UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    Form 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  For the quarterly period ended March 31, 2011

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

           For the transition period from ____________ to ____________

                       Commission file number 000-30219ame


                             Chancellor Group, Inc.
             (Exact Name of Registrant as Specified in Its Charter)

            Nevada                                        87-0438647
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

 216 South Price Road, Pampa, TX  79065                     79065
(Address of Principal Executive Offices)                  (Zip Code)

                                 (806-688-9697)
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has 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 (2) has been subject to such filing  requirements for the past 90
days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer [ ]                        Accelerated filer [ ]

Non-accelerated filer [ ]                          Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding the issuer's common stock, $.001 par value, was
66,850,030 as of May 13, 2011.
<PAGE>
                             Chancellor Group, Inc.

                               Table of Contents

                                                                        Page No.
                                                                        --------

PART I FINANCIAL INFORMATION

Item 1.  Financial Statements.........................................      1

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations....................................     11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk...     14

Item 4.  Controls and Procedures......................................     14

PART II

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds...    15

Item 6.  Exhibits......................................................    15

                                       ii
<PAGE>
ITEM 1. FINANCIAL STATEMENTS

                             Chancellor Group, Inc.

                                    INDEX

                                                                        Page No.
                                                                        --------

Consolidated Balance Sheets as of March 31, 2011 and
December 31, 2010 (Unaudited)..........................................    2

Consolidated Statements of Operations
  For the Three Months Ended March 31, 2011 and 2010 (Unaudited).......    3

Consolidated Statements of Cash Flows
  For the Three Months Ended March 31, 2011 and 2010 (Unaudited).......    4

Notes to Unaudited Consolidated Financial Statements ..................    5


                                       1
<PAGE>
                             Chancellor Group, Inc.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    March 31, 2011       December 31, 2010
                                                                    --------------       -----------------
                                                                     (Unaudited)
<S>                                                                <C>                    <C>
ASSETS

Current Assets:
  Cash in Bank                                                       $    416,056           $    560,098
  Restricted Cash                                                         250,000                250,000
  Revenue Receivable                                                       90,342                 91,053
  Prepaid Insurance                                                        14,943                 21,479
                                                                     ------------           ------------
Total Current Assets                                                      771,341                922,630
                                                                     ------------           ------------
Property and Equipment:
  Leasehold Costs - Developed                                           1,773,749              1,773,749
  Office Building & Equipment                                             134,630                134,630
  Fleet - Road                                                            178,929                178,929
  Heavy Field Equipment & Tools                                           455,128                455,128
  Accumulated Depreciation and Amortization                              (840,876)              (773,487)
                                                                     ------------           ------------
Total Property and Equipment, Net                                       1,701,506              1,768,949
                                                                     ------------           ------------
Other Assets:
  Investment in Unconsolidated Subsidiary                                  29,998                 50,000
  Unamortized Letter of Credit                                                838                  2,095
  Deposits                                                                    250                    250
                                                                     ------------           ------------
Total Other Assets                                                         31,086                 52,345
                                                                     ------------           ------------

Total Assets                                                         $  2,503,987           $  2,743,924
                                                                     ============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts Payable                                                   $    132,262           $     88,415
  Accrued Expenses                                                         20,567                 59,806
                                                                     ------------           ------------
Total Current Liabilities                                                 152,829                148,221
                                                                     ------------           ------------
Stockholders' Equity:
  Series B Preferred Stock: $1,000 Par Value 250,000 shares
   authorized, non outstanding                                                 --                     --
  Common Stock:  $.001 par value, 250,000,000 shares
   authorized 66,850,030 and 66,640,030 shares issued and
   outstanding, respectively                                               66,850                 66,640
  Paid in Capital                                                       3,472,763              3,458,273
  Retained Earnings (Deficit)                                          (1,188,455)              (929,210)
                                                                     ------------           ------------
Total Stockholders' Equity                                              2,351,158              2,595,703
                                                                     ------------           ------------

Total Liabilities and Stockholders' Equity                           $  2,503,987           $  2,743,924
                                                                     ============           ============
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                       2
<PAGE>
                             Chancellor Group, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND MARCH 31, 2010
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         March 31, 2011         March 31, 2010
                                                         --------------         --------------
<S>                                                       <C>                    <C>
Sales - Net of Royalties Paid:
  Oil                                                     $    185,194           $    168,767
  Natural Gas                                                    9,465                 19,000
                                                          ------------           ------------
Gross Revenues                                                 194,659                187,767
                                                          ------------           ------------

Severance Taxes                                                  9,302                  9,178
                                                          ------------           ------------

Net Revenue                                                    185,357                178,589
                                                          ------------           ------------
Operating Expenses:
  Lease Operating Expense                                       49,675                 48,634
  Other Operating Expense                                      118,690                162,622
  General & Administrative Expense                             185,687                181,698
  Depreciation, Depletion & Amortization                        67,388                 66,931
                                                          ------------           ------------
Total Operating Expense                                        421,440                459,885
                                                          ------------           ------------

Income (loss) From Operations                                 (236,083)              (281,296)
                                                          ------------           ------------
Other Income (Expenses):
  Interest                                                         620                  3,514
  Loss from Unconsolidated Subsidiary                          (20,002)                    --
                                                          ------------           ------------
Total Other Income (Expense)                                   (19,382)                 3,514
                                                          ------------           ------------
Financing Charges:
  Interest                                                         709                     --
  Bank Fees Amortization                                         3,070                  1,520
                                                          ------------           ------------
Total Financing Charges                                          3,779                  1,520
                                                          ------------           ------------

Income (Loss) before provision for Income Taxes               (259,244)              (279,302)
Provision for Income Taxes(Benefits)                                --                     --
                                                          ------------           ------------
Net Income (Loss)                                         $   (259,244)          $   (279,302)
                                                          ============           ============

Net Per Share                                                       (*)                    (*)

Weighted Average Number of Common Shares Outstanding        66,712,363             65,111,869
</TABLE>

----------
* Less than $.01 per Share


            See Notes to Unaudited Consolidated Financial Statements

                                       3
<PAGE>
                             Chancellor Group, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND MARCH 31, 2010
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       March 31, 2011        March 31, 2010
                                                                       --------------        --------------
<S>                                                                     <C>                   <C>
Cash Flows From Operating Activities:
  Net (Loss)                                                            $  (259,244)          $  (279,302)
  Adjustments to Reconcile Net (Loss) to Net
   Cash (Used for) Operating Activities:
     Depreciation and Amortization                                           67,388                66,932
     Non-Cash Stock Compensation                                             14,700                41,800
     Loss from Unconsolidated Subsidiary                                     20,002                    --
  Change in Assets and Liabilities
     Decrease in Operating Assets                                             8,504                37,150
     Increase in Operating Liabilities                                        4,608                27,723
                                                                        -----------           -----------
          Net Cash (Used for) Operating Activities                         (144,042)             (105,697)
                                                                        -----------           -----------

