Stonefire Energy Corp. Announces 2008 Second Quarter Financial Results

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES.


Stonefire Energy Corp. (the "Corporation" or "Stonefire") (TSX VENTURE:SFE.A)
(TSX VENTURE:SFE.B) is pleased to announce that it has filed on SEDAR its
unaudited financial statements and related management's discussion and analysis
("MD&A") for the three month and six month periods ended June 30, 2008. Selected
operational and financial results are outlined below and should be read in
conjunction with Stonefire's unaudited financial statements and related MD&A
which can be found at www.sedar.com.




Financial and Operating Highlights

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                               Three months ended          Six months ended
                               Jun 30,     Jun 30,       Jun 30,     Jun 30,
                                 2008        2007          2008        2007
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($ except share amounts)   (unaudited) (unaudited)   (unaudited) (unaudited)
FINANCIAL
Petroleum and natural
 gas revenue             $  4,959,295  $  354,852  $  7,410,033  $  747,264
Funds flow from (used in)
 operations (1)             2,434,653       9,702     3,149,711     (17,507)
  Per share, basic (1)           0.11        0.00          0.14       (0.00)
Net income (loss)             708,520    (196,976)      562,247    (496,887)
  Per share, basic               0.03       (0.01)         0.02       (0.02)
Capital expenditures     $  3,654,880  $4,362,435     7,676,552   8,302,638
Working capital deficit
 (end of period)                                   $(12,218,762) $ (206,365)
Shares outstanding
 (end of period)
  Class A, including
   shares under share
   purchase loans                                    18,265,000  15,265,000
  Class B                                             1,012,000   1,012,000
Options                                               1,775,000   1,421,000
Weighted average shares
 outstanding
  Class A                  18,202,500  15,265,000    18,202,500  13,604,669
  Class B                   1,012,000   1,012,000     1,012,000   1,012,000
Conversion of Class B
 shares (2)                 3,609,005   7,084,000     3,609,005   7,084,000
                           ----------- -----------  ------------ -----------
Weighted average basic
 shares outstanding        22,823,505  23,361,000    22,823,505  21,700,669
Class A share trading
  High                                             $       2.30  $     2.29
  Low                                                      0.65        1.05
  Close                                            $       2.19  $     1.25
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OPERATIONS
Production
  Natural gas liquids
   (bbls/d)                       128          20           113          19
  Natural gas (mcf/d)           3,569         361         2,889         391
  Total (boe/d at 6:1)            722          80           594          85
Reference prices
  WTI (US$ per bbl)      $     123.98  $    65.03  $     110.94  $    61.65
  AECO (Cdn$ per GJ)             9.69        6.70          8.59        6.86
Average selling price
  Natural gas liquids
   (per bbl)                   103.38       55.61         91.05       53.98
  Natural gas (per mcf)         11.57        7.73         10.54        7.87
Operating netback
 (per boe at 6:1)               43.45       25.58         37.69       23.48
Funds flow netback
 (per boe at 6:1)        $      37.06  $     1.33  $      29.13  $    (1.14)


(1) Management uses funds flow from operations (before changes in non-cash
    working capital) to analyze operating performance and leverage. Funds
    flow from operations as presented does not have any standardized
    meaning prescribed by Canadian generally accepted accounting
    principles (GAAP) and, therefore, may not be comparable with the
    calculation of similar measures by other entities.

(2) For the period ended June 30, 2008, the Class B shares are converted at
    the period-end Class A share price of $2.19 (2007 - $1.25) and added to
    the Class A shares to calculate basic shares outstanding.



2008 Second Quarter Corporate Highlights

- Average production of 722 boe/d, an increase of 803 percent over Q2 2007
production of 80 boe/d and a record high quarterly rate.


- Continued 100 percent exploration success in the quarter with the drilling of
1 (1.0 net), 2,353 metre-deep multi-zone exploration well in the Edson field.
This maintains 100 percent drilling success through the first half with the
drilling of a total of three gross, 2.5 net exploration wells.


- Record high funds flow of $2.4 million and a record high average operating
netback of $43.45 per boe in the quarter.


- Strengthened financial capacity, with lines of credit increased from $14.0
million to $17.0 million in June.


- Shot 22 kilometres of 100 percent working interest, proprietary, 2D seismic
program at Edson and Leaman.


- Capital spending of $3.7 million for the quarter with majority spent on
drilling, completions and the tie-in of 1.0 net well.


- Satisfied the remainder of the Corporation's total $5.7 million in
flow-through spending obligations for 2008.


- Average operating costs of $6.77 per boe for the quarter, 36 percent lower
than in Q2 2007. Operating costs are forecast to average $5.00 to $6.00 per boe
for the remainder of 2008.


President's Message

It is a great pleasure to report on Stonefire's activities for the second
quarter of 2008. During the quarter Stonefire continued to experience success in
executing its business plan of organic growth via the drill bit. The quarter saw
record production, record operating netbacks, record cash flow and continued 100
percent exploration drilling success.


Average production for the quarter of 722 boe per day represented an 803 percent
increase over the second quarter of 2007 and a 55 percent increase over the
first quarter of 2008. Record production in the quarter was achieved in spite of
a total shut-in of the Corporation's McLeod production of approximately 250 net
boe per day for two weeks in June due to a third-party pipeline outage.


Having elected not to hedge any of its production, Stonefire was able to benefit
fully from strong commodity prices in the quarter and generated record operating
netbacks of $43.45 per boe and record funds flow from operations of $2.4
million. Operating costs per unit of production continued to decline with
increased production and operating efficiencies, averaging $6.77 per boe for the
quarter. Costs are expected to continue to decline with further increases to
production, and additional operating efficiencies, especially thanks to the
Corporation's 100 percent working interest Edson gas plant, which entered
service in September 2007 and is currently providing throughput of approximately
2.8 mmcf per day.


