UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-Q








(Mark
One)





þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
              For
      the quarterly period ended June 30,
      2009;ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
              For
      the transition period from ____________ to
  ____________.





Commission
file number:   1-32158

















GEOGLOBAL
      RESOURCES INC.(Exact
      name of registrant as specified in its charter)Delaware
            
            33-0464753(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)Suite
      #310, 605 – 1 Street SW,   Calgary,
      Alberta,   Canada
            
            T2P
      3S9(Address
      of principal executive offices)
            
            (Zip
      Code)Registrant's
      telephone number, including area code:
            
            +1
      403-777-9250





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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.




YES
      þ
            NO
      o








Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).




YES
      o
            NO
      þ








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 definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer
            
            Accelerated
      filer
            þ
            Non-accelerated
      filer
            
            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  o
            NO
      þ





The
number of shares outstanding of the registrant’s common stock as of August 5,
2009 was 72,805,756








GEOGLOBAL
RESOURCES INC.


(a
development stage enterprise)


QUARTERLY
REPORT ON FORM 10-Q





TABLE
OF CONTENTS





Page
      No.PART
      I
                FINANCIAL
      INFORMATIONITEM 1.
              
              Financial
      StatementsCondensed
      Consolidated Balance Sheets as of June 30, 2009 and December 31,
      2008
              
              3Condensed
      Consolidated Statements of Operations and Comprehensive Loss for the three
      and six months ended  June 30, 2009 and June 30, 2008 and for
      the period from inception on  August 21, 2002 to June 30,
      2009
              
              4Consolidated
      Statements of Changes in Stockholders' Equity
              
              5Condensed
      Consolidated Statements of Cash Flows for the six months ended June 30,
      2009 and June 30, 2008 and for the period from inception on August 21,
      2002 to June 30, 2009
              
              7Notes
      to the Condensed Consolidated Financial Statements as at June 30,
      2009
              
              8ITEM 2.
              
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              
              20ITEM 3.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              28ITEM 4.
              
              Controls
      and Procedures
              
              29PART
      II
                OTHER
      INFORMATIONITEM 1A.
              
              Risk
      Factors
              
              30ITEM 6.
              
              Exhibits
              
              34














PART
I


FINANCIAL
INFORMATION





ITEM
1.                 FINANCIAL
STATEMENTS





GEOGLOBAL
      RESOURCES INC.
                  (a
      development stage enterprise)
                  CONDENSED
      CONSOLIDATED BALANCE SHEETSJune
      30, 2009
                
                
                December
      31, 2008(Unaudited)AssetsCurrentCash
      and cash equivalents
                
                
                22,375,669
                
                
                
                25,432,814Accounts
      receivable
                
                
                266,278
                
                
                
                229,642Prepaids
      and deposits
                
                
                97,703
                
                
                
                242,05922,739,650
                
                
                
                25,904,515Restricted
      deposits (note 4)
                
                
                6,925,000
                
                
                
                10,800,000Property
      and equipment (note 5)
                
                
                39,164,523
                
                
                
                35,160,81468,829,173
                
                
                
                71,865,329LiabilitiesCurrentAccounts
      payable
                
                
                3,548,052
                
                
                
                4,847,513Accrued
      liabilities
                
                
                3,521,371
                
                
                
                4,330,591Due
      to related companies (note 11)
                
                
                58,943
                
                
                
                32,9167,128,366
                
                
                
                9,211,020Asset
      retirement obligation (note 6)
                
                
                745,368
                
                
                
                633,5987,873,734
                
                
                
                9,844,618Stockholders'
      EquityCapital
      stockAuthorized100,000,000
      common shares with a par value of $0.001 each1,000,000
      preferred shares with a par value of $0.01 eachIssued72,805,756
      common shares (December 31, 2008 – 72,805,756)
                
                
                58,214
                
                
                
                58,214Additional
      paid-in capital
                
                
                87,556,739
                
                
                
                84,554,673Deficit
      accumulated during the development stage
                
                
                (26,659,514
                )
                
                
                (22,592,176
                )60,955,439
                
                
                
                62,020,71168,829,173
                
                
                
                71,865,329See
      Going Concern (note 2), Commitments (note 13) and Contingencies (note
      14).
                  The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.





Page
3








GEOGLOBAL
      RESOURCES INC.
                  (a
      development stage enterprise)
                  CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                  (Unaudited)Three
      months
                  ended
                  June
      30, 2009
                
                
                Three
      months
                  ended
                  June
      30, 2008
                
                
                Six
      months
                  ended
                  June
      30, 2009
                
                
                Six
      months
                  ended
                  June
      30, 2008
                
                
                Period
      from Inception,
                  August
      21, 2002
                  to
      June 30, 2009Revenue
      and other incomeOil
      sales
                
                
                190,048
                
                
                
                --
                
                
                
                190,048
                
                
                
                --
                
                
                
                190,048Interest
      income
                
                
                83,933
                
                
                
                242,849
                
                
                
                198,029
                
                
                
                691,851
                
                
                
                5,759,606Consulting
      fees recovered
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                66,025Equipment
      costs recovered
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                19,395Gain
      on sale of equipment
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                42,228273,981
                
                
                
                242,849
                
                
                
                388,077
                
                
                
                691,851
                
                
                
                6,077,302ExpensesOperating
                
                
                83,271
                
                
                
                --
                
                
                
                83,271
                
                
                
                --
                
                
                
                83,271General
      and administrative
                
                
                886,573
                
                
                
                664,689
                
                
                
                1,719,742
                
                
                