Cash Flows From Investing Activities:

          Net Cash Provided by (used for) Investing Activities                   --                    --
                                                                        -----------           -----------

Cash Flows From Financing Activities:

          Net Cash Provided by (used for) Financing Activities                   --                    --
                                                                        -----------           -----------

Net Increase (Decrease) in Cash and Cash Equivalents                       (144,042)             (105,697)

Cash and Cash Equivalents at the Beginning of the Period                    810,098             1,404,695
                                                                        -----------           -----------

Cash and Cash Equivalents at the End of the Period                      $   666,056           $ 1,298,998
                                                                        ===========           ===========

Supplemental Disclosures of Cash Flows Information
  Interest Paid                                                         $       709           $        --

  Income Taxes Paid                                                     $        --           $        --
</TABLE>


            See Notes to Unaudited Consolidated Financial Statements

                                       4
<PAGE>
                             CHANCELLOR GROUP, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2011


NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION

Chancellor  Group,  Inc.  (the  "Company",  "our",  "we",  "Chancellor"  or  the
"Company" ) was  incorporated  in the state of Utah on May 2, 1986, and then, on
December  30, 1993,  dissolved as a Utah  corporation  and  reincorporated  as a
Nevada  corporation.  The Company's primary business purpose is to engage in the
exploration  and  production  of oil and gas. On March 26, 1996,  the  Company's
corporate name was changed from  Nighthawk  Capital,  Inc. to Chancellor  Group,
Inc. The Company's headquarters is in Pampa, Texas.

OPERATIONS

The Company and its wholly-owned  subsidiaries,  Gryphon Production Company, LLC
and Gryphon Field  Services,  LLC, own 138 wells, of which 29 are water disposal
wells and 2 are gas wells,  although "associated" gas is also produced from some
oil  wells.  As of March 31,  2011,  approximately  67 oil wells and 2 gas wells
located in Gray and  Hutchinson  counties in the Texas  panhandle  are  actively
producing.  We also own and operate our 15.9 acre property,  with its shop, yard
and office  complex.  Company  equipment  includes two work-over rigs as well as
other oil field related equipment.

In addition, we own approximately 4,830 gross and net acres of production rights
on six leases,  which includes 4,300 acres of developed acreage and 500 acres of
undeveloped  acreage,  approximately  300 acres of which was previously owned by
Mobil and  approximately  200 acres of which are on the Worley Combs lease.  The
six leases have the production rights for oil, casing-head gas and natural gas.

We  produced  a total of 2,058  barrels of oil and 1,275 mcf of gas in the three
months  ended March 31,  2011.  The oil is light sweet crude and the natural gas
has very high heat content, 1600 to 2600 btu/scf.

BASIS OF PRESENTATION

The  consolidated  financial  statements  of  Chancellor  Group,  Inc. have been
prepared  pursuant to the rules and regulations of the SEC for Quarterly Reports
on Form  10-Q and in  accordance  with  GAAP.  Accordingly,  these  consolidated
financial  statements  do  not  include  all of the  information  and  footnotes
required by GAAP for annual financial statements.  These consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes in the Chancellor  Group,  Inc.  Annual Report on Form 10-K
for the year ended December 31, 2010.

The  consolidated  financial  statements  are  unaudited,  but, in  management's
opinion,  include all adjustments (which,  unless otherwise noted,  include only
normal  recurring  adjustments)  necessary  for  a  fair  presentation  of  such
financial  statements.  Financial  results  for  this  interim  period  are  not
necessarily  indicative  of results that may be expected  for any other  interim
period or for the year ending December 31, 2010.

SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The  accompanying  consolidated  financial  statements  include the  accounts of
Chancellor Group,  Inc.; and its wholly owned  subsidiaries:  Gryphon Production
Company,  LLC, and Gryphon Field Services,  LLC. These entities are collectively
hereinafter  referred  to as  "the  Company".  Any  inter-company  accounts  and
transactions have been eliminated.

ACCOUNTING YEAR

The Company employs a calendar  accounting year. The Company  recognizes  income
and expenses based on the accrual method of accounting under generally  accepted
accounting standards in the United States of America.

                                       5
<PAGE>
USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  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 reporting  period.  Actual  results
could differ from those estimates.

PRODUCTS AND SERVICES, GEOGRAPHIC AREAS AND MAJOR CUSTOMERS

The Company  plans to develop its  domestic oil and gas  properties,  located in
Gray and  Hutchinson  counties in the Texas  panhandle,  and possibly to acquire
additional producing oil and gas properties.  The Company's major customers,  to
which the majority of its oil and gas production is sold,  are Plains  Marketing
and DCP Midstream.

NET INCOME (LOSS) PER SHARE

The net income (loss) per share is computed by dividing the net income (loss) by
the weighted  average number of shares of common  outstanding.  Warrants,  stock
options,  and  common  stock  issuable  upon  the  conversion  of the  Company's
preferred  stock (if any),  are not  included in the  computation  if the effect
would be  anti-dilutive  and would  increase the  earnings or decrease  loss per
share.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.

Concentration of Credit Risk

Some of the Company's  operating  cash balances are  maintained in accounts that
currently  exceed  federally  insured  limits.  The  Company  believes  that the
financial strength of depositing  institutions  mitigates the underlying risk of
loss. To date,  these  concentrations  of credit risk have not had a significant
impact on the Company's financial position or results of operations.

RESTRICTED CASH

Included in cash in bank at March 31, 2011 are deposits  totaling $250,000 which
are  assigned  and held as  collateral  for a letter  of  credit  issued  to the
Railroad Commission of Texas as required for its oil and gas activities.

ACCOUNTS RECEIVABLE

The Company  reviews  accounts  receivable  periodically  for  collectibles  and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed  necessary.  An  allowance  for  doubtful  accounts  was  not  considered
necessary or recorded at March 31, 2011.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and  depreciated  under the straight
line  method over the  estimated  useful life of the  equipment.  The  estimated
useful life of leasehold  costs,  equipment  and tools ranges from five to seven
years.  The useful life of the office  building and warehouse is estimated to be
twenty years.

