Mr. Michael Atkinson reports

CANADIAN PHOENIX RELEASES SECOND QUARTER RESULTS AND ANNOUNCES TERMINATION OF SARS PLAN AND ISSUANCE OF OPTIONS

Canadian Phoenix Resources Corp. has released its consolidated results for the three and six months ended June 30, 2010.

      SUMMARY OF SECOND QUARTER AND YEAR-TO-DATE 2010 FINANCIAL RESULTS
                (in thousands of dollars, except as indicated)

                                     For the three months  For the six months
                                           ended June 30,      ended June 30,
                                           2010      2009      2010      2009
    
Average petroleum and natural gas
production (boe/d)                          530       882       761       975
Average realized price ($/boe)            54.50     53.27     60.09     43.55
Petroleum and natural gas revenue       $ 2,628   $ 4,278   $ 8,280   $ 7,683
Netbacks ($/boe)                          16.09     22.74     20.54     17.15
Equity investment (loss)                 (1,543)     (836)   (1,026)   (5,780)
Income (loss) for the period             16,389   (11,083)   12,868   (20,292)
Per share -- basic and diluted          $354.34    ($0.24)  $278.21    ($0.45)

During the second quarter of 2010, Canadian Phoenix made two significant divestments:

• On May 26, 2010, the shareholders of the corporation and the shareholders of the corporation's subsidiary, Serrano Energy Ltd., approved the sale of all of Serrano's shares to an intermediate oil and gas producer. The disposition of the corporation's 10,981,000 shares in Serrano yielded gross proceeds of $24.8-million, of which $2.1-million was immediately used to repay the corporation's mezzanine loan.
• On April 27, 2010, the corporation entered into a voting agreement with its 58-per-cent-owned investee, Marble Point Energy Ltd. (now Teine Energy Ltd.) and a third party, pursuant to which the corporation agreed to vote its shares held in Marble Point in favour of an amalgamation between Marble Point and the third party, subject to receipt of requisite shareholder and regulatory approval. The corporation's shareholders approved the transaction at a special meeting of shareholders held on May 26, 2010, while the shareholders of Marble Point approved the transaction (under slightly modified terms, none of which impacted the cash consideration available to the corporation) on June 25, 2010. Gross proceeds on the sale of the corporation's 90 million shares in Marble Point were $45-million.

With the closing of these transactions, the corporation now has significant cash holdings (approximately $67-million) to go along with approximately $61-million of tax pools, and is positioned for a significant reinvestment into the oil and gas sector. The corporation's special committee is currently analyzing and evaluating opportunities in this regard.

Financial summary

The results of Serrano are included to the disposition date of May 26, 2010, and the equity results of Marble Point are included to the disposition date of June 25, 2010.

The second quarter of 2010 saw oil prices remain at levels consistent with the past two quarters at around $78 (U.S.) per barrel (WTI), but poorer natural gas prices, which averaged $3.86 (AECO spot) compared with $5.36 in the first quarter of 2010. While oil prices are expected to remain in the $75 to $90 range for the remainder of the year, natural gas prices are likely to remain at the current low levels, due primarily to excess supply in the North American market. With the disposal of the corporation's investments in Serrano and Marble Point, movements in oil and natural gas prices are more relevant to the corporation's reinvestment strategies and opportunities than their impact on the corporation's financial performance.

For the three and six months ended June 30, 2010, the corporation recorded income after tax of $16.4-million and 12.9-million. Heavily impacting these results were the accounting gains recorded on the dispositions of Serrano ($13.2-million) and Marble Point ($12.8-million) noted previously. Excluding these gains, and also excluding a $5-million impairment charge on property, plant and equipment, a loss of $4.6-million was realized in the second quarter, and a loss of $8.1-million year to date.

Netbacks from oil and gas sales were approximately $800,000 and $2.8-million for the three and six months ended June 30, 2010. After general and administrative costs of $4.5-million and $5.9-million, funds from operations were negative at $3.9-million and $3.2-million for the respective three- and six-month periods.

The $5-million impairment charge recorded at June 30, 2010, was in relation to the corporation's property, plant and equipment, as the carrying value exceeded the future discounted cash flows associated with proved and probable reserves.

Financial position

At June 30, 2010, the corporation had cash on hand of $66.9-million, net assets of $67.5-million and no debt. As noted previously, the significant increase in cash on hand is due to the dispositions of Serrano and Marble Point.

The consolidated financial statements and related management's discussion and analysis can be found on SEDAR's website and the corporation's website.

Cancellation of stock appreciation rights (SARs) plan and issuance of options to directors

The board of directors approved today the termination of the corporation's SARs plan, which was originally put in place in June, 2009. Under the SARs plan, termination of the plan results in the immediate exercise of all outstanding unexercised rights. The estimated payout of the 1.92 million outstanding SARs to holders is $1-million, which had been accrued in the June 30, 2010, consolidated interim financial statements as a liability.

Concurrent with the termination of the SARs plan, the board of directors approved the issuance of 2.3 million options (5 per cent of outstanding common shares) to directors of the corporation. The options, which vest immediately, will have an exercise price of $1.28 (the current share price) and a five-year term to expiry.