                1,169,977
                
                
                
                9,338,754Consulting
      fees
                
                
                169,333
                
                
                
                162,273
                
                
                
                352,496
                
                
                
                464,261
                
                
                
                6,255,212Professional
      fees
                
                
                216,503
                
                
                
                404,379
                
                
                
                448,346
                
                
                
                518,696
                
                
                
                3,328,166Accretion
      Expense
                
                
                13,315
                
                
                
                8,490
                
                
                
                25,987
                
                
                
                14,868
                
                
                
                58,189Depletion
      and depreciation
                
                
                57,190
                
                
                
                12,932
                
                
                
                72,609
                
                
                
                25,564
                
                
                
                391,488Impairment
      of oil and gas
                  properties
      (note 5)
                
                
                --
                
                
                
                3,765,015
                
                
                
                --
                
                
                
                3,765,015
                
                
                
                10,098,015Foreign
      exchange (gain) loss
                
                
                (5,762
                )
                
                
                9,061
                
                
                
                (1,036
                )
                
                
                21,762
                
                
                
                109,7211,420,423
                
                
                
                5,026,839
                
                
                
                2,701,415
                
                
                
                5,980,143
                
                
                
                29,662,816Net
      loss and comprehensive loss
                  for
      the period
                
                
                (1,146,442
                )
                
                
                (4,783,990
                )
                
                
                (2,313,338
                )
                
                
                (5,288,292
                )
                
                
                (23,585,514
                )Warrant
      modification (note 9)
                
                
                (1,754,000
                )
                
                
                --
                
                
                
                (1,754,000
                )
                
                
                --
                
                
                
                (3,074,000
                )Net
      loss and comprehensive loss
                  applicable
      to common stockholders
                
                
                (2,900,442
                )
                
                
                (4,738,990
                )
                
                
                (4,067,338
                )
                
                
                (5,288,292
                )
                
                
                (26,659,514
                )Basic
      and diluted net loss
                  per
      share (note 12)
                
                
                (0.04
                )
                
                
                (0.07
                )
                
                
                (0.06
                )
                
                
                (0.08
                )Weighted
      average common shares
                  outstanding
                
                
                67,805,756
                
                
                
                67,205,755
                
                
                
                67,805,756
                
                
                
                67,205,755





The
accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.


Page
4








GEOGLOBAL
      RESOURCES INC.
                  (a
      development stage enterprise)
                  CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY
                  (Unaudited)Number
      of
                  Shares
                  #
                
                
                Capital Stock
                  $
                
                
                Additional
                  paid-in
      capital
                  $
                
                
                Accumulated
                  Deficit
                  $
                
                
                Stockholders'
                  Equity
                  $Common
      shares issued on incorporation - Aug 21, 2002
                
                
                1,000
                
                
                
                64
                
                
                
                --
                
                
                
                --
                
                
                
                64Net
      loss and comprehensive loss for the period
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (13,813
                )
                
                
                (13,813
                )Balance
      at December 31, 2002
                
                
                1,000
                
                
                
                64
                
                
                
                --
                
                
                
                (13,813
                )
                
                
                (13,749
                )Capital
      stock of GeoGlobal at August 29, 2003
                
                
                14,656,688
                
                
                
                14,657
                
                
                
                --
                
                
                
                10,914,545
                
                
                
                10,929,202Elimination
      of GeoGlobal capital stock in recognition
                  of
      reverse takeover
                
                
                (1,000
                )
                
                
                (14,657
                )
                
                
                --
                
                
                
                (10,914,545
                )
                
                
                (10,929,202
                )Common
      shares issued during 2003:On
      acquisition
                
                
                34,000,000
                
                
                
                34,000
                
                
                
                1,072,960
                
                
                
                --
                
                
                
                1,106,960Options
      exercised for cash
                
                
                396,668
                
                
                
                397
                
                
                
                101,253
                
                
                
                --
                
                
                
                101,650December
      2003 private placement financing
                
                
                6,000,000
                
                
                
                6,000
                
                
                
                5,994,000
                
                
                
                --
                
                
                
                6,000,000Share
      issuance costs on private placement
                
                
                --
                
                
                
                --
                
                
                
                (483,325
                )
                
                
                --
                
                
                
                (483,325
                )Share
      issuance costs on acquisition
                
                
                --
                
                
                
                --
                
                
                
                (66,850
                )
                
                
                --
                
                
                
                (66,850
                )Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                62,913
                
                
                
                --
                
                
                
                62,913Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (518,377
                )
                
                
                (518,377
                )Balance
      at December 31, 2003
                
                
                55,053,356
                
                
                
                40,461
                
                
                
                6,680,951
                
                
                
                (532,190
                )
                
                
                6,189,222Common
      shares issued during 2004:Options
      exercised for cash
                
                
                115,000
                
                
                
                115
                
                
                
                154,785
                
                
                
                --
                
                
                
                154,900Broker
      Warrants exercised for cash
                
                
                39,100
                
                
                
                39
                
                
                
                58,611
                
                
                
                --
                
                
                
                58,650Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                350,255
                
                
                
                --
                
                
                
                350,255Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (1,171,498
                )
                
                
                (1,171,498
                )Balance
      at December 31, 2004
                
                
                55,207,456
                
                
                
                40,615
                
                
                
                7,244,602
                
                
                
                (1,703,688
                )
                
                
                5,581,529Common
      shares issued during 2005:Options
      exercised for cash
                
                
                739,000
                
                
                
                739
                
                
                
                1,004,647
                
                
                
                --
                
                
                