OIL AND GAS PROPERTIES

The Company follows the successful  efforts method of accounting for its oil and
gas  activities.  Under  this  accounting  method,  costs  associated  with  the
acquisition,  drilling and equipping of successful  exploratory  and development
wells are  capitalized.  Geological  and  geophysical  costs,  delay rentals and
drilling  costs of  unsuccessful  exploratory  wells are  charged  to expense as
incurred.  The  carrying  value of mineral  leases is depleted  over the minimum
estimated  productive life of the leases, or ten years.  Undeveloped  properties
are periodically  assessed for possible impairment due to  un-recoverability  of
costs invested.  Cash received for partial  conveyances of property interests is
treated as a recovery of cost and no gain or loss is recognized.

DEPLETION

The carrying value of the mineral leases is depleted over the minimum  estimated
productive life of the leases, or ten years.

                                       6
<PAGE>
INCOME TAX

Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are  recognized  for  deductible   temporary   differences  and  operating  loss
carry-forwards and deferred tax liabilities are recognized for taxable temporary
differences.  Temporary  differences  are the  differences  between the reported
amounts of assets and liabilities  and their tax bases.  Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management,  it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.  Deferred tax assets and  liabilities  are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

REVENUE RECOGNITION

The Company recognizes revenue when a product is sold to a customer,  either for
cash or as evidenced by an obligation on the part of the customer to pay.

FAIR VALUE MEASUREMENTS AND DISCLOSURES

The Company estimates fair values of assets and liabilities which require either
recognition  or disclosure in the financial  statements in accordance  with FASB
ASC Topic 820 "FAIR  VALUE  MEASUREMENTS".  There is no  material  impact on the
consolidated  financial  statements  related  to  fair  value  measurements  and
disclosures. Fair value measurements include the following levels:

Level 1:   Quoted  market  prices  in active  markets  for  identical  assets or
           liabilities.  Valuations for assets and liabilities  traded in active
           exchange markets,  such as the New York Stock Exchange.  Level 1 also
           includes  U.S.  Treasury and federal  agency  securities  and federal
           agency  mortgage-backed  securities,  which are  traded by dealers or
           brokers in active  markets.  Valuations  are  obtained  from  readily
           available pricing sources for market transactions involving identical
           assets or liabilities.

Level 2:   Observable  market  based  inputs  or  unobservable  inputs  that are
           corroborated  by market data.  Valuations for assets and  liabilities
           traded  in less  active  dealer  or broker  markets.  Valuations  are
           obtained from third party  pricing  services for identical or similar
           assets or liabilities.

Level 3:   Unobservable  inputs  that  are  not  corroborated  by  market  data.
           Valuations  for assets and  liabilities  that are derived  from other
           valuation methodologies,  including option pricing models, discounted
           cash flow  models  and  similar  techniques,  and not based on market
           exchange,  dealer, or broker traded transactions.  Level 3 valuations
           incorporate  certain  assumptions  and projections in determining the
           fair value assigned to such assets or liabilities.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of the Company's  financial  instruments,  including cash and
cash equivalents,  accounts  receivable and accounts payable and long term debt,
as reported in the accompanying  consolidated  balance sheet,  approximates fair
values.

EMPLOYEE STOCK-BASED COMPENSATION

Compensation  expense  is  recognized  for  performance-based  stock  awards  if
management deems it probable that the performance conditions are or will be met.
Determining  the  amount of  stock-based  compensation  expense  requires  us to
develop  estimates  that are used in  calculating  the fair value of stock-based
compensation,  and also requires us to make estimates of  assumptions  including
expected stock price volatility which is derived based upon our historical stock
prices.

BUSINESS COMBINATIONS

The Company accounts for business combinations in accordance with FASB ASC Topic
805 "BUSINESS  COMBINATIONS".  This standard modifies certain aspects of how the
acquiring  entity   recognizes  and  measures  the  identifiable   assets,   the
liabilities  assumed and the goodwill  acquired in a business  combination.  The
Company did not enter into any business  combinations  during the quarter ending
March 31, 2011.

The Company  complies with the accounting  guidance  related to consolidation of
variable  interest  entities  ("VIEs")  that  requires  a  reporting  entity  to
determine  if a  primary  beneficiary  that  would  consolidate  the VIE  from a
quantitative risk and rewards approach, to a qualitative approach based on which
variable  interest  holder  has the power to  direct  the  economic  performance
related  activities  of the VIE as well as the  obligation  to absorb  losses or
right to receive benefits that could potentially be significant to the VIE. This
guidance  requires  the primary  beneficiary  assessment  to be  performed on an
ongoing  basis and also  requires  enhanced  disclosures  that will provide more
transparency  about a company's  involvement  in a VIE. The Company did not have
any VIEs that required  consolidation in these financial  statements  during the
quarter ending March 31, 2011.

                                       7
<PAGE>
SUBSEQUENT EVENTS

Events  occurring  after March 31, 2011,  were  evaluated  through the date this
Quarterly  Report  was  issued,  in  compliance  FASB ASC Topic 855  "SUBSEQUENT
EVENTS",  to  ensure  that  any  subsequent  events  that met the  criteria  for
recognition and/or disclosure in this report have been included.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued Accounting  Standards Update ("ASU") 2010-03 to
align  the  oil  and gas  reserve  estimation  and  disclosure  requirements  of
Extractive  Industries  --  Oil  and  Gas  Topic  of  the  Accounting  Standards
Codification  with the requirements in the SEC's final rule,  "MODERNIZATION  OF
THE OIL AND GAS  REPORTING  REQUIREMENTs."  We  implemented  ASU  2010-03  as of
December 31,  2009.  Key items in the new rules  include  changes to the pricing
used to  estimate  reserves  and  calculate  the full cost  ceiling  limitation,
whereby a 12-month  average  price is used  rather than a single day spot price,
the use of new  technology  for  determining  reserves,  the  ability to include
nontraditional  resources in reserves  and the ability to disclose  probable and
possible  reserves.  Management has elected not to include probable and possible
reserves in its reserve studies and related disclosures.

In January 2010, the FASB issued ASU 2010-6,  "IMPROVING  DISCLOSURES ABOUT FAIR
VALUE MEASUREMENTS.". This update requires additional disclosure within the roll
forward  of  activity  for assets and  liabilities  measured  at fair value on a
recurring basis,  including  transfers of assets and liabilities between Level 1
and  Level 2 of the  fair  value  hierarchy  and the  separate  presentation  of
purchases,  sales,  issuances and settlements of assets and  liabilities  within
Level 3 of the fair value hierarchy.  In addition,  the update requires enhanced
disclosures  of the  valuation  techniques  and  inputs  used in the fair  value
measurements  within  Levels  2 and  3.  The  new  disclosure  requirements  are
effective  for interim and annual  periods  beginning  after  December 15, 2009,
except for the  disclosure of purchases,  sales,  issuances and  settlements  of
Level 3 measurements. Those disclosures are effective for fiscal years beginning
after December 15, 2010. As ASU 2010-6 only requires enhanced  disclosures,  the
adoption  of this  update  did  not  have a  material  effect  on its  financial
position, cash flows and results of operations.

