547       61,756
    Cash flow from
     operating activities
    Cash flow from
     operating activities
     per unit                  39,959        4,402       14,848       22,392
       Basic                    $0.57        $0.06        $0.19        $0.28
       Diluted                  $0.55        $0.08        $0.19        $0.28
    Funds flow from
     operations(1)             29,988       34,192       17,478       19,514
    Funds flow from
     operations per unit(1)
       Basic                    $0.43        $0.47        $0.22        $0.25
       Diluted                  $0.42        $0.45        $0.22        $0.25
    Net income (loss)          (8,571)       1,741      (17,003)        (434)
    Net income (loss) per
     unit
       Basic and Diluted       $(0.12)       $0.02       $(0.21)      $(0.01)
    Net capital
     expenditures (cash)       27,915        6,739        7,562        14,828
    Distributions declared     16,866       18,376       19,132        19,077
    Distributions per unit      $0.24        $0.24        $0.24         $0.24
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" in respect of the term "funds flow from
        operations" and "funds flow from operations per unit".



    TRUE ENERGY TRUST
    CONSOLIDATED BALANCE SHEETS
    As at September 30 and December 31 (unaudited)
    -------------------------------------------------------------------------

    ($000s)                                                2009         2008
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Accounts receivable                           $    16,675  $    28,119
      Marketable securities (note 4)                          -          120
      Deposits and prepaid expenses                       5,526        5,969
      Commodity contract asset (note 15)                  5,126        3,726
                                                   --------------------------
                                                         27,327       37,934
    Property, plant and equipment (note 5)              415,788      698,183
                                                   --------------------------
    Total assets                                    $   443,115  $   736,117
                                                   --------------------------
                                                   --------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities      $    17,500  $    34,128
      Distribution payable to unitholders                     -        1,570
      Commodity contract liability (note 15)                111            -
      Future income taxes (note 13)                       1,473        1,100
                                                   --------------------------
                                                         19,084       36,798

    Long-term debt (note 6)                              26,485      132,388
    Convertible debentures (note 7)                      82,549       81,124
    Asset retirement obligations (note 8)                24,776       33,682
    Future income taxes (note 13)                           967       42,777
                                                   --------------------------
    Total liabilities                                   153,861      326,769
                                                   --------------------------

    NON-CONTROLLING INTEREST
      Exchangeable shares of subsidiary (note 9)          2,413        2,887

    UNITHOLDERS' EQUITY
      Unitholders' capital (note 10)                    917,012      917,012
      Equity component of convertible debentures          5,119        5,119
      Contributed surplus (note 11)                      27,974       28,240

      Accumulated other comprehensive income                  -         (620)
      Deficit                                          (663,264)    (543,290)
                                                   --------------------------
                                                       (663,264)    (543,290)
                                                   --------------------------

                                                   --------------------------
    Total unitholders' equity                           286,841      406,461
                                                   --------------------------
    Total liabilities and unitholders' equity       $   443,115  $   736,117
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
    For the three and nine months ended September 30 (unaudited)


                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    REVENUES
      Petroleum and
       natural gas sales  $    23,860  $    72,225  $    85,010  $   224,332
      Royalties                (2,570)     (13,799)     (14,202)     (45,588)
      Gain (loss) on
       commodity contracts
       (note 15)                1,721       38,080       15,281      (21,918)
                         ----------------------------------------------------
                               23,011       96,506       86,089      156,826

    EXPENSES
      Production                9,089       15,494       34,951       48,660
      Transportation              340        2,534        3,170        5,855
      General and
       administrative           3,244        3,610        8,667       11,872
      Interest and
       financing charges        3,573        3,318       11,093       11,321
      Unit-based
       compensation
       (recovery) (notes
       10 and 11)                  (3)         660         (363)       1,089
      Depletion,
       depreciation and
       accretion               19,683       29,985       74,312       99,497
      Loss on sale of
       marketable
       securities (note 4)          -            -          501            -
      Loss on petroleum
       and natural gas
       properties sold
       (note 5)                     -            -      114,182            -
                         ----------------------------------------------------
                               35,926       55,601      246,513      178,294

    INCOME (LOSS) BEFORE
     TAXES                    (12,915)      40,905     (160,424)     (21,468)

    TAXES
      Capital taxes                 -          588            -        1,702
      Future income tax
       recovery (note 13)      (3,243)      10,245      (41,546)     (13,071)
                         ----------------------------------------------------
                               (3,243)      10,833      (41,546)     (11,369)

    NET INCOME (LOSS)
     BEFORE NON-CONTROLLING
     INTEREST                  (9,672)      30,072     (118,878)     (10,099)

      Non-controlling
       interest                   (39)         133         (474)         (43)
                         ----------------------------------------------------

    NET INCOME (LOSS)          (9,633)      29,939     (118,404)     (10,056)
      Unrealized loss on
       available for sale
       marketable securities        -         (323)           -         (323)
      Realized loss on
       available for sale
       marketable securities        -            -          620            -
                         ----------------------------------------------------

    COMPREHENSIVE INCOME
     (LOSS)               $    (9,633) $    29,616  $  (117,784) $   (10,379)
                         ----------------------------------------------------

    Net income (loss) per
     trust unit
      Basic               $     (0.12) $      0.38  $     (1.51) $     (0.13)
      Diluted             $     (0.12) $      0.38  $     (1.51) $     (0.13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
    For the three and nine months ended September 30 (unaudited)

                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    UNITHOLDERS' CAPITAL
      Balance, beginning
       of period          $   917,012  $   924,158  $   917,012  $   925,573
      Repurchased under
       normal course
       issuer bid                   -       (2,926)           -       (4,503)
      Exchangeable shares
       converted                    -          179            -          341
                         ----------------------------------------------------
      Balance, end of
       period                 917,012      921,411      917,012      921,411
                         ----------------------------------------------------

    EQUITY COMPONENT OF
     CONVERTIBLE DEBENTURES
                         ----------------------------------------------------
      Balance, beginning
       and end of period        5,119        5,119        5,119        5,119
                         ----------------------------------------------------