                1,005,3862003
      Purchase Warrants exercised for cash
                
                
                2,214,500
                
                
                
                2,214
                
                
                
                5,534,036
                
                
                
                --
                
                
                
                5,536,250Broker
      Warrants exercised for cash
                
                
                540,900
                
                
                
                541
                
                
                
                810,809
                
                
                
                --
                
                
                
                811,350September
      2005 private placement financing
                
                
                4,252,400
                
                
                
                4,252
                
                
                
                27,636,348
                
                
                
                --
                
                
                
                27,640,600Share
      issuance costs on private placement
                
                
                --
                
                
                
                --
                
                
                
                (1,541,686
                )
                
                
                --
                
                
                
                (1,541,686
                )Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                4,354,256
                
                
                
                --
                
                
                
                4,354,256Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (3,162,660
                )
                
                
                (3,162,660
                )Balance
      at December 31, 2005
                
                
                62,954,256
                
                
                
                48,361
                
                
                
                45,043,012
                
                
                
                (4,866,348
                )
                
                
                40,225,025Common
      shares issued during 2006:Options
      exercised for cash
                
                
                2,284,000
                
                
                
                2,285
                
                
                
                2,706,895
                
                
                
                --
                
                
                
                2,709,180Options
      exercised for notes receivable
                
                
                184,500
                
                
                
                185
                
                
                
                249,525
                
                
                
                --
                
                
                
                249,7102003
      Purchase Warrants exercised for cash
                
                
                785,500
                
                
                
                786
                
                
                
                1,962,964
                
                
                
                --
                
                
                
                1,963,750Share
      issuance costs
                
                
                --
                
                
                
                --
                
                
                
                (74,010
                )
                
                
                --
                
                
                
                (74,010
                )Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                3,012,514
                
                
                
                --
                
                
                
                3,012,514Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (1,548,803
                )
                
                
                (1,548,803
                )Balance
      at December 31, 2006
                
                
                66,208,256
                
                
                
                51,617
                
                
                
                52,900,900
                
                
                
                (6,415,151
                )
                
                
                46,537,366Common
      shares issued during 2007:Options
      exercised for cash
                
                
                317,500
                
                
                
                317
                
                
                
                320,358
                
                
                
                --
                
                
                
                320,675June
      2007 private placement financing
                
                
                5,680,000
                
                
                
                5,680
                
                
                
                28,394,320
                
                
                
                --
                
                
                
                28,400,000Share
      issuance costs on private placement
                
                
                --
                
                
                
                --
                
                
                
                (2,612,973
                )
                
                
                --
                
                
                
                (2,612,973
                )2007
      Compensation Options
                
                
                --
                
                
                
                --
                
                
                
                705,456
                
                
                
                --
                
                
                
                705,4562005
      Stock Purchase Warrant modification
                
                
                --
                
                
                
                --
                
                
                
                1,320,000
                
                
                
                (1,320,000
                )
                
                
                --2005
      Compensation Option & Warrant modification
                
                
                --
                
                
                
                --
                
                
                
                240,000
                
                
                
                --
                
                
                
                240,000Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                1,522,996
                
                
                
                --
                
                
                
                1,522,996Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (1,543,110
                )
                
                
                (1,543,110
                )Balance
      as at December 31, 2007
                
                
                72,205,756
                
                
                
                57,614
                
                
                
                82,791,057
                
                
                
                (9,278,261
                )
                
                
                73,570,410





Page
5





GEOGLOBAL
      RESOURCES INC.
                  (a
      development stage enterprise)
                  CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY (continued)
                  (Unaudited)Number
      of
                  Shares
                  #
                
                
                Capital Stock
                  $
                
                
                Additional
                  paid-in
      capital
                  $
                
                
                Accumulated
                  Deficit
                  $
                
                
                Stockholders'
                  Equity
                  $Balance
      from December 31, 2007
                
                
                72,205,756
                
                
                
                57,614
                
                
                
                82,791,057
                
                
                
                (9,278,261
                )
                
                
                73,570,410Common
      shares issued during 2008:Options
      exercised for cash
                
                
                600,000
                
                
                
                600
                
                
                
                659,400
                
                
                
                --
                
                
                
                660,000Stock-based
      compensation
                
                
                --
                
                
                
                --
                
                
                
                1,104,216
                
                
                
                --
                
                
                
                1,104,216Net
      loss and comprehensive loss for the year
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (13,313,915
                )
                
                
                (13,313,915
                )Balance
      as at December 31, 2008
                
                
                72,805,756
                
                
                
                58,214
                
                
                
                84,554,673
                
                
                
                (22,592,176
                )
                
                
                62,020,711Transactions
      during the period:Compensation
      option and warrant
                  modification
      (note 9)
                
                
                --
                
                
                
                --
                
                
                
                264,000
                
                
                
                --
                
                
                
                264,000Stock
      purchase warrant modification (note 9)
                
                
                --
                
                
                
                --
                
                
                
                1,754,000
                
                
                
                (1,754,000
                )
                
                
                --Stock-based
      compensation (note 10)
                
                
                --
                
                
                
                --
                
                
                
                984,066
                
                
                
                --
                
                
                
                984,066Net
      loss and comprehensive loss for the period
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (2,313,338
                )
                
                
                (2,313,338
                )Balance
      as at June 30, 2009
                
                
                72,805,756
                
                
                
                58,214
                
                
                
                87,556,739
                
                
                
                (26,659,514
                )
                
                
                60,955,439The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.