There were various  other updates  recently  issued,  most of which  represented
technical  corrections to the  accounting  literature or application to specific
industries,  and are not  expected  to have a material  impact on the  Company's
financial position, results of operations or cash flows.

NOTE 2. INCOME TAXES

Deferred income taxes arise from temporary differences in recognition of certain
revenues  and  expenses  between  financial  statement  and  income tax basis of
accounting,  and also net  operating  loss  carry-forwards  and other tax credit
carry-forwards

At March 31, 2011, the Company had a federal net operating loss carry-forward of
approximately  $2,375,000.  A deferred tax asset of  approximately  $475,000 has
been partially offset by a valuation allowance of approximately  $297,000 due to
federal net operating loss carry-back and carry-forward limitations.

At March 31,  2011,  the  Company  also had  approximately  $178,000 in deferred
income tax liability  attributable to timing differences  between federal income
tax depreciation, depletion and book depreciation, which has been offset against
the deferred tax asset related to the net operating loss carry-forward.

Management  evaluated  the  Company's  tax  positions  under  FASB  ASC No.  740
"UNCERTAIN TAX POSITIONS," and concluded that the Company had taken no uncertain
tax positions that require adjustment to the consolidated  financial  statements
to comply with the provisions of this guidance. With few exceptions, the Company
is no longer subject to income tax  examinations by the U.S.  federal,  state or
local tax authorities for years before 2008.

NOTE 3. STOCKHOLDERS' EQUITY

PREFERRED STOCK

The Company has provided for the  issuance of 250,000  shares,  par value $1,000
per share, of convertible  Preferred  Series B stock ("Series B"). Each Series B
share is  convertible  into 166.667  shares of the  Company's  common stock upon
election by the  shareholder of the Series B Share,  with dates and terms set by
the Board. No shares of Series B preferred stock are outstanding.

COMMON STOCK

The Company has 250,000,000  authorized shares of common stock, par value $.001,
with 66,850,030 shares issued and outstanding as of March 31, 2011.

                                       8
<PAGE>
STOCK BASED COMPENSATION

For the three months ending March 31, 2011,  the Company  recognized  $14,700 in
professional  and  consulting  fees expense  related to stock  issued,  which is
recorded in general and administrative expenses.

STOCK OPTIONS AND WARRANTS

NON-EMPLOYEE STOCK OPTIONS AND WARRANTS

The Company  accounts for  non-employee  stock  options under FASB ASC Topic 505
"EQUITY-BASED  PAYMENTS TO  NON-EMPLOYEES",  whereby  options costs are recorded
based on the fair value of the  consideration  received or the fair value of the
equity  instruments  issued,  whichever  is more  reliably  measurable.  For the
quarter ending March 31, 2011, no options were issued, exercised or cancelled.

The Company  currently has outstanding  warrants  expiring  December 31, 2014 to
purchase an  aggregate  of  6,000,000  shares of common  stock;  these  warrants
consist of warrants to purchase  2,000,000  shares at an exercise price of $.025
per share,  and warrants to purchase  4,000,000  shares at an exercise  price of
$0.02 per share. In July 2009, the Company issued  additional  warrants expiring
June 30, 2014 to purchase an aggregate  of 500,000  shares of common stock at an
exercise  price of $0.125 per share.  In 2010,  the  Company  issued  additional
warrants  expiring in 2015 to purchase an aggregate of 336,000  shares of common
stock at an exercise price of $0.125 per share.  During 2011, the Company issued
additional  warrants  expiring in 2016 to purchase an aggregate of 84,000 shares
of common stock at an exercise price of $0.125 per share.

On March 31, 2011, the Company had the following outstanding warrants:

                                                                    Weighted
                              Remaining        Exercise Price        Average
Exercise      Number of    Contractual Life     Times Number        Exercise
 Price         Shares         (in years)          of Shares          Price
 -----         ------         ----------          ---------          -----

$0.025       2,000,000            4              $  50,000
$0.020       4,000,000            4              $  80,000
$0.125         500,000           3.5             $  62,500
$0.125         420,000           4.5             $  52,500
            ----------                           ---------
             6,920,000                           $ 245,000          $ 0.033
            ==========                           =========

                                                   Weighted
                                                    Average        Remaining
                                   Number of       Exercise     Contractual Life
       Warrants                     Shares           Price        (in years)
       --------                     ------           -----        ----------

Outstanding at January 1, 2011     6,836,000        $ 0.044
                                   ---------        -------
Issued                                84,000          0.125
Exercised                                 --             --
Expired/Cancelled                         --             --
                                   ---------        -------
Outstanding at March 31, 2011      6,920,000        $ 0.033           4.0
                                   ---------        -------         -----
Exercisable at March 31, 2011      6,920,000        $ 0.033           4.0
                                   ---------        -------         -----

EMPLOYEE STOCK OPTIONS

The  Company  accounts  for  employee  stock  options  under  FASB ASC Topic 718
"COMPENSATION-STOCK  COMPENSATION". The Company issued no employee stock options
and had none outstanding as of March 31, 2011.

                                       9
<PAGE>
NOTE 4. PROPERTY AND EQUIPMENT

A summary of fixed assets at:

<TABLE>
<CAPTION>
                                             Balance                                        Balance
                                           December 31,                                     March 31,
                                              2010           Additions      Deletions         2011
                                           ----------        ---------      ---------      ----------
<S>                                        <C>              <C>             <C>             <C>
Auto/Transportation Equipment              $  178,929       $       --      $       --      $  178,929
Buildings & Improvements                      125,280          125,280
Leasehold Costs - Developed                 1,773,749        1,773,749
Furniture, Fixtures & Office Equipment          9,350            9,350
Machinery & Equipment                         455,128          455,128
                                           ----------       ----------      ----------      ----------
                                           $2,542,436       $       --      $       --      $2,542,436
                                           ==========       ==========      ==========      ==========

Less: Accumulated Depreciation                773,487           67,388              --         840,875
                                           ----------       ----------      ----------      ----------
                                           $1,768,949       $   67,388      $       --      $1,701,561
                                           ==========       ==========      ==========      ==========
</TABLE>

NOTE 5. LONG-TERM DEBT

The Company had no long-term debt at March 31, 2011.