    CONTRIBUTED SURPLUS
      Balance, beginning of
       period                  27,943       21,158       28,240       19,454
      Unit-based
       compensation expense
       (note 10 and 11)           174          364          564        1,529
      Incentive units
       voluntarily
       surrendered                  -          466            -          466
      Adjustment of prior
       period unit-based
       compensation expense
       for forfeitures of
       unvested incentive
       units                     (143)        (148)        (830)        (590)
      Adjustment for
       repurchase of units
       under normal course
        Issuer bid                  -        1,982            -        2,963
                         ----------------------------------------------------
      Balance, end of
       period                  27,974       23,822       27,974       23,822
                         ----------------------------------------------------

    DEFICIT
      Balance, beginning
       of period             (653,631)    (546,373)    (543,290)    (487,366)
      Net income (loss)        (9,633)      29,939     (118,404)     (10,056)
      Distributions
       declared                     -       (9,474)      (1,570)     (28,486)
                         ----------------------------------------------------
      Balance, end of
       period                (663,264)    (525,908)    (663,264)    (525,908)
                         ----------------------------------------------------

    ACCUMULATED OTHER
     COMPREHENSIVE INCOME
      Balance, beginning
       of period                    -            -         (620)           -
      Unrealized loss on
       available for sale
       marketable
       securities                   -         (323)           -         (323)
      Realized loss on sale
       of marketable
       securities (note 4)          -            -          620            -
                         ----------------------------------------------------
      Balance, end of period        -         (323)           -         (323)
                         ----------------------------------------------------

    -------------------------------------------------------------------------
    TOTAL UNITHOLDERS'
     EQUITY               $   286,841  $   424,121  $   286,841  $   424,121
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.




    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the three and nine months ended September 30 (unaudited)

                                Three months ended         Nine months ended
                                      September 30,             September 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    Cash provided by
     (used in):
    CASH FLOW FROM
     OPERATING ACTIVITIES
    Net income (loss)     $    (9,633) $    29,939  $  (118,404) $   (10,056)
    Items not involving
     cash:
      Non-controlling
       interest (note 9)          (39)         133         (474)         (43)
      Depletion,
       depreciation and
       accretion               19,683       29,985       74,312       99,497
      Unit-based
       compensation
       (recovery) (notes
       10 and 11)                  (3)         660         (363)       1,089
      Unrealized loss
       (gain) on commodity
       contracts (note 15)      3,851      (49,911)      (1,289)      (6,674)
      Accretion on
       convertible
       debentures                 474          440        1,425        1,286
      Future income tax
       recovery (note 13)      (3,243)      10,245      (41,546)     (13,071)
      Loss on sale of
       marketable
       securities (note 4)          -            -          501            -
      Loss on petroleum
       and natural gas
       properties sold
       (note 5)                     -            -      114,182            -
      Asset retirement
       costs incurred
       (note 8)                  (218)        (893)      (1,269)      (1,605)
      Change in non-cash
       working capital
       (note 12)                1,278        8,808          853       (3,282)
                         ----------------------------------------------------
                               12,150       29,406       27,928       67,141

    CASH FLOW FROM (USED
     IN) FINANCING
     ACTIVITIES
      Decrease in bank debt   (93,720)      (8,867)    (105,903)     (51,884)
      Repurchase of trust
       units under normal
       course issuer bid            -         (944)           -       (1,540)
      Distributions
       declared                     -       (9,474)      (1,570)     (28,486)
                         ----------------------------------------------------
                              (93,720)     (19,285)    (107,473)     (81,910)
      Change in non-cash
       working capital
       (note 12)                  861         (207)          52       (3,317)
                         ----------------------------------------------------
                              (92,859)     (19,492)    (107,421)     (85,227)

    CASH FLOW FROM (USED
     IN) INVESTING ACTIVITIES
      Additions to property,
       plant and equipment     (2,710)     (13,811)      (6,617)     (26,541)
      Proceeds on sale of
       property, plant and
       equipment               84,696           32       92,977       44,350
      Proceeds on sale of
       marketable securities        -            -          349            -
                         ----------------------------------------------------
                               81,986      (13,779)      86,709       17,809
      Change in non-cash
       working capital
       (note 12)               (1,277)       3,865       (7,216)         277
                         ----------------------------------------------------
                               80,709       (9,914)      79,493       18,086

      Change in cash                -            -            -            -

      Cash, beginning of
       period                       -            -            -            -
    -------------------------------------------------------------------------

      Cash, end of period $         -  $         -  $         -  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.


    TRUE ENERGY TRUST
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)
    -------------------------------------------------------------------------
    1.  STRUCTURE OF THE TRUST

        True Energy Trust ("True" or the "Trust") is an open-ended,
        unincorporated investment trust governed by the laws of the Province
        of Alberta. Pursuant to a Plan of Arrangement (the "TKE Arrangement")
        that became effective on November 2, 2005, True Energy Inc. and TKE
        Energy Trust ("TKE") entered into a business combination whereby True
        Energy Inc. acquired TKE in a reverse takeover, thus creating True
        Energy Trust and a publicly listed exploration focused company, Vero
        Energy Inc.

        The purpose of the Trust is to indirectly explore for, develop and
        hold interests in petroleum and natural gas properties, through
        investments in securities of subsidiaries and net profits interests
        in oil and natural gas properties. The business of the Trust is
        carried on by True Energy Inc. and its indirect wholly owned
        subsidiary True Energy Peru S.A.C. The Trust owns, directly and
        indirectly, 100% of the common shares, (excluding the exchangeable
        shares - see note 9) of True Energy Inc. and True Energy Peru S.A.C.
        The activities of True Energy Inc. are financed through interest
        bearing notes from the Trust and third party debt.

