U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

Mark One
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2007

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                For the transition period from ______ to _______

                           COMMISSION FILE NO. 0-25455

                            MORGAN CREEK ENERGY CORP.
                 ______________________________________________
                 (Name of small business issuer in its charter)

             NEVADA                                   201777817
_______________________________            ____________________________________
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

                5050 QUORUM DRIVE, SUITE 700, DALLAS, TEXAS 75254
                _________________________________________________
                    (Address of principal executive offices)

                                 (214) 321-0603
                           ___________________________
                           (Issuer's telephone number)

Securities registered pursuant to Section       Name of each exchange on which
            12(b) of the Act:                            registered:

                   NONE
                   ____

Securities registered pursuant to Section 12(g) of the Act:

                 COMMON STOCK, $0.001
                 ____________________
                   (Title of Class)

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check  whether the issuer (i) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (ii) has been
subject to such filing requirements for the past 90 days.

                            Yes [X]         No [ ]

<PAGE>

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment  to  this  Form  10-KSB.  [X]

Indicate by checkmark  whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State issuers revenues for its most recent fiscal year $ -0-.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days. March 25, 2008: $8,815,084

ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

                                       N/A

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 and 15(d) of the  Securities  Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

Class                                     Outstanding as of  March 25, 2008
Common Stock, $0.001                      41,976,589

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (i) any annual report to security  holders;
(ii) any proxy or information statement; and (iii) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities  Act"). The
listed documents should be clearly described for  identification  purposes (e.g.
annual reports to security holders for fiscal year ended December 24, 1990).

                                       N/A

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]


                                       2


<PAGE>


                            MORGAN CREEK ENERGY CORP.

                                   FORM 10-KSB

                                                                            Page

Part I.

Item 1.            Description of Business                                    4

Item 2.            Description of Property                                   23

Item 3.            Legal Proceedings                                         23

Item 4.            Submission of Matters to a Vote of Security Holders       24

Part II.

Item 5.            Market for Common Equity and Related Stockholder Matters
                   and Small Business Issuer Purchases of Equity Securities  24

Item 6.            Management's Discussion and Analysis and Plan of
                   Operation                                                 27

Item 7.            Financial Statements                                      34

Item 8.            Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                       50

Item 8A.           Controls and Procedures                                   50

Item 8A(T).        Controls and Procedures                                   51

Item 8B.           Other Information                                         51

Part III

Item 9.            Directors, Executive Officers, Promoters, Control Persons
                   and Corporate Governance; Compliance With Section 16(a)
                   of the Exchange Act                                       51

Item 10.           Executive Compensation                                    55

Item 11.           Security Ownership of Certain Beneficial Owners and
                   Management and Related Stockholder Matters                58

Item 12.           Certain Relationships and Related Transactions and
                   Director Independence                                     60

Item 13.           Exhibits                                                  61

Item 14.           Principal Accountant Fees and Services                    62

Signatures                                                                   63


                                       3


<PAGE>


Statements made in this Form 10-KSB that are not historical or current facts are
"forward-looking  statements"  made  pursuant to the safe harbor  provisions  of
Section  27A of the  Securities  Act of 1933 (the  "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use  of  terms  such  as  "may,"  "will,"  "expect,"  "believe,"   "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such  forward-looking  statements  be  subject  to the  safe  harbors  for  such
statements.  We wish to caution  readers not to place undue reliance on any such
forward-looking  statements,   which  speak  only  as  of  the  date  made.  Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties  and important  factors beyond our control that could cause actual
results and events to differ  materially from  historical  results of operations
and events  and those  presently  anticipated  or  projected.  We  disclaim  any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

AVAILABLE INFORMATION

Morgan  Creek Energy Corp.  files  annual,  quarterly,  current  reports,  proxy
statements,  and other  information with the Securities and Exchange  Commission
(the  "Commission").  You may read and copy documents referred to in this Annual
Report  on  Form  10-KSB  that  have  been  filed  with  the  Commission  at the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You
may obtain  information on the operation of the Public Reference Room by calling
the Commission at  1-800-SEC-0330.  You can also obtain copies of our Commission
filings by going to the Commission's website at http://www.sec.gov


PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

Morgan Creek Energy Corp. was incorporated under the laws of the State of Nevada
on October 19, 2004 and has been engaged in the business of  exploration  of oil
and gas bearing  properties in the United States since its inception.  After the
effective  date of our  registration  statement  filed with the  Securities  and
Exchange   Commission   (February  14,  2006),  we  commenced   trading  on  the
Over-the-Counter  Bulletin Board under the symbol "MCRE:OB". Our shares are also
traded on the Frankfurt Stock Exchange in Germany under the symbol "M6C".

Please note that throughout this Annual Report,  and unless otherwise noted, the
words "we," "our," "us," the "Company," or "Morgan
Creek," refers to Morgan Creek Energy Corp.

Transfer Agent

Our transfer agent is Transfer  Online,  Inc., 317 S.W. Alder Street,  2nd Floor
Portland, Oregon 97204.


                                       4

<PAGE>


CURRENT BUSINESS OPERATIONS

We are a natural resource  exploration and production  company currently engaged
in the exploration, acquisition and development of oil and gas properties in the
United States and within North  America.  Our primary  activity and focus is our
leases  in  Texas  (the  "Quachita   Prospect").   To  date,  we  have  acquired
approximately  2,365 gross acres within the  Quachita  Prospect for a three-year
term.  We acquired a 100%  working  interest  and a 77% net revenue  interest in
natural gas targeted Quachita Prospect leases.  The leases are unproven and were
acquired  for  approximately  $338,000.  In  addition,  we have  leased  various
properties  totaling  approximately  4,800 gross  acres  within the State of New
Mexico for a  five-year  term in  consideration  for  $52,083  (the "New  Mexico
Prospect"). We have a 100% working interest and an 87.5% net revenue interest in
the leases.

OIL AND GAS PROPERTIES

The acreage and location of our oil and gas properties is summarized as follows:

                                                       NET ACRES(*)
Texas                                                     1,971
New Mexico                                                3,472
                                                       ------------
Total:                                                    5,443

(*)  Certain of our  interests  in our oil and gas  properties  may be less than
     100%.  Accordingly,  we  have  presented  the  acreage  of our  oil and gas
     properties on a net acre basis.

         QUACHITA PROSPECT

As of the date of this Annual Report, we lease  approximately 1,971 acres within
the Quachita Trend in the State of Texas for a three-year term in  consideration
of approximately $338,000. We have a 100% working interest and a 77% net revenue
interest in the Quachita Prospect leases.

BOGGS  #1.  As of the date of this  Annual  Report,  we  received  a permit  for
drilling of the twin well on the Quachita Prospect and commenced drilling of our
first well (the "Boggs #1). We have identified seven separate potential areas of
exploration  interest  in the  Quachita  Lease and have  carried  out wide scale
leasing on the first of these targets.  We completed the drilling portion of the
Boggs #1 well on July 13, 2007.  Subsequently,  we began production  testing and
evaluation  of the well. Of the five tested  zones,  four  produced  significant
volumes of natural gas. As formation  water was also  produced  with the natural
gas in the tested zones, the Boggs #1 is currently under  evaluation.  We intend
to secure all immediate  rights  relating to oil and gas in the areas  providing
control over any potential  major  structural  play that develops as a result of
this  in-depth  exploration.  During  fiscal year ended  December 31,  2007,  we
incurred $1,335,780 in drilling and completion expenditures on the Boggs #1.

The Boggs #1 has been privately  funded with the funding  investors  receiving a
75% working  interest and a 54% net revenue  interest in exchange for  providing
100% of all drilling and completion  costs.  Therefore,  we retain a 25% working


                                       5

<PAGE>

interest and a 23% net revenue interest in the Boggs #1 well. As of December 31,
2007,  we have  received  approximately  $759,000  in funding  from the  private
investors and incurred  $1,335,780 in drilling and completion costs on Boggs #1.
Currently,  we are negotiating with the funding  investors to acquire their well
for an amount  equal to the total  amount of their  investment  of $759,000  and
forgiveness of the additional amounts due and owing.

PETERS  RANCH  LEASE.  On  approximately  January 30,  2007,  we acquired a 100%
working interest and a 77% net revenue interest in two fully equipped oil leases
located in the State of Texas for aggregate  consideration of $55,000.  The Mata
lease is located in Webb  County and the Peters  Ranch lease is located in Duval
County  (collectively,  the "Peters Ranch Lease").  On  approximately  April 23,
2007,  we entered  into an  agreement to sell the Peters Ranch Lease for $65,000
(the "Peters Ranch  Agreement").  In accordance with the terms and provisions of
an agreement between the purchaser and one of our shareholders,  the amounts due
and owing under the Peters Ranch  Agreement were offset against  amounts we owed
to our shareholder. See #Item 12. Certain Relationships and Related Transactions
and Director Independence - Loans."

         NEW MEXICO PROSPECT

As of the date of this Annual Report,  we have leased various  properties in the
New Mexico Prospect totaling  approximately  3,472 net acres within the State of
New Mexico for a five year term in  consideration  for  $52,083.  We have a 100%
working interest and a 87.5% net revenue  interest in the leases  comprising the
New Mexico Prospect.

PROPOSED FUTURE BUSINESS OPERATIONS

Our strategy is to complete the further  acquisition  of additional  oil and gas
opportunities  that fall within the criteria of providing a geological basis for
development of drilling initiatives that can provide near term revenue potential
and fast drilling  capital  repatriation  from  production  cash flows to create
expanding reserves. We anticipate that our ongoing efforts,  subject to adequate
funding being available,  will continue to be focused on successfully concluding
negotiations for additional  tracts of prime acreage in the coal bed methane and
other gas  producing  domains,  and to  implement  the  drilling of new wells to
develop reserves and to provide  revenues.  We plan to build a strategic base of
proven reserves and production.

Our ability to continue to complete  planned  exploration  activities and expand
land  acquisitions and explore  drilling  opportunities is dependent on adequate
capital  resources  being available and further sources of debt and equity being
obtained.  The  two  following  alternatives  provide  the  basis  for  business
development options:

DEVELOPMENT OF CURRENT LEASES

The requirement to raise further funding for oil and gas exploration beyond that
obtained  for the next six month  period  continues  to depend on the outcome of
geological and engineering testing occurring over this interval.  Based upon the
completion of current  property  evaluations  on the Quachita  Prospect,  and if
results  provide  the  basis to  continue  development  and  geological  studies
indicate high probabilities of sufficient production quantities, we will attempt


                                       6

<PAGE>

to raise capital to further our drilling program to establish up to six wells on
leases  in  hand,  build  production  infrastructure  and  pipeline,  and  raise
additional  capital for  drilling on the New Mexico  Prospect  and further  land
acquisitions. This has included the following activity:

     o   Site  preparation for entry into current  wellbores  including  roadway
         upgrade and  operations  site,  design,  review,  and finalize  testing
         procedures,  book  zone  fracture  and  testing  consultants,   arrange
         equipment required.

     o   Pull old well tubing, run test tools in wellbore, cut well casing, test
         target gas zones with acid and water.

     o   If gas content  conducive  to  production,  complete  well by inserting
         downhole pump and rods, set pumping unit, wellhead, and gas line.

     o   Complete pipeline.

     o   Create well development model and investment documents to develop wells
         on subject leases including funding plan.

     o   Create investor communications materials, corporate identity.

     o   Raise funding for well development.

     o   Drill,  complete,  and produce from well drilling program and selective
         re-entry programs.

     o   Target  further  leases for  exploration  potential and obtain  further
         funding to acquire new development targets.

NEW LEASE ACQUISITION AND DEVELOPMENT

If gas  quality  and  quantities  are  not  deemed  sufficient  from  work to be
conducted  on our  current  leases  during  the first six  months of  operation,
additional land  acquisitions  will be assessed and obtained subject to adequate
capital  resources  being available and further sources of debt and equity being
obtained.  The  following  outlines  anticipated  activities  pursuant  to  this
business option.

     o   Site  preparation for entry into current  wellbores  including  roadway
         upgrade and  operations  site,  design,  review,  and finalize  testing
         procedures,  book  zone  fracture  and  testing  consultants,   arrange
         equipment required.

     o   Pull old well tubing, run test tools in wellbore, cut well casing, test
         target gas zones with acid and water,

     o   If gas content  not deemed  conducive  to  production,  target  further
         leases for exploration  potential and obtain further funding to acquire
         new development targets.


                                       7

<PAGE>


We will require  additional  funding to implement our proposed  future  business
activities.  See  "Item 6.  Management's  Discussion  and  Analysis  and Plan of
Operation."

We do not expect to purchase any significant equipment or increase significantly
the number of our employees during the next twelve months.  Our current business
strategy is to obtain resources under contract where possible because management
believes that this strategy,  at its current level of development,  provides the
best services available in the circumstances,  leads to lower overall costs, and
provides the best flexibility for our business operations.

COAL BED METHANE GAS

Natural gas  consists  primarily  of methane,  which is  produced  when  organic
material is physically turned into coal under extreme geologic conditions.  When
the coal and methane  conversion  process occurs such that the resultant coal is
saturated with water and methane is trapped within the coal, the result is "coal
bed methane."  Water  permeates  coal beds and the water  pressure traps the gas
within the coal.  Because coal has a large and complex internal surface area, it
can store volumes of gas six or seven time as much as a conventional  nature gas
reservoir of equal rock volume. Coal bed methane is kept in place usually by the
presence  of  water.  Thus the  production  of coal bed  methane  in many  cases
requires the  dewatering of the coal gas to be extracted.  Therefore,  in a coal
bed gas well,  water can be produced in large  volumes  especially  in the early
stages  of  production.  As the  amount  of  water in the  coal  decreases,  gas
production increases.

COMPETITION

We operate in a highly  competitive  industry,  competing with major oil and gas
companies,  independent  producers and institutional  and individual  investors,
which are actively seeking oil and gas properties  throughout the world together
with the equipment, labor and materials required to operate properties.  Most of
our competitors have financial  resources,  staffs and facilities  substantially
greater than ours.  The principal  area of  competition  is  encountered  in the
financial  ability to acquire good acreage  positions and drill wells to explore
for oil and  gas,  then,  if  warranted,  drill  production  wells  and  install
production  equipment.  Competition  for the acquisition of oil and gas wells is
intense with many oil and gas properties and/or leases or concessions  available
in a competitive bidding process in which we may lack technological  information
or expertise available to other bidders.  Therefore, we may not be successful in
acquiring and developing  profitable properties in the face of this competition.
No assurance can be given that a sufficient number of suitable oil and gas wells
will be available for acquisition and development.

GOVERNMENT REGULATION

The production and sale of oil and gas are subject to various federal, state and
local  governmental  regulations,  which  may be  changed  from  time to time in
response to economic or political  conditions and can have a significant  impact
upon overall operations. Matters subject to regulation include discharge permits
for drilling  operations,  drilling bonds,  reports concerning  operations,  the
spacing of wells, unitization and pooling of properties,  taxation,  abandonment
and restoration  and  environmental  protection.  These laws and regulations are
under constant review for amendment or expansion.  From time to time, regulatory
agencies  have  imposed  price   controls  and   limitations  on  production  by
restricting  the  rate of flow of oil and  gas  wells  below  actual  production
capacity  in  order  to  conserve  supplies  of oil and  gas.  Changes  in these


                                       8

<PAGE>

regulations could require us to expend significant  resources to comply with new
laws or regulations or changes to current requirements and could have a material
adverse effect on our business operations.

REGULATION OF OIL AND NATURAL GAS PRODUCTION

Our oil and natural gas  exploration,  production  and  related  operations  are
subject to extensive  rules and  regulations  promulgated by federal,  state and
local  authorities  and  agencies.   Failure  to  comply  with  such  rules  and
regulations can result in substantial  penalties.  The regulatory  burden on the
oil and natural gas industry  increases  our cost of doing  business and affects
our profitability. Although we believe we are in substantial compliance with all
applicable  laws  and  regulations,  because  such  rules  and  regulations  are
frequently amended or reinterpreted, we are unable to predict the future cost or
impact of complying with such laws.

Many states require permits for drilling operations,  drilling bonds and reports
concerning  operations and impose other requirements relating to the exploration
and  production  of oil and  natural  gas.  Such  states  also have  statutes or
regulations  addressing  conservation  matters,  including  provisions  for  the
unitization or pooling of oil and natural gas properties,  the  establishment of
maximum rates of production from wells, and the regulation of spacing,  plugging
and abandonment of such wells.

FEDERAL REGULATION OF NATURAL GAS

The Federal Energy Regulatory  Commission ("FERC") regulates  interstate natural
gas transportation  rates and service conditions,  which affect the marketing of
natural gas produced by us, as well as the revenues  received by us for sales of
such production.  Since the mid-1980's,  FERC has issued a series of orders that
have  significantly  altered the  marketing and  transportation  of natural gas.
These orders mandate a fundamental  restructuring  of interstate  pipeline sales
and transportation service,  including the unbundling by interstate pipelines of
the sale,  transportation,  storage and other  components of the city-gate sales
services such pipelines previously performed.  One of FERC's purposes in issuing
the orders was to  increase  competition  within all phases of the  natural  gas
industry. Certain aspects of these orders may be modified as a result of various
appeals and related  proceedings  and it is  difficult  to predict the  ultimate
impact of the  orders on us and  others.  Generally,  the  orders  eliminate  or
substantially reduce the interstate  pipelines'  traditional role as wholesalers
of natural gas in favor of providing  only storage and  transportation  service,
and have  substantially  increased  competition  and  volatility  in natural gas
markets.

The price,  which we may receive  for the sale of oil and  natural gas  liquids,
would be affected  by the cost of  transporting  products  to markets.  FERC has
implemented regulations establishing an indexing system for transportation rates
for oil  pipelines,  which,  generally,  would  index such  rates to  inflation,
subject to certain  conditions and limitations.  We are not able to predict with
certainty the effect,  if any, of these  regulations  on any future  operations.
However,  the regulations may increase  transportation  costs or reduce wellhead
prices for oil and natural gas liquids.


ENVIRONMENTAL MATTERS


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<PAGE>


Our operations and properties will be subject to extensive and changing federal,
state and local  laws and  regulations  relating  to  environmental  protection,
including  the  generation,  storage,  handling,  emission,  transportation  and
discharge of materials into the environment,  and relating to safety and health.
The recent trend in environmental legislation and regulation generally is toward
stricter  standards,  and  this  trend  will  likely  continue.  These  laws and
regulations may (i) require the  acquisition of a permit or other  authorization
before construction or drilling commences and for certain other activities; (ii)
limit or prohibit  construction,  drilling and other activities on certain lands
lying within wilderness and other protected areas; and (iii) impose  substantial
liabilities for pollution  resulting from our operations.  The permits  required
for  several of our  operations  are  subject to  revocation,  modification  and
renewal  by  issuing  authorities.  Governmental  authorities  have the power to
enforce their  regulations,  and violations are subject to fines or injunctions,
or both. In the opinion of  management,  we are in substantial  compliance  with
current  applicable  environmental law and regulations,  and we have no material
commitments  for  capital  expenditures  to comply with  existing  environmental
requirements.   Nevertheless,   changes  in  existing   environmental  laws  and
regulations or in interpretations thereof could have a significant impact on our
business operations, as well as the oil and natural gas industry in general.

The  Comprehensive  Environmental,  Response,  Compensation,  and  Liability Act
("CERCL ") and  comparable  state  statutes  impose  strict,  joint and  several
liability  on owners and  operators  of sites and on persons who  disposed of or
arranged for the disposal of "hazardous  substances"  found at such sites. It is
not  uncommon for the  neighboring  landowners  and other third  parties to file
claims for personal injury and property damage allegedly caused by the hazardous
substances released into the environment.  The Federal Resource Conservation and
Recovery Act  ("RCRA")  and  comparable  state  statutes  govern the disposal of
"solid waste" and "hazardous  waste" and authorize the imposition of substantial
fines and  penalties  for  noncompliance.  Although  CERCLA  currently  excludes
petroleum from its definition of "hazardous substance," state laws affecting our
operations impose clean-up liability relating to petroleum and petroleum related
products.  In addition,  although  RCRA  classifies  certain oil field wastes as
"non-hazardous," such exploration and production wastes could be reclassified as
A  hazardous  wastes,  thereby  making  such  wastes  subject to more  stringent
handling and disposal requirements.