Page
6





GEOGLOBAL
      RESOURCES INC.
                  (a
      development stage enterprise)
                  CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (Unaudited)Six
      months
                  ended
                  June
      30, 2009
                
                
                Six
      months
                  ended
                  June
      30, 2008
                
                
                Period
      from Inception,
                  August
      21, 2002
                  to
      June 30, 2009Cash
      flows provided by (used in) operating activities:Net
      loss
                
                
                (2,313,338
                )
                
                
                (5,288,292
                )
                
                
                (23,585,514
                )Adjustments
      to reconcile net loss to net cash used
                  in
      operating activities:Accretion
      expense
                
                
                25,987
                
                
                
                14,868
                
                
                
                58,189Asset
      impairment
                
                
                --
                
                
                
                3,765,015
                
                
                
                10,098,015Depletion
      and depreciation
                
                
                72,609
                
                
                
                25,564
                
                
                
                391,488Gain
      on sale of equipment
                
                
                --
                
                
                
                --
                
                
                
                (42,228
                )Stock-based
      compensation (note 10)
                
                
                605,323
                
                
                
                312,662
                
                
                
                6,517,225Compensation
      option & warrant  modification (note 9)
                
                
                264,000
                
                
                
                --
                
                
                
                504,000Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                (36,636
                )
                
                
                (115,504
                )
                
                
                (191,278
                )Prepaids
      and deposits
                
                
                144,356
                
                
                
                35,656
                
                
                
                (66,135
                )Accounts
      payable
                
                
                (12,728
                )
                
                
                (181,754
                )
                
                
                35,513Accrued
      liabilities
                
                
                (261,057
                )
                
                
                (322,500
                )
                
                
                100,601Due
      to related companies
                
                
                26,027
                
                
                
                1,220
                
                
                
                17,187(1,485,457
                )
                
                
                (1,753,065
                )
                
                
                (6,162,937
                )Cash
      flows provided by (used in) investing activities:Oil
      and natural gas property additions
                
                
                (3,611,792
                )
                
                
                (7,452,611
                )
                
                
                (41,442,127
                )Property
      and equipment additions
                
                
                --
                
                
                
                (15,028
                )
                
                
                (1,521,301
                )Proceeds
      on sale of equipment
                
                
                --
                
                
                
                --
                
                
                
                82,800Cash
      acquired on acquisition
                
                
                --
                
                
                
                --
                
                
                
                3,034,666Restricted
      deposits
                
                
                3,875,000
                
                
                
                (5,263,738
                )
                
                
                (8,095,000
                )Changes
      in investing assets and liabilities:Cash
      call receivable
                
                
                --
                
                
                
                --
                
                
                
                --Prepaids
      and deposits
                
                
                --
                
                
                
                (41,332
                )
                
                
                (31,568
                )Accounts
      payable
                
                
                (1,286,733
                )
                
                
                (2,736,862
                )
                
                
                3,463,531Accrued
      liabilities
                
                
                (548,163
                )
                
                
                868,139
                
                
                
                3,420,770(1,571,688
                )
                
                
                (14,641,432
                )
                
                
                (41,088,229
                )Cash
      flows provided by (used in) financing activities:Proceeds
      from issuance of common shares
                
                
                --
                
                
                
                --
                
                
                
                75,612,165Share
      issuance costs
                
                
                --
                
                
                
                --
                
                
                
                (4,073,388
                )Changes
      in financing liabilities:Note
      payable
                
                
                --
                
                
                
                --
                
                
                
                (2,000,000
                )Accounts
      payable
                
                
                --
                
                
                
                --
                
                
                
                61,078Due
      to related companies
                
                
                --
                
                
                
                --
                
                
                
                26,980--
                
                
                
                --
                
                
                
                69,626,835Net
      increase (decrease) in cash and cash equivalents
                
                
                (3,057,145
                )
                
                
                (16,394,497
                )
                
                
                22,375,669Cash
      and cash equivalents, beginning of the period
                
                
                25,432,814
                
                
                
                48,134,858
                
                
                
                --Cash
      and cash equivalents, end of the period
                
                
                22,375,669
                
                
                
                31,740,361
                
                
                
                22,375,669Cash
      and cash equivalentsCurrent
      bank accounts
                
                
                222,308
                
                
                
                396,046
                
                
                
                222,308Short
      term deposits
                
                
                22,153,361
                
                
                
                31,344,315
                
                
                
                22,153,36122,375,669
                
                
                
                31,740,361
                
                
                
                22,375,669




The
accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.


Page
7
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


1.         Organization
and Nature of Operations




The
Company is engaged primarily in the pursuit of petroleum and natural gas through
exploration and development in India.  Since inception, the efforts of
GeoGlobal have been devoted to the pursuit of Production Sharing Contracts with
the Gujarat State Petroleum Corporation, Oil India Limited among others, and the
Government of India and the development thereof.  The Company is a
Delaware corporation whose common stock is listed and traded on the NYSE
Euronext Exchange under the symbol GGR.




On August
29, 2003 (the inception date), the Company commenced oil and gas exploration
activities.  As of June 30, 2009, the Company has not earned
significant revenue from its oil and gas operations.  Accordingly, the
Company’s activities are considered to be those of a “Development Stage
Enterprise” as set forth in SFAS No. 7, “Accounting for Development Stage
Entities.”  Among the disclosures required by SFAS No. 7 are that the
Company’s financial statements be identified as those of a development stage
company.  In addition, the statements of operations and comprehensive
loss, stockholders equity (deficit) and cash flows are required to disclose all
activity since the Company’s date of inception.  The Company will
continue to prepare its financial statements and related disclosures in
accordance with SFAS No. 7 until such time that the Company’s oil and gas
properties have generated significant revenues.