        On August 19, 2009, the Trust announced that its Board of Directors
        had approved the conversion from a trust structure to a growth
        oriented, public exploration and production company pursuant to the
        terms of a plan of arrangement (the "Arrangement"). The
        reorganization of the Trust under the Arrangement (the
        "Reorganization") was approved by the Trust's securityholders at the
        special meeting on October 28, 2009, and received customary court and
        regulatory approvals. The Reorganization was completed with an
        effective date of November 1, 2009 and the company now operates under
        the name of Bellatrix Exploration Ltd. ("Bellatrix" or the
        "Company"). Unitholders of the Trust received an equal number of
        common shares of Bellatrix which holds the assets and liabilities
        previously held, directly or indirectly, by the Trust. Exchangeable
        shares of the Trust were exchanged for common shares of Bellatrix at
        the current exchange ratio in effect on the effective date.
        Strategically, the Arrangement has re-positioned the company,
        allowing Bellatrix to move forward with a corporate organic growth
        model and a strong balance sheet.

        Pursuant to the Arrangement, the Unitholders' Capital of the Trust
        Units as of the effective date of November 1, 2009 shall be reduced
        by the amount of the deficit of the Trust on October 31, 2009.

        The Reorganization will be accounted for on a continuity of interest
        basis and accordingly, the consolidated financial statements for
        periods prior to the effective date of the Reorganization will
        reflect the financial position, results of operations and cash flows
        as if the Company had always carried on the business formerly carried
        on by the Trust.

    2.  SIGNIFICANT ACCOUNTING POLICIES

        The interim consolidated financial statements of the Trust have been
        prepared by management in accordance with generally accepted
        accounting policies in Canada. The unaudited interim consolidated
        financial statements have been prepared following the same accounting
        policies and methods of computation as the consolidated financial
        statements for the fiscal year ended December 31, 2008, except as
        described in note 3. The interim consolidated financial statement
        note disclosures do not include all of those required by Canadian
        generally accepted accounting principles ("GAAP") applicable for
        annual financial statements. Accordingly, the interim consolidated
        financial statements should be read in conjunction with the
        consolidated financial statements and the notes thereto as at and for
        the year ended December 31, 2008.

    3.  RECENT ACCOUNTING PRONOUNCEMENTS

        Effective January 1, 2009, the Trust adopted the following new
        accounting standard:

           Goodwill and intangible assets

           The CICA issued a new accounting standard, Section 3064 - Goodwill
           and Intangible Assets, which replaces Section 3062 - Goodwill and
           Other Intangible Assets, and Section 3450 - Research and
           Development costs. The new section establishes standards for the
           recognition, measurement and disclosure of goodwill and intangible
           assets. Application of the new section does not have any impact on
           the Trust's financial statements.

        International Financial Reporting Standards ("IFRS")

        On February 13, 2008 the CICA Accounting Standards Board announced
        that Canadian public reporting issuers will be required to report
        under International Financial Reporting Standards ("IFRS"), which
        will replace Canadian generally accepted accounting principles for
        years beginning on or after January 1, 2011. Currently, we are
        assessing the effects of adoption and developing a plan accordingly.
        We will continue to monitor any changes in the adoption of IFRS and
        will update plans as necessary.

    4.  MARKETABLE SECURITIES

        The Trust's investment in Veraz Petroleum Ltd. was sold in May 2009
        for proceeds of $0.3 million and a realized loss on sale of
        $0.5 million that was recognized in the 2009 second quarter.

    5.  PROPERTY, PLANT AND EQUIPMENT

        ($000s)
        ---------------------------------------------------------------------
                                                    Accumulated
                                                      depletion
                                                            and     Net book
        September 30, 2009                    Cost depreciation        value
        ---------------------------------------------------------------------
        Petroleum and natural gas
         properties                    $   939,224  $   525,226  $   413,998
        Office furniture and equipment       3,994        2,204        1,790
        ---------------------------------------------------------------------
                                       $   943,218  $   527,430  $   415,788
        ---------------------------------------------------------------------

        December 31, 2008
        ---------------------------------------------------------------------
        Petroleum and natural gas
         properties                    $ 1,375,331  $   679,196  $   696,135
        Office furniture and equipment       3,955        1,907        2,048
        ---------------------------------------------------------------------
                                       $ 1,379,286  $   681,103  $   698,183
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Trust has included $39.4 million (December 31, 2008:
        $62.8 million) for future development costs and excluded
        $22.6 million (December 31, 2008: $31.3 million) for undeveloped land
        and $27.8 million (December 31, 2008: $42.5 million) for estimated
        salvage from the depletion calculation during the three month period
        ended September 30, 2009.

        For the nine month period ended September 30, 2009, the Trust
        capitalized $0.3 million of general and administrative expenses and
        $0.1 million of unit-based compensation expense directly related to
        exploration activities.

        Petroleum and Natural Gas Properties Sold

        On July 30, 2009, the Trust closed a divestiture for the majority of
        its petroleum and natural gas properties in Saskatchewan (the
        "Saskatchewan Divestiture") for net proceeds of approximately $85
        million, net of closing adjustments and closing costs.

        The disposition was accounted for in accordance with Accounting
        Guideline 16 - "Oil and Gas Accounting - Full Cost". Under full cost
        accounting, if crediting the proceeds from disposition to costs
        results in a change of 20 percent or more to the depletion rate then
        a gain or loss on disposition should be recognized. When a gain or
        loss is to be recognized the total net book value of capitalized
        costs should be allocated between the properties sold and the
        properties retained. The assets sold were an allocation of the
        Trust's historical full cost pool based on a pro-rata ratio of future
        cash flows of proved reserves associated with the assets sold,
        discounted at 10%, as compared to all oil and gas assets on June 30,
        2009. In the second quarter of 2009, the Trust recorded a
        $114.2 million loss on the assets sold for the excess of the
        allocated net book value of the assets, compared to the total
        estimated net proceeds, after purchase adjustments and closing costs,
        of approximately $85 million.