We intend to acquire leasehold  interests in properties that for many years have
produced oil and natural gas.  Although the previous  owners of these  interests
may have  used  operating  and  disposal  practices  that were  standard  in the
industry at the time,  hydrocarbons or other wastes may have been disposed of or
released on or under the properties.  In addition, some of our properties may be
operated  in the  future  by  third  parties  over  which  we have  no  control.
Notwithstanding  our lack of control  over  properties  operated by others,  the
failure of the operator to comply with applicable environmental regulations may,
in certain circumstances, adversely impact our business operations.

The  National  Environmental  Policy Act ("NEPA") is  applicable  to many of our
planned  activities and operations.  NEPA is a broad procedural statute intended
to ensure that  federal  agencies  consider  the  environmental  impact of their
actions by requiring such agencies to prepare  environmental  impact  statements
("EIS") in connection with all federal activities that significantly  affect the
environment.  Although  NEPA is a  procedural  statute  only  applicable  to the
federal  government,  a portion  of our  properties  may be  acreage  located on
federal land. The Bureau of Land  Management's  issuance of drilling permits and


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<PAGE>

the  Secretary  of the  Interior's  approval  of plans of  operation  and  lease
agreements all constitute federal action within the scope of NEPA. Consequently,
unless the responsible  agency determines that our drilling  activities will not
materially  impact the environment,  the responsible  agency will be required to
prepare an EIS in conjunction with the issuance of any permit or approval.

The  Endangered  Species Act  ("ESA")  seeks to ensure  that  activities  do not
jeopardize endangered or threatened animals, fish and plant species, nor destroy
or modify the  critical  habitat of such  species.  Under ESA,  exploration  and
production  operation,   as  well  as  actions  by  federal  agencies,  may  not
significantly  impair or jeopardize the species or their  habitat.  ESA provides
for criminal  penalties for willful  violations of the Act.  Other statutes that
provide  protection  to  animal  and  plant  species  and that may  apply to our
operations  include,  but are not necessarily  limited to, the Fish and Wildlife
Coordination  Act, the Fishery  Conservation  and Management  Act, the Migratory
Bird Treaty Act and the National Historic  Preservation Act. Although we believe
that our operations are in substantial compliance with such statutes, any change
in these  statutes  or any  reclassification  of a species as  endangered  could
subject us to  significant  expense to modify our  operations  or could force to
discontinue certain operations altogether.

Management  believes  that  we  are  in  substantial   compliance  with  current
applicable environmental laws and regulations.

RESEARCH AND DEVELOPMENT ACTIVITIES

No research  and  development  expenditures  have been  incurred,  either on our
account or sponsored by customers, to the date of our inception.

EMPLOYEES

We do not employ any persons on a  full-time  or on a  part-time  basis.  Marcus
Johnson is our President and Chief Executive Officer, and D. Bruce Horton is our
Chief  Financial   Officer  and  Treasurer.   These  individuals  are  primarily
responsible for all of our day-to-day operations. Other services are provided by
outsourcing and consultant and special purpose contracts.

RISK FACTORS

An investment in our common stock involves a number of very  significant  risks.
You should carefully  consider the following risks and uncertainties in addition
to  other  information  in  evaluating  our  company  and  its  business  before
purchasing  shares of our common  stock.  Our  business,  operating  results and
financial condition could be seriously harmed due to any of the following risks.
The risks  described  below are all of the material  risks that we are currently
aware of that are facing our company. Additional risks not presently known to us
may also  impair  our  business  operations.  You could lose all or part of your
investment due to any of these risks.


RISKS RELATED TO OUR BUSINESS

         WE  WILL  NEED  TO  RAISE  ADDITIONAL  FINANCING  TO  COMPLETE  FURTHER
         EXPLORATION.


                                       11

<PAGE>

We will  require  significant  additional  financing  in order to  continue  our
exploration activities and our assessment of the commercial viability of our oil
and  gas  properties.  Furthermore,  if the  costs  of our  planned  exploration
programs  are greater than  anticipated,  we may have to seek  additional  funds
through  public or  private  share  offerings  or  arrangements  with  corporate
partners. There can be no assurance that we will be successful in our efforts to
raise  these  require  funds,  or on terms  satisfactory  to us.  The  continued
exploration of our oil and gas  properties  and the  development of our business
will depend upon our ability to establish  the  commercial  viability of our oil
and gas properties and to ultimately develop cash flow from operations and reach
profitable operations.  We currently are in the exploration stage and we have no
revenue from operations and we are experiencing  significant negative cash flow.
Accordingly,  the only other  sources  of funds  presently  available  to us are
through the sale of equity. We presently believe that debt financing will not be
an  alternative to us as all of our  properties  are in the  exploration  stage.
Alternatively,  we may finance  our  business by offering an interest in our oil
and gas properties to be earned by another party or parties carrying out further
exploration and development  thereof or to obtain project or operating financing
from financial  institutions,  neither of which is presently intended. If we are
unable to obtain this additional financing,  we will not be able to continue our
exploration activities and our assessment of the commercial viability of our oil
and properties. Further, if we are able to establish that development of our oil
and gas properties is  commercially  viable,  our inability to raise  additional
financing at this stage would  result in our  inability to place our oil and gas
properties into production and recover our investment.

As our oil and gas  properties do not contain any reserves,  we may not discover
commercially  exploitable  quantities of oil or gas on our properties that would
enable us to enter into commercial production,  achieve revenues and recover the
money we spend on exploration.

Our  properties  do not contain  reserves  in  accordance  with the  definitions
adopted by the SEC and there is no assurance that any exploration  programs that
we carry out will establish  reserves.  All of our oil and gas properties are in
the exploration stage as opposed to the development stage and have no known body
of reserves.  The known reserves at these projects have not yet been  determined
to be economic,  and may never be determined to be economic.  We plan to conduct
further  exploration  activities  on our oil and gas  properties,  which  future
exploration  may include the  completion  of  feasibility  studies  necessary to
evaluate  whether  commercial  reserves exist on any of our mineral  properties.
There is a substantial risk that these exploration activities will not result in
discoveries   of   commercially   recoverable   reserves  of  oil  or  gas.  Any
determination that our properties contain commercially recoverable quantities of
oil or  gas  may  not be  reached  until  such  time  that  final  comprehensive
feasibility  studies have been concluded that establish that a potential reserve
is likely to be economic.  There is a substantial  risk that any  preliminary or
final  feasibility  studies  carried  out by us will not  result  in a  positive
determination that our oil and gas properties can be commercially developed.

         OUR  EXPLORATION  ACTIVITIES ON OUR OIL AND GAS  PROPERTIES  MAY NOT BE
         COMMERCIALLY  SUCCESSFUL,  WHICH  COULD LEAD US TO ABANDON OUR PLANS TO
         DEVELOP THE PROPERTY AND OUR INVESTMENTS IN EXPLORATION.

Our  long-term  success  depends  on  our  ability  to  establish   commercially
recoverable quantities of oil and natural gas on our properties that can then be
developed into commercially viable operations. Oil and gas exploration is highly
speculative  in nature,  involves many risks and is  frequently  non-productive.


                                       12

<PAGE>

These risks include unusual or unexpected geologic formations, and the inability
to obtain suitable or adequate machinery, equipment or labor. The success of oil
and gas exploration is determined in part by the following factors:

     o   identification  of  potential  oil and  natural gas  reserves  based on
         superficial analysis;

     o   availability of government-granted exploration permits;

     o   the quality of management and geological and technical expertise; and

     o   the capital available for exploration.

Substantial  expenditures are required to establish proven and probable reserves
through drilling and analysis,  to develop processes to extract oil and gas, and
to develop the drilling and  processing  facilities  and  infrastructure  at any
chosen site. Whether an oil and gas reserve will be commercially  viable depends
on a number of  factors,  which  include,  without  limitation,  the  particular
attributes of the reserve;  oil and natural gas prices,  which fluctuate widely;
and government regulations,  including, without limitation, regulations relating
to prices, taxes,  royalties,  land tenure, land use, importing and exporting of
oil and gas and environmental  protection. We may invest significant capital and
resources  in  exploration  activities  and abandon such  investments  if we are
unable to identify commercially  exploitable reserves. The decision to abandon a
project may reduce the trading  price of our common stock and impair our ability
to raise future financing.  We cannot provide any assurance to investors that we
will discover or acquire any oil or gas reserves in sufficient quantities on any
of our properties to justify commercial operations. Further, we will not be able
to  recover  the  funds  that we  spend  on  exploration  if we are not  able to
establish  commercially  recoverable  reserves  of  oil  or  natural  gas on our
properties.

         OUR  BUSINESS  IS  DIFFICULT  TO  EVALUATE  BECAUSE  WE HAVE A  LIMITED
         OPERATING HISTORY.

In considering  whether to invest in our common stock,  you should consider that
there is only limited historical financial and operating  information  available
on which to base your evaluation of our  performance.  Our inception was October
19, 2004 and, as a result, we have a limited operating history.

         WE HAVE A HISTORY OF OPERATING  LOSSES AND THERE CAN BE NO ASSURANCE WE
         WILL BE PROFITABLE IN THE FUTURE.

We have a history of operating losses,  expect to continue to incur losses,  and
may never be  profitable,  and we must be  considered  to be in the  exploration
stage.  Further,  we have been  dependent on sales of our equity  securities and
debt financing to meet our cash  requirements.  We have incurred losses totaling
approximately $4,963,000 from October 19, 2004 (inception) to December 31, 2007.
As of December 31, 2007, we had an  accumulated  deficit of  $4,962,778  and had
incurred losses of approximately  $817,000 during fiscal year ended December 31,
2007.  Further,  we do not expect positive cash flow from operations in the near
term.  There is no assurance that actual cash  requirements  will not exceed our
estimates. In particular,  additional capital may be required in the event that:
(i)  the  costs  to  acquire  additional  leases  are  more  than  we  currently
anticipate;  (ii) drilling and completion  costs for  additional  wells increase


                                       13

<PAGE>

beyond our  expectations;  or (iii) we encounter  greater costs  associated with
general and administrative expenses or offering costs.

Our  development  of and  participation  in what could evolve into an increasing
number of oil and gas prospects may require  substantial  capital  expenditures.
The  uncertainty  and factors  described  throughout this section may impede our
ability to economically find, develop,  produce, and acquire natural gas and oil
reserves. As a result, we may not be able to achieve or sustain profitability or
positive cash flows from operating activities in the future.

         WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS'
         REPORT  ACCOMPANYING  OUR  DECEMBER  31,  2007 AND  DECEMBER  31,  2006
         FINANCIAL STATEMENTS.

The independent  auditor's  report  accompanying  our December 31, 2007 and 2006
audited  financial  statements  contains  an  explanatory  paragraph  expressing
substantial  doubt  about  our  ability  to  continue  as a going  concern.  The
consolidated  financial statements have been prepared "assuming that the Company
will continue as a going concern." Our ability to continue as a going concern is
dependent on raising additional capital to fund our operations and ultimately on
generating future profitable operations.  There can be no assurance that we will
be able to raise sufficient  additional capital or eventually have positive cash
flow from  operations to address all of our cash flow needs.  If we are not able
to find  alternative  sources  of cash  or  generate  positive  cash  flow  from
operations,  our business and  shareholders  will be  materially  and  adversely
affected.

         WE WILL REQUIRE ADDITIONAL FUNDING IN THE FUTURE.

Based upon our historical  losses from  operations,  we will require  additional
funding  in the  future.  If we cannot  obtain  capital  through  financings  or
otherwise,  our ability to execute our development plans and achieve  production
levels will be greatly limited. Our current development plans require us to make
capital  expenditures for the exploration and development of our oil and natural
gas properties. Historically, we have funded our operations through the issuance
of equity. We may not be able to obtain additional financing on favorable terms,
if at all.  Our future  cash flows and the  availability  of  financing  will be
subject to a number of variables,  including potential production and the market
prices of oil and natural gas. Further, debt financing, if utilized,  could lead
to a diversion  of cash flow to satisfy  debt-servicing  obligations  and create
restrictions on business operations. If we are unable to raise additional funds,
it would have a material adverse effect upon our operations.

         AS PART OF OUR GROWTH STRATEGY, WE INTEND TO ACQUIRE ADDITIONAL OIL AND
         GAS PROPERTIES.

As part of our  growth  strategy,  we intend to acquire  additional  oil and gas
production properties.  Current and subsequent acquisitions may pose substantial
risks to our  business,  financial  condition,  and  results of  operations.  In
pursuing acquisitions,  we will compete with other companies, many of which have
greater financial and other resources to acquire attractive properties.  Even if
we are successful in acquiring additional properties, some of the properties may
not produce  revenues at  anticipated  levels or failure to conduct  drilling on
prospects within specified time periods may cause the forfeiture of the lease in
that prospect.  There can be no assurance  that we will be able to  successfully
integrate  acquired  properties,  which could  result in  substantial  costs and
delays  or  other  operational,   technical,  or  financial  problems.  Further,


                                       14

<PAGE>

acquisitions could disrupt ongoing business  operations.  If any of these events
occur,  it would have a material  adverse effect upon our operations and results
from operations.

         WE ARE A NEW ENTRANT INTO THE OIL AND GAS  EXPLORATION  AND DEVELOPMENT
         INDUSTRY WITHOUT PROFITABLE OPERATING HISTORY.

Since  inception,  our activities have been limited to  organizational  efforts,
obtaining  working capital and acquiring and developing a very limited number of
properties. As a result, there is limited information regarding property related
production potential or revenue generation  potential.  Further, our Leases have
no probable,  proved or developed  producing  reserves.  As a result, our future
revenues may be limited or non-existent.

The business of oil and gas exploration and development is subject to many risks
and if oil and  natural  gas is found in  economic  production  quantities,  the
potential  profitability  of future  possible oil and gas ventures  depends upon
factors beyond our control.  The potential  profitability of oil and natural gas
properties if economic  quantities  are found is dependent upon many factors and
risks  beyond our  control,  including,  but not limited  to: (i)  unanticipated
ground conditions; (ii) geological problems; (iii) drilling and other processing
problems;  (iv) the  occurrence of unusual  weather or operating  conditions and
other force majeure events;  (v) lower than expected  reserve  quantities;  (vi)
accidents;  (vii)  delays in the  receipt of or  failure  to  receive  necessary
government permits;  (viii) delays in transportation;  (ix) labor disputes;  (x)
government permit restrictions and regulation restrictions;  (xi) unavailability
of materials  and  equipment;  and (xii) the failure of equipment or drilling to
operate in accordance with specifications or expectations.

         OUR DRILLING OPERATIONS MAY NOT BE SUCCESSFUL.

We intend to test certain zones in wellbores  already  drilled on certain of the
properties  and  if  results  are  positive  and  capital  is  available,  drill
additional  wells and begin  production  operations from existing and new wells.
There can be no assurance  that our current  well  re-completion  activities  or
future drilling  activities  will be successful,  and we cannot be sure that our
overall drilling success rate or our production  operations  within a particular
area will ever come to fruition,  and if it does, will not decline over time. We
may not recover all or any portion of our capital investment in the wells or the
underlying  leaseholds.  Unsuccessful  drilling activities would have a material
adverse effect upon our results of operations and financial condition.  The cost
of drilling, completing, and operating wells is often uncertain, and a number of
factors  can delay or prevent  drilling  operations  including:  (i)  unexpected
drilling conditions;  (ii) pressure or irregularities in geological  formations;
(iii) equipment failures or accidents; (iv) adverse weather conditions; and (iv)
shortages or delays in availability of drilling rigs and delivery of equipment.

         OUR PRODUCTION INITIATIVES MAY NOT PROVE SUCCESSFUL.

The coal beds from which we intend to produce  natural  gas  frequently  contain
water, which may hamper our ability to produce gas in commercial quantities. The
amount of natural gas that can be  commercially  produced  depends upon the coal
quality,  the original gas content of the coal seam,  the thickness of the seam,
the reservoir pressure, the rate at which gas is released from the coal, and the
existence of any natural  fractures  through  which the gas can flow to the well
bore. However,  coal beds frequently contain water that must be removed in order


                                       15

<PAGE>

for the gas to detach from the coal and flow to the well bore.  The average life
of a coal bed well is only five to six years.  Our ability to remove and dispose
of sufficient  quantities of water from the coal seam will determine  whether or
not we can produce coal bed methane in commercial quantities.

There is no guarantee that the potential  drilling  locations we have or acquire
in the future will ever produce  natural gas or oil, which could have a material
adverse effect upon our results of operations.

         PROSPECTS  THAT WE DECIDE TO DRILL MAY NOT YIELD  NATURAL GAS OR OIL IN
         COMMERCIALLY VIABLE QUANTITIES.

We describe some of our current  prospects in this Annual Report.  Our prospects
are in various stages of  preliminary  evaluation and assessment and we have not
reached the point where we will decide to drill at all on the subject prospects.
However,  the use of seismic data,  historical  drilling logs,  offsetting  well
information,  and other  technologies  and the study of producing  fields in the
same area will not enable us to know conclusively  prior to drilling and testing
whether  natural gas or oil will be present or, if present,  whether natural gas
or oil will be present in sufficient  quantities or quality to recover  drilling
or completion costs or to be economically  viable. In sum, the cost of drilling,
completing  and operating any wells is often  uncertain and new wells may not be
productive.

         WE MAY BE UNABLE TO IDENTIFY LIABILITIES ASSOCIATED WITH THE PROPERTIES
         OR OBTAIN PROTECTION FROM SELLERS AGAINST THEM.

One of our growth  strategies is to capitalize on opportunistic  acquisitions of
oil and natural gas reserves.  However,  our reviews of acquired  properties are
inherently  incomplete  because it  generally is not feasible to review in depth
every individual  property  involved in each  acquisition.  A detailed review of
records  and  properties  may  not  necessarily  reveal  existing  or  potential
problems,  nor will it permit a buyer to become  sufficiently  familiar with the
properties  to  assess  fully  their   deficiencies   and  potential.   Further,
environmental problems, such as ground water contamination,  are not necessarily
observable  even when an inspection is undertaken.  We may not be able to obtain
indemnification  or other  protections  from the sellers  against such potential
liabilities,  which  would have a material  adverse  effect  upon our results of
operations.

         THE POTENTIAL PROFITABILITY OF OIL AND GAS VENTURES DEPENDS UPON GLOBAL
         POLITICAL AND MARKET RELATED FACTORS BEYOND OUR CONTROL.

World  prices and markets for oil and gas are  unpredictable,  highly  volatile,
potentially  subject  to  governmental  fixing,   pegging,   controls,   or  any
combination  of these and other  factors,  and  respond to changes in  domestic,
international,  political, social, and economic environments.  Additionally, due
to  worldwide  economic  uncertainty,  the  availability  and cost of funds  for
production  and  other  expenses  have  become  increasingly  difficult,  if not
impossible, to project. These and other changes and events may materially affect
our financial performance. The potential profitability of oil and gas properties
is dependent on these and other factors beyond our control.


                                       16

<PAGE>


         PRODUCTION  OR OIL AND GAS RESOURCES IF FOUND ARE DEPENDENT ON NUMEROUS
         OPERATIONAL  UNCERTAINTIES  SPECIFIC TO THE AREA OF THE  RESOURCE  THAT
         AFFECTS ITS PROFITABILITY.

Production area specifics affect  profitability.  Adverse weather conditions can
hinder drilling  operations and ongoing  production  work. A productive well may
become  uneconomic  in the  event  water or  other  deleterious  substances  are
encountered  which impair or prevent the  production  of oil and/or gas from the
well.  Production  and  treatments  on other wells in the area can have either a
positive or negative effect on our production and wells. In addition, production
from any well  may be  unmarketable  if it is  impregnated  with  water or other
deleterious  substances.  The content of  hydrocarbons is subject to change over
the life of producing wells. The  marketability of oil and gas from any specific
reserve which may be acquired or discovered will be affected by numerous factors
beyond our control. These factors include, but are not limited to, the proximity
and capacity of oil and gas pipelines,  availability of room in the pipelines to
accommodate additional production, processing and production equipment operating
costs and equipment  efficiency,  market  fluctuations of prices and oil and gas
marketing  relationships,  local  and  state  taxes,  mineral  owner  and  other
royalties,  land  tenure,  lease bonus costs and lease damage  costs,  allowable
production,  and  environmental  protection.  These factors cannot be accurately
predicted and the combination of these factors may result in us not receiving an
adequate return on our invested capital.