At March 31,  2011,  the Company  has an  irrevocable  blanket  letter of credit
totaling $250,000 issued to the Railroad Commission of Texas as required for its
oil and gas  activities,  which is  secured by certain  bank  deposits  totaling
$250,000.  The  Company  has  recognized  approximately  $1,500 in  amortization
expense  related to bank fees associated with this letter of credit in the three
months  ending  March  31,  2011,  and  currently  has  approximately   $800  in
unamortized bank fees as of March 31, 2011.

NOTE 6. ACCUMULATED COMPENSATED ABSENCES

It is the Company's policy to permit employees to accumulate a limited amount of
earned but unused vacation, which will be paid to employees upon separation from
the Company's  service.  The cost of vacation and sick leave is recognized  when
payments are made to employees. These amounts are immaterial and not accrued.

NOTE 7. RELATED PARTY TRANSACTIONS

The Company has used the services of a consulting  company owned by the Chairman
of the Board. The Company has paid $24,000 for those services during the quarter
ending March 31, 2011.

NOTE 8. SUBSEQUENT EVENTS

Events  occurring  after  March 31,  2011 were  evaluated  through the date this
Quarterly  Report  was  issued,  in  compliance  FASB ASC Topic 855  "Subsequent
Events",  to  ensure  that  any  subsequent  events  that met the  criteria  for
recognition  and/or disclosure in this report have been included.  There were no
such subsequent events.

                                       10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Throughout this report, we make statements that may be deemed  "forward-looking"
statements  within the meaning of Section 27A of the  Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements,  other than statements of historical facts, that address activities,
events,  outcomes and other matters that  Chancellor  plans,  expects,  intends,
assumes,  believes,  budgets,  predicts,   forecasts,   projects,  estimates  or
anticipates  (and other similar  expressions)  will,  should or may occur in the
future are  forward-looking  statements.  These  forward-looking  statements are
based on management's current belief, based on currently available  information,
as to the outcome and timing of future events. When considering  forward-looking
statements,  you  should  keep in mind the risk  factors  and  other  cautionary
statements in this report.

We caution you that these  forward-looking  statements are subject to all of the
risks and uncertainties,  many of which are beyond our control,  incident to the
exploration for and development, production and sale of oil and gas. These risks
include, but are not limited to, commodity price volatility,  inflation, lack of
availability  of goods  and  services,  environmental  risks,  operating  risks,
regulatory  changes,  the  uncertainty  inherent  in  estimating  proved oil and
natural gas reserves and in projecting  future rates of production and timing of
development  expenditures  and other  risks  described  herein,  the  effects of
existing or continued  deterioration in economic conditions in the United States
or the  markets in which we  operate;  and acts of war or  terrorism  inside the
United States or abroad.

BACKGROUND

The Company is an independent oil and gas  exploration  and development  company
focused on building and revitalizing  our oil and gas properties  located in the
State of Texas.  The Company is organized as a producing oil and gas company and
licensed as an operator by the Texas Railroad Commission. We are in the business
of acquisition, exploration, and development of oil and natural gas properties.

Our common stock is quoted on the  Over-The-Counter  market and trades under the
symbol CHAG.OB.  As of May 13, 2011,  there are 66,850,030  shares of our common
stock issued and outstanding.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

PRODUCTION:  During the three months ended March 31, 2011,  we produced and sold
2,058 barrels of oil and produced and sold 1,275 mcf of gas, generating $194,659
in gross  revenues  net of  royalties  paid,  with a one month lag in receipt of
revenues for the prior months  sales,  as compared with 2,243 barrels of oil and
1,933 mcf of gas,  generating  $187,767 in gross  revenues net of royalties paid
during the three months ended March 31, 2010. We had 67 wells actually producing
oil and 2 producing gas at March 31, 2011, and had 70 wells  actually  producing
oil and 2 producing gas at March 31, 2010.

The Company and its wholly-owned  subsidiaries,  Gryphon Production Company, LLC
and Gryphon Field  Services,  LLC, own 138 wells, of which 29 are water disposal
wells and 2 are gas wells,  although "associated" gas is also produced from some
oil wells. As of March 31, 2011, approximately 67 wells were actively producing.
We also own and operate our 15.9 acre property,  with its shop,  yard and office
complex.  Company  equipment  includes two  work-over  rigs as well as other oil
field related equipment.  In addition,  we own approximately 4,830 gross and net
acres of production rights on six leases, which includes 500 gross and net acres
of undeveloped acreage, approximately 300 acres of which was previously owned by
Mobil, and the balance of approximately 200 acres on the Worley Combs lease. The
six leases have production rights for oil, casing-head gas and natural gas.

The following table  summarizes our production  volumes and average sales prices
for the three months ended March 31:

                                             2011         2010
                                           -------       -------
        Oil and Gas Sales:
          Oil Sales (Bbl)                    2,058         2,243
          Natural Gas Sales (Mcf)            1,275         1,933

        Average Sales Price:
          Oil, per Bbl                     $ 89.99       $ 75.23
          Gas, per McF                     $  7.56       $  9.83

                                       11
<PAGE>
During  the  first  quarter  of 2011 our main gas  purchaser  closed  lines  for
maintenance of their plant.  In addition 2 new gas meters had to be installed to
comply with Texas Railroad Commission regulations,  causing a noticeable loss of
natural gas production  during the quarter ending March 31, 2011 compared to the
same period in 2010.  Bad weather in our area of the Panhandle  coupled with the
need for  major  parts  replacement  on rigs  resulted  in  slightly  lower  oil
production during the first quarter of 2011 compared to the same period in 2010.
The reduction in our production  was offset in part by the increased  production
resulting from our  acquisition  of 15 oil wells in Hutchinson  County in May of
2010 and management  believes that the wells acquired in this  transaction  will
continue to increase our production and reserves in our 2011 fiscal year.

 DEPRECIATION  AND  AMORTIZATION:   Expense   recognized  for  depreciation  and
amortization of property and equipment  increased $500, or  approximately  1% in
the three  months  ended  March 31, 2011 from the three  months  ended March 31,
2010. This increase was primarily  attributable  to the additional  depreciation
related to the oil and gas properties and equipment acquired during May 2010.