    6.  Bank Debt

        ($000s)
        ---------------------------------------------------------------------
                                                   September 30, December 31,
                                                           2009         2008
        ---------------------------------------------------------------------

        Operating facility                          $     3,672  $     7,388
        Revolving term facility                          22,813      125,000
        ---------------------------------------------------------------------
        Balance, end of period                      $    26,485  $   132,388
        ---------------------------------------------------------------------

        On August 17, 2009, True finalized new syndicated credit facilities
        to replace its then existing bank facilities. The new facilities
        consist of a $10 million demand operating facility provided by one
        Canadian bank and a $75 million extendible revolving term credit
        facility provided by one Canadian bank and one Canadian financial
        institution. Amounts borrowed under the credit facilities bear
        interest at a floating rate based on the applicable Canadian prime
        rate, U.S. base rate or LIBOR rate, plus between 1.50% and 4.50%,
        depending on the type of borrowing and the Trust's debt to cash flow
        ratio. The credit facilities are guaranteed by the Trust and all
        material subsidiaries by a $400 million debenture containing a first
        ranking charge and security interest. True has provided a negative
        pledge and undertaking to provide fixed charges over major petroleum
        and natural gas reserves in certain circumstances. A standby fee is
        charged of between 0.60% and 1.12% on the undrawn portion of the
        credit facilities, depending on the Trust's debt to cash flow ratio,

        The revolving period for the revolving term credit facility will end
        on June 29, 2010, unless extended for a further 364-day period.
        Should the facility not be extended it will convert to a
        non-revolving term facility with the full amount outstanding due 366
        days after the last day of the revolving period of June 29, 2010. The
        borrowing base will be subject to re-determination on March 31, 2010.

        Payment will not be required under the revolving term facility for
        more than 365 days from September 30, 2009 and as there is sufficient
        availability under the revolving term credit facility to also cover
        the operating facility, the entire amounts owing on the credit
        facilities have been classified as long-term.

        Pursuant to True's credit facilities, the Trust was permitted to pay
        the semi-annual interest payments on the Debentures, cash
        distributions in connection with redemption of trust units and
        payments by the Trust to unitholders and debenture holders in
        relation to the normal course issuer bids approved by the TSX on
        August 17, 2009 and monthly distributions to unitholders, provided
        that distributions in a fiscal year did not exceed $10 million.

        In connection with the Reorganization, Bellatrix confirmed its
        $85 million facilities with existing lenders on November 1, 2009 on
        substantially the same terms and conditions. The Company is fully
        compliant with all of its debt covenants.

    7.  CONVERTIBLE DEBENTURES

        The following table shows the convertible debenture activities for
        the nine month period ended September 30, 2009 and the year ended
        December 31, 2008:

        ---------------------------------------------------------------------
                                                           Debt       Equity
                                         Number of    Component    Component
                                        Debentures       ($000s)      ($000s)
        ---------------------------------------------------------------------
        Balance, December 31, 2007          86,250  $    79,407  $     5,119
        Accretion                                -        1,717            -
        ---------------------------------------------------------------------
        Balance, December 31, 2008          86,250  $    81,124  $     5,119
        ---------------------------------------------------------------------
        Accretion                                -        1,425            -
        ---------------------------------------------------------------------
        Balance, September 30, 2009         86,250  $    82,549  $     5,119
        ---------------------------------------------------------------------

        In November 2008, the Trust received Toronto Stock Exchange approval
        for its normal course issuer bid program ("NCIB") to repurchase up to
        10% of the issued and outstanding 7.50% convertible unsecured
        subordinated debentures of the Trust from December 1, 2008 to
        November 30, 2009. As of September 30, 2009 there have been no
        repurchases of convertible debentures under the NCIB. The 7.5%
        debentures have a face value of $1,000 per debenture and have a
        maturity date of June 2011. Pursuant to True's credit facility, the
        Trust was permitted to repurchase debentures in relation to the
        normal course issuer bids approved by the TSX on August 17, 2009.

        In connection with the reorganization of the Trust effective
        November 1, 2009, the convertible debentures have been assumed by
        Bellatrix. Holders of the debentures will be entitled to receive
        Bellatrix common shares, rather than Trust units, on conversion of
        such debentures. On November 1, 2009, Bellatrix had a principal
        amount of $85.68 million of convertible debentures outstanding.

    8.  ASSET RETIREMENT OBLIGATIONS

        The Trust's asset retirement obligations result from net ownership
        interests in petroleum and natural gas assets including well sites,
        gathering systems and processing facilities. The Trust estimates the
        total undiscounted amount of cash flows required to settle its asset
        retirement obligations is approximately $62.4 million which will be
        incurred between 2009 and 2053. A credit-adjusted risk-free rate of
        8 percent and an inflation rate of 2.4 percent were used to calculate
        the fair value of the asset retirement obligations.

        ---------------------------------------------------------------------
                                                  September 30,  December 31,
        ($000s)                                           2009          2008
        ---------------------------------------------------------------------
        Balance, beginning of period                $    33,682  $    28,373
        Liabilities incurred on development
         activities                                         263          784
        Changes in prior period estimates                 1,213        8,302
        Liabilities released on dispositions            (10,925)      (3,333)
        Liabilities settled during the period            (1,269)      (2,603)
        Accretion expense                                 1,812        2,159
        ---------------------------------------------------------------------
        Balance, end of period                       $   24,776  $    33,682
        ---------------------------------------------------------------------

    9. EXCHANGEABLE SHARES OF SUBSIDIARY / NON-CONTROLLING INTEREST

                                                  September 30,  December 31,
                                                          2009          2008
                                            Amount                    Amount
                               Number       ($000s)      Number       ($000s)
        ---------------------------------------------------------------------
        Balance, beginning of
         period               294,026  $     2,887      390,276  $     3,922
        Non-controlling
         interest recovery          -         (474)           -          (83)
        Exchanged for trust
         units                      -            -      (96,250)        (952)
        ---------------------------------------------------------------------
        Balance, end of
         period               294,026  $     2,413      294,026  $     2,887
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The exchange ratio is calculated monthly based on the five day
        weighted average trust unit trading price preceding the monthly
        effective date. The exchangeable shares are not eligible for cash
        distributions; however cash distributions will increase the exchange
        ratio. As at September 30, 2009, the exchange ratio was 1.06272
        (2008: 1.02179).