The first well of the Corporation's four-well, 100 percent working interest
summer drilling program was successfully drilled and cased late in the second
quarter in the Edson field. It was drilled by Stonefire to a true vertical depth
of 2,353 metres and encountered six potential Deep Basin natural gas zones.
Subsequent to the end of the quarter this well has been completed in four gas
zones and is expected to commence production by mid-August at an initial rate of
1 - 2 mmcf per day.


This well maintains our 100 percent drilling success through the end of the
second quarter on three gross (2.5 net) exploration gas wells drilled by
Stonefire in the Edson and McLeod fields. As of this date two additional, 100
percent working interest wells have been successfully drilled and cased in the
Corporation's core Edson area and completion and testing operations are
underway. These wells are close to the Corporation's 100 percent working
interest Edson gathering and processing facilities and are expected to commence
production by late August. With the latest drilling success the Corporation is
on track to meet or exceed its production targets for the year of an average
2008 rate of 800 boe per day and an exit rate of 1,000 boe per day.


The Corporation continues to expand its drilling inventory and exploration
opportunities. During the quarter Stonefire shot 22 kilometres of 100 percent
working interest proprietary seismic data at Edson and Leaman. This data has
helped firm up a number of 100 percent working interest exploration drilling
locations. Three of the zones recently discovered and completed by Stonefire in
the Edson area offer horizontal development potential. These formations are
being drilled horizontally with multi-stage fracture completions in the greater
Edson area by other operators, with excellent results. Stonefire will be
evaluating the potential for horizontal development drilling on its Edson lands
following further delineation with vertical wells. Horizontal development
drilling holds the potential to generate significant upside for the Corporation.


During the quarter capital expenditures totaled $3.65 million, with the majority
($2.70 million) spent on drilling and completions. Capital expenditures to the
end of the second quarter totaled $7.68 million, with the majority ($4.85
million) spent on drilling and completions. During the second quarter bank lines
were increased to $17 million from $14 million and the Corporation exited the
second quarter with net debt and working capital deficit of $12.2 million. Funds
flow from operations for the quarter totaled $2.4 million and the Corporation
generated positive earnings of $0.71 million. Also of note in the quarter is
that all flow-through spending obligations resulting from past flow-through
financings have been satisfied. With increasing cash flow and bank lines
Stonefire is well positioned to execute the originally forecast capital budget
for 2008 of approximately $12 million while maintaining a conservative debt to
cash flow ratio.


Looking forward, Stonefire remains on track to meet or exceed its production
targets for 2008. Natural gas and oil prices strengthened considerably in the
second quarter and despite a moderate pullback in the third quarter the outlook
on commodity pricing, especially for natural gas, remains very positive.
Industry forecasts call for increasing demand for natural gas in North America
as a fuel of choice. Stonefire is well positioned for future growth with a
dedicated and skilled management team, a rapidly growing, long-reserve-life
production base, growing cash flow, improving operating efficiencies and
netbacks, a growing inventory of high-working-interest, operated drilling
locations and control of gas processing facilities in the Corporation's core
Edson area.


Stonefire Energy Corp. is an Alberta-based company formed to participate in oil
and gas exploration, development and acquisitions focusing in the West Central
region of Alberta. The Company's shares trade on the TSX Venture Exchange under
the symbols SFE.A and SFE.B. The Company currently has 18,265,000 Class A shares
and 1,012,000 Class B shares outstanding.


As referred to above, to view a full copy of the Corporation's unaudited
financial results for the period ended June 30, 2008, including the
Corporation's unaudited financial statements and accompanying MD&A, please refer
to the SEDAR website at www.sedar.com or on the Corporation's website at
www.stonefire-energy.com.


Reader Advisory

This news release contains certain forward-looking statements, including
management's assessment of future plans and operations, and capital expenditures
and the timing thereof, that involve substantial known and unknown risks and
uncertainties, certain of which are beyond Stonefire's control. Such risks and
uncertainties include, 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,
delays resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external sources, the
impact of general economic conditions in Canada, the United States and overseas,
industry conditions, changes in laws and regulations (including the adoption of
new environmental laws and regulations) and changes in how they are interpreted
and enforced, increased competition, the lack of availability of qualified
personnel or management, fluctuations in foreign exchange or interest rates,
stock market volatility and market valuations of companies with respect to
announced transactions and the final valuations thereof, and obtaining required
approvals of regulatory authorities. Stonefire's actual results, performance or
achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurances can be given
that any of the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what benefits, including the amount
of proceeds, that Stonefire will derive therefrom. Readers are cautioned that
the foregoing list of factors is not exhaustive. All subsequent forward-looking
statements, whether written or oral, attributable to Stonefire or persons acting
on its behalf are expressly qualified in their entirety by these cautionary
statements. Furthermore, the forward-looking statements contained in this news
release are made as at the date of this news release and Stonefire 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.


Petroleum and natural gas volumes are converted to an equivalent measurement
basis referred to as a "barrel of oil equivalent" (boe) on the basis of 6
thousand cubic feet of natural gas equalling 1 barrel of oil. This is based on
an energy equivalency conversion method applicable at the burner tip and does
not necessarily represent a value equivalency at the wellhead. Readers are
cautioned that boe figures may be misleading, particularly if used in isolation.


To request a free copy of Stonefire's financial report or if you would like to
be put on Stonefire's mailing list please contact Ronald Williams, Vice
President, Finance and CFO at [e-mail].