         IF  PRODUCTION   RESULTS  FROM   OPERATIONS,   WE  ARE  DEPENDENT  UPON
         TRANSPORTATION AND STORAGE SERVICES PROVIDED BY THIRD PARTIES.

We will be  dependent  on the  transportation  and storage  services  offered by
various  interstate and intrastate  pipeline companies for the delivery and sale
of our gas supplies. Both the performance of transportation and storage services
by  interstate  pipelines and the rates charged for such services are subject to
the jurisdiction of the Federal Energy Regulatory Commission or state regulatory
agencies.  An  inability to obtain  transportation  and/or  storage  services at
competitive  rates could hinder our processing and marketing  operations  and/or
affect our sales margins.

         OUR RESULTS OF OPERATIONS  ARE DEPENDENT UPON MARKET PRICES FOR OIL AND
         GAS, WHICH FLUCTUATE WIDELY AND ARE BEYOND OUR CONTROL.

If and when  production  from oil and gas  properties  is reached,  our revenue,
profitability,  and cash flow  depend  upon the  prices  and  demand for oil and
natural  gas.  The  markets for these  commodities  are very  volatile  and even
relatively modest drops in prices can significantly affect our financial results
and impede our  growth.  Prices  received  also will affect the amount of future
cash flow available for capital expenditures and may affect our ability to raise
additional  capital.  Lower prices may also affect the amount of natural gas and
oil that  can be  economically  produced  from  reserves  either  discovered  or
acquired.  Factors that can cause price fluctuations  include:  (i) the level of
consumer  product demand;  (ii) domestic and foreign  governmental  regulations;
(iii) the price and availability of alternative  fuels; (iv) technical  advances
affecting  energy  consumption;  (v)  proximity  and  capacity  of oil  and  gas
pipelines and other  transportation  facilities;  (vi)  political  conditions in
natural gas and oil producing regions;  (vii) the domestic and foreign supply of
natural gas and oil;  (viii) the ability of members of Organization of Petroleum
Exporting Countries to agree to and maintain oil price and production  controls;
(ix) the price of foreign imports;  and (x) overall domestic and global economic
conditions.


                                       17

<PAGE>


The  availability  of a ready market for our oil and gas depends  upon  numerous
factors  beyond our control,  including  the extent of domestic  production  and
importation   of  oil  and  gas,  the  relative   status  of  the  domestic  and
international  economies,  the  proximity  of our  properties  to gas  gathering
systems,  the capacity of those  systems,  the  marketing  of other  competitive
fuels,   fluctuations  in  seasonal  demand  and   governmental   regulation  of
production,  refining,  transportation and pricing of oil, natural gas and other
fuels.

         THE OIL AND GAS  INDUSTRY IN WHICH WE OPERATE  INVOLVED  MANY  INDUSTRY
         RELATED OPERATING AND  IMPLEMENTATION  RISKS THAT CAN CAUSE SUBSTANTIAL
         LOSSES,  INCLUDING,  BUT NOT LIMITED TO,  UNPRODUCTIVE  WELLS,  NATURAL
         DISASTERS, FACILITY AND EQUIPMENT PROBLEMS AND ENVIRONMENTAL HAZARDS.

Our drilling  activities  are subject to many risks,  including the risk that we
will not  discover  commercially  productive  reservoirs.  Drilling  for oil and
natural gas can be  unprofitable,  not only from dry holes,  but from productive
wells that do not produce  sufficient  revenues to return a profit. In addition,
our drilling and producing operations may be curtailed, delayed or canceled as a
result of other drilling and production, weather and natural disaster, equipment
and service  failure,  environmental  and regulatory,  and site specific related
factors,  including  but not  limited  to: (i)  fires;  (ii)  explosions;  (iii)
blow-outs  and  surface  cratering;  (iv)  uncontrollable  flows of  underground
natural gas, oil, or formation water; (v) natural  disasters;  (vi) facility and
equipment failures; (vii) title problems; (viii) shortages or delivery delays of
equipment and services; (ix) abnormal pressure formations; and (x) environmental
hazards such as natural gas leaks, oil spills,  pipeline ruptures and discharges
of toxic gases.

If any of these events occur, we could incur substantial  losses as a result of:
(i) injury or loss of life;  (ii) severe damage to and  destruction of property,
natural resources or equipment;  (iii) pollution and other environmental damage;
(iv) clean-up responsibilities; (v) regulatory investigation and penalties; (vi)
suspension of our operations; or (vii) repairs necessary to resume operations.

If we were to  experience  any of these  problems,  it could  affect well bores,
gathering  systems and processing  facilities,  any one of which could adversely
affect our  ability to conduct  operations.  We may be  affected by any of these
events more than larger companies, since we have limited working capital.

         THE OIL  AND  GAS  INDUSTRY  IS  HIGHLY  COMPETITIVE  AND  THERE  IS NO
         ASSURANCE THAT WE WILL BE SUCCESSFUL IN ACQUIRING LEASES.

The oil and natural gas industry is intensely  competitive,  and we compete with
other  companies that have greater  resources.  Many of these companies not only
explore  for and  produce  oil and  natural  gas,  but also  carry  on  refining
operations and market  petroleum and other  products on a regional,  national or
worldwide basis.  These companies may be able to pay more for productive oil and
natural gas properties and exploratory  prospects or define,  evaluate,  bid for
and purchase a greater  number of properties and prospects than our financial or
human resources permit. In addition,  these companies may have a greater ability
to continue  exploration  activities  during  periods of low oil and natural gas
market  prices.  Our  larger  competitors  may be able to absorb  the  burden of


                                       18

<PAGE>

present and future federal,  state,  local and other laws and  regulations  more
easily than we can, which would adversely affect our competitive  position.  Our
ability to acquire additional  properties and to discover reserves in the future
will be dependent  upon our ability to evaluate and select  suitable  properties
and to consummate transactions in a highly competitive environment. In addition,
because we have fewer  financial and human  resources than many companies in our
industry,  we may be at a disadvantage in bidding for exploratory  prospects and
producing oil and natural gas properties.

         THE  MARKETABILITY  OF NATURAL  RESOURCES  WILL BE AFFECTED BY NUMEROUS
         FACTORS  BEYOND OUR  CONTROL,  WHICH MAY RESULT IN US NOT  RECEIVING AN
         ADEQUATE RETURN ON INVESTED CAPITAL TO BE PROFITABLE OR VIABLE.

The marketability of natural resources which may be acquired or discovered by us
will be affected by numerous  factors beyond our control.  These factors include
market  fluctuations  in oil and gas  pricing  and  demand,  the  proximity  and
capacity of natural  resource  markets and  processing  equipment,  governmental
regulations,  land tenure,  land use,  regulation  concerning  the importing and
exporting of oil and gas and  environmental  protection  regulations.  The exact
effect of these factors cannot be accurately  predicted,  but the combination of
these  factors may result in us not  receiving  an  adequate  return on invested
capital to be profitable or viable.

         OIL AND GAS OPERATIONS ARE SUBJECT TO  COMPREHENSIVE  REGULATION  WHICH
         MAY CAUSE  SUBSTANTIAL  DELAYS OR REQUIRE  CAPITAL OUTLAYS IN EXCESS OF
         THOSE ANTICIPATED CAUSING AN ADVERSE EFFECT ON OUR BUSINESS OPERATIONS.

Oil and gas operations are subject to federal, state, and local laws relating to
the protection of the environment,  including laws regulating removal of natural
resources from the ground and the discharge of materials  into the  environment.
Oil and gas  operations are also subject to federal,  state,  and local laws and
regulations which seek to maintain health and safety standards by regulating the
design  and  use  of  drilling  methods  and  equipment.  Various  permits  from
government  bodies are required  for drilling  operations  to be  conducted;  no
assurance  can be  given  that  such  permits  will be  received.  Environmental
standards  imposed by federal,  provincial,  or local authorities may be changed
and any such  changes  may have  material  adverse  effects  on our  activities.
Moreover,  compliance  with such laws may cause  substantial  delays or  require
capital outlays in excess of those  anticipated,  thus causing an adverse effect
on us.  Additionally,  we may be subject to  liability  for  pollution  or other
environmental  damages  which  we  may  elect  not  to  insure  against  due  to
prohibitive  premium costs and other reasons.  To date we have not been required
to spend material amounts on compliance with environmental regulations. However,
we may be  required to do so in future and this may affect our ability to expand
or maintain our operations.

In general,  our  exploration  and production  activities are subject to certain
federal,  state and local laws and regulations relating to environmental quality
and pollution  control.  Such laws and  regulations  increase the costs of these
activities and may prevent or delay the  commencement  or continuance of a given
operation.  Compliance  with these laws and  regulations  has not had a material
effect on our operations or financial  condition to date.  Specifically,  we are
subject  to  legislation   regarding  emissions  into  the  environment,   water
discharges  and  storage and  disposition  of  hazardous  wastes.  In  addition,
legislation  has been  enacted  which  requires  well and  facility  sites to be


                                       19

<PAGE>

abandoned and reclaimed to the satisfaction of state authorities.  However, such
laws and  regulations  are  frequently  changed and we are unable to predict the
ultimate cost of compliance. Generally, environmental requirements do not appear
to affect us any  differently  or to any  greater  or lesser  extent  than other
companies in the industry.

We believe  that our  operations  comply,  in all  material  respects,  with all
applicable  environmental  regulations.  We need  insurance  to protect our self
against risks  associated with the leases  obtained.  The leases allow for entry
onto the properties for the purposes of oil and gas  exploration.  The insurance
we require  relates solely to developments on the properties for the purposes of
oil and gas exploration.

When and if we are  convinced  that our  current  leases  or those  subsequently
acquired are capable of hydrocarbon  production and sales,  and we plan to drill
more than one well, we intend to maintain a $2,000,000  per year limit policy on
bodily  injury and  general  liability  with  regard to risks  incurred  for the
drilling  of up to 25 wells.  This  will  allow for our  growth to  contain  non
contract  labor that would  require us to carry such  additional  insurance  for
risks  pertaining to oil and gas  exploration  conducted  directly by us. Such a
policy  would   include   coverage  for  numerous   locations   for   pollution,
environmental  damage,  chemical spills and commercial general liability,  fire,
and personal injury. Such a policy will not be required until such time and date
as we believe that we will begin a sustained drilling and operating program, and
that at least one well has been  drilled and is producing to justify and warrant
further drilling and a sustained drilling and operating program.

         ANY CHANGE TO GOVERNMENT REGULATION/ADMINISTRATIVE PRACTICES MAY HAVE A
         NEGATIVE IMPACT ON OUR ABILITY TO OPERATE AND OUR PROFITABILITY.

The laws,  regulations,  policies  or current  administrative  practices  of any
government body,  organization or regulatory  agency in the United States or any
other  jurisdiction,  may be changed,  applied or  interpreted in a manner which
will fundamentally alter our ability to carry on business. The actions, policies
or regulations, or changes thereto, of any government body or regulatory agency,
or other special  interest groups,  may have a detrimental  effect on us. Any or
all of these  situations  may have a negative  impact on our  ability to operate
and/or our profitability.

         WE MAY BE UNABLE TO RETAIN  KEY  EMPLOYEES  OR  CONSULTANTS  OR RECRUIT
         ADDITIONAL QUALIFIED PERSONNEL.

Our  extremely  limited  personnel  means  that we  would be  required  to spend
significant  sums of money to locate and train new employees in the event any of
our employees resign or terminate their  employment with us for any reason.  Due
to our  limited  operating  history and  financial  resources,  we are  entirely
dependent  on the  continued  service  of Marcus  Johnson,  our Chief  Executive
Officer,  and D. Bruce Horton, our Chief Financial Officer.  Further,  we do not
have key man life insurance on either of these individuals.  We may not have the
financial resources to hire a replacement if one or both of our officers were to
die.  The  loss  of  service  of  either  of  these  employees  could  therefore
significantly and adversely affect our operations.

         OUR OFFICERS AND DIRECTORS MAY BE SUBJECT TO CONFLICTS OF INTEREST.


                                       20

<PAGE>

Our officers and directors  serve only part time and are subject to conflicts of
interest.  Each devotes part of his working  time to other  business  endeavors,
including consulting relationships with other entities, and has responsibilities
to these other entities. Such conflicts include deciding how much time to devote
to our affairs,  as well as what business  opportunities  should be presented to
us. Because of these  relationships,  our officers and directors will be subject
to conflicts of interest.  Currently, we have no policy in place to address such
conflicts of interest.

         NEVADA LAW AND OUR ARTICLES OF INCORPORATION  MAY PROTECT OUR DIRECTORS
         FROM CERTAIN TYPES OF LAWSUITS.

Nevada law provides that our officers and directors  will not be liable to us or
our  stockholders  for monetary  damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons  against all damages  incurred in  connection  with our  business to the
fullest extent provided or allowed by law. The  exculpation  provisions may have
the effect of  preventing  stockholders  from  recovering  damages  against  our
officers  and  directors  caused by their  negligence,  poor  judgment  or other
circumstances.  The indemnification provisions may require us to use our limited
assets to defend our officers and directors  against  claims,  including  claims
arising out of their negligence, poor judgment, or other circumstances.

RISKS RELATED TO OUR COMMON STOCK

         SALES OF A  SUBSTANTIAL  NUMBER OF SHARES OF OUR COMMON  STOCK INTO THE
         PUBLIC  MARKET  BY  CERTAIN  STOCKHOLDERS  MAY  RESULT  IN  SIGNIFICANT
         DOWNWARD  PRESSURE  ON THE PRICE OF OUR COMMON  STOCK AND COULD  AFFECT
         YOUR ABILITY TO REALIZE THE CURRENT TRADING PRICE OF OUR COMMON STOCK.

Sales of a substantial number of shares of our common stock in the public market
by certain  stockholders  could  cause a  reduction  in the market  price of our
common stock. As of the date of this Annual Report, we have 41,976,589 shares of
common  stock  issued  and  outstanding.  Of the  total  number  of  issued  and
outstanding shares of common stock,  certain  stockholders are able to resell up
to 4,167,700 shares of our common stock pursuant to the  Registration  Statement
declared  effective  on  February  14,  2006.  As a result  of the  Registration
Statement,  4,167,700  shares of our common stock were issued and are  available
for  immediate  resale  which  could have an adverse  effect on the price of our
common stock.

As of the date of this Annual Report, there are 25,105,789 outstanding shares of
our common stock that are restricted  securities as that term is defined in Rule
144 under  the  Securities  Act of 1933,  as  amended  (the  "Securities  Act").
Although the Securities Act and Rule 144 place certain  prohibitions on the sale
of  restricted  securities,  restricted  securities  may be sold into the public
market under certain conditions.  Further, as of the date of this Annual Report,
there are an aggregate of 1,850,000  stock options  outstanding and an aggregate
of 944,105  Warrants  outstanding.  See "Item 5.  Market  for Common  Equity and
Related Stockholder Matters."

Any  significant  downward  pressure  on the  price of our  common  stock as the
selling stockholders sell their shares of our common stock could encourage short
sales by the selling  stockholders  or others.  Any such short sales could place


                                       21

<PAGE>

further downward pressure on the price of our common stock.

         THE TRADING  PRICE OF OUR COMMON STOCK ON THE OTC  BULLETIN  BOARD WILL
         FLUCTUATE  SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING
         THEIR SHARES.

As of  the  date  of  this  Annual  Report,  our  common  stock  trades  on  the
Over-the-Counter  Bulletin Board. There is a volatility associated with Bulletin
Board  securities in general and the value of your investment  could decline due
to the  impact of any of the  following  factors  upon the  market  price of our
common  stock:  (i)  disappointing  results from our  discovery  or  development
efforts;  (ii) failure to meet our revenue or profit goals or operating  budget;
(iii)  decline  in demand for our  common  stock;  (iv)  downward  revisions  in
securities  analysts'  estimates or changes in general  market  conditions;  (v)
technological innovations by competitors or in competing technologies; (vi) lack
of funding generated for operations;  (vii) investor  perception of our industry
or our prospects; and (viii) general economic trends.

In addition,  stock markets have experienced  price and volume  fluctuations and
the market prices of securities have been highly  volatile.  These  fluctuations
are often unrelated to operating performance and may adversely affect the market
price of our common  stock.  As a result,  investors may be unable to sell their
shares at a fair price and you may lose all or part of your investment.

         ADDITIONAL  ISSUANCE OF EQUITY SECURITIES MAY RESULT IN DILUTION TO OUR
         EXISTING STOCKHOLDERS.

Our Articles of  Incorporation  authorize the issuance of 100,000,000  shares of
common stock.  Common stock is our only authorized  class of stock. The board of
directors has the authority to issue  additional  shares of our capital stock to
provide  additional  financing in the future and the issuance of any such shares
may result in a reduction of the book value or market  price of the  outstanding
shares of our common  stock.  If we do issue any such  additional  shares,  such
issuance also will cause a reduction in the  proportionate  ownership and voting
power  of  all  other  stockholders.   As  a  result  of  such  dilution,   your
proportionate ownership interest and voting power will be decreased accordingly.
Further, any such issuance could result in a change of control.

         OUR COMMON STOCK IS CLASSIFIED AS A "PENNY STOCK" UNDER SEC RULES WHICH
         LIMITS THE MARKET FOR OUR COMMON STOCK.

The SEC has adopted  rules that regulate  broker-dealer  practices in connection
with   transactions  in  "penny  stocks."  Penny  stocks  generally  are  equity
securities with a price of less than $5.00 (other than securities  registered on
certain national securities  exchanges or quoted on the NASDAQ system,  provided
that current price and volume  information  with respect to transactions in such
securities  is provided by the exchange or system).  Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure  document prepared by the
SEC,  which  specifies  information  about  penny  stocks  and  the  nature  and
significance  of risks of the penny  stock  market.  A  broker-dealer  must also
provide the customer  with bid and offer  quotations  for the penny  stock,  the
compensation  of the  broker-dealer,  and sales person in the  transaction,  and
monthly account statements  indicating the market value of each penny stock held


                                       22

<PAGE>

in the  customer's  account.  In addition,  the penny stock rules  require that,
prior to a transaction  in a penny stock not otherwise  exempt from those rules,
the broker-dealer must make a special written determination that the penny stock
is a suitable  investment for the purchaser and receive the purchaser's  written
agreement to the transaction.  These disclosure requirements may have the effect
of reducing the trading  activity in the secondary market for stock that becomes
subject to those penny stock  rules.  If a trading  market for our common  stock
develops,  our common  stock will  probably  become  subject to the penny  stock
rules, and shareholders may have difficulty in selling their shares.

         A MAJORITY OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED STATES,
         WITH THE  RESULT  THAT IT MAY BE  DIFFICULT  FOR  INVESTORS  TO ENFORCE
         WITHIN THE UNITED  STATES ANY JUDGMENTS  OBTAINED  AGAINST US OR ANY OF
         OUR DIRECTORS OR OFFICERS.

A majority of our  directors  and officers  are  nationals  and/or  residents of
countries other than the United States, and all or a substantial portion of such
persons'  assets are located outside the United States.  As a result,  it may be
difficult  for  investors  to effect  service  of process  on our  directors  or
officers,  or enforce within the United States or Canada any judgments  obtained
against us or our officers or directors, including judgments predicated upon the
civil  liability  provisions of the securities  laws of the United States or any
state  thereof.  Consequently,  you may be  effectively  prevented from pursuing
remedies under U.S. federal securities laws against them. In addition, investors
may not be able to commence an action in a Canadian  court  predicated  upon the
civil liability provisions of the securities laws of the United States.

ITEM 2. DESCRIPTION OF PROPERTIES

We lease our principal  office space  located at 5050 Quorum  Drive,  Suite 700,
Dallas, Texas 75254. The office space is for corporate identification,  mailing,
and courier  purposes only and costs us approximately  $210 monthly.  The office
and  services  related  thereto may be  cancelled  at any time with a thirty day
notice.

ITEM 3. LEGAL PROCEEDINGS

During  fiscal year ended  December 31, 2007, we were in a dispute in connection
with  the  services  provided  by  Warwick  Advisors  Corp.  under a  consulting
agreement  dated September 6, 2006 (the  "Agreement").  The parties entered into
binding arbitration as allowed for within the Agreement.  On October 9, 2007 the
Arbitrator ruled in favor of Warkwick  Advisors Corp. and we were ordered to pay
$24,120. The liability was settled on October 31, 2007.