        Effective November 1, 2009, the remaining exchangeable shares were
        exchanged for 312,458 common shares of Bellatrix.

    10. UNITHOLDERS' CAPITAL

        a. Trust Units

        ---------------------------------------------------------------------
                               September 30, 2009         December 31, 2008
                                            Amount                    Amount
                               Number       ($000s)      Number       ($000s)
        ---------------------------------------------------------------------
        Balance, beginning
         of period         78,496,581  $   917,012   79,216,046  $   925,573
        Repurchased under
         normal course
         issuer bid                 -            -     (814,300)      (9,513)
        Exchangeable shares
         converted                  -            -       94,835          952
        ---------------------------------------------------------------------
        Balance, end of
         period            78,496,581  $   917,012   78,496,581  $   917,012
        ---------------------------------------------------------------------

        In August 2008, the Trust announced approval of the renewal of its
        normal course issuer bid ("NCIB") program to repurchase up to
        7.8 million of its outstanding trust units during the period
        August 28, 2008 through August 27, 2009, subject to certain
        restrictions. As of December 31, 2008, the Trust had purchased
        615,100 trust units at a weighted average price of $2.74 per trust
        unit under the NCIB renewed on August 28, 2008. No repurchases have
        taken place in the nine month period ended September 30, 2009.
        Pursuant to True's credit facilities, the Trust was permitted to
        repurchase trust units in relation to the normal course issuer bids
        approved by the TSX on August 17, 2009. The NCIB of trust units
        expired effective August 27, 2009.

        In connection with the Reorganization effective November 1, 2009, the
        trust units of the Trust and the equivalent number of trust units for
        exchangeable shares of the Trust, based on the current exchange
        ratio, were exchanged for a total of 78,809,039 new common shares of
        Bellatrix.

        b. Trust Unit Incentive Plan

        The following tables summarize information regarding trust unit
        incentive rights for the nine month period ended September 30, 2009:

        Unit Rights Continuity
        ---------------------------------------------------------------------
                                               Weighted Average
                                               Exercise Price(a)      Number
        ---------------------------------------------------------------------
        Balance, December 31, 2008                  $      3.97    2,700,500
        Granted                                     $      1.43    2,866,800
        Forfeited                                   $      4.24   (1,528,071)
        ---------------------------------------------------------------------
        Balance, September 30, 2009                 $      2.11    4,039,229
        ---------------------------------------------------------------------
        (a) Exercise prices reflect grant prices less reduction in exercise
            prices.

        As of September 30, 2009, a total of 7,880,905 unit incentive rights
        were reserved, leaving an additional 3,841,676 available for future
        grants.

        Unit Rights Outstanding, September 30, 2009
        ---------------------------------------------------------------------
                     Outstanding                          Exercisable
                                      Weighted
                                       Average                       Exercise
                                      Exercise     Weighted             Price
                                         Price      Average            Net of
         Exercise Price         At         Net    Remaining        At   Price
                 Net of  September    of Price  Contractual September Reduct-
             Reductions   30, 2009  Reductions         Life  30, 2009   ions
        ---------------------------------------------------------------------
        $ 0.65 - $ 1.50  1,381,274      $ 1.13          4.5         -      -
        $ 1.64 - $ 2.47  2,046,624      $ 2.02          4.2   180,320 $ 2.47
        $ 2.58 - $ 4.29    177,833      $ 3.62          3.6    60,499 $ 3.66
        $ 4.23 - $ 5.57    433,498      $ 5.01          2.6   297,653 $ 5.02
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        $ 0.65 - $ 5.57  4,039,229      $ 2.11          4.1   538,472 $ 4.01
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        In connection with the Reorganization effective November 1, 2009, a
        new option plan under Bellatrix was approved. As a result, the
        existing 4,067,733 incentive unit rights as at November 1, 2009 were
        exchanged for an equal number of new common share options of
        Bellatrix with the same terms as to exercise price, vesting and
        expiry dates.

        c. Employee Trust Unit Savings Plan

        Effective October 1, 2006, the Trust introduced an employee trust
        unit savings plan for the benefit of all employees. Under the savings
        plan, employees may elect to contribute up to 10 percent of their
        salary and contributions are used to fund the acquisition of trust
        units. The Trust matches employee contributions at a rate of $1.00
        for each $1.00 contributed. Trust units are purchased in the open
        market by the plan administrator, an investment firm, on behalf of
        the participants in the plan. For the nine month period ended
        September 30, 2009, the Trust matched $0.1 million (2008 - $0.2
        million) under the plan. Effective for March 2009, the Trust
        suspended matching contributions under the plan until further notice.

    11. CONTRIBUTED SURPLUS

        ---------------------------------------------------------------------
                                                   September 30, December 31,
        ($000s)                                            2009         2008
        ---------------------------------------------------------------------
        Balance, beginning of period                $    28,240  $    19,454
        Unit-based compensation expense                     564        1,869
        Incentive units voluntarily surrendered               -          466
        Adjustment of prior period unit-based
         compensation expense for forfeitures of
         unvested incentive units                          (830)        (526)
        Adjustment for repurchase of units under NCIB         -        6,977
        ---------------------------------------------------------------------
        Balance, end of period                      $    27,974  $    28,240
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Unit-based Compensation Expense

        During the nine months ended September 30, 2009, the Trust granted
        2,866,800 unit incentive rights to employees, directors and officers.
        Of the unit incentive rights granted during the period, 2,221,258
        unit incentive rights have an exercise price that is higher than the
        Trust's unit market price on the grant date. The unit incentive
        rights for which the exercise price is higher than the Trust's unit
        market price on the grant date have a weighted average fair value of
        $0.2583 per unit and an average exercise price of $1.70. The
        remaining unit incentive rights have a weighted average fair value of
        $0.3962 per unit. During the nine month period ended September 30,
        2009, the Trust recorded unit-based compensation of $0.6 million, of
        which $0.1 million was capitalized to property, plant and equipment.