GENERAL AND ADMINISTRATIVE EXPENSES: During the three months ended March 31, our
general and  administrative  expenses  increased  $3,989, or approximately 2% in
2011 from 2010.  Significant  components  of these  expenses  include  salaries,
professional  fees, and  insurance.  Salaries  (included in both  administrative
expenses and operating costs) decreased approximately 10% during 2011, primarily
the  result  of  staff  reductions.  Professional  fees  increased  $55,016,  or
approximately  225%, during 2011,  primarily the result of a change in auditors,
as previously disclosed in our Form 8-K filing dated January 25, 2011. Insurance
decreased $9,965, or approximately 36%, during 2011.

OVERALL:  The majority of the past two years we have  continued with the ongoing
production,  maintenance and enhancements of our 63 currently producing wells in
Gray county,  as well as bringing into  production our 4 new wells in Hutchinson
county  during the third quarter of 2010.  As a result of these  efforts,  along
with  continued  increases in oil prices during most of 2010 and 2011, our gross
revenues increased by approximately  $9,000, or 4% during the three months ended
March 31, 2011  compared to the three months  ended March 31, 2010.  At the same
time we were  also able to  reduce  our  direct  lease  and  operating  costs by
$42,891,  or 20%,  compared  to the same  period  last year.  The  Company  also
recognized  a loss of  approximately  $20,000  related to its  investment  in an
unconsolidated  subsidiary  (Munda We) in the three months ended March 31, 2011.
The Company  expects this to be a discrete  event, as the Company has terminated
this  agreement,  effective  March 22, 2011.  However,  with our  administrative
expenses and  depreciation  remaining  stable,  we again  reported a net loss of
$259,244 during the three months ended March 31, 2011, compared to a net loss of
$279,302  reported for the same period last year.  Management  anticipates  that
both oil and gas production  volumes and prices will continue to increase during
2011,  as well as  continuing to look for  opportunities  to reduce  general and
administrative  expenses,  in an effort to continue to improve  profitability of
the Company.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW:  The following table highlights  certain  information  relation to our
liquidity and capital resources at:

                                    March 31, 2011       December 31, 2010
                                    --------------       -----------------

          Working Capital             $  618,512            $  774,409
          Current Assets              $  771,341            $  922,630
          Current Liabilities         $  152,829            $  148,221
          Stockholders' Equity        $2,351,158            $2,595,703

Our working  capital at March 31, 2011 decreased by $155,897,  or  approximately
20%,  from  December  31,  2010.   Current  assets   decreased  by  $151,289  or
approximately 16%, while current liabilities  increased $4,608, or approximately
3%. Decrease in current assets were attributable to several factors, including a
decrease in cash in bank and prepaid insurance.

Our capital  resources  consist  primarily of cash from operations and permanent
financing,  in the form of capital  contributions  from our stockholders.  As of
March  31,  2011  the  Company  had  $666,056  of cash on hand,  which  includes
restricted  cash of $250,000 held as collateral for a letter of credit issued to
the Railroad  Commission  of Texas as required  for its oil and gas  activities.
Other  than  financing  continuing  operations,   additional  capital  would  be

                                       12
<PAGE>
necessary   should  we  decide  to  further  expand  our  operations  or  pursue
acquisitions of additional property or significant production equipment.

CASH FLOW:  Net cash used during three months ended March 31, 2011 was $144,042,
compared  to net cash used of  $105,697  during  same  period in 2010.  The most
significant  factors  causing  the  decrease in net cash flow during the quarter
ending  March 31,  2011 were  professional  fees of $78,000  and our net loss of
$259,244.

Cash used for operations  increased by $38,345,  or approximately 36% during the
first quarter of 2011,  compared to 2010. This increase is primarily  related to
increase in professional  fees related to the change in auditors,  as previously
disclosed in our Form 8-K filing dated January 25, 2011.

EQUITY  FINANCING:  As of March 31,  2011,  our  stockholders  have  contributed
$3,539,613 in equity  financing.  We do not anticipate that  significant  equity
financing will take place in the foreseeable future.

CONTRACTUAL OBLIGATIONS

On July 1, 2009, the Company  entered into a 24-month  non-exclusive  consultant
agreement with PK Advisors, LLC ("PK") in connection with the Company's interest
in creating a strategy for growing the core business,  creating market awareness
and providing  general  strategic  corporate  advice.  In  accordance  with this
agreement,  during each month in the period of 18 months beginning on January 1,
2010, until the consulting agreement is terminated,  the Company is obligated to
issue  40,000  shares of  unregistered  common  stock and five year  warrants to
purchase  14,000  shares of our common stock with a strike price of $.125 to PK.
Additional cash  consideration  would be payable to PK for any future investment
transactions for which PK provides assistance. The Company recorded professional
fees expense of $8,400 related to this agreement in the quarter ending March 31,
2011.

On July 1, 2009, the Company  entered into a 24-month  non-exclusive  consultant
agreement  with  Equity  Source  Partners,  LLC ("ESP") in  connection  with the
Company's  interest  in  creating  a strategy  for  growing  the core  business,
creating market awareness and providing general  strategic  corporate advice. In
accordance  with this  agreement,  during  each month in the period of 18 months
beginning on January 1, 2010, until the consulting agreement is terminated,  the
Company is  obligated to issue 30,000  shares of  unregistered  common stock and
five year  warrants to purchase  14,000 shares of our common stock with a strike
price of $.125 to ESP. Additional cash consideration would be payable to ESP for
any  future  investment  transactions  for which ESP  provides  assistance.  The
Company recorded  professional  fees expense of $6,300 related to this agreement
in the quarter ending March 31, 2011.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange  Commission (the "SEC")  recently issued  "FINANCIAL
REPORTING RELEASE NO. 60 CAUTIONARY  ADVICE REGARDING  DISCLOSURE ABOUT CRITICAL
ACCOUNTING  POLICIES"  ("FRR  60"),   suggesting  companies  provide  additional
disclosures,  discussion and commentary on those accounting  policies considered
most  critical to its  business and  financial  reporting  requirements.  FRR 60
considers  an  accounting  policy  to be  critical  if it is  important  to  the
Company's   financial   condition  and  results  of  operations,   and  requires
significant  judgment and estimates on the part of management in the application
of the policy. For a summary of the Company's  significant  accounting policies,
including the critical  accounting policies discussed below, please refer to the
accompanying notes to the financial statements provided in this Quarterly Report
on Form 10-Q.