2.         Going
Concern




To date,
the Company has not earned significant revenue from its operations and is
considered to be in the development stage.  The Company incurs
negative cash flows from operations, and at this time all exploration activities
and overhead expenses are financed by way of equity issuance and interest
income.  The recoverability of the costs incurred to date is uncertain
and dependent upon achieving commercial production or sale.




The
Company's ability to continue as a going concern is dependent upon obtaining the
necessary financing to complete further exploration and development activities
and generate profitable operations from its oil and natural gas interests in the
future.  The Company's financial statements as at and for the period
ended June 30, 2009 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company during the six months
ended June 30, 2009 incurred a net loss of approximately $2.3 million, used
approximately $1.5 million of cash flow in its operating activities, used
approximately $1.6 million in its investing activities and had an accumulated
deficit of approximately $26.7 million.  These matters raise doubt
about the Company’s ability to continue as a going concern.




The
Company expects to incur expenditures to further its exploration programs and
the Company's existing cash balance and any cash flow from operating activities
may not be sufficient to satisfy its current obligations and meet its
exploration commitments of $31.0 million over the next three
years.  The Company is considering various alternatives to remedy any
future shortfall in capital.  The Company may deem it necessary to
raise capital through equity markets, debt markets or other financing
arrangements, including participation arrangements that may be available for
continued exploration expenditures.  As a result of the current global
financial crisis, there can be no assurance this capital will be available and
if it is not, the Company may be forced to substantially curtail or cease
exploration block acquisition and/or exploration expenditures.




As at
June 30, 2009, the Company has working capital of approximately $15.6 million
which is available for the Company's future operations.  In addition,
the Company has $6.9 million in restricted deposits pledged as security against
the minimum work programs which will be released upon completion of the minimum
work programs.




Should
the going concern assumption not be appropriate and the Company is not able to
realize its assets and settle its liabilities, commitments (as described in note
13) and contingencies (as described in note 14) in the normal course of
operations, these condensed consolidated financial statements would require
adjustments to the amounts and classifications of assets and liabilities, and
these adjustments could be significant.




These
condensed consolidated financial statements do not reflect the adjustments or
reclassifications of assets and liabilities that would be necessary if the
Company is unable to continue as a going concern.





Page
8
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


3.         Significant
Accounting Policies




Basis
of presentation


The
accompanying condensed consolidated financial statements of the Company have not
been audited and are presented in United States dollars unless otherwise noted
and have been prepared by management in accordance with accounting principles
generally accepted in the United States of America.




In the
opinion of management, these condensed consolidated financial statements reflect
all of the normal and recurring adjustments necessary to present fairly the
financial position at June 30, 2009, the results of operations for the three and
six months ended and the cash flows for the six months ended June 30, 2009 and
2008 and for the period from inception of August 21, 2002 to June 30, 2009.
 In preparing these accompanying condensed consolidated financial
statements, management has made certain estimates and assumptions that affect
reported amounts in the financial statements and related disclosures.  The
Company bases its estimates on various assumptions that are believed to be
reasonable under the circumstances.  Accordingly, actual results may differ
significantly from these estimates under different assumptions or
circumstances.




Certain
information, accounting policies, and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in this
Form 10-Q pursuant to certain rules and regulations of the Securities and
Exchange Commission. These condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2008.  The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year.




Recent
Accounting Pronouncements


SFAS 141R– In December 2007,
the FASB issued Statement of Financial Accounting Standards No. 141 (revised
2007) (SFAS 141R), “Business Combinations”.  SFAS 141R requires the
acquiring entity in a business combination to recognize the assets acquired and
liabilities assumed. Further, SFAS 141R also changes the accounting for acquired
in-process research and development assets, contingent consideration, partial
acquisitions, transaction costs and non-controlling interests.  The
Company adopted this new accounting standard on January 1, 2009.  The
adoption of SFAS 141R will impact future business combinations.




FSP 157-2– In February 2008,
the FASB issued FASB Staff Position on Statement 157, "Effective Date of FASB
Statement No. 157, "(FSP 157-2). FSP 157-2 delayed the effective date of SFAS
157 for nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed on a recurring basis, to fiscal years beginning after
November 15, 2008.  The Company’s significant nonfinancial assets and
liabilities include those reporting units measured at fair value in a goodwill
impairment test, asset retirement obligations and non-financial assets acquired
and liabilities assumed in a business combination.  The Company
adopted this new accounting standard on January 1, 2009.  The adoption
of FSP 157-2 did not have an impact on our financial statements.




FSP 157-3– In October 2008,
the FASB issued FASB Staff Position on Statement 157, "Determining the Fair
Value of a Financial Asset When the Market for That Asset Is Not Active” (FSP
157-3).  FSP 157-3 clarifies how SFAS 157 should be applied when
valuing securities in markets that are not active by illustrating key
considerations in determining fair value.  It also reaffirms the
notion of fair value as the exit price as of the measurement
date.  FSP 157-3 was effective upon issuance, which included periods
for which financial statements have not yet been issued.  The Company
adopted this new accounting standard effective July 1, 2008.  The
adoption of FSP 157-3 did not have a material impact on our financial
statements.