        The fair values of all incentive rights granted are estimated on the
        date of grant using the Black-Scholes option-pricing model. The
        weighted average fair market value of incentive rights granted during
        the nine month period ended September 30, 2009 and the assumptions
        used in their determination are as noted below:

        ---------------------------------------------------------------------
                                                                        2009
        ---------------------------------------------------------------------
        Assumptions:
          Risk free interest rate (%)                                    2-3
          Expected life (years)                                            5
          Expected volatility (%)                                      69-84
        ---------------------------------------------------------------------
        Results:
          Weighted average fair value of each incentive
           right granted                                         $    0.2831
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    12. SUPPLEMENTAL CASH FLOW INFORMATION

        Cash Interest and Taxes Paid
        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------
        Cash paid:
          Interest        $     1,416  $     1,406  $     6,589  $     9,491
          Taxes (net of
           refunds)       $         1  $       811  $      (272) $     1,342
        ---------------------------------------------------------------------

        Change in Non-cash Working Capital
        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------
        Changes in non-cash
         working capital items:
          Accounts
           receivable     $     6,112  $    14,527  $    11,444  $     9,705
          Deposits and
           prepaid
           expenses            (1,181)      (1,422)         443         (357)
          Accounts payable
           and accrued
           liabilities         (4,069)        (626)     (16,628)     (12,488)
          Distribution
           payable to
           unitholders              -          (13)      (1,570)      (3,182)
        ---------------------------------------------------------------------
                          $       862  $   (12,466) $    (6,311) $    (6,322)
        ---------------------------------------------------------------------
        Changes related to:
          Operating
           activities     $     1,278  $     8,808  $       853  $    (3,282)
          Financing
           activities             861         (207)          52       (3,317)
          Investing
           activities          (1,277)       3,865       (7,216)         277
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
                          $       862  $    12,466  $    (6,311) $    (6,322)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    13. INCOME TAXES

        The Trust is a mutual fund trust as defined under the Income Tax Act
        (Canada). All taxable income earned by the Trust has been allocated
        to unitholders and such allocations are deducted for income tax
        purposes.

        As at September 30, 2009, the total "temporary difference" (tax basis
        exceeds accounting basis) in the Trust is $9 million. As at September
        30, 2009, the Trust's subsidiaries have a tax basis of approximately
        $367 million that is available to shelter future taxable income.
        Included in this tax basis are estimated non-capital loss carry
        forwards of approximately $20 million that expire in years through
        2027. In addition, the Trust itself has approximately $17 million of
        tax basis.

        Subsequent to the conversion from a Trust to a Corporation, Bellatrix
        is expected to have approximately $382 million in tax pools that is
        available to shelter future taxable income. As a result of the
        conversion, approximately $1.7 million in tax pools related to unit
        issue costs were eliminated.

    14. PER TRUST UNIT AMOUNTS

        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
                                 2009         2008         2009         2008
        ---------------------------------------------------------------------
        Basic trust units
         outstanding       78,496,581   78,862,690   78,496,581   78,862,690

        Dilutive effect of:

          Trust unit
           incentive rights
           outstanding      4,039,229    2,539,166    4,039,229    2,539,166
          Units issuable
            for exchangeable
            shares            312,467      340,642      312,467      340,642
          Units issuable for
           convertible
           debentures       5,390,625    5,390,625    5,390,625    5,390,625
        ---------------------------------------------------------------------
        Diluted trust units
         outstanding       88,238,902   87,133,123   88,238,902   87,133,123
        ---------------------------------------------------------------------
        Weighted average
         trust units
         outstanding       78,496,581   78,996,154   78,496,581   79,140,544
        Dilutive effect of
         exchangeable
         shares, trust
         unit incentive
         plan and
         convertible
         debentures(1)              -            -            -            -
        ---------------------------------------------------------------------
        Diluted weighted
         average trust
         units outstanding 78,496,581   78,996,154   78,496,581   79,140,544
        ---------------------------------------------------------------------
        (1) A total of 4,039,229 (2008: 2,539,166) trust incentive units,
            312,467 (2008: 340,642) exchangeable shares and 5,390,625 (2008:
            5,390,625) trust units issuable pursuant to the conversion of
            convertible debentures were excluded from the calculation for the
            three and nine month period ended September 30, 2009 as they were
            not dilutive.

    15. FINANCIAL RISK MANAGEMENT

        a. Credit risk

        As at September 30, 2009, accounts receivable was comprised of and
        estimated to be aged as follows:

        ---------------------------------------------------------------------
                                      Not past due     Past due
                                        (less than     (90 days
        Aging ($000s)                      90 days)     or more)       Total
        ---------------------------------------------------------------------
        Trade accounts receivable            2,561        3,666        6,227
        Accrued and other receivables        7,851        3,667       11,518
        Less: allowance for doubtful
         accounts                                -       (1,070)      (1,070)
        ---------------------------------------------------------------------
        Total                               10,412        6,263       16,675
        ---------------------------------------------------------------------
        After considering September 30, 2009 trade accounts payable from the
        same companies and cash receipts received subsequent to September 30,
        2009, the Trust's trade receivables aged 90 or more days of
        approximately $3.7 million, before the provision for doubtful
        accounts, are reduced to a net balance of approximately $2.3 million.

        b. Liquidity risk

        The following are the contractual maturities of financial liabilities
        as at September 30, 2009:
        ---------------------------------------------------------------------
        Financial
         liability     (less than)
         ($000s)           1 Year        1-2 Years    2-5 Years   Thereafter
        ---------------------------------------------------------------------
        Accounts
          payable
         and accrued
         liabilities(1)    17,500                -            -            -
        Commodity
         contract
         liability            111
        Bank debt -
         principal(2)           -           26,485            -            -
        Convertible
         debentures-
         principal              -           86,250
        Convertible
         debentures-
         interest(3)        4,839            6,469            -            -
        ---------------------------------------------------------------------
        Total              22,450          119,204            -            -
        ---------------------------------------------------------------------
        (1) As at September 30, 2009, $1.6 million of accrued coupon interest
            payable in relation to the convertible debentures is included in
            Accounts Payable and Accrued Liabilities.