Management  is not  aware of any other  legal  proceedings  contemplated  by any
governmental authority or any other party involving us or our properties.  As of
the date of this Annual Report, no director, officer or affiliate is (i) a party
adverse to us in any legal proceeding,  or (ii) has an adverse interest to us in
any legal  proceedings.  Management is not aware of any other legal  proceedings
pending or that have been threatened against us or our properties.


                                       23

<PAGE>


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During  fiscal year ended  December 31, 2007,  no matters were  submitted to our
stockholders for approval.


                                     PART II

ITEM 5.  MARKET FOR COMMON  EQUITY AND  RELATED  STOCKHOLDER  MATTERS  AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR COMMON EQUITY

Shares of our common stock commenced trading on the OTC Bulletin Board under the
symbol "MCRE:OB" on approximately  May 24, 2006. The market for our common stock
is limited, and can be volatile. The following table sets forth the high and low
bid prices  relating to our common  stock on a  quarterly  basis for the periods
indicated  as  quoted by the  NASDAQ  stock  market.  These  quotations  reflect
inter-dealer prices without retail mark-up,  mark-down, or commissions,  and may
not reflect actual transactions.

            QUARTER ENDED              HIGH BID        LOW BID
          December 31, 2007              $0.76          $0.30
         September 30, 2007              $0.85          $0.45
            June 30, 2007                $1.20          $0.36
           March 31, 2007                $0.98          $0.45

As of March 1, 2008, we had 25  shareholders  of record,  which does not include
shareholders whose shares are held in street or nominee names.

DIVIDEND POLICY

No  dividends  have ever been  declared by the Board of  Directors on our common
stock.  Our  losses  do not  currently  indicate  the  ability  to pay any  cash
dividends,  and we do not indicate the intention of paying cash dividends either
on our common stock in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS

We have one equity  compensation  plan, the Morgan Creek Energy Corp. 2006 Stock
Option Plan (the "2006 Plan").  The table set forth below  presents  information
relating to our equity compensation plans as of the date of this Annual Report:


                                       24

<PAGE>

<TABLE>
<CAPTION>


                                 NUMBER OF SECURITIES TO BE                                     NUMBER OF SECURITIES
                                  ISSUED UPON EXERCISE OF      WEIGHTED-AVERAGE EXERCISE      REMAINING AVAILABLE FOR
                                    OUTSTANDING OPTIONS,          PRICE OF OUTSTANDING         FUTURE ISSUANCE UNDER
                                    WARRANTS AND RIGHTS       OPTIONS, WARRANTS AND RIGHTS   EQUITY COMPENSATION PLANS
        PLAN CATEGORY                       (A)                           (B)                  (EXCLUDING COLUMN (A))
_______________________________  __________________________   ____________________________   _________________________
<S>                                       <C>                              <C>                        <C>
Equity Compensation Plans
Approved by Security Holders
(2006 Stock Option Plan)                  1,850,000                        $1.10                      3,150,000
Equity Compensation Plans Not
Approved by Security Holders                944,105                        $3.00                            -0-

</TABLE>


2006 STOCK OPTION PLAN

On April 3, 2006, our Board of Directors authorized and approved the adoption of
the 2006 Plan effective April 3, 2006,  under which an aggregate of 5,000,000 of
our shares may be issued.

The purpose of the 2006 Plan is to enhance our  long-term  stockholder  value by
offering  opportunities  to our  directors,  officers,  employees  and  eligible
consultants  to acquire  and  maintain  stock  ownership  in order to give these
persons  the  opportunity  to  participate  in our  growth and  success,  and to
encourage them to remain in our service.

The 2006 Plan is to be  administered  by our Board of  Directors  or a committee
appointed by and  consisting  of one or more members of the Board of  Directors,
which shall determine (i) the persons to be granted Stock Options under the 2006
Plan;  (ii) the number of shares  subject to each option,  the exercise price of
each Stock Option;  and (iii) whether the Stock Option shall be  exercisable  at
any time  during  the option  period up to ten (10)  years or whether  the Stock
Option shall be  exercisable in  installments  or by vesting only. The 2006 Plan
provides  authorization  to the Board of  Directors  to grant  Stock  Options to
purchase a total number of shares of Common Stock of the Company,  not to exceed
5,000,000  shares as at the date of  adoption by the Board of  Directors  of the
2006 Plan. At the time a Stock Option is granted under the 2006 Plan,  the Board
of Directors  shall fix and determine the exercise  price at which shares of our
common stock may be acquired.

In the event an optionee  ceases to be employed by or to provide  services to us
for reasons other than cause, retirement,  disability or death, any Stock Option
that is vested and held by such optionee  generally may be exercisable within up
to ninety (90) calendar days after the effective date that his position  ceases,
and after such 90-day period any unexercised  Stock Option shall expire.  In the
event an  optionee  ceases to be  employed  by or to provide  services to us for
reasons of retirement,  disability or death, any Stock Option that is vested and
held by such optionee  generally may be exercisable  within up to one-year after
the effective date that his position ceases,  and after such one-year period any
unexercised Stock Option shall expire.


                                       25

<PAGE>

No Stock Options granted under the Stock Option Plan will be transferable by the
optionee,  and each Stock Option will be exercisable  during the lifetime of the
optionee  subject  to the  option  period  up to ten (10)  years or  limitations
described  above.  Any Stock Option held by an optionee at the time of his death
may be exercised  by his estate  within one (1) year of his death or such longer
period as the Board of Directors may determine.

The exercise price of a Stock Option granted  pursuant to the 2006 Plan shall be
paid in full to us by  delivery  of  consideration  equal to the  product of the
Stock Option in accordance with the requirements of the Nevada Revised Statutes.
Any Stock Option settlement, including payment deferrals or payments deemed made
by way of  settlement  of  pre-existing  indebtedness  may be  subject  to  such
conditions, restrictions and contingencies as may be determined.

INCENTIVE STOCK OPTIONS

The 2006 Plan further  provides  that,  subject to the  provisions  of the Stock
Option Plan and prior shareholder approval,  the Board of Directors may grant to
any key  individuals  who are our employees  eligible to receive  options one or
more  incentive  stock  options to purchase the number of shares of common stock
allotted by the Board of Directors (the "Incentive Stock  Options").  The option
price per share of common  stock  deliverable  upon the exercise of an Incentive
Stock  Option  shall be at least  100% of the fair  market  value of the  common
shares of the Company,  and in the case of an Incentive  Stock Option granted to
an optionee  who owns more than 10% of the total  combined  voting  power of all
classes of our stock,  shall not be less than 100% of the fair  market  value of
our common  shares.  The option term of each  Incentive  Stock  Option  shall be
determined by the Board of Directors,  which shall not commence sooner than from
the date of grant and shall terminate no later than ten (10) years from the date
of grant of the Incentive Stock Option, subject to possible early termination as
described above.

COMMON STOCK PURCHASE WARRANTS

As of the date of this Annual  Report,  there are an aggregate of 944,105 common
stock purchase warrants issued and outstanding (the "Warrants") We did not issue
any  Warrants  during  fiscal year ended  December  31,  2007.  The  Warrants to
purchase  shares of common stock and the shares of common stock  underlying  the
Warrants were issued in a private  placement by us during fiscal year 2006 at an
exercise  price of $3.00 per share during the period  commencing  on October 16,
2006 and ending on the day which is earlier of (a)  twenty-four  months from the
date of issuance of the Warrants or eighteen months from the effective date of a
proposed registration statement.

As of the date of this Annual Report, none of the Warrants have been exercised.

RECENT SALES OF UNREGISTERED SECURITIES

As of the date of this Annual Report and during  fiscal year ended  December 31,
2007, to provide capital, we sold stock in private placement  offerings,  issued
stock in exchange  for our debts or pursuant to  contractual  agreements  as set
forth below.


                                       26

<PAGE>

FEBRUARY 2008 PRIVATE PLACEMENT OFFERING

On February 13,  2008,  we closed a private  placement  offering  (the  "Private
Placement  Offering"),  whereby we issued an aggregate  of  7,576,068  shares of
common stock at a deemed  settlement  and  issuance  price of $0.20 per share in
settlement  of an  aggregate  $1,515,214  in debt due and owing by us to certain
non-U.S. residents. See "Item 6 Management's Discussion and Analysis and Plan of
Operation - Material Commitments."

The Private Placement  Offering was completed in reliance on Regulation S of the
Securities  Act.  Sales  were  made  to only  non-U.S.  residents.  The  Private
Placement  Offering was not  registered  under the  Securities  Act or under any
state securities laws and may not be offered or sold without  registration  with
the  Securities  and Exchange  Commission  or an applicable  exemption  from the
registration requirements. The per share price of the Private Placement Offering
was  arbitrarily  determined  by our Board of Directors  based upon  analysis of
certain factors  including,  but not limited to, stage of development,  industry
status,  investment  climate,  perceived  investment  risks,  our assets and net
estimated worth.

DEBT SETTLEMENT

Our Board of Directors,  pursuant to a Board of Directors' meeting held on April
1, 2008,  approved and  authorized the settlement of an aggregate of $917,123 in
current  indebtedness  (the "Debt  Settlement")  by the issuance of an aggregate
4,585,616 shares of our restricted  common stock at $0.20 per share effective as
of March 24, 2008. The aggregate 4,585,616 shares of common stock were issued to
seven  creditors  (each a  "Creditor")  pursuant to the terms and  conditions of
those certain  $0.20 Share for Debt Private  Placement  Subscription  Agreements
(collectively,  the  "Subscription  Agreements")  as entered into between us and
each such  Creditor.

The Debt Settlement was made to five non-United  States Creditors in reliance on
Rule 903 of Regulation S promulgated  under the Securities Act and to two United
States  accredited  Creditors in reliance on Section 4(2) of the Securities Act.
The securities  issued in the Debt Settlement have not been registered under the
Securities Act or under any state securities laws and may not be offered or sold
without  registration with the United States Securities and Exchange  Commission
or an applicable  exemption from the  registration  requirements.  See "Item 12.
Certain  Relationships  and Related  Transactions  and Director  Independence  -
Loans."

There were no finders'  fees or  commissions  payable by us upon the  successful
completion  of the Debt  Settlement  and we have  agreed to file a  registration
statement  with  the  United  States  Securities  and  Exchange   Commission  in
accordance  with the  Securities Act covering the resale of the shares of common
stock as issued to the Creditors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The  summarized  financial data set forth in the table below is derived from and
should be read in  conjunction  with our audited  financial  statements  for the
period from  inception  (October  19,  2004) to year ended  December  31,  2007,
including  the notes to those  financial  statements  which are included in this
Annual Report.  The following  discussion should be read in conjunction with our
audited financial statements and the related notes that appear elsewhere in this
Annual Report. The following discussion contains forward-looking statements that


                                       27

<PAGE>

reflect our plans,  estimates  and  beliefs.  Our actual  results  could  differ
materially from those discussed in the forward looking statements.  Factors that
could cause or contribute to such  differences  include,  but are not limited to
those discussed  below and elsewhere in this Annual Report,  particularly in the
section entitled "Risk Factors".  Our audited financial statements are stated in
United  States  Dollars  and are  prepared  in  accordance  with  United  States
Generally Accepted Accounting Principles.

We are an exploration  stage company and have not generated any revenue to date.
The following  table sets forth selected  financial  information for the periods
indicated.

RESULTS OF OPERATION

                                     FISCAL YEAR ENDED      FOR THE PERIOD FROM
                                       DECEMBER 31            OCTOBER 19, 2004
                                      2007 AND 2006            (INCEPTION) TO
                                                              DECEMBER 31, 2007
                               _________________________    ____________________

General and                    $817,021      $3,918,002           $4,962,778
Administrative Expenses
    Investor relations            9,120         112,744              162,074
    expenses
    Consulting expenses         189,991         346,992              628,458
    Management fees             312,990         311,707              624,697
    Impairment of oil and         -0-         1,273,410            1,273,410
    gas  properties
    Management fees               -0-         1,527,170            1,527,170
    -stock based
    compensation
    Office and general          156,639         176,884              356,744
Professional                    148,281         169,095              390,225
Fees
Net Loss                      ($817,021)    ($3,918,002)         ($4,962,778)

We have incurred  recurring  losses to date. Our financial  statements have been
prepared assuming that we will continue as a going concern and, accordingly,  do
not include adjustments relating to the recoverability and realization of assets
and classification of liabilities that might be necessary should we be unable to
continue in operation.


                                       28

<PAGE>

We expect we will  require  additional  capital to meet our long term  operating
requirements. We expect to raise additional capital through, among other things,
the sale of equity or debt securities.

FISCAL YEAR ENDED  DECEMBER 31, 2007 COMPARED TO FISCAL YEAR ENDED  DECEMBER 31,
2006.

Our net loss for fiscal year ended December 31, 2007 was ($817,021)  compared to
a net loss of  ($3,918,002)  during  fiscal  year  ended  December  31,  2006 (a
decrease of $3,100,981). During fiscal year ended December 31, 2007 and 2006, we
did not generate any revenue.

During  fiscal  year  ended   December  31,  2007,   we  incurred   general  and
administrative  expenses of  $817,021  compared to  $3,918,002  incurred  during
fiscal year ended  December 31, 2006 (a decrease of  $3,100,981).  These general
and administrative  expenses incurred during fiscal year ended December 31, 2007
consisted of: (i) consulting  fees of $189,991 (2006:  $346,992);  (ii) investor
relations of $9120 (2006:  $112,744);  (iii)  management fees of $312,990 (2006:
$311,707);   (iv)  office  and  general  of  $156,639  (2006:   $176,884);   (v)
professional  fees of $148,281  (2006:  $169,095);  (vi) management fees - stock
based  compensation of $-0- (2006:  1,527,170);  and (vii) impairment of oil and
gas properties of $-0- (2006: $1,273,410).

During fiscal year ended December 31, 2007, we did not incur any management fees
- stock based compensation relating to the valuation of stock options granted to
our officers and directors. We also did not record any impairment of oil and gas
properties  during  fiscal  year ended  December  31,  2007.  Thus,  general and
administrative  expenses  incurred  during  fiscal year ended  December 31, 2007
compared to fiscal year ended December 31, 2006  decreased  primarily due to the
non-incurrence  of management fees - stock based  compensation and no impairment
of oil and gas properties. General and administrative expenses generally include
corporate overhead, financial and administrative contracted services, marketing,
and consulting costs.

Consulting  fees  decreased  during  fiscal year ended  December 31, 2007 due to
decrease in use of contractual services. Of the $817,021 incurred as general and
administrative  expenses during fiscal year ended December 31, 2007, we incurred
consulting  expenses of $189,991  payable to  International  Market Trend,  Inc.
("IMT").  In addition,  IMT advanced us $6,000 during fiscal year ended December
31, 2007. As of December 31, 2007,  we owed IMT $56,873,  which is unsecured and
non-interest  bearing and has no definite  repayment terms.  Effective March 24,
2008, we settled an aggregate $86,873 with IMT by the issuance of 434,366 shares
of our  restricted  common stock at $0.20 per share.  An officer and director of
IMT is also one of our shareholders.

Of the $817,021  incurred as general and  administrative  expenses during fiscal
year ended  December 31, 2007, an aggregate of $312,990 was incurred  payable to
our officers and  directors in  management  fees.  We also  incurred  additional
compensation  to our Chief  Geologist and Operations  Manager in accordance with
certain  contractual  arrangements  that in the event we  acquire an oil and gas
property  which was directly  introduced to us by either our Chief  Geologist or
Operations  Manager,  we will assign up to a 1.5% overriding  royalty  interest.
Therefore,  during fiscal year ended  December 31, 2007, we recorded  additional
compensation of $1,739,  which is the estimated cost of royalty interests earned
during the period. See "Item 10. Executive Compensation."


                                       29

<PAGE>

Our net loss  during  fiscal year ended  December  31,  2007 was  ($817,021)  or
($0.03) per share  compared to a net loss of  ($3,918,002)  or ($0.14) per share
during  fiscal year ended  December 31, 2006.  The  weighted  average  number of
shares  outstanding  was  29,814,905  for fiscal  year ended  December  31, 2007
compared to 28,811,306 for fiscal year ended December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

FISCAL YEAR ENDED DECEMBER 31, 2007

As at fiscal year ended  December 31, 2007,  our current assets were $33,989 and
our current  liabilities  were  $2,718,691,  which resulted in a working capital
deficiency of ($2,684,702).  As at fiscal year ended December 31, 2007,  current
assets  were  comprised  of: (i)  $16,098 in cash;  and (ii)  $17,891 in prepaid
expenses  and  other.  As at  fiscal  year  ended  December  31,  2007,  current
liabilities  were  comprised  of: (i)  $389,612 in accounts  payable and accrued
liabilities;  and (ii) $1,570,079 due to related parties;  and (iii) $759,000 in
drilling advances payable.

As at fiscal year ended  December  31, 2007,  our total  assets were  $1,758,091
comprised of: (i) $33,989 in current assets; and (ii) $1,724,102 in unproven oil
and gas  properties.  The  increase  in total  assets  during  fiscal year ended
December 31, 2007 from fiscal year ended  December 31, 2006 was primarily due to
recording of drilling costs relating to the Boggs #1 well.

As at fiscal year ended December 31, 2007, our total liabilities were $2,718,691
comprised  entirely of current  liabilities.  The increase in liabilities during
fiscal year ended December 31, 2007 from fiscal year ended December 31, 2006 was
primarily  due to the increase in amounts due to related  parties and in amounts
payable and accrued liabilities and drilling advances payable.  See " - Material
Commitments."

Stockholders'  deficit  increased from ($143,579) for fiscal year ended December
31, 2006 to ($960,600) for fiscal year ended December 31, 2007.

CASH FLOWS FROM OPERATING ACTIVITIES

We have not generated positive cash flows from operating activities.  For fiscal
year ended  December 31, 2007,  net cash flows used in operating  activities was
($385,194),  consisting  primarily of a net loss of  ($817,021).  Net cash flows
used in operating  activities  was  adjusted by $269,877 to  reconcile  accounts
payable and accrued  liabilities,  $191,086  to  reconcile  costs due to related
parties,  and $29,136 to reconcile  prepaid  expenses and other. For fiscal year
ended  December  31,  2006,  net cash flows  used in  operating  activities  was
($839,051),  consisting primarily of a net loss of ($3,918,002), and adjusted by
$1,527,170 in stock based compensation,  $1,273,410 in impairment of oil and gas
properties,  $200,000  to  reconcile  costs due to related  parties,  $64,043 to
reconcile  accounts  payable and accrued  liabilities,  and $28,083 to reconcile
amounts due to related parties.

CASH FLOWS FROM INVESTING ACTIVITIES


                                       30

<PAGE>


For fiscal  year  ended  December  31,  2007,  net cash flows used in  investing
activities was ($1,479,032) consisting of oil and gas property expenditures. For
fiscal year ended December 31, 2006, net cash flows used in investing activities
was ($903,393) for the acquisition of oil and gas properties.

CASH FLOWS FROM FINANCING ACTIVITIES

We have  financed  our  operations  primarily  from either  advancements  or the
issuance  of equity and debt  instruments.  For fiscal year ended  December  31,
2007, net cash flows provided from financing  activities was $1,874,500 compared
to $1,741,158 for fiscal year ended December 31, 2006. Cash flows from financing
activities  for fiscal year ended  December  31,  2007  consisted  primarily  of
$759,000 in drilling  advances and  $1,115,500 in advances from related  parties
compared  to  $1,416,158  in proceeds  on sale of common  stock and  $325,000 in
advances from related parties for fiscal year ended December 31, 2006.

We expect that working capital requirements will continue to be funded through a
combination  of our  existing  funds and further  issuances of  securities.  Our
working capital requirements are expected to increase in line with the growth of
our business.