NATURAL GAS AND OIL PROPERTIES

In January 2010, the Financial  Accounting Standards Board issued ASU 2010-03 to
align  the  oil  and gas  reserve  estimation  and  disclosure  requirements  of
Extractive  Industries  --  Oil  and  Gas  Topic  of  the  Accounting  Standards
Codification  with the requirements in the SEC's final rule,  "MODERNIZATION  OF
THE OIL AND GAS  REPORTING  REQUIREMENTS".  We  implemented  ASU  2010-03  as of
December 31,  2009.  Key items in the new rules  include  changes to the pricing
used to  estimate  reserves  and  calculate  the full cost  ceiling  limitation,
whereby a 12-month  average  price is used  rather than a single day spot price,
the use of new  technology  for  determining  reserves,  the  ability to include
nontraditional  resources in reserves  and the ability to disclose  probable and
possible  reserves.  Management has elected not to include probable and possible
reserves in its reserve studies and related disclosures.

The  process  of  estimating  quantities  of oil and gas  reserves  is  complex,
requiring  significant  decisions in the evaluation of all available geological,
geophysical,  engineering and economic data. The data for a given field may also
change  substantially over time as a result of numerous factors  including,  but
not limited to, additional development activity, evolving production history and
continual  reassessment  of the viability of production  under varying  economic
conditions.  As a result,  material  revisions to existing reserve estimates may
occur from time to time. Although every reasonable effort is made to ensure that
reserve estimates reported represent the most accurate assessments possible, the
subjective  decisions  and variances in available  data for various  fields make
these  estimates  generally  less precise than other  estimates  included in the
financial statement disclosures.

                                       13
<PAGE>
INCOME TAXES

As part of the process of preparing the consolidated  financial  statements,  we
are  required  to  estimate  federal  and  state  income  taxes  in  each of the
jurisdictions in which Chancellor operates. This process involves estimating the
actual  current tax  exposure  together  with  assessing  temporary  differences
resulting from  differing  treatment of items,  such as derivative  instruments,
depreciation,  depletion and amortization,  and certain accrued  liabilities for
tax and  accounting  purposes.  These  differences  and our net  operating  loss
carry-forwards result in deferred tax assets and liabilities, which are included
in our  consolidated  balance  sheet.  We must then assess,  using all available
positive and negative evidence, the likelihood that the deferred tax assets will
be recovered  from future  taxable  income.  If we believe that  recovery is not
likely,  we must  establish  a  valuation  allowance.  Generally,  to the extent
Chancellor  establishes  a valuation  allowance or  increases or decreases  this
allowance in a period, we must include an expense or reduction of expense within
the tax provision in the consolidated statement of operations.

Under  accounting  guidance for income taxes, an enterprise must use judgment in
considering  the relative impact of negative and positive  evidence.  The weight
given to the  potential  effect of  negative  and  positive  evidence  should be
commensurate with the extent to which it can be objectively  verified.  The more
negative  evidence that exists (i) the more  positive  evidence is necessary and
(ii) the more difficult it is to support a conclusion that a valuation allowance
is not needed for some portion or all of the deferred tax asset.  Among the more
significant types of evidence that we consider are:

     *    taxable income projections in future years;
     *    whether  the  carry-forward  period  is so brief  that it would  limit
          realization of tax benefit;
     *    future sales and  operating  cost  projections  that will produce more
          than enough  taxable income to realize the deferred tax asset based on
          existing sales prices and cost structures; and
     *    our  earnings  history  exclusive  of the loss that created the future
          deductible amount coupled with evidence indicating that the loss is an
          aberration rather than a continuing condition.

If (i) oil and natural gas prices were to decrease  significantly  below present
levels  (and if such  decreases  were  considered  other than  temporary),  (ii)
exploration,  drilling and operating costs were to increase significantly beyond
current  levels,  or  (iii) we were  confronted  with  any  other  significantly
negative  evidence  pertaining to our ability to realize our NOL  carry-forwards
prior to their expiration,  we may be required to provide a valuation  allowance
against our deferred  tax assets.  As of March 31, 2011, a deferred tax asset of
$475,000 has been  recognized but partially  offset by a valuation  allowance of
approximately   $297,000  due  to  federal  NOL  carry-back  and   carry-forward
limitations

OFF-BALANCE SHEET ARRANGEMENTS:

There  are  no  off-balance  sheet   transactions,   arrangements,   obligations
(including contingent  obligations),  or other relationships of the Company with
unconsolidated  entities or other  persons  that have,  or may have,  a material
effect on our financial condition,  changes in financial condition,  revenues or
expenses,  results of operations,  liquidity,  capital  expenditures  or capital
resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a
security  resulting  from  changes  in the  general  level  of  interest  rates.
Investments  that are  classified  as cash and cash  equivalents  have  original
maturities of six months or less. Our interest income is sensitive to changes in
the general level of U.S. interest rates.

Credit Risk - Our  accounts  receivables  are subject,  in the normal  course of
business,  to  collection  risks.  We  regularly  assess  these  risks  and have
established  policies  and  business  practices  to protect  against the adverse
effects of collection  risks.  As a result,  we do not  anticipate  any material
losses in this area.

Commodity  Price  Risk - We  are  exposed  to  market  risks  related  to  price
volatility of crude oil and natural gas. The prices of crude oil and natural gas
affect our  revenues,  since sales of crude oil and natural gas  comprise all of
the  components of our  revenues.  A decline in crude oil and natural gas prices
will likely  reduce our  revenues,  unless we  implement  offsetting  production
increases. We do not use derivative commodity instruments for trading purposes.

ITEM 4T. CONTROLS AND PROCEDURES

The  Company's  Chief  Executive  Officer  and  Principal  Financial  Officer is
primarily  responsible  for the accuracy of the  financial  information  that is
presented  in this  quarterly  Report.  This officer has, as of the close of the
period  covered by this Quarterly  Report on Form 10-Q,  evaluated the Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  Based upon that evaluation,  this officer  concluded that our disclosure
controls  and  procedures  were  effective  as  of  that  date  to  ensure  that
information  required to be  disclosed  by us in our reports  filed or submitted
under the Exchange Act is (a)  accumulated  and  communicated to our management,
including our principal executive and financial officer, as appropriate to allow

                                       14
<PAGE>
timely discussions  regarding required  disclosure and (b) recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.  There were no changes to the Company's  internal controls in this period
identified in connection with this evaluation that have materially affected,  or
are reasonably likely materially to affect,  the Company's internal control over
financial reporting.

                           PART II--OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following  table sets forth the sales of unregistered  securities  since the
Company's last report filed under this item.