        (2) Bank debt is based on a revolving term which is reviewed at least
            annually and converts to a 366 day non-revolving facility if not
            renewed. Refer to note 6 for further details.

        (3) Convertible debentures outstanding at September 30, 2009 bear
            interest at a coupon rate of 7.5%, which currently requires total
            annual interest payments of $6.5 million.

        Interest due on the bank credit facility is calculated based upon
        floating rates.

        c. Commodity price risk

        Commodity price risk is the risk that the fair value or future cash
        flows will fluctuate as a result of changes in commodity prices.
        Commodity prices for petroleum and natural gas are impacted by not
        only the relationship between the Canadian and United States dollar,
        as outlined above, but also world economic events that dictate the
        levels of supply and demand.

        The Trust utilizes both financial derivatives and physical delivery
        sales contracts to manage commodity price risks. All such
        transactions are conducted in accordance with the risk management
        policy that has been approved by the Board of Directors.

        The Trust's formal risk management policy permits management to use
        specified price risk management strategies including fixed price
        contracts, costless collars and the purchase of floor price options,
        other derivative financial instruments, and physical delivery sales
        contracts to reduce the impact of price volatility and ensure minimum
        prices for a maximum of eighteen months beyond the current date. The
        program is designed to provide price protection on a portion of the
        Trust's future production in the event of adverse commodity price
        movement, while retaining significant exposure to upside price
        movements. By doing this, the Trust seeks to provide a measure of
        stability to funds flows from operations, as well as, to ensure True
        realizes positive economic returns from its capital developments and
        acquisition activities.

        As at September 30, 2009, the Trust had entered into commodity price
        risk management arrangements as follows:

        ---------------------------------------------------------------------
                                                    Price      Price
        Type             Period        Volume       Floor     Ceiling   Index
        ---------------------------------------------------------------------
        Natural
         Gas       March 1, 2009
         fixed   to Dec. 31, 2009  5,000 GJ/day  $ 5.90 CDN  $ 5.90 CDN  AECO

        Natural
         Gas        Oct. 1, 2009
         fixed   to Dec. 31, 2009  5,000 GJ/day  $ 8.09 CDN  $ 8.09 CDN  AECO

        Natural
         Gas        Oct. 1, 2009
         fixed   to Dec. 31, 2009  5,000 GJ/day  $ 6.26 CDN  $ 6.26 CDN  AECO

        Natural
         Gas        Jan. 1, 2010
         fixed  to March 31, 2010  5,000 GJ/day  $ 7.16 CDN  $ 7.16 CDN  AECO

        Natural
         Gas        Jan. 1, 2010
         fixed  to March 31, 2010  5,000 GJ/day  $ 8.00 CDN  $ 8.00 CDN  AECO

        Natural
         Gas
         call       Jan. 1, 2010
         option  to Dec. 31, 2010  5,000 GJ/day           -  $ 8.05 CDN  AECO

        Natural
         Gas       April 1, 2010
         fixed   to June 30, 2010  5,000 GJ/day  $ 6.59 CDN  $ 6.59 CDN  AECO

        Oil        March 1, 2009
         collar  to Dec. 31, 2009     500 bbl/d  $52.30 CDN  $80.70 CDN   WTI
        ---------------------------------------------------------------------

        The fair value of commodity risk management contracts as at
        September 30, 2009 is a net asset of $5.0 million.

        Subsequent to September 30, 2009, the Trust entered into commodity
        price risk management arrangements as follows:

        ---------------------------------------------------------------------
                                                    Price      Price
        Type             Period        Volume       Floor     Ceiling  Index
        ---------------------------------------------------------------------
        Natural
         Gas       April 1, 2010
         fixed   to June 30, 2010  5,000 GJ/day  $ 5.53 CDN  $ 5.53 CDN  AECO

        Natural
         Gas        July 1, 2010
         fixed  to Sept. 30, 2010 10,000 GJ/day  $ 5.66 CDN  $ 5.66 CDN  AECO

        Natural
         Gas        Oct. 1, 2010
         fixed   to Dec. 31, 2010 10,000 GJ/day  $6.245 CDN  $6.245 CDN  AECO
        ---------------------------------------------------------------------

        For the three and nine months ended September 30, 2009 and 2008, the
        gain (loss) on commodity contracts was comprised of the following:

        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30,             September 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------
        Gain (loss) on
         commodity
         contracts
          Realized(1)     $     5,572  $   (11,831) $    13,992  $   (28,592)
          Unrealized(2)        (3,851)      49,911        1,289        6,674
        ---------------------------------------------------------------------
                          $     1,721  $    38,080  $    15,281  $   (21,918)
        ---------------------------------------------------------------------
        (1) Realized gains and losses on commodity contracts represent actual
            cash settlements and other amounts paid under these contracts.

        (2) Unrealized gains and losses on commodity contracts represent
            non-cash adjustments for changes in the fair value of these
            contracts during the period.

        The Trust has entered into a natural gas physical delivery sales
        contract to sell 5,275 GJ/day at a fixed price of $7.90/GJ for the
        fourth quarter of 2009.

        d. Interest rate risk

        The Trust had no interest rate swap or financial contracts in place
        during the three and nine months period ended September 30, 2009.

        e. Capital management

        The Trust's policy is to maintain a strong capital base so as to
        maintain investor, creditor and market confidence and to sustain the
        future development of the business. The Trust manages its capital
        structure and makes adjustments to it in the light of changes in
        economic conditions and the risk characteristics of the underlying
        petroleum and natural gas assets. The Trust considers its capital
        structure to include unitholders' equity, bank debt, convertible
        debentures and working capital. In order to maintain or adjust the
        capital structure, the Trust may from time to time issue trust units,
        adjust its capital spending, and/or dispose of certain assets to
        manage current and projected debt levels.