PLAN OF OPERATION AND FUNDING

Existing working capital, further advances and debt instruments, and anticipated
cash flow are expected to be adequate to fund our  operations  over the next six
months.  We have no  lines  of  credit  or other  bank  financing  arrangements.
Generally,  we have  financed  operations  to date  through the  proceeds of the
private  placement  of  equity  and debt  instruments.  In  connection  with our
business plan, management anticipates additional increases in operating expenses
and capital expenditures relating to: (i) oil and gas operating properties; (ii)
possible drilling  initiatives on current properties and future properties;  and
(iii) future  property  acquisitions.  We intend to finance these  expenses with
further issuances of securities,  and debt issuances.  Thereafter,  we expect we
will need to raise  additional  capital and generate  revenues to meet long-term
operating  requirements.  Additional  issuances  of equity or  convertible  debt
securities will result in dilution to our current  shareholders.  Further,  such
securities  might have rights,  preferences  or privileges  senior to our common
stock.  Additional  financing may not be available upon acceptable  terms, or at
all. If adequate  funds are not  available or are not  available  on  acceptable
terms,  we may not be  able  to  take  advantage  of  prospective  new  business
endeavors or opportunities,  which could  significantly and materially  restrict
our business operations.

During  fiscal year ended  December 31,  2007,  we did not engage in any private
placement  offerings.  However,  during  February  2008, we engaged in a private
placement offering under Regulation S of the Securities Act pursuant to which we
received gross  proceeds of $1,515,214,  of which all consisted of settlement of
debt relating to amounts  previously  advanced to us by one of our  shareholders
and related accrued  interest.  And effective March 24, 2008, we also settled an
aggregate $917,123 in debt by the issuance of 4,585,616 shares of our restricted
common stock at $0.20 per share.

MATERIAL COMMITMENTS


                                       31

<PAGE>

During fiscal year ended December 31, 2007, one of our shareholders  advanced an
aggregate of $1,130,500 to us. As at December 31, 2006, an aggregate of $325,500
was already owing to this shareholder,  which is subject to interest at the rate
of 8% per annum and has no definite  repayment  terms.  During fiscal year ended
December 31, 2007, an aggregate of $65,000  resulting from proceeds  received on
disposal of the Peters Ranch Lease was utilized to offset the  aggregate  amount
due  and  owing  to  the  shareholder.   Also  add  the  $25,000  settlement  by
transferring Railroad bonds owed by the company to the shareholder.  Thus, as of
December 31, 2007,  an  aggregate  of  $1,365,500  was due and owing and accrued
interest totaled $66,456.

Subsequently,  during January 2008, an additional  advance was made by this same
shareholder  to us for an aggregate  amount of  $1,512,214  due and owing.  This
amount was assigned by the shareholder to various assignees and settled pursuant
to the issuance of 7,576,068 shares of our restricted  common stock at $0.20 per
share. See "Item 5. Market for Common Equity and Related Stockholder Matters and
Small  Business  Issuer  Purchases  of  Equity  Securities  -  Recent  Sales  of
Unregistered Securities."

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any  significant  equipment  during the next twelve
months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this  Annual  Report,  we do not have  any  off-balance  sheet
arrangements  that have or are  reasonably  likely  to have a current  or future
effect on our financial condition,  changes in financial condition,  revenues or
expenses,  results of operations,  liquidity,  capital  expenditures  or capital
resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our December 31, 2007 and December
31, 2006  financial  statements  contains an  explanatory  paragraph  expressing
substantial  doubt  about  our  ability  to  continue  as a going  concern.  The
financial  statements  have been prepared  "assuming  that we will continue as a
going concern," which  contemplates  that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.

RECENT ACCOUNTING PRONOUNCEMENTS

In March  2008,  the FASB  issued SFAS No.  161,  DISCLOSURES  ABOUT  DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 161"). SFAS 161 is intended to improve
financial  reporting  about  derivative  instruments  and hedging  activities by
requiring  enhanced  disclosures to enable investors to better  understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows. SFAS 161 achieves these improvements by requiring  disclosure of the fair
values of derivative instruments and their gains and losses in a tabular format.
It also  provides  more  information  about an entity's  liquidity  by requiring
disclosure of  derivative  features that are credit  risk-related.  Finally,  it
requires  cross-referencing within footnotes to enable financial statement users
to locate important information about derivative  instruments.  SFAS 161 will be


                                       32

<PAGE>

effective for financial  statements  issued for fiscal years and interim periods
beginning after November 15, 2008,  will be adopted by the Company  beginning in
the  first  quarter  of  2009.  The  Company  does  not  expect  there to be any
significant  impact of adopting SFAS 161 on its financial  position,  cash flows
and results of operations.

In February 2007, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 159, THE FAIR VALUE  OPTION FOR  FINANCIAL
ASSETS AND FINANCIAL  LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO.
115 ("SFAS No. 159").  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve  financial  reporting  by providing  entities  with the  opportunity  to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  This  Statement  is  expected  to  expand  the  use of  fair  value
measurement,   which  is  consistent  with  the  Board's  long-term  measurement
objectives for accounting for financial instruments. This statement is effective
as of the  beginning  of our first  fiscal year that begins  after  November 15,
2007,  although earlier adoption is permitted.  As of December 31, 2007, we have
not adopted this  statement and  management  has not  determined the effect that
adopting  this  statement  would have on our  financial  position  or results of
operations.

In December  2007,  the FASB issued  SFAS No.  160,  NONCONTROLLING  INTEREST IN
CONSOLIDATED FINANCIAL STATEMENTS,  AN AMENDMENT OF ARB NO. 51 ("SFAS No. 160"),
which will change the  accounting  and reporting for minority  interests,  which
will  be  recharacterized  as  noncontrolling  interests  and  classified  as  a
component of equity  within the  consolidated  balance  sheets.  SFAS No. 160 is
effective as of the beginning of an entity's  first fiscal year  beginning on or
after  December 15, 2008.  Earlier  adoption is  prohibited.  Management has not
determined the effect that adopting this  statement  would have on our financial
position or results of operations.

In  December  2007,  the FASB  issued  SFAS No.  141  (Revised  2007),  BUSINESS
COMBINATIONS  ("SFAS No.  141R").  SFAS No. 141R will change the  accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the  acquisition-date  fair value with  limited  exceptions.  SFAS No. 141R will
change the accounting  treatment and disclosure for certain  specific items in a
business   combination.   SFAS  No.  141R  applies   prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
entity's first annual  reporting period beginning on or after December 15, 2008.
Accordingly,  any business combinations completed by us prior to January 1, 2009
will be recorded and  disclosed  following  existing  GAAP.  Management  has not
determined the effect that adopting this  statement  would have on our financial
position or results of operations.

In  September  2006,  FASB issued SFAS No. 157,  FAIR VALUE  MEASURE  ("SFAS No.
157"). This Statement defines fair value,  establishes a framework for measuring
fair  value  in  generally  accepted  accounting   principles  (GAAP),   expands
disclosures  about fair value  measurements,  and applies under other accounting
pronouncements that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements.  However, the FASB anticipates that
for some entities, the application of SFAS No. 157 will change current practice.
SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November 15, 2007,  which for us is the fiscal year  beginning


                                       33

<PAGE>

January 1, 2008. We are currently evaluating the impact of adopting SFAS No. 157
but do not  expect  that it will  have a  significant  effect  on its  financial
position or results of operations.

In  September  2006,  the FASB issued SFAS No. 158,  EMPLOYERS'  ACCOUNTING  FOR
DEFINED  BENEFIT  PENSION AND OTHER  POSTRETIREMENT  PLANS "SFAS No. 158".  This
Statement  requires  an employer to  recognize  the over funded or under  funded
status of a defined  benefit post  retirement  plan (other than a  multiemployer
plan) as an asset or liability in its  statement of financial  position,  and to
recognize  changes in that funded  status in the year in which the changes occur
through  comprehensive income. SFAS No. 158 is effective for fiscal years ending
after December 15, 2006.  The Company has  determined  that the adoption of this
standard  did not have any  impact on the  Company's  results of  operations  or
financial position.

In June 2006, FASB issued  Interpretation  No. 48, ACCOUNTING FOR UNCERTAINTY IN
INCOME  TAXES-AN  INTERPRETATION  OF FASB  STATEMENT  NO. 109 ("FIN  48").  This
Interpretation   clarifies  the  accounting  for  uncertainty  in  income  taxes
recognized in an enterprise's  financial  statements in accordance with FASB No.
109, "ACCOUNTING FOR INCOME TAXES." This Interpretation prescribes a recognition
threshold and measurement  attribute for the financial statement recognition and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
This  Interpretation  also provides guidance on  derecognition,  classification,
interest  and  penalties,   accounting  in  interim   periods,   disclosure  and
transition.  This  Interpretation  is effective for fiscal years beginning after
December 15, 2006. We have  determined  that the adoption of FIN 48 did not have
any material impact on our results of operations or financial position.

ITEM 7. FINANCIAL STATEMENTS


                            MORGAN CREEK ENERGY CORP.

                         (An Exploration Stage Company)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2007













REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDER'S EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO FINANCIAL STATEMENTS

                                       34


<PAGE>


                                 DALE MATHESON
                            CARR-HILTON LABONTE LLP
                           __________________________
                           DMCL CHARTERED ACCOUNTANTS
                                   LETTERHEAD


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors of Morgan Creek Energy Corp.:

We have audited the balance sheets of Morgan Creek Energy Corp. (an exploration
stage company) as at December 31, 2006 and 2005 and the statements of
operations, stockholders' equity and cash flows for the years then ended and for
the period from inception on October 19, 2004 to December 31, 2006. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2006 and 2005
and the results of its operations and cash flows for the years then ended and
for the period from inception on October 19, 2004 to December 31, 2006 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, to date the Company has not generated revenues since
inception, has incurred losses in developing its business, and further losses
are anticipated. The Company requires additional funds to meet its obligations
and finance its operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

                                                                          "DMCL"

                                           DALE MATHESON CARR-HILTON LABONTE LLP
                                                           CHARTERED ACCOUNTANTS

March 30, 2007
Vancouver, Canada


                                       35


<PAGE>


                        DE JOYA GRIFFITH & COMPANY, LLC
                        _______________________________
                   CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS





             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders of
Morgan Creek Energy Corp.
Henderson, Nevada

We have audited the accompanying  balance sheet of Morgan Creek Energy Corp. (An
Exploration Stage Company) as of December 31, 2007 and the related statements of
operations, stockholders' deficit, and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility is to express an opinion on the financial statements based on our
audit.  We did not audit the  financial  statements of Morgan Creek Energy Corp.
for the year ended  December 31, 2006.  Those  statements  were audited by other
auditors whose report has been furnished to us and our opinion,  in so far as it
relates to the amounts  included in the year ended  December 31, 2006,  is based
solely on the report of other auditors.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Morgan Creek Energy Corp. as of
December 31, 2007,  and the results of their  operations  and cash flows for the
year then ended in conformity with accounting  principles  generally accepted in
the United States.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the Company has suffered  recurring losses from  operations,  which
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans in regard to these matters are also described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

De Joya Griffith & Company, LLC

/s/ De Joya Griffith & Company, LLC
Henderson, NV
March 25, 2008

________________________________________________________________________________
                 2580 Anthem Village Drive, Henderson, NV 89052
               Telephone (702) 588-5960  Facsimile (702) 588-5979


                                       36


<PAGE>
<TABLE>
<CAPTION>

                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                                 BALANCE SHEETS

                                                                                               December 31,       December 31,
                                                                                                   2007               2006
_________________________________________________________________________________________________________________________________
                                                                                                 (Audited)         (Audited)

                                     ASSETS


<S>                                                                                             <C>                  <C>
CURRENT ASSETS
     Cash                                                                                       $      16,098        $    5,824
     Prepaid expenses and other                                                                        17,891            13,755
_________________________________________________________________________________________________________________________________

TOTAL CURRENT ASSETS                                                                                   33,989            19,579

OIL AND GAS PROPERTIES, unproven (Note 3)                                                           1,724,102           310,070
_________________________________________________________________________________________________________________________________

TOTAL ASSETS                                                                                    $   1,758,091        $  329,649
=================================================================================================================================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable and accrued liabilities                                                   $     389,612        $  119,735
     Due to related parties  (Note 6)                                                               1,570,079           353,493
     Drilling advances payable (Note 3)                                                               759,000                 -
_________________________________________________________________________________________________________________________________

TOTAL CURRENT LIABILITIES                                                                           2,718,691           473,228
_________________________________________________________________________________________________________________________________

GOING CONCERN (Note 1)

STOCKHOLDERS' DEFICIT (Note 4)
Common stock, 100,000,000 shares authorized with $0.001 par value
Issued and outstanding - 29,814,905 common shares                                                      29,815            29,815
     (December 31, 2006 - 29,814,905)
Additional paid-in-capital                                                                          3,972,363         3,972,363
Deficit accumulated during exploration stage                                                       (4,962,778)       (4,145,757)
_________________________________________________________________________________________________________________________________

TOTAL STOCKHOLDERS' DEFICIT                                                                          (960,600)         (143,579)
_________________________________________________________________________________________________________________________________

TOTAL LIABILITIES & STOCK HOLDERS' DEFICIT                                                      $   1,758,091        $  329,649
=================================================================================================================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       37

<PAGE>
<TABLE>
<CAPTION>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                            STATEMENTS OF OPERATIONS


                                                                              Year ended       Year ended      October 19, 2004
                                                                              December 31,     December 31,     (inception) to
                                                                                  2007             2006        December 31, 2007
_________________________________________________________________________________________________________________________________
                                                                               (Audited)         (Audited)          (Audited)

GENERAL AND ADMINISTRATIVE EXPENSES

<S>                                                                           <C>             <C>                 <C>
     Investor relations                                                       $     9,120     $      112,744      $     162,074
     Consulting fees                                                              189,991            346,992            628,458
     Management fees - related party                                              312,990            311,707            624,697
     Management fees - stock based compensation                                         -          1,527,170          1,527,170
     Impairment of oil and gas properties (Note 3)                                      -          1,273,410          1,273,410
     Office and general                                                           156,639            176,884            356,744
     Professional fees                                                            148,281            169,095            390,225
_________________________________________________________________________________________________________________________________

NET LOSS                                                                      $  (817,021)    $   (3,918,002)     $  (4,962,778)

=================================================================================================================================




BASIC AND DILUTED LOSS PER COMMON SHARE                                       $     (0.03)    $        (0.14)
=================================================================================================================================

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING-BASIC AND DILUTED                                           29,814,905         28,811,306
=================================================================================================================================

</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       38


<PAGE>

<TABLE>
<CAPTION>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                       STATEMENT OF STOCKHOLDERS' DEFICIT

      FOR THE PERIOD FROM OCTOBER 19, 2004 (INCEPTION) TO DECEMBER 31, 2007
                                    (AUDITED)

                                                              Common Stock             Additional        Deficit
                                                                                                       accumulated
                                                                                                         during
                                                        Number of                       Paid in        exploration    Stockholders'
                                                          Shares         Amount         Capital           stage          Equity
___________________________________________________________________________________________________________________________________

<S>                                                      <C>             <C>           <C>           <C>                <C>
Balance, October 19, 2004                                         -      $      -      $         -   $           -      $       -
Common stock issued for oil and gas property
     at $0.025 per share - November 19, 2004             24,000,000        24,000          576,000               -        600,000
Capital distribution to founding share holder
     on acquisition of oil and gas property (Note
     3)                                                           -             -         (600,000)              -       (600,000)
Common stock issued for cash at $0.025 per share
     - November 26, 2004 and December 15, 2004           13,750,000        13,750          330,000               -        343,750
Common stock issued for cash at $0.125 per share
     - December 15, 2004                                  2,640,800         2,641          327,459               -        330,100
Net loss for the period                                           -             -                -         (23,729)       (23,729)
___________________________________________________________________________________________________________________________________

Balance, December 31, 2004                               40,390,800        40,391          633,459         (23,729)       650,121
Common stock issued for cash at $0.125 per share
     - March 9, 2005                                        280,000           280           34,720               -         35,000
Net loss for the year                                             -             -                -        (204,026)      (204,026)
___________________________________________________________________________________________________________________________________

Balance, December 31, 2005                               40,670,800        40,671          668,179        (227,755)       481,095
Common stock issued for cash at $1.50 per share
     - October 16, 2006                                     944,105           944        1,415,214               -      1,416,158
Common stock issued for oil and gas property
     at $1.75 per share - October 17, 2006 (Note 3)         200,000           200          349,800               -        350,000
Stock-based compensation                                          -             -        1,527,170               -      1,527,170
Restricted common shares cancelled
     - December 19, 2006                                (12,000,000)      (12,000)          12,000               -              -
Net loss for the year                                             -             -                -      (3,918,002)    (3,918,002)
___________________________________________________________________________________________________________________________________

Balance, December 31, 2006                               29,814,905        29,815        3,972,363      (4,145,757)      (143,579)
Net loss for the year                                             -             -                -        (817,021)      (817,021)
___________________________________________________________________________________________________________________________________

Balance, December 31, 2007                               29,814,905      $ 29,815       $3,972,363    $ (4,962,778)     $(960,600)
===================================================================================================================================
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       39


<PAGE>
<TABLE>
<CAPTION>

                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                            STATEMENTS OF CASH FLOWS
                                    (AUDITED)

                                                                                                                October 19, 2004
                                                                                       Year ended                (inception) to
                                                                                      December 31,                December 31,
                                                                                 2007               2006              2007
_________________________________________________________________________________________________________________________________

<S>                                                                          <C>                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                                                    $     (817,021)     $ (3,918,002)      $ (4,962,778)
  Adjustments to reconcile net loss to net cash used in operating
  activities:
     - Stock based compensation                                                           -         1,527,170          1,527,170
     - Impairment of oil and gas properties                                               -         1,273,410          1,273,410
CHANGES IN OPERATING ASSETS AND LIABILITIES
     - Decrease (increase) in prepaid expenses and other                            (29,136)          (13,755)           (42,891)
     - Due from related party                                                             -           200,000                  -
     - Due to / from related parties                                                191,086            28,083            229,169
     - Increase (decrease) in accounts payable and accrued liabilities              269,877            64,043            349,935
_________________________________________________________________________________________________________________________________

NET CASH USED IN OPERATING ACTIVITIES                                              (385,194)         (839,051)        (1,625,985)
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
  Oil and gas property expenditures                                              (1,479,032)         (903,393)        (2,682,425)
_________________________________________________________________________________________________________________________________

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                      (1,479,032)         (903,393)        (2,682,425)
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds on sale of common stock                                                      -         1,416,158          2,125,008
    Drilling Advances                                                               759,000                 -            759,000
    Advances from related parties                                                 1,115,500           325,000          1,440,500
_________________________________________________________________________________________________________________________________

NET CASH PROVIDED BY FINANCING ACTIVITIES                                         1,874,500         1,741,158          4,324,508
_________________________________________________________________________________________________________________________________

INCREASE (DECREASE)  IN CASH                                                         10,274            (1,286)            16,098

CASH, BEGINNING OF PERIOD                                                             5,824             7,110                  -
_________________________________________________________________________________________________________________________________

CASH, END OF PERIOD                                                          $       16,098      $      5,824       $     16,098
=================================================================================================================================


SUPPLEMENTAL CASH FLOW INFORMATION AND
  NONCASH INVESTING AND FINANCING ACTIVITIES:
     Cash paid for interest                                                  $            -      $          -       $
     Cash paid for income taxes                                              $            -      $          -       $
     Common stock issued for acquisition of oil and gas property             $            -      $    350,000       $    950,000
     Transfer of bond against settlement of debt                             $       25,000      $          -       $     25,000
     Non-cash sale of oil and gas property in property (Note 3)              $       65,000      $          -       $     65,000


</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       40

<PAGE>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
________________________________________________________________________________

Morgan Creek Energy Corp. (the  "Company") is an exploration  stage company that
was  organized to enter into the oil and gas  industry.  The Company  intends to
locate, explore, acquire and develop oil and gas properties in the United States
and within North America.  The primary  activity and focus of the Company is its
leases  in  Texas  ("Quachita  Prospect").  To date  the  Company  has  acquired
approximately  2,365 gross acres.  During the production  testing and evaluation
period on the first well on the property,  the Boggs #1, four of the five tested
zones produced  significant volumes of natural gas. Analysis of the gas indicate
a "sweet"  condensate rich gas with BTU values of 1,000. This quality will yield
a premium price over the current U.S.  average  natural gas price.  As formation
water was also produced  with the natural gas in the tested zones,  the Boggs #1
is currently under evaluation.

During the period the Company has begun leasing  acreage in New Mexico.  To date
the Company has acquired approximately 4800 gross acres.