SFAS 160 – In December 2007,
the FASB issued Statement of Financial Accounting Standards No. 160 (SFAS 160),
“Non-controlling Interests in Consolidated Financial Statements – an amendment
of ARB No. 51.”  Under SFAS 160, all entities are required to report
non-controlling (minority) interests in subsidiaries as equity in the
consolidated financial statements. In addition, transactions between an entity
and non-controlling interests will be treated as equity
transactions.  The Company adopted this new accounting standard on
January 1, 2009.  The adoption of SFAS 160 did not have an impact on
our financial statements.




SFAS 161 – In March 2008, the
FASB issued Statement of Financial Accounting Standards No. 161 (SFAS 161),
“Disclosures about Derivative Instruments and Hedging Activities – an amendment
of FASB Statement No. 133.” SFAS 161 expands disclosures for derivative
instruments by requiring entities to disclose the fair value of derivative
instruments and their gains or losses in tabular format.  SFAS 161
also requires disclosure of information about credit risk-related contingent
features in derivative agreements, counterparty credit risk, and strategies and
objectives for using derivative instruments.  The Company adopted this
new accounting standard on January 1, 2009.  The adoption of SFAS 161
did not have a material impact on our financial statements as the standard
relates only to disclosures of items measured at fair value.




Page
9
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


3.         Significant
Accounting Policies (continued)




FSP FAS 107-1 and APB 28-1–In April
2009, the FASB issued FASB Staff Position on FAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments" (FSP FAS 107-1 and APB
28-1).  This FSP requires that the fair value disclosures required by
SFAS 107 “Disclosures about Fair Value of Financial Instruments” be included for
interim reporting periods.  The Company adopted this new accounting
standard effective April 1, 2009.  The adoption of FSP FAS 107-1 and
APB 28-1 did not have a material impact on the Company’s financial
statements.




FSP FAS 115-2 and FAS 124-2 –
In April 2009, the FASB issued FASB Staff Position on FAS 115-2 and FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments” (FSP FAS
115-2 and FAS 124-2).  This FSP amends the impairment guidance
relating to certain debt securities and will require a company to assess the
likelihood of selling the security prior to recovering its cost
basis.  Additionally, when a company meets the criteria for
impairment, the impairment charges related to credit losses would be recognized
in earnings, while non-credit losses would be reflected in other comprehensive
income.  The Company adopted this new accounting standard effective
April 1, 2009.  The adoption of FSP FAS 115-2 and FAS 124-2 did not
have a material impact on the Company’s financial statements.




FSP FAS 157-4– In April 2009,
the FASB issued FASB Staff Position on FAS 157-4, “Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS
157-4).  FSP FAS 157-4 provides guidance on determining when the
trading volume and activity for an asset or liability has significantly
decreased, which may indicate an inactive market, and on measuring the fair
value of an asset or liability in inactive markets.  The Company
adopted this new accounting standard effective April 1, 2009.  The
adoption of FSP FAS 157-4 did not have a material impact on the Company’s
financial statements.




FSP FAS 141R-1– In April
2009, the FASB issued FASB Staff Position on FAS 141R-1, “Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies” (FSP FAS 141R-1).  FSP FAS 141R-1 requires that an
acquirer recognize at fair value, at the acquisition date, an asset acquired or
a liability assumed in a business combination that arises from a contingency if
the acquisition-date fair value of the asset or liability can be determined
during the measurement period.  The Company adopted this new
accounting standard on January 1, 2009.   This standard will be
applied to future business combinations.




SFAS 165 – In May 2009, the
FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which establishes
general standards of accounting for, and disclosure of, events that occur after
the balance sheet date, but before financial statements are issued or are
available to be issued.  SFAS 165 is effective for interim or annual
financial periods ending after June 15, 2009.  The adoption of SFAS
165 did not have a material effect on the Company’s financial
statements.




SFAS 166 – In June 2009, the
FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an
amendment of FASB Statement No. 140” (“SFAS 166”).  SFAS 166 seeks to
improve the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets.  Specifically,
SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates
more stringent conditions for reporting a transfer of a portion of a financial
asset as a sale, clarifies other sale-accounting criteria, and changes the
initial measurement of a transferor’s interest in transferred financial
assets.  SFAS 166 is effective for annual reporting periods beginning
after November 15, 2009. The Company is currently evaluating the impact the
adoption of SFAS 166 will have on our financial position and results of
operations.




Page
10
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


3.         Significant
Accounting Policies (continued)




SFAS 167 – In June 2009, the
FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS
167”). SFAS 167 amends FASB Interpretation No. 46(R), “Consolidation of Variable
Interest Entities” for determining whether an entity is a variable interest
entity (“VIE”) and requires an enterprise to perform an analysis to determine
whether the enterprise’s variable interest or interests give it a controlling
financial interest in a VIE.  Under SFAS 167, an enterprise has a
controlling financial interest when it has (i) the power to direct the
activities of a VIE that most significantly impact the entity’s economic
performance and (ii) the obligation to absorb losses of the entity or the right
to receive benefits from the entity that could potentially be significant to the
VIE.  SFAS 167 also requires an enterprise to assess whether it has an
implicit financial responsibility to ensure that a VIE operates as designed when
determining whether it has power to direct the activities of the VIE that most
significantly impact the entity’s economic performance.  SFAS 167 also
requires ongoing assessments of whether an enterprise is the primary beneficiary
of a VIE, requires enhanced disclosures and eliminates the scope exclusion for
qualifying special-purpose entities.  SFAS 167 is effective for annual
reporting periods beginning after November 15, 2009.  The Company is
currently evaluating the impact the adoption of SFAS 167 will have on our
financial position and results of operations.