                                                                     Total
                                                   Principal     Offering Price/
     Date               Title and Amount  (1)      Purchaser     Consideration
     ----               ----------------  ---      ---------     -------------

April 15, 2011    90,000 shares of common stock.     Advisor        $  0 (1)
April 15, 2011   120,000 shares of common stock.     Advisor        $  0 (1)

----------
(1)  Securities  issued  in  consideration  for  advisory   services.   See  the
     disclosure  provided in ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTRACTUAL  OBLIGATIONS for
     a description of these services.  The Company  recorded  professional  fees
     expense  of $14,700  related to the  issuance  of these  securities  in the
     quarter ending March 31, 2011.

The Company did not engage an  underwriter  with respect to any of the issuances
of securities described in the foregoing table, and none of these issuances gave
rise to any underwriting discount or commission.

All of the  issuances  described  above are exempt from  registration  under the
Securities Act of 1933, as amended, pursuant to Rule 505 promulgated thereunder.
Alternatively,  none of the  issuances  described  above  constituted  a "public
offering"  of  securities  under  Section  4(2)  of  the  Securities  Act,  and,
accordingly,  all of such  issuances  are  exempt  from  registration  under the
Securities Act.

ITEM 6.  EXHIBITS

3.1      Certificate  of  Incorporation  of  Nighthawk   Capital,   Inc.  (Utah)
         (incorporated by reference to Exhibit 2.1 to the Company's Registration
         Statement  on Form  10-SB12G,  filed with the  Securities  and Exchange
         Commission on April 5, 2000).

3.2      Articles  on  Incorporation  on  Nighthawk   Capital,   Inc.   (Nevada)
         (incorporated by reference to Exhibit 2.2 to the Company's Registration
         Statement  on Form  10-SB12G,  filed with the  Securities  and Exchange
         Commission on April 5, 2000).

3.3      Articles of Merger of Nighthawk  Capital,  Inc.  (Utah) into  Nighthawk
         Capital, Inc. (Nevada) (incorporated by reference to Exhibit 2.3 to the
         Company's  Registration  Statement  on Form  10-SB12G,  filed  with the
         Securities and Exchange Commission on April 5, 2000).

3.4      By-Laws  (incorporated  by  reference  to Exhibit 2.4 to the  Company's
         Registration Statement on Form 10-SB12G,  filed with the Securities and
         Exchange Commission on April 5, 2000.

3.5      Amendments to the Articles of Incorporation of Nighthawk Capital, Inc.,
         dated as of March 26, 1996.  (incorporated  by reference to Exhibit 3.5
         to the Company's  Annual Report on Form 10-K, filed with the Securities
         and Exchange Commission on March 25, 2011.

3.6      Certificate  of Amendment of Articles of  Incorporation  of  Chancellor
         Group, Inc., dated as of February 25, 2000.  (incorporated by reference
         to Exhibit 3.6 to the Company's  Annual Report on Form 10-K, filed with
         the Securities and Exchange Commission on March 25, 2011.

4.1      Form of Warrant  issuable to PK and ESP.  (incorporated by reference to
         Exhibit 4.1 to the Company's  Quarterly Report on Form 10-Q, filed with
         the Securities and Exchange Commission on November 15, 2010).

10.1     Agreement and Plan of  Reorganization,  dated October 19, 2000, between
         Chancellor Group, Inc. and Southwin  financial,  Ltd.  (incorporated by
         reference to Exhibit No. 10.1 to the Company's  Current  Report on Form
         8-K, filed with the Securities and Exchange  Commission on November 21,
         2000).

31       Certification  of  Chief  Executive  Officer  and  Principal  Financial
         Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

32       Certification  of  Chief  Executive  Officer  and  Principal  Financial
         Officer  Pursuant  to 18 U.S.C.  Section  1350 as adopted  pursuant  to
         Section 906 of the Sarbanes Oxley Act of 2002.

                                       15
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      Chancellor Group, Inc.
                                         (Registrant)


                                      By: /s/ Maxwell Grant
                                         ---------------------------------------
                                         Chief Executive Officer and
                                         Principal Financial Officer

Dated: May 13, 2011

                                       16
<PAGE>
                                  EXHIBIT INDEX

Exhibit
Number                             Description
------                             -----------

3.1      Certificate  of  Incorporation  of  Nighthawk   Capital,   Inc.  (Utah)
         (incorporated by reference to Exhibit 2.1 to the Company's Registration
         Statement  on Form  10-SB12G,  filed with the  Securities  and Exchange
         Commission on April 5, 2000).

3.2      Articles  on  Incorporation  on  Nighthawk   Capital,   Inc.   (Nevada)
         (incorporated by reference to Exhibit 2.2 to the Company's Registration
         Statement  on Form  10-SB12G,  filed with the  Securities  and Exchange
         Commission on April 5, 2000).

3.3      Articles of Merger of Nighthawk  Capital,  Inc.  (Utah) into  Nighthawk
         Capital, Inc. (Nevada) (incorporated by reference to Exhibit 2.3 to the
         Company's  Registration  Statement  on Form  10-SB12G,  filed  with the
         Securities and Exchange Commission on April 5, 2000).

3.4      By-Laws  (incorporated  by  reference  to Exhibit 2.4 to the  Company's
         Registration Statement on Form 10-SB12G,  filed with the Securities and
         Exchange Commission on April 5, 2000.

3.5      Amendments to the Articles of Incorporation of Nighthawk Capital, Inc.,
         dated as of March 26, 1996.  (incorporated  by reference to Exhibit 3.5
         to the Company's  Annual Report on Form 10-K, filed with the Securities
         and Exchange Commission on March 25, 2011.

3.6      Certificate  of Amendment of Articles of  Incorporation  of  Chancellor
         Group, Inc., dated as of February 25, 2000.  (incorporated by reference
         to Exhibit 3.6 to the Company's  Annual Report on Form 10-K, filed with
         the Securities and Exchange Commission on March 25, 2011.

4.1      Form of Warrant  issuable to PK and ESP.  (incorporated by reference to
         Exhibit 4.1 to the Company's  Quarterly Report on Form 10-Q, filed with
         the Securities and Exchange Commission on November 15, 2010).

10.1     Agreement and Plan of  Reorganization,  dated October 19, 2000, between
         Chancellor Group, Inc. and Southwin  financial,  Ltd.  (incorporated by
         reference to Exhibit No. 10.1 to the Company's  Current  Report on Form
         8-K, filed with the Securities and Exchange  Commission on November 21,
         2000).

31       Certification  of  Chief  Executive  Officer  and  Principal  Financial
         Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

32       Certification  of  Chief  Executive  Officer  and  Principal  Financial
         Officer  Pursuant  to 18 U.S.C.  Section  1350 as adopted  pursuant  to
         Section 906 of the Sarbanes Oxley Act of 2002.