GOING CONCERN
The Company  commenced  operations  on October 19, 2004 and has not realized any
revenues since inception. As of December 31, 2007 the Company has an accumulated
deficit of  $4,962,778  and a working  capital  deficiency  of  $2,684,702.  The
ability of the Company to continue as a going  concern is  dependent  on raising
capital  to fund  ongoing  operations  and  carry  out  its  business  plan  and
ultimately to attain  profitable  operations.  Accordingly,  these factors raise
substantial doubt as to the Company's ability to continue as a going concern. To
date the Company has funded its initial  operations by way of private placements
of common stock and advances from related  parties.  Subsequent to the period on
February 13, 2008 the company  converted  $1,515,214  of related  party debt and
accrued interest into 7,576,068 shares of common stock (refer to Note 6).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________

ORGANIZATION
The Company  was  incorporated  on October 19, 2004 in the State of Nevada.  The
Company's fiscal year end is December 31.

BASIS OF PRESENTATION
These financial  statements are presented in United States dollars and have been
prepared  in  accordance  with  United  States  generally  accepted   accounting
principles.

OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all costs related to the acquisition of methane,  petroleum,
and natural gas interests are capitalized. Under this method, all productive and
non-productive  costs  incurred  in  connection  with  the  exploration  for and
development of oil and gas reserves are capitalized. Such costs include land and
lease acquisition  costs,  annual carrying charges of non-producing  properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive  wells,  and direct  exploration  salaries and related  benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related  capitalized  costs without  recognition of a gain or loss unless
the  disposal  would  result in a change of 20 percent or more in the  depletion
rate. The Company currently operates solely in the U.S.

Depreciation  and depletion of proved oil and gas  properties is computed on the
units-of-production   method  based  upon  estimates  of  proved  reserves,   as
determined by  independent  consultants,  with oil and gas being  converted to a
common unit of measure based on their relative energy content.

                                       41
<PAGE>



                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

OIL AND GAS PROPERTIES (CONTINUED)
The costs of acquisition  and  exploration  of unproved oil and gas  properties,
including  any  related  capitalized   interest  expense,  are  not  subject  to
depletion,  but  are  assessed  for  impairment  either  individually  or  on an
aggregated  basis. The costs of certain  unevaluated  leasehold acreage are also
not  subject to  depletion.  Costs not  subject to  depletion  are  periodically
assessed for possible  impairment  or  reductions  in  recoverable  value.  If a
reduction in  recoverable  value has  occurred,  costs  subject to depletion are
increased or a charge is made  against  earnings  for those  operations  where a
reserve base is not yet established.

Estimated future removal and site  restoration  costs are provided over the life
of  proven  reserves  on  a  units-of-production  basis.  Costs,  which  include
production equipment removal and environmental  remediation,  are estimated each
period by management based on current regulations, actual expenses incurred, and
technology and industry  standards.  The charge is included in the provision for
depletion and depreciation and the actual  restoration  expenditures are charged
to the accumulated provision amounts as incurred.

The Company applies a ceiling test to capitalized  costs which limits such costs
to the aggregate of the estimated  present value,  using a ten percent  discount
rate of the estimated  future net revenues from production of proven reserves at
year end at market  prices less future  production,  administrative,  financing,
site  restoration,  and  income  tax costs  plus the lower of cost or  estimated
market value of unproved  properties.  If  capitalized  costs are  determined to
exceed estimated future net revenues,  a write-down of carrying value is charged
to depletion in the period.

ASSET RETIREMENT OBLIGATIONS
The Company has adopted the  provisions of SFAS No. 143,  "Accounting  for Asset
Retirement Obligations." SFAS No. 143 requires the fair value of a liability for
an asset  retirement  obligation  to be  recognized in the period in which it is
incurred  if a  reasonable  estimate of fair value can be made.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
related oil and gas properties

USE OF ESTIMATES
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those  estimates.  Significant  areas  requiring  management's
estimates  and  assumptions  are  the   determination   of  the  fair  value  of
transactions  involving  common  stock and  financial  instruments.  Other areas
requiring estimates include deferred tax balances and asset impairment tests.

FINANCIAL INSTRUMENTS
The fair  value of the  Company's  financial  assets and  financial  liabilities
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments.

EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding for the period.  Dilutive earnings (loss) per share reflects
the  potential  dilution of  securities  that could share in the earnings of the
Company.  Dilutive  earnings (loss) per share is equal to that of basic earnings
(loss) per share as the effects of stock options and warrants have been excluded
as they are anti-dilutive.

INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  Under
this method,  deferred tax assets and  liabilities are recognized for the future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
balances.  Deferred tax assets and  liabilities  are measured  using  enacted or
substantially  enacted tax rates  expected to apply to the taxable income in the
years in which those  differences  are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in income in the  period  that  includes  the date of  enactment  or
substantive  enactment.  As at December  31, 2007 the Company had net  operating
loss carryforwards,  however, due to the uncertainty of realization, the Company
has provided a full  valuation  allowance for the deferred tax assets  resulting
from these loss carryforwards.

                                       42
<PAGE>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

STOCK-BASED COMPENSATION
On January 1, 2006, the Company adopted the fair value recognition provisions of
Financial Accounting Standards Board ("FASB") Statement No. 123(R),  SHARE-BASED
PAYMENT,   ("SFAS   123R").   The   Company   adopted   SFAS   123R   using  the
modified-prospective-transition  method.  Under this method,  compensation  cost
recognized for the year ended December 31, 2006 includes:  a) compensation  cost
for all share-based payments granted prior to, but not yet vested as of December
31, 2005,  based on the grant-date  fair value  estimated in accordance with the
original  provisions of SFAS 123, and b)  compensation  cost for all share-based
payments  granted  subsequent to December 31, 2005, based on the grant-date fair
value  estimated in  accordance  with the  provisions of SFAS 123R. In addition,
deferred  stock  compensation  related to  non-vested  options is required to be
eliminated  against  additional  paid-in capital upon adoption of SFAS 123R. The
results for the prior periods have not been restated.  The Company's  results of
operations  for the year ended  December 31, 2006 were no different  than if the
Company had not adopted SFAS 123R because (i) there were no  previously  granted
stock options, and (ii) all stock options granted during the year ended December
31, 2006 were  granted to  consultants  with the related  fair value  accounting
consistent under SFAS 123 and SFAS 123R. As a result, no pro forma disclosure of
the impact of adopting SFAS 123R has been  provided for the year ended  December
31, 2006.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or services from other than  employees in accordance  with SFAS No. 123
and the conclusions  reached by the Emerging Issues Task Force ("EITF") in Issue
No.  96-18.  Costs  are  measured  at the  estimated  fair  market  value of the
consideration  received or the  estimated  fair value of the equity  instruments
issued,  whichever is more reliably measurable.  The value of equity instruments
issued for  consideration  other than  employee  services is  determined  on the
earliest  of a  performance  commitment  or  completion  of  performance  by the
provider of goods or services as defined by EITF 96-18.

RECENT ACCOUNTING PRONOUNCEMENT
In March  2008,  the FASB  issued SFAS No.  161,  DISCLOSURES  ABOUT  DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 161"). SFAS 161 is intended to improve
financial  reporting  about  derivative  instruments  and hedging  activities by
requiring  enhanced  disclosures to enable investors to better  understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows. SFAS 161 achieves these improvements by requiring  disclosure of the fair
values of derivative instruments and their gains and losses in a tabular format.
It also  provides  more  information  about an entity's  liquidity  by requiring
disclosure of  derivative  features that are credit  risk-related.  Finally,  it
requires  cross-referencing within footnotes to enable financial statement users
to locate important information about derivative  instruments.  SFAS 161 will be
effective for financial  statements  issued for fiscal years and interim periods
beginning after November 15, 2008,  will be adopted by the Company  beginning in
the  first  quarter  of  2009.  The  Company  does  not  expect  there to be any
significant  impact of adopting SFAS 161 on its financial  position,  cash flows
and results of operations.

In February 2007, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 159, THE FAIR VALUE  OPTION FOR  FINANCIAL
ASSETS AND FINANCIAL  LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO.
115 ("SFAS No. 159").  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve  financial  reporting  by providing  entities  with the  opportunity  to
mitigate  volatility in reported  earnings cause by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  This  Statement  is  expected  to  expand  the  use of  fair  value
measurement,   which  is  consistent  with  the  Board's  long-term  measurement
objectives for accounting for financial instruments. This statement is effective
as of the  beginning  of the  Company's  first  fiscal  year that  begins  after
November 15, 2007,  although earlier  adoption is permitted.  As of December 31,
2007,  the  Company  has not  adopted  this  statement  and  management  has not
determined the effect that adopting this  statement  would have on the Company's
financial position or results of operations.

In December  2007,  the FASB issued  SFAS No.  160,  NONCONTROLLING  INTEREST IN
CONSOLIDATED FINANCIAL STATEMENTS,  AN AMENDMENT OF ARB NO. 51 ("SFAS No. 160"),
which will change the  accounting  and reporting for minority  interests,  which
will  be  recharacterized  as  noncontrolling  interests  and  classified  as  a
component of equity  within the  consolidated  balance  sheets.  SFAS No. 160 is
effective as of the beginning of an entity's  first fiscal year  beginning on or
after  December 15, 2008.  Earlier  adoption is  prohibited.  Management has not
determined the effect that adopting this  statement  would have on the Company's
financial position or results of operations.


                                       43
<PAGE>



                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

In  December  2007,  the FASB  issued  SFAS No.  141  (Revised  2007),  BUSINESS
COMBINATIONS  ("SFAS No.  141R").  SFAS No. 141R will change the  accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the  acquisition-date  fair value with  limited  exceptions.  SFAS No. 141R will
change the accounting  treatment and disclosure for certain  specific items in a
business   combination.   SFAS  No.  141R  applies   prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
entity's first annual  reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations completed by the Company prior to January
1, 2009 will be recorded and disclosed  following existing GAAP.  Management has
not  determined  the  effect  that  adopting  this  statement  would have on the
Company's financial position or results of operations.

In  September  2006,  FASB issued SFAS No. 157,  FAIR VALUE  MEASURE  ("SFAS No.
157"). This Statement defines fair value,  establishes a framework for measuring
fair  value  in  generally  accepted  accounting   principles  (GAAP),   expands
disclosures  about fair value  measurements,  and applies under other accounting
pronouncements that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements.  However, the FASB anticipates that
for some entities, the application of SFAS No. 157 will change current practice.
SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November  15,  2007,  which for the Company is the fiscal year
beginning  January 1, 2008.  The Company is currently  evaluating  the impact of
adopting SFAS No. 157 but does not expect that it will have a significant effect
on its financial position or results of operations.

In  September  2006,  the FASB issued SFAS No. 158,  EMPLOYERS'  ACCOUNTING  FOR
DEFINED  BENEFIT  PENSION AND OTHER  POSTRETIREMENT  PLANS "SFAS No. 158".  This
Statement  requires  an employer to  recognize  the over funded or under  funded
status of a defined  benefit post  retirement  plan (other than a  multiemployer
plan) as an asset or liability in its  statement of financial  position,  and to
recognize  changes in that funded  status in the year in which the changes occur
through  comprehensive income. SFAS No. 158 is effective for fiscal years ending
after December 15, 2006.  The Company has  determined  that the adoption of this
standard  did not have any  impact on the  Company's  results of  operations  or
financial position.

In June 2006, FASB issued  Interpretation  No. 48, ACCOUNTING FOR UNCERTAINTY IN
INCOME  TAXES-AN  INTERPRETATION  OF FASB  STATEMENT  NO. 109 ("FIN  48").  This
Interpretation   clarifies  the  accounting  for  uncertainty  in  income  taxes
recognized in an enterprise's  financial  statements in accordance with FASB No.
109, "ACCOUNTING FOR INCOME TAXES." This Interpretation prescribes a recognition
threshold and measurement  attribute for the financial statement recognition and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
This  Interpretation  also provides guidance on  derecognition,  classification,
interest  and  penalties,   accounting  in  interim   periods,   disclosure  and
transition.  This  Interpretation  is effective for fiscal years beginning after
December 15, 2006.  The Company has  determined  that the adoption of FIN 48 did
not have any material impact on the Company's results of operations or financial
position.

NOTE 3 - OIL AND GAS PROPERTIES
________________________________________________________________________________

(A) QUACHITA PROSPECT
The Company leased various properties totalling  approximately 2,365 gross acres
within  the  Quachita  Trend  within the state of Texas for a three year term in
consideration  for $338,353.  The Company has a 100% Working  Interest and a 77%
N.R.I. in the leases.

BOGGS #1
On June 7,  2007 the  Company  began  drilling  its first  well on the  Quachita
Prospect  (Boggs #1). During the year the Company began  production  testing and
evaluation  of the well. Of the five tested  zones,  four  produced  significant
volumes of natural gas. As formation  water was also  produced  with the natural
gas in the tested zones, the Boggs # 1 is currently under evaluation. During the
year  $1,335,781  was incurred on drilling and  completion  expenditures  on the
Boggs #1. The Boggs #1 was privately funded with the funding investors receiving
a 75% Working  Interest and a 54% Net Revenue Interest in exchange for providing
100% of all drilling and completion  costs. For the year ended December 31, 2007
the  Company  had  incurred  $1,335,781  of costs  on Boggs #1 and had  received
$759,000 in funding from the private  investors..  As at December 31, 2007,  the
Company has retained a 25% Working Interest and a 19.25% Net Revenue Interest in
the Boggs #1.  Subsequent to year end, the Company  negotiated  with the funding
investors to acquire their interest in the well for an amount equal to the total
amount of their initial investment being

                                       44
<PAGE>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 3 - OIL AND GAS PROPERTIES (CONTINUED)
________________________________________________________________________________
$759,000 and  forgiveness of any additional  amounts owing.  Effective March 24,
2008, the Company completed this acquisition and settlement through the issuance
of 3,795,000 shares of common stock at $0.20 per share.

(B) PETERS RANCH LEASE
On January  30,  2007 the  Company  acquired a 100%  working  interest,  77% net
revenue interest,  in two fully equipped South Texas oil leases;  the Mata lease
in Webb County and the Peters  Ranch  located in Duval  County for  $55,000.  On
April 23,  2007 the  Company  reached  an  agreement  to sell the  property  for
$65,000.  By agreement  between the purchaser and a shareholder  of the Company,
the amounts owing under this agreement were offset against  amounts owing by the
Company to this shareholder (refer to Note 6).

(C) NEW MEXICO PROSPECT
The Company to date has leased various properties  totalling  approximately 4800
gross acres within the state of New Mexico for a five year term in consideration
for $52,083.  The Company has a 100% Working Interest and an 87.5% N.R.I. in the
leases.

NOTE 4 - STOCKHOLDERS' DEFICIT
________________________________________________________________________________

(A)      SHARE CAPITAL
The Company's  capitalization  is 100,000,000  common shares with a par value of
$0.001 per share.

On May 10, 2006, the directors of the Company  approved a special  resolution to
undertake a forward split of the common stock of the Company on a basis of 2 new
shares for 1 old share. On July 26, 2006, the directors of the Company  approved
a special resolution to undertake a further forward split of the common stock of
the Company on a basis of 2 new shares for 1 old share.

All references in these financial  statements to number of common shares,  price
per share and weighted average number of common shares  outstanding prior to the
2:1 forward  stock split on May 10, 2006 and the 2:1 forward  split on August 8,
2006 have been adjusted to reflect  these stock splits on a  retroactive  basis,
unless otherwise noted.

On December 19, 2006 a founding  shareholder of the Company returned  12,000,000
restricted  shares of common stock to treasury and the shares were  subsequently
cancelled  by  the  Company.  The  shares  were  returned  to  treasury  for  no
consideration to the shareholder.

(B)      PRIVATE PLACEMENTS
On November  26, 2004 the Company  issued  6,200,000  shares of common  stock at
$0.025 per share for proceeds of $155,000.

On December  15, 2004 the Company  issued  7,550,000  shares of common  stock at
$0.025 per share for proceeds of $188,750 and  2,640,800  shares of common stock
at $0.125 per share for proceeds of $330,100.

On March 9, 2005 the Company issued 280,000 shares of common stock at a price of
$0.125 per share for proceeds of $35,000.

On October 16, 2006 the Company  completed  a private  placement  consisting  of
944,105 units at $1.50 per unit for proceeds of  $1,416,158.  Each unit consists
of one common share and one non-transferable  share purchase warrant exercisable
at $3.00 per share for the period  commencing  on October 16, 2006 and ending on
October 16, 2008,  being the day which is the earlier of 24 months from the date
of  issuance  of the units or 18  months  from the  effective  date of a planned
registration statement.  Of this private placement,  563,333 of the units issued
were  in  exchange  for  $845,000  previously  advanced  to  the  Company  by  a
shareholder.  The  estimated  fair value of the warrants at the date of grant of
$592,210,  which has been included in additional paid in capital, was determined
using the  Black-Scholes  option pricing model with an expected life of 2 years,
risk  free  interest  rate of  4.49%,  a  dividend  yield of 0% and an  expected
volatility of 153%.

(C)      OTHER ISSUANCES
On February 13, 2008, the Company issued  7,576,068  shares of common stock at a
price of $0.20 per share on  settlement  of related  party  advance  and related
accrued interest totalling $1,515,214. (refer to Note 6)

On March 24,  2008,  the Company  issued  4,585,616  shares of common stock at a
price of $0.20 per share on settlement of related party advances and acquisition
of interest in the Boggs well


                                       45
<PAGE>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
________________________________________________________________________________

(D)      SHARE PURCHASE WARRANTS
Details of the Company's  share purchase  warrants  issued and outstanding as of
December 31, 2007 are as follows:

<TABLE>
<CAPTION>

  Exercise price     Weighted average price       Number of warrants to purchase shares                 Expiry Date
________________________________________________________________________________________________________________________________

<S>                           <C>                                <C>                                 <C>
      $3.00                   $3.00                              944,105                             October 16, 2008


</TABLE>

The Company's share purchase  warrants activity for the years ended December 31,
2007 and 2006 is summarized as follows:

<TABLE>
<CAPTION>

                                                                 Weighted average exercise        Weighted average remaining
                                         Number of Warrants           Price per share           In contractual life (in years)
________________________________________________________________________________________________________________________________

<S>                                            <C>                              <C>                                 <C>
Balance, December 31, 2005                           -                          $    -                                 -
Issued                                         944,105                            3.00                                 -
Expired                                              -                               -                                 -
Exercised                                            -                               -                                 -
________________________________________________________________________________________________________________________________

Balance, December 31, 2006                     944,105                            3.00                              1.80
Issued                                               -                               -                                 -
Expired                                              -                               -                                 -
Exercised                                            -                               -                                 -
________________________________________________________________________________________________________________________________

Balance, December 31, 2007                     944,105                          $ 3.00                              1.80
================================================================================================================================
</TABLE>

All Warrants are exercisable as of December 31, 2007


NOTE 5 - STOCK OPTION PLAN
________________________________________________________________________________

On April 3, 2006 the Board of  Directors of the Company  ratified,  approved and
adopted a Stock  Option Plan for the Company in the amount of  5,000,000  shares
with an exercisable period up to 10 years. In the event an optionee ceases to be
employed by or to provide  services to the Company for reasons other than cause,
any Stock  Option  that is vested and held by such  optionee  maybe  exercisable
within up to ninety  calendar  days after the  effective  date that his position
ceases. No Stock Option granted under the Stock Option Plan is transferable. Any
Stock  Option held by an optionee at the time of his death may be  exercised  by
his estate  within one year of his death or such  longer  period as the Board of
Directors may determine.

As approved by the Board of directors, on December 12, 2006, the Company granted
1,850,000  stock options to certain  officers,  directors and  management of the
Company at $1.10 per share.  The term of these options are five years. The total
fair value of these  options at the date of grant was estimated to be $1,527,170
and was recorded as a stock based  compensation  expense  during 2006.  The fair
value of these  options was estimated  using the  Black-Scholes  option  pricing
model  with the  following  assumptions:  expected  life of 3 years;  risk  free
interest rate of 4.49%; dividend yield of 0% and expected volatility of 187%.