SFAS 168 – In June 2009, the
FASB issued SFAS No. 168, “The FASB Accounting Standards
CodificationTM
and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162” (“SFAS 168”).  SFAS 168 establishes the FASB
Standards Accounting Codification (“Codification”) as the source of
authoritative GAAP recognized by the FASB to be applied to nongovernmental
entities and rules and interpretive releases of the SEC as authoritative GAAP
for SEC registrants.  The Codification will supersede all the existing
non-SEC accounting and reporting standards upon its effective date and
subsequently, the FASB will not issue new standards in the form of Statements,
FASB Staff Positions or Emerging Issues Task Force Abstracts.  SFAS
168 will become effective for the Company’s third quarter of
2009.  The Codification is not intended to change existing
GAAP.  Accordingly, the Company does not anticipate any impact on its
consolidated financial statements.





4.         Restricted
Deposits




The
Company’s PSCs relating to exploration blocks onshore and offshore India contain
provisions whereby the joint venture participants must provide the Government of
India a bank guarantee in the amount of 35% of the participant's share of the
minimum work program for a particular phase, to be undertaken annually during
the budget period April 1 to March 31.  These bank guarantees have
been provided to the Government of India and serve as guarantees for the
performance of such minimum work programs and are in the form of irrevocable
letters of credit which are secured by term deposits of the Company in the same
amount.




The term
deposits securing these bank guarantees are as follows:




June
      30, 2009
                        
                        
                        December
      31, 2008$
                        
                        
                        
                        $Exploration
      Blocks - IndiaMehsana
                        
                        
                        160,000
                        
                        
                        
                        160,000Sanand/Miroli
                        
                        
                        1,300,000
                        
                        
                        
                        1,300,000Ankleshwar
                        
                        
                        1,490,000
                        
                        
                        
                        1,490,000Tarapur
                        
                        
                        940,000
                        
                        
                        
                        940,000DS
      03
                        
                        
                        450,000
                        
                        
                        
                        450,000DS
      04
                        
                        
                        215,000
                        
                        
                        
                        215,000KG
      Onshore
                        
                        
                        1,475,000
                        
                        
                        
                        3,695,000RJ
      20
                        
                        
                        490,000
                        
                        
                        
                        1,475,000RJ
      21
                        
                        
                        405,000
                        
                        
                        
                        1,075,0006,925,000
                        
                        
                        
                        10,800,000





Page
11
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


5.         Property
and Equipment




The
amounts capitalized as oil and natural gas properties were incurred for the
purchase, exploration and ongoing development of various properties in
India.




June
      30, 2009
                  $
                
                
                December
      31, 2008
                  $Oil
      and natural gas properties (using the full-cost method)Proved
      properties
                
                
                5,268,846
                
                
                
                --Unproved
      properties
                
                
                43,016,110
                
                
                
                44,182,707Total
      oil and natural gas properties
                
                
                48,284,956
                
                
                
                44,182,707Building
                
                
                889,609
                
                
                
                889,609Computer,
      office and other equipment
                
                
                548,893
                
                
                
                548,893Total
      property and equipment
                
                
                49,723,458
                
                
                
                45,621,209Impairment
      of oil and natural gas properties
                
                
                (10,098,015
                )
                
                
                (10,098,015
                )Accumulated
      depletion and depreciation
                
                
                (460,920
                )
                
                
                (362,380
                )Total
      property and equipment, net
                
                
                39,164,523
                
                
                
                35,160,814




The
Company’s oil and natural gas properties consist of contract interests in 10
exploration blocks held in India.




The
Company has capitalized $650,976 (June 30, 2008 - $658,626) of general and
administrative expenses directly related to exploration activities, including
$378,743 (June 30, 2008 - $303,711) of stock-based compensation
expense.  In addition, the Company has capitalized $25,931 (June 30,
2008 - $Nil) of support equipment depreciation.




Impairment
of Oil and Gas Properties


The
Company performed a ceiling test calculation at June 30, 2009, to assess the
ceiling limitation of its proved oil properties.  The price of crude
oil was $66.42 and is based upon the Nigeria Bonny Light bench
mark.  At June 30, 2009, the Company’s net capitalized costs of proved
oil and natural gas properties did not exceed the ceiling
limitation.




For the
period ended June 30, 2009, the Company charged $Nil (June 30, 2008 -
$3,765,015) to the statement of operations for impairment charges.




6.         Asset
Retirement Obligation




Asset
retirement obligations are recorded for an obligation where the Company will be
required to retire, dismantle, abandon and restore tangible long-lived
assets.




The
following table summarizes the changes in the asset retirement
obligation:




June
      30, 2009
                  $
                
                
                December
      31, 2008
                  $Asset
      retirement obligation at beginning of period
                
                
                633,598
                
                
                
                318,922Liabilities
      incurred
                
                
                85,783
                
                
                
                282,474Accretion
      expense
                
                
                25,987
                
                
                
                32,202Asset
      retirement obligation at end of period
                
                
                745,368
                
                
                
                633,598





Page
12
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


7.         Fair
Value Measurements




Periodically,
the Company utilizes cash equivalents held in guaranteed investment
certificates, terms deposits and bearer deposits notes to invest a portion of
its cash on hand.  These securities are carried at fair value on the
consolidated balance sheets, with the changes in the fair value included in the
consolidated statements of operations and comprehensive loss for the period in
which the change occurs.




As
defined in SFAS 157, fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price).  SFAS 157
establishes a fair value hierarchy that prioritizes the inputs used to measure
fair value.  The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1
measurement) and the lowest priority to unobservable inputs (level 3
measurement).