        The Trust monitors capital based on the ratio of total net debt to
        annualized funds flow (the "ratio"). This ratio is calculated as
        total net debt, defined as outstanding bank debt, plus the liability
        component of convertible debentures, plus or minus working capital
        (excluding commodity contract assets and liabilities, current portion
        of long-term debt and future income tax assets or liabilities),
        divided by funds flow from operations (cash flow from operating
        activities before changes in non-cash working capital and deductions
        for asset retirement costs) for the most recent calendar quarter,
        annualized (multiplied by four). The total net debt to annualized
        funds flow ratio may increase at certain times as a result of
        acquisitions, fluctuations in commodity prices, timing of capital
        expenditures and other factors. In order to facilitate the management
        of this ratio, the Trust prepares annual capital expenditure budgets
        and sets unitholder distributions on a monthly basis. Capital
        expenditure budgets and levels of monthly unitholder distributions
        are reviewed and updated as necessary depending on varying factors
        including current and forecast prices, successful capital deployment
        and general industry conditions. The annual and updated budgets and
        monthly unitholder distributions are approved by the Board of
        Directors.

        Given the continuing uncertain economic conditions, the Trust has
        suspended unit distributions in order to maintain financial
        flexibility. The Trust plans to continue to monitor forecasted debt
        levels to manage its operations within forecasted funds flow. The
        Trust expects the total net debt to annualized funds flow ratio to
        reflect the economic burdens experienced as a result of the recent
        downturn in the global economic environment. The Trust will continue
        to monitor developments within the global economic environment to
        consider the impacts on the current or future lending arrangements.

        The Trust's long-term strategy, under a more stable economic
        environment, is to target a total net debt to annualized funds flow
        ratio of 2.0 times. Focus in 2009 has been to improve the Company's
        financial flexibility and to build a strong balance sheet. Strategic
        divestitures completed during the year has contributed to the
        reduction of the Trust's ratio of total net debt to annualized funds
        flow based on 2009 third quarter results to 2.4 times compared to
        9.2 times at December 31, 2008. True continues to take a balanced
        approach to the priority use of funds flows. The Debentures have a
        maturity date of June 30, 2011. Upon maturity, the Company may settle
        the principal in cash or issuance of additional common shares of
        Bellatrix effective November 1, 2009. Excluding Debentures, net debt
        to annualized funds flow based on 2009 third quarter results was
        0.5 times.

        The calculation of total net debt and total net debt to cash flow is
        as follows:

        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
        ($000s, except                September 30,             September 30,
         where noted)            2009         2008         2009         2008
        ---------------------------------------------------------------------

        Long-term debt         26,485      116,591       26,485      116,591
        Convertible
         debentures
         (liability
         component)            82,549       80,693       82,549       80,693
        Working capital
         excess                (4,701)      (3,511)      (4,701)      (3,511)
        ---------------------------------------------------------------------
        Total net debt(1)
         at year end          104,333      193,773      104,333      193,773

        Debt to funds flow
         from operations
         ratio (annualized)(2)
        Funds flow from
         operations
         (annualized)          44,360       85,954       37,792       96,037
        Total net debt(1) to
         periods funds flow
         from operations
         ratio (annualized)      2.4x         2.3x         2.8x         2.0x

        Net debt(1)
         (excluding convertible
         debentures) at quarter
         end                   21,784      113,080       21,784      113,080
        Net debt to periods
         funds flow from
         operations ratio
         (annualized)            0.5x         1.3x         0.6x         1.2x

        Debt to funds flow
         from operations
         ratio (trailing)(3)
        Total net debt to
         periods funds flow
         from operations ratio
         (trailing)              2.0x         2.1x         2.0x         2.1x
        Net debt to periods
         funds flow from
         operations ratio
         (trailing)              0.4x         2.1x         0.4x         2.1x
        ---------------------------------------------------------------------
        (1) Net debt includes the net working capital deficiency (excess)
            before short-term commodity contract assets and liabilities,
            current portion of long-term debt and short-term future income
            tax assets and liabilities. Total net debt also includes the
            liability component of convertible debentures and excludes asset
            retirement obligations and the future income tax liability.

        (2) Debt to funds flow from operations ratio (annualized) is
            calculated based upon second quarter funds flow from operations
            annualized.

        (3) Trailing periods funds flow from operations is based on the
             trailing twelve-months period ended September 30, 2009 and 2008.

        The Trust's credit facilities are based on petroleum and natural gas
        reserves (see note 6). The credit facilities outline limitations on
        percentages of forecasted production, from external reserve engineer
        data, which may be managed through financial commodity risk
        management contracts and limitations on property dispositions without
        prior consent of the lenders. The Trust also had normal course
        issuer bids for its convertible debentures and trust units, as
        detailed in note 7 and 10, respectively.

        f. Fair value of financial instruments

        The Trust's financial instruments as at September 30, 2009 include
        accounts receivable, deposits, marketable securities, commodity
        contract liability, accounts payable and accrued liabilities,
        distributions payable, long-term debt and convertible debentures. The
        fair value of accounts receivable, accounts payable and accrued
        liabilities and distributions payable approximate their carrying
        amounts due to their short-terms to maturity.

        The fair value of commodity contracts is determined by discounting
        the difference between the contracted price and published forward
        price curves as at the balance sheet date, using the remaining
        contracted petroleum and natural gas volumes. The fair value of
        commodity contracts as at September 30, 2009 was a net asset of
        $5.0 million.

        Long-term bank debt bears interest at a floating market rate and
        accordingly the fair market value approximates the carrying value.

        The fair value of the convertible debentures of $74.4 million is
        based on exchange traded values.

Bellatrix Exploration Ltd. is a Calgary-based oil and natural gas exploration and production company. Bellatrix was incorporated under the Business Corporations Act of Alberta. The Company explores for, develops and holds interests in petroleum and natural gas properties. Common shares and convertible debentures of Bellatrix trade on the Toronto Stock Exchange ("TSX") under the symbols BXE and BXE.DB, respectively. An updated corporate presentation will be posted on www.bellatrixexploration.com.

Bellatrix Exploration Ltd.
1920, 800 5th Avenue SW
Calgary, Alberta T2P 3T6
Main: 403-266-8670
Fax: 403-264-8163
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Bellatrix Exploration
Investor Relations
investor.relations@bxe.com
Emergency Contact
1-403-266-8670