                                       46
<PAGE>


                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 5 - STOCK OPTION PLAN (CONTINUED)
________________________________________________________________________________

The Company's  stock option  warrants  activity for the years ended December 31,
2007 and 2006 is summarized as follows:

<TABLE>
<CAPTION>

                                                                 Weighted average exercise        Weighted average remaining
                                         Number of Options            Price per share           In contractual life (in years)
________________________________________________________________________________________________________________________________

<S>                                          <C>                                <C>                                <C>
Balance, December 31, 2005                           -                          $    -                                 -
Granted                                      1,850,000                            1.10                                 -
Expired                                              -                               -                                 -
Exercised                                            -                               -                                 -
________________________________________________________________________________________________________________________________

Balance, December 31, 2006                   1,850,000                            1.10                              4.95
Granted                                              -                               -                                 -
Expired                                              -                               -                                 -
Exercised                                            -                               -                                 -
________________________________________________________________________________________________________________________________

Balance, December 31, 2007                   1,850,000                          $ 1.10                              4.95
================================================================================================================================
</TABLE>

All options are exercisable as of December 31, 2007.


NOTE 6 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________

INTERNATIONAL MARKET TREND, INC. ("IMT")
An officer  and  director of IMT, a private  company,  is a  shareholder  of the
Company. During the year ended December 31, 2007 the Company incurred consulting
fees of $120,000 to IMT (December 31, 2006 - $167,500). In addition,  during the
year IMT advanced the Company  $6,000.  As of December 31, 2007 the Company owed
IMT  $56,873  which  is  unsecured  non-interest  bearing,  and has no  specific
repayment  terms.  Subsequent  to the period the  Company  converted  $86,873 in
consulting  fees and advances  through the issuance of 434,366  common shares of
the Company at $0.20 per share (Refer Note 4).

During the year ended  December 31, 2007 a shareholder  of the Company  advanced
$10,000 to the Company.  In addition,  as at December 31, 2007, $71,250 is owing
to the President of the Company for expenses incurred by the President on behalf
of the Company.  These  amounts are unsecured  non-interest  bearing and without
specific repayment terms.

As at  December  31,  2006,  $325,000  was owing to a separate  shareholder  for
advances  made  to the  Company.  During  the  year,  December  31,  2007,  this
shareholder made further advances to the Company of $1,130,500. In addition, the
$65,000  proceeds on disposal of the Peters Ranch Lease (as described in Note 3)
were offset  against these amounts owing by agreement  between this  shareholder
and the purchaser,  as well as the assignment of the $25,000 Railroad Commission
bond.  As a result,  as of December  31, 2007  $1,365,500  was owing which bears
interest at 8% per annum and has no specific repayment terms. As of December 31,
2007 total accrued interest was $66,456 (December 31, 2006 - $1,211).

Subsequent  to December 31, 2007,  the above  advances,  accrued  interest,  and
further advances from this shareholder that were received in January 2008, for a
total  of  $1,515,214  were  assigned  to  other  parties.  These  amounts  were
subsequently  settled by the Company through the issuance of 7,576,068 shares of
the  Company's  common  stock at $0.20  per  share  (Refer  Note 8-  "Subsequent
Events").


MANAGEMENT FEES
During the year ended December 31, 2007, the Company paid officers and directors
$311,250 for management fees (2006 -$311,707).

As part of their  compensation  agreements  the  Company's  chief  Geologist and
Operations Manager (hereafter  referred to as "Executives") each receives and is
assigned at the time of acquisition up to a 1.5% overriding  royalty interest in
any oil and gas  properties  which are directly  introduced by the Executives to
the  Company.  During the year ended  December  31,  2007 the  Company  recorded
related additional compensation to the Executives of $1,739 (2006 - $nil), being
the estimated cost of royalty interests earned during the year.

                                       47
<PAGE>



                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)
________________________________________________________________________________

MANAGEMENT FEES (CONTINUED)
Subsequent to the period the Company converted $71,250 of management fees of the
President of the Company  through the issuance of 356,250  common  shares of the
Company at $0.20 per share (Refer to Note 4 and Note 8).

NOTE 7 - INCOME TAXES
________________________________________________________________________________

The Company has adopted the FASB No. 109 for reporting purposes.  As of December
31,  2007,  and 2006 the  Company  had net  operating  loss  carry  forwards  of
approximately  $2,162,000 and $1,345,177,  respectively that may be available to
reduce future years' taxable income through 2027.  Future tax benefits which may
arise as a result of these losses have not been  recognized  in these  financial
statements,  as  their  realization  is  determined  not  likely  to  occur  and
accordingly, the Company has recorded a valuation allowance for the deferred tax
asset relating to these tax loss carryforwards.

At December 31, 2007 and 2006,  the Company had a federal  operating  loss carry
forward of $2,162,198 and $1,345,177, respectively.

The provision for income taxes  consisted of the  following  components  for the
years ended December 31:
                                         2007                    2006
                                  ___________________    _____________________
Current:
     Federal                                      --                       --
                                                  --
     State                                                                 --
Deferred:                                         --                       --
                                  ___________________    _____________________
                                                  --                       --
_________

Components of net deferred tax assets,  including a valuation allowance,  are as
follows at December 31:

                                          2007                  2006
                                  ___________________    _____________________
Deferred tax assets:
Net operating loss carryforward         $  2,162,198              $ 1,345,177

                                                  --                       --
                                  ___________________    _____________________
      Total deferred tax assets              756,769                  470,812


Less: Valuation Allowance                   (756,769)                (470,812)
                                  ___________________    _____________________
    Net Deferred Tax Assets             $         --            $          --

The valuation allowance for deferred tax assets as of December 31, 2007 and 2006
was  $756,769  and  $470,812,  respectively.  In  assessing  the recovery of the
deferred  tax assets,  management  considers  whether it is more likely than not
that some portion or all of the  deferred  tax assets will not be realized.  The
ultimate  realization of deferred tax assets is dependent upon the generation of
future taxable income in the periods in which those temporary differences become
deductible.  Management considers the scheduled reversals of future deferred tax
assets,  projected future taxable income, and tax planning  strategies in making
this assessment.  As a result, management determined it was more likely than not
the deferred tax assets would be realized as of December 31, 2007 and 2006.
________________________________________________________________________________

                                       48
<PAGE>



                            MORGAN CREEK ENERGY CORP.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007
________________________________________________________________________________


Reconciliation  between  the  statutory  rate and the  effective  tax rate is as
follows at December 31:

                                             2007                   2006
                                       __________________     _________________

Federal statutory tax rate                       (35.0)%               (34.0)%
                                       __________________     _________________
Change in valuation allowance                      35.0%                 35.0%
                                       __________________     _________________

Effective tax rate                                    0%                    0%



NOTE 8 - SUBSEQUENT EVENTS
________________________________________________________________________________

OTHER ISSUANCES
On February 13, 2008, the Company issued  7,576,068  shares of common stock at a
price of $0.20 per share on  settlement  of related  party  advance  and related
accrued interest totalling $1,515,214. (refer to Note 6)

On March 24,  2008,  the Company  issued  4,585,616  shares of common stock at a
price of $0.20 per share on settlement of related party advances and acquisition
of interest in the Boggs well


                                       49

<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

Effective July 31, 2007, our Board of Directors accepted the resignation of Dale
Matheson  Carr-Hilton  LaBonte  LLP,  Chartered  Accountants  ("DMCL"),  as  our
principal  independent  registered public accounting firm. On the same date, our
Board of Directors  appointed De Joya  Griffith & Company,  LLC as our principal
independent  registered  public  accounting  firm.

The reports of DMCL on our  consolidated  financial  statements  for each of the
fiscal years ended December 31, 2005 and 2006 did not contain an adverse opinion
or disclaimer of opinion, nor were they modified as to uncertainty,  audit scope
or accounting principles, other than to state that there is substantial doubt as
to our  ability to continue as a going  concern.  During our fiscal  years ended
December 31, 2005 and 2006, and during the subsequent period through to the date
of DMCL's resignation,  there were no disagreements between us and DMCL, whether
or not resolved, on any matter of accounting principles or practices,  financial
statement disclosure, or auditing scope or procedure,  which, if not resolved to
the  satisfaction of DMCL,  would have caused DMCL to make reference  thereto in
their reports on our audited consolidated financial statements.

We provided DMCL with a copy of a Current  Report on Form 8-K and requested that
DMCL  furnish  us  with a  letter  addressed  to  the  Securities  and  Exchange
Commission  stating  whether or not DMCL agrees with the statements  made in the
Current Report on Form 8-K with respect to DMCL and, if not, stating the aspects
with which they do not agree. We received the requested letter from DMCL wherein
they have  confirmed  their  agreement to our  disclosures in the Current Report
with  respect  to DMCL.  A copy of DMCL's  letter was filed as an exhibit to the
Current Report.

In connection  with our  appointment  of De Joya Griffith & Company,  LLC as our
principal registered accounting firm at this time, we have not consulted De Joya
Griffith & Company,  LLC on any matter relating to the application of accounting
principles to a specific transaction,  either completed or contemplated,  or the
type of audit opinion that might be rendered on our financial statements.

ITEM 8A. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was conducted under the supervision and with the  participation of
our management,  including Marcus Johnson,  our Chief Executive  Officer ("CEO")
and D. Bruce Horton,  our Chief Financial Officer ("CFO"),  of the effectiveness
of the design and  operation of our  disclosure  controls and  procedures  as of
December  31,  2007.  Based  on that  evaluation,  Messrs.  Johnson  and  Horton
concluded that our disclosure  controls and procedures  were not effective as of
such date to ensure that  information  required to be  disclosed  in the reports
that  we file  or  submit  under  the  Exchange  Act,  is  recorded,  processed,
summarized  and  reported  within the time  periods  specified  in SEC rules and
forms.  Such  officers  also  confirm  that there was no change in our  internal
control over  financial  reporting  during the year ended December 31, 2007 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.

AUDIT COMMITTEE REPORT


                                       50

<PAGE>


The Board of Directors has  established an audit  committee.  The members of the
audit  committee are Mr. Marcus  Johnson,  Mr.  Stephen  Jewett and Mr. D. Bruce
Horton and. One of the three  members of the audit  committee  is  "independent"
within the meaning of Rule 10A-3 under the Exchange Act. The audit committee was
organized in November 20, 2004 and operates under a written  charter  adopted by
our Board of Directors.

The audit  committee  has reviewed and  discussed  with  management  our audited
financial  statements  as of and for fiscal year ended  December 31,  2007.  The
audit  committee has also  discussed  with De Joya  Griffith & Company,  LLC the
matters  required to be discussed by  Statement  on Auditing  Standards  No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public  Accountants.  The audit committee
has received and  reviewed the written  disclosures  and the letter from De Joya
Griffith & Company, LLC required by Independence Standards Board Standard No. 1,
Independence  Discussions with Audit Committees,  as amended,  and has discussed
with De Joya Griffith & Company, LLC their independence.

Based on the reviews and discussions  referred to above, the audit committee has
recommended  to the Board of  Directors  that the audited  financial  statements
referred  to above be  included  in our Annual  Report on Form 10-KSB for fiscal
year ended December 31, 2007 filed with the Securities and Exchange Commission.

We maintain "disclosure controls and procedures," as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"),
that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. We
conducted an evaluation (the "Evaluation"), under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer of the
effectiveness of the design and operation of our disclosure controls and
procedures ("Disclosure Controls") as of the end of the period covered by this
report pursuant to Rule 13a-15 of the Exchange Act. The evaluation of our
disclosure controls and procedures included a review of the disclosure controls'
and procedures' objectives, design, implementation and the effect of the
controls and procedures on the information generated for use in this report. In
the course of our evaluation, we sought to identify data errors, control
problems or acts of fraud and to confirm the appropriate corrective actions, if
any, including process improvements, were being undertaken. Our Chief Executive
Officer and our Chief Financial Officer concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were
effective and were operating at the reasonable assurance level.

ITEM 8A(T)

Not applicable.

ITEM 8B. OTHER INFORMATION

Not applicable.

                                    PART III

ITEM 9. DIRECTORS,  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
        GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

All of our directors  hold office until the next annual  general  meeting of the
shareholders or until their  successors are elected and qualified.  Our officers
are  appointed  by our board of directors  and hold office  until their  earlier
death, retirement, resignation or removal.

Our directors and executive officers, their ages, positions held are as follows:


                                       51

<PAGE>



NAME                     AGE    POSITION WITH THE COMPANY

Marcus M. Johnson         59    President, Chief  Executive Officer/Principal
                                Executive Officer and a Director and Chairman
                                of the Board

D. Bruce Horton           63    Secretary/Treasurer, Chief Financial Officer,
                                Principal Accounting Officer, Stock Option Plan
                                Administrator and a Director

Thomas A. Markham II      57    Chief Geologist and a Director

Stephen Jewett            69    Director

Erik Essiger              42    Director

BUSINESS EXPERIENCE

The following is a brief  account of the  education  and business  experience of
each director,  executive officer and key employee during at least the past five
years,  indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he or she was employed,
and including other directorships held in reporting  companies.

MARCUS  JOHNSON:  Mr.  Johnson  has  been  our  President  and  Chief  Executive
Officer/Principal  Executive Officer and a director and Chairman of our Board of
Directors since October 25, 2006. Mr.  Johnson,  AIA, has previously been active
in  management  in both the  private  and  public  sectors  as a  consultant  to
management with an emphasis on investor relations and awareness. Mr. Johnson has
performed consulting services for Intergold Corporation,  now known as Lexington
Resources,   Inc.,  and   Vega-Atlantic   Corporation,   now  known  as  Transax
International  Limited. Mr. Johnson is a professional  architect and a member of
the American  Institute of  Architects.  Mr.  Johnson has been the  professional
architectural  consultant  of record on  various  commercial  projects  and is a
consultant to Exterior Research & Design, LLC, where he is currently retained as
an expert for determining  architectural  management  standards.  Mr. Johnson is
also the chief executive  officer and director to Geneva  Resources,  Inc. since
October 2006.

D. BRUCE HORTON has been one of our  directors and our  Secretary/Treasurer  and
Chief Financial Officer and Principal  Accounting Officer since August 21, 2006.
During the past five years, Mr. Horton has been active in the financial arena in
both the private and public  sectors as an accountant  and financial  management
consultant with an emphasis on corporate financial reporting,  financing and tax
planning.  Mr. Horton has specialized in corporate management,  re-organization,
merger and acquisition,  international  tax structuring,  and public and private
financing  for over thirty  years.  From 1972  through  1986,  Mr.  Horton was a
partner in a public  accounting firm. In 1986, Mr. Horton co-founded the Clearly
Canadian  Beverage  Corporation,  of which he was a director and chief financial
officer  from June 1986 to May 1997.  He is a  principal  consultant  in Calneva
Financial  Services  Ltd.  that provides  accounting  and  financial  management
consulting  services as well as investment  banking services focusing on venture


                                       52

<PAGE>

capital  opportunities  in Asia.  Mr.  Horton is also an officer and director of
Geneva  Resources,  Inc.  since May 2006 and an officer and  director of Uranium
International Corp. since July 2007, which both are publicly traded companies.


THOMAS ALDEN MARKHAM II: Mr. Markham has been our Chief Geologist and one of our
directors  since  August  21,  2006.  Mr.  Markham is a  professional  geologist
specializing   evaluations   and   management  of  oil  and  gas  plays  in  the
mid-continental  U.S.  Since  receiving his Masters of Geology,  Mr. Markham has
focused on oil and gas plays.  He began his career working with BEPCO,  ARCO and
then TENNECO,  acting as geologist on a wide range of projects  spanning over 12
years of development on leading plays including the Pinon,  Allen Hill,  Brunson
Ranch, J.D. Shale, Brown Bassett Extension and NYY projects. During this period,
he directed 15 Ph D-level geologists and managed  exploration  budgets up to $21
million.  Mr.  Markham has  recently  acted as Chief  Geologist in charge of the
supervision  and  generation  of a  21,000  acre  Pennsylvanian  gas play in the
Permian  Basin.  Mr.  Markham was  instrumental  in the play's  development  and
finalized  negotiations  with the Osage Tribe of Oklahoma for drilling rights on
57-quarter  sections  (9,120  acres).  He has  been an  independent  oil and gas
geologist  managing  project  generation and evaluation for various industry and
non-industry groups primarily in the Mid Continent. Mr. Markham has successfully
drilled and completed  proprietary prospects (while providing the supervision of
seismic, leasing, drilling, completion, and production activities) of 88 oil and
gas wells (to 10,500') in Texas, New Mexico, and Oklahoma. He was the generating
geologist  of a 5 TCFG  overthrust  play in Central  Texas,  he  finalized a New
Mexico San Andres  stratigraphic  play (50 to 100 MMBO at 4,000')  and a Permian
Basin  Devonian  structural  play and managed the  screening  and  evaluation of
Springer - Atoka sub-basin  prospects of the Anadarko Basin (3-D). Mr. Markham's
work has been published in the American Gas Journal and he has been invited on a
technical  tour of the former Soviet Union to review oil and gas assets.  He was
also guest speaker at the American  Association  of Petroleum  Landman's  (AAPL)
"Buying  Oil and Gas  Properties"  seminar.  He  continues  to carry out Reserve
Evaluation for non-industry groups including the FDIC (Federal Deposit Insurance
Corp. - Wichita and Dallas Branches) and the IRS (Internal Revenue Service). Mr.
Markham is not a director or officer of any other U.S. reporting company.

STEVE JEWETT has been one of our directors  and a member of our Audit  Committee
since October 2004. From 1978 to the current date, Mr. Jewett has been the owner
and independent  operator of Stephen Jewett - Chartered  Accountant.  During his
career,  Mr.  Jewett was  auditor of several  public  companies,  and  currently
focuses  on tax  related  engagements.  Mr.  Jewett  received  his  degree  as a
Chartered  Accountant  from the  Institute of Chartered  Accountants  of British
Columbia and is our Audit  Committee's  financial  expert.  Mr. Jewett is also a
director and audit committee member to Geneva Resources, Inc., since May 2006.

ERIK ESSIGER has been one of our directors  since August 21, 2006.  Mr.  Essiger
has more than fifteen years of experience in corporate finance and lead advisory
services relating to strategic and commercial development projects across a wide
variety  of  sectors  and  including,  in  particular,  within  the  industrial,
automotive,  business  services,  retail and  consumer  goods  sectors.  In this
respect Mr. Essiger has performed  various  commercial and strategy  services as
both an external  consultant  and as a board member and  managing  director of a
number of companies,  including a venture capital company.  During the past five
years Mr.  Essiger  has been:  (i) the  Managing  Director  and the  founder  of


                                       53

<PAGE>

Precisetech  GmbH, a corporate finance advisory company focused on international
M&A  transactions  (from  October  2004  to  present);  (ii)  a  member  of  the
Supervisory Board of Corix Capital AG (from December 2003 to present); (iii) the
Senior Manager, Transaction Services Strategy Group, with PricewaterhouseCoopers
AG,  heading  up the  commercial  and due  diligence  practice  of that group in
Germany which  provided  services  mainly to private  equity clients of the firm
(from April 2003 to September  2004);  and (iv) a member of the Executive  Board
(Vorstand)  of MultiMedia  Technologies  AG, a producer of  set-top-boxes  and a
company  operating  in the  fields of  interactive  digital  television  and the
streaming  media  market  (from  July 2000 to July  2002) Mr.  Essiger  also has
extensive  international  experience in corporate  restructuring;  especially in
Germany,  Russia,  Hong  Kong  and  Switzerland;  and  he  was a  member  of the
German-Russian  co-operation  council. Mr. Essiger is also a director of Uranium
Energy Corp., a publicly traded company.

FAMILY RELATIONSHIPS

There are no family relationships among our directors or officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

During the past five years, none of our directors, executive officers or persons
that may be deemed  promoters is or have been  involved in any legal  proceeding
concerning:  (i) any  bankruptcy  petition  filed by or against any  business of
which such person was a general partner or executive  officer either at the time
of the bankruptcy or within two years prior to that time; (ii) any conviction in
a  criminal  proceeding  or  being  subject  to a  pending  criminal  proceeding
(excluding traffic violations and other minor offenses);  (iii) being subject to
any order, judgment or decree, not subsequently reversed,  suspended or vacated,
of any court of competent  jurisdiction  permanently or  temporarily  enjoining,
barring,  suspending or otherwise limiting  involvement in any type of business,
securities or banking  activity;  or (iv) being found by a court, the Securities
and Exchange  Commission or the  Commodity  Futures  Trading  Commission to have
violated a federal or state  securities or commodities law (and the judgment has
not been reversed, suspended or vacated).

COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE

As of the date of this Annual Report, Messrs.  Johnson,  Markham and Jewett have
been appointed as members to our audit  committee.  Two of the three members are
"independent" within the meaning of Rule 10A-3 under the Exchange Act and are in
addition financial experts. The audit committee operates under a written charter
adopted by the Board of Directors on November 20, 2004.

The audit committee's  primary function is to provide advice with respect to our
financial  matters  and to  assist  the Board of  Directors  in  fulfilling  its
oversight responsibilities regarding finance,  accounting, and legal compliance.
The audit committee's primary duties and responsibilities  will be to: (i) serve
as an independent and objective party to monitor our financial reporting process
and internal  control system;  (ii) review and appraise the audit efforts of our
independent  accountants;  (iii) evaluate our quarterly financial performance as


                                       54

<PAGE>

well as our  compliance  with laws and  regulations;  (iv) oversee  management's
establishment and enforcement of financial policies and business practices;  and
(v) provide an open avenue of communication  among the independent  accountants,
management and the Board of Directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our  directors and officers,  and the
persons who  beneficially own more than ten percent of our common stock, to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.  Copies of all filed  reports  are  required to be  furnished  to us
pursuant to Rule 16a-3  promulgated  under the Exchange Act. Based solely on the
reports received by us and on the  representations of the reporting persons,  we
believe that these persons have complied with all applicable filing requirements
during the fiscal year ended December 31, 2007.

ITEM 10. EXECUTIVE COMPENSATION

The  following  table sets forth the  compensation  paid to our Chief  Executive
Officer and those  executive  officers that earned in excess of $100,000  during
fiscal  years  ended  December  31,  2007 and  2006  (collectively,  the  "Named
Executive Officers"):

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

_______________________________________________________________________________________________________________________________
                                                                     NON-EQUITY    NON-QUALIFIED     ALL OTHER
                                                                   INCENTIVE PLAN     DEFERRED     COMPENSATION
                                                                    COMPENSATION    COMPENSATION
NAME AND                                       STOCK                                  EARNINGS
PRINCIPAL                  SALARY    BONUS    AWARDS    OPTION                                                       TOTAL
POSITION          YEAR    ($) (1)     ($)       ($)     AWARDS ($)       ($)            ($)             ($)         ($) (2)
_______________________________________________________________________________________________________________________________
<S>               <C>         <C>      <C>       <C>     <C>             <C>           <C>             <C>          <C>
Marcus            2006       -0-      -0-       -0-      412,748                                                    $412,748
Johnson,
President and
CEO               2007    $71,250     -0-       -0-        -0-           ---            ---             ---           71,250
_______________________________________________________________________________________________________________________________

Thomas
Markham, Chief
Geologist         2007   $120,869     -0-       -0-        -0-           ---            ---             ---         $120,869
_______________________________________________________________________________________________________________________________

<FN>

(1)  This  amount  represents  fees paid by us to the Named  Executive  Officers
     during the past year pursuant to consulting services provided in connection
     with  their  respective  position  as Chief  Executive  Officer  and  Chief
     Geologist. During fiscal year ended December 31, 2007, we paid: (i) $71,250
     to Marcus Johnson,  our Chief Executive  Officer;  and (ii) $120,000 and an
     additional  $869 in  accordance  with the 1.5%  royalty  interest to Thomas
     Markham,  our Chief Geologist.  During fiscal year ended December 31, 2006,


                                       55

<PAGE>

     we also paid certain executive  officers the following  amounts,  which did
     not exceed  $100,000  and,  therefore,  not required to be disclosed in the
     Summary  Compensation  Table:  (i)  $60,000  and an  additional  $4,795  in
     accordance  with the 1.5%  royalty  interest to Thomas  Markham,  our Chief
     Geologist;  and (ii) $35,000 to Grant Atkins,  our previous Chief Financial
     Officer.  Effective March 24, 2008, we also settled an aggregate  amount of
     $71,250  in debt due and owing to Mr.  Johnson by the  issuance  of 356,250
     shares of our restricted common stock at $0.20 per share.

(2)  This amount represents the fair value of these options at the date of grant
     which was estimated using the Black-Scholes option pricing model.

</FN>
</TABLE>


STOCK OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2007

The following  table sets forth  information as at December 31, 2007 relating to
options that have been granted to the Named Executive Officers:

<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
                                          OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
___________________________________________________________________________________________________________________________________
                                                OPTION AWARDS                                    STOCK AWARDS
                                                                                                                        Equity
                                                                                                                        Incentive
                                                                                                           Equity       Plan
                                                                                                           Incentive    Awards:
                                                                                                           Plan         Market or
                                                                                                           Awards:      Payout
                                             Equity                                              Market    Number of    Value of
                                             Incentive Plan                                      Value of  Unearned     Unearned
                 Number of    Number of      Awards: Number                          Number of   Shares    Shares,      Shares,
                 Securities   Securities     of Securities                           Shares or   or Units  Units or     Units or
                 Underlying   Underlying     Underlying                              Units of    of Stock  Other        Other
                 Unexercised  Unexercised    Unexercised     Option                  Stock That  That      Rights That  Rights That
                 Options      Options        Unearned        Exercise  Option        Have Not    Have Not  Have Not     Have Not
                 Exercisable  Unexercisable  Options         Price     Expiration    Vested      Vested    Vested       Vested
Name                 (#)          (#)            (#)           ($)     Date            (#)        ($)        (#)          (#)
___________________________________________________________________________________________________________________________________
<S>               <C>             <C>           <C>           <C>      <C>            <C>         <C>        <C>           <C>
Marcus Johnson                                                         December 15,
President/CEO     500,000         -0-           -0-           1.10     2011           -0-         -0-        -0-           -0-
___________________________________________________________________________________________________________________________________

</TABLE>


                                       56

<PAGE>

The following table sets forth information  relating to compensation paid to our
directors during fiscal year ended December 31, 2007 and 2006:

<TABLE>
<CAPTION>

DIRECTOR COMPENSATION TABLE
_____________________________________________________________________________________________________________________________
                                                                             Change in
                                                                             Pension
                                                                             Value and
                      Fees                                Non-Equity         Nonqualified
                      Earned or                           Incentive          Deferred              All
                      Paid in     Stock      Option       Plan               Compensation         Other
                      Cash        Awards     Awards       Compensation       Earnings          Compensation       Total
Name                    ($)        ($)         ($)              ($)              ($)                ($)             ($)
_____________________________________________________________________________________________________________________________
<S>                   <C>           <C>      <C>                <C>              <C>               <C>         <C>
Marcus Johnson,
Chairman                                     (3)
  2006                    -0-       -0-      $412,748           -0-              -0-               -0-          $412,748
  2007                    -0-       -0-          -0-            -0-              -0-               -0-               -0-
_____________________________________________________________________________________________________________________________
Thomas Markham        (1)            -0-        (3)             -0-              -0-               -0-          $477,543
   2006               $64,794        -0-     $412,748           -0-              -0-               -0-               -0-
   2007                   -0-                    -0-
_____________________________________________________________________________________________________________________________
Erik Essinger         (2)             -0-    (3)                -0-              -0-               -0-          $303,492
   2006                97,118         -0-    $206,374           -0-              -0-               -0-               -0-
   2007                   -0-                      -0-
_____________________________________________________________________________________________________________________________
Steve Jewett               -0-      -0-      (3)                -0-              -0-               -0-          $ 41,275
  2006                     -0-      -0-       $41,275           -0-              -0-               -0-               -0-
  2007                                             -0-
_____________________________________________________________________________________________________________________________
D. Bruce Horton           -0-       -0-      (3)                -0-              -0-               -0-          $ 41,275
  2006                    -0-       -0-       $41,275           -0-              -0-               -0-               -0-
  2007                                             -0-
_____________________________________________________________________________________________________________________________

<FN>
     (1)Thomas  Markham  received  these  fess  as  executive   compensation  in
         connection with his role as our Chief Geologist.

     (2)Erik Essiger received this  compensation for services  rendered to us in
         connection with business  related  consulting and promotional  services
         performed in Europe on our behalf.

     (3)This amount  represents  the fair value of these  options at the date of
         grant which was estimated using the Black-Scholes option pricing model.

</FN>
</TABLE>


                                       57

<PAGE>

EMPLOYMENT AND CONSULTING AGREEMENTS

MARKHAM CONSULTING SERVICES AGREEMENT

On  approximately  August 1, 2006, we entered into a  month-to-month  consulting
services  agreement  with Thomas  Markham,  our Chief  Geologist  (the  "Markham
Consulting  Services  Agreement").  In  accordance  with the  verbal  terms  and
provisions of the Markham Consulting Services  Agreement:  (i) Mr. Markham shall
provide to us all necessary  services and perform all duties associated with his
executive  position  as Chief  Geologist;  (ii) we shall  pay to Mr.  Markham  a
monthly fee of  $10,000;  and (iii) Mr.  Markham  shall  receive a 1.5%  royalty
interest in all properties Mr. Markham  introduces to us which are  subsequently
acquired by us.

During fiscal year ended  December 31, 2007, we paid an aggregate of $120,000 to
Mr.  Markham  in  accordance  with the  monthly  fee and an  additional  $870 in
accordance with the amounts earned under the royalty interest

During  fiscal year ended  December 31, 2006, we paid an aggregate of $60,000 to
Mr.  Markham in  accordance  with the  monthly fee and an  additional  $4,795 in
accordance with the amounts earned under the royalty interest

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

As of the date of this Annual  Report,  the  following  table sets forth certain
information with respect to the beneficial ownership of our common stock by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock and by each of our current directors and executive  officers.  Each person
has sole voting and investment power with respect to the shares of common stock,
except  as  otherwise  indicated.  Beneficial  ownership  consists  of a  direct
interest in the shares of common stock, except as otherwise indicated. As of the
date of this Annual Report,  there are 41,976,589  shares of common stock issued
and outstanding.

<TABLE>
<CAPTION>

                                                         AMOUNT AND NATURE OF          PERCENTAGE OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                 BENEFICIAL OWNERSHIP(1)                OWNERSHIP
DIRECTORS AND OFFICERS:

<S>                                                          <C>                                <C>
Marcus Johnson                                               3,870,650 (2)                       8.83%
2020 Prospect Way
Bellingham, Washington 98229


                                       58


<PAGE>

D. Bruce Horton                                               387,500 (3)                        0.88%
2443 Alder Street
Vancouver, British Columbia
Canada, V6H 4A4

Thomas Markham                                               1,125,000(4)                        2.57%
8801 Christian Court
Plano, Texas 75025

Erik Essiger                                                   500,000(5)                        1.14%
P.O. Box 37491
Dubai
United Arab Emeriates

Steve Jewett                                                    50,000(6)                        0.11 %
1201-1633 West 8th Avenue
Vancouver, British Columbia
Canada V6J 5H7

All executive officers and directors as a group (5           5,933,150(7)                       13.53%
persons)

<FN>

*     Less than one percent.
     (1) Under Rule 13d-3, a beneficial owner of a security  includes any person
         who,  directly  or  indirectly,  through  any  contract,   arrangement,
         understanding,  relationship,  or otherwise  has or shares:  (i) voting
         power,  which  includes  the power to vote,  or to direct the voting of
         shares;  and (ii) investment power, which includes the power to dispose
         or direct the disposition of shares. Certain shares may be deemed to be
         beneficially  owned by more than one person (if, for  example,  persons
         share the  power to vote or the power to  dispose  of the  shares).  In
         addition, shares are deemed to be beneficially owned by a person if the
         person has the right to acquire the shares (for example,  upon exercise
         of an option) within 60 days of the date as of which the information is
         provided.  In computing  the  percentage  ownership of any person,  the
         amount of shares  outstanding is deemed to include the amount of shares
         beneficially  owned by such person (and only such  person) by reason of
         these acquisition  rights.  As a result,  the percentage of outstanding
         shares  of any  person  as shown  in this  table  does not  necessarily
         reflect the person's  actual  ownership or voting power with respect to
         the number of shares of common  stock  actually  outstanding  as of the
         date of this Annual Report. As of the date of this Annual Report, there
         are  41,976,589  shares issued and  outstanding.  Beneficial  ownership
         amounts reflect the forward stock splits  effective May 2006 and August
         2006.


                                       59
<PAGE>

     (2) This figure  includes:  (i) 3,370,650  shares of common stock; and (ii)
         500,000 stock options to purchase 500,000 shares of our common stock at
         an exercise price of $1.10 per share expiring on December 15, 2011.
     (3) This figure  includes:  (i) 337,500  shares of common  stock;  and (ii)
         50,000 stock  options to purchase  50,000 shares of our common stock at
         an exercise price of $1.10 per share expiring on December 15, 2011.
     (4) This figure  includes:  (i) 625,000  shares of common  stock;  and (ii)
         500,000 stock options to purchase 500,000 shares of our common stock at
         an exercise price of $1.10 per share expiring on December 15, 2011.
     (5) This figure  includes:  (i) 250,000  shares of common  stock;  and (ii)
         250,000 stock options to purchase 250,000 shares of our common stock at
         an exercise price of $1.10 per share expiring on December 15, 2011.
     (6) This figure  includes 50,000 stock options to purchase 50,000 shares of
         our common  stock at an exercise  price of $1.10 per share  expiring on
         December 15, 2011.
     (7) This figure  includes:  (i) 4,586,850  shares of common stock; and (ii)
         1,350,000  stock  options to  purchase  1,350,000  shares of our common
         stock at $1.10 per share expiring on December 15, 2011.
</FN>
</TABLE>

CHANGES IN CONTROL

We are unaware of any contract, or other arrangement or provision, the operation
of which may at a subsequent date result in a change of control of our company.

ITEM  12.  CERTAIN   RELATIONSHIPS   AND  RELATED   TRANSACTIONS   AND  DIRECTOR
INDEPENDENCE

Except for the transactions described below, none of our directors,  officers or
principal  stockholders,  nor any associate or affiliate of the foregoing,  have
any  interest,  direct  or  indirect,  in any  transaction  or in  any  proposed
transactions,  which has materially affected or will materially affect us during
fiscal year ended December 31, 2007.

EMPLOYMENT AND CONSULTING AGREEMENTS

MARKHAM CONSULTING SERVICES AGREEMENT

On  approximately  August 1, 2006, we entered into a  month-to-month  consulting
services  agreement  with Thomas  Markham,  our Chief  Geologist  (the  "Markham
Consulting  Services  Agreement").  In  accordance  with the  verbal  terms  and
provisions of the Markham Consulting Services  Agreement:  (i) Mr. Markham shall
provide to us all necessary  services and perform all duties associated with his
executive  position  as Chief  Geologist;  (ii) we shall  pay to Mr.  Markham  a
monthly fee of  $10,000;  and (iii) Mr.  Markham  shall  receive a 1.5%  royalty
interest in all properties Mr. Markham  introduces to us which are  subsequently
acquired by us.

INTERNATIONAL MARKET TREND

On  approximately  June 1, 2005,  we entered  into a  month-to-month  consulting
agreement  with IMT (the  "Consulting  Agreement"),  whereby IMT performs a wide
range of management, administrative, financial and business development services
for us. During fiscal year ended December 31, 2007, we incurred  consulting fees
in the amount of $189,991 to IMT. In  additional,  IMT advanced us $6,000 during
fiscal year ended  December  31,  2007.  As of December  31,  2007,  we owed IMT
$56,873,  which  is  unsecured  and  non-interest  bearing  and has no  definite
repayment  terms.  Effective  March 24, 2008, we settled an aggregate of $86,873
with IMT by the  issuance of 434,366  shares of our  restricted  common stock at
$0.20 per share.

One of our shareholders is an officer and director of IMT.

LOANS

During fiscal year ended December 31, 2007, one of our shareholder advanced to
us $10,000. In addition, as at December 31, 2007 $71,250 is due and owing our
President/Chef Executive Officer for expenses incurred by our President/Chief
Executive Officer on our behalf. These amounts are unsecured, non-interest
bearing and without specific repayment terms.

As at December 31, 2006, $325,000 was due and owing to a separate shareholder
for advances to us by such shareholder. During fiscal year ended December 31,
2007, this shareholder made further advances to us of $1,130,500. On
approximately April 23, 2007, we entered into the Peters Ranch Agreement,
whereby we agreed to sell the property for $65,000. The $65,000 was offset
against amounts we owed to this shareholder, as well as the assignment of the
$25,000 Rail Road Commission bond. Therefore, as a result, at December 31, 2007,
an aggregate of $1,365,500 was due and owing to the shareholder, which bears
interest at 8% per annum and has no specific repayment terms. As of December 31,
2007, total accrued interest was $66,456.

On March 24, 2008, the above advances, accrued interest and further advances
from this shareholder received in January 2008 for a total of $1,515,214 were
assigned to other parties. This amount was subsequently settled by us through
the issuance of 7,576,068 shares of our restricted common stock at $0.20 per
share. See "Item 5. Market for Common Equity and Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities - Recent Sales of
Unregistered Securities."


                                       60

<PAGE>


ITEM 13. EXHIBITS

The following exhibits are filed as part of this Annual Report.

EXHIBIT NO.                  DOCUMENT

3.1                 Articles of Incorporation (1)

3.2                 Bylaws (1)

4.1                 Chapman Oil and Gas Lease (2)

4.2                 Hurley Oil and Gas Lease (2)

4.3                 Lease Assignment between Geneva Energy Corp.
                    And Morgan Energy Corp. dated December 17,
                    2004 (2)

4.4                 Fletcher Lewis Letter (3)

4.5                 Fletcher Lewis Consent dated December 31,
                    2004 (3)

4.6                 American News Publishing Letter dated
                    January 13, 2006 (3)

10.1                Asset Purchase Agreement between Morgan
                    Creek Energy Corp. and Geneva Energy Corp.
                    Dated December 15, 2004 (1)

10.1                Charter of Audit Committee (1)

14                  Code of Business Conduct (1)

16                  Letter of Dale Matheson Carr-Hilton LaBonte LLP
                    Chartered Accountants (4)

31.1                Certification of Chief Executive Officer
                    Pursuant to Rule 13a-14(a) or 15d-14(a) of
                    the Securities Exchange Act.

31.2                Certification of Chief Financial Officer
                    Pursuant to Rule 13a-14(a) or 15d-14(a) of
                    the Securities Exchange Act.

32.1                Certification of Chief Executive Officer and
                    Chief Financial Officer Under Section 1350
                    as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act.


                                       61


<PAGE>

(1)  Incorporated by reference from Form SB-2 filed with the Commission on April
11, 2005.

(2) Incorporated by reference from Form SB-2/A filed with the Commission on June
14, 2005.

(3)  Incorporated  by reference  from Form SB-2/A filed with the  Commission  on
January 13, 2006.

(4)  Incorporated  by reference  from Form Current  Report on 8-K filed with the
Commission on August 3, 2008.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

During fiscal year ended December 31, 2007, we incurred approximately $42,142 in
fees  to  our  principal  independent  accountants  ($33,142  to  Dale  Matheson
Carr-Hilton Labonte LLP and $9,000 to De Joya Griffth) for professional services
rendered in  connection  with the audit of our financial  statements  for fiscal
year ended December 31, 2007 and for the review of our financial  statements for
the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007.

During fiscal year ended December 31, 2006, we incurred approximately $48,400 in
fees to our principal independent  accountant for professional services rendered
in connection  with the audit of our financial  statements for fiscal year ended
December  31,  2006  and for the  review  of our  financial  statements  for the
quarters ended March 31, 2006, June 30, 2006 and September 30, 2006.

During fiscal year ended  December 31, 2007, we did not incur any other fees for
professional services rendered by our principal  independent  accountant for all
other non-audit  services which may include,  but is not limited to, tax-related
services, actuarial services or valuation services.


                                       62


<PAGE>


SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                    MORGAN CREEK ENERGY CORP.


Dated: April 9, 2008                By: /s/ MARCUS M. JOHNSON
                                            _______________________________
                                            Marcus Johnson, President/Chief
                                            Executive Officer


Dated: April 9, 2008                By: /s/ D. BRUCE HORTON
                                            ________________________________
                                            D. Bruce Horton, Treasurer/Chief
                                            Financial Officer

















                                       63