The three
levels of the fair value hierarchy defined by SFAS 157 are as
follows:




Level 1 –
Quoted prices are available in active markets for identical assets or
liabilities as of the reporting date.  Active markets are those in
which transactions for the asset or liability occur in sufficient frequency and
volume to provide pricing information on an ongoing basis.




Level 2 –
Pricing inputs are other than quoted prices in active markets included in level
1, which are either directly or indirectly observable as of the reported date
and includes those financial instruments that are valued using models or other
valuation methodologies.




Level 3 –
Pricing inputs include significant inputs that are generally less observable
from objective sources.  These inputs may be used with internally developed
methodologies that result in management’s best estimate of fair
value.




As at
June 30, 2009, the Company’s financial assets that are re-measured at fair value
on a recurring basis consisted of $22,153,361 in cash equivalents that are
classified as cash and cash equivalents and $6,925,000 in cash equivalents that
are classified as restricted deposits in the Consolidated Balance
Sheets.  As there are no withdrawal restrictions, these are classified
within Level 1 of the fair value hierarchy because they are valued using quoted
market prices for identical assets.





8.         Escrowed
common stock




In August
2003, the Company completed a transaction with GeoGlobal Resources (India) Inc.,
a corporation then wholly-owned by Mr. Jean Paul Roy, whereby the Company
acquired all of the outstanding capital stock of GeoGlobal Resources (India)
Inc. in exchange for 34.0 million shares of its Common Stock and a US$2.0
million promissory note which has been paid in full.  Of the 34.0 million
shares, 14.5 million shares were delivered to Mr. Roy at the closing of the
transaction and an aggregate of 19.5 million shares were held in
escrow.




In August
2004, 14.5 million shares were released to Mr. Roy from escrow upon the
commencement of a drilling program on the KG Offshore Block.  The final 5.0
million shares remain in escrow and will be released only if a commercial
discovery as defined under the PSC is declared on the KG Offshore
Block.  Subsequent to the quarter end, Mr. Roy requested the release
from escrow of the remaining 5.0 million shares and the Company’s Board of
Directors is currently reviewing that request.


Page
13
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


9.         Warrants




From time
to time, the Company has issued compensation options, compensation warrants and
or warrants (collectively the “warrants”) in connection with financing
transactions.  The fair value of any warrants issued is recorded as a
reduction to share capital related to the financing transaction with a
corresponding increase recorded to Warrants.  The fair value of the
Warrants is determined using the Black–Scholes option pricing model and
management’s assumptions as disclosed.




Activity
with respect to all warrants is presented below for the periods as
noted:




June
      30, 2009
                
                
                December
      31, 2008Warrants
                  #
                
                
                Weighted
      Average Exercise Price
                  $
                
                
                Warrants
                  #
                
                
                Weighted
      Average Exercise Price
                  $Outstanding
      warrants at the beginning of period
                
                
                5,599,716
                
                
                
                7.91
                
                
                
                5,599,716
                
                
                
                7.91Warrants
      granted
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Warrants
      exercised
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Warrants
      outstanding at the end of period
                
                
                5,599,716
                
                
                
                7.91
                
                
                
                5,599,716
                
                
                
                7.91Exercisable
      at end of period
                
                
                5,599,716
                
                
                
                7.91
                
                
                
                5,599,716
                
                
                
                7.91




The
weighted average remaining life by exercise price as of June 30, 2009 is
summarized below:




Warrants
              
              Outstanding
      and
                Exercisable
                #
              
              
              Weighted
      Average Remaining Life
                (Months)
              
              
              Weighted
      Average Exercise Price
                $Compensation
      Options
              
              
              535,944
              
              
              
              23.7
              
              
              
              5.55Compensation
      Warrants
              
              
              97,572
              
              
              
              23.7
              
              
              
              9.00Stock
      Purchase Warrants
              
              
              4,966,200
              
              
              
              23.7
              
              
              
              8.145,599,716
              
              
              
              23.7
              
              
              
              7.91




The
warrants have certain terms and conditions as follows:




On May
26, 2009, the Board of Directors approved a two year extension for all
Compensation Options, Compensation Warrants and Stock Purchase Warrants from
June 20, 2009 to June 20, 2011.




Compensation
options enable the holder to purchase one fully-paid non-assessable common share
of the Company at a specified price up to June 20, 2011.  Certain
compensation options consist of one compensation option and one half of one
common share purchase warrant referred to as compensation warrants;




Compensation
warrants enable the holder to purchase one fully-paid non-assessable common
share of the Company at a specified price up to June 20, 2011; and




Warrants
enable the holder to purchase one fully-paid non-assessable common share of the
Company at a specified price up to June 20, 2011.




The
Company has recorded the incremental difference in the fair value of these
instruments immediately prior to and after the modification.  The fair
value of the instruments was determined using a Black-Scholes option-pricing
model using the following assumptions as at the date of extension:




June
      20, 2009Risk-free
      interest rate
                
                
                1.25%Expected
      life
                
                2.0
      yearsExpected
      volatility
                
                
                127.7%Expected
      dividend yield
                
                
                0%




The
resulting incremental fair value of $1,754,000 associated with the Stock
Purchase Warrants held by shareholders was recorded as a charge to the deficit,
with a corresponding entry to additional paid-in capital.




The
resulting incremental fair value of the Compensation Options and the
Compensation Option Warrants of $264,000 were recorded as charge to general and
administrative expense, with a corresponding entry to additional paid-in
capital.


Page
14
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


10.         Stock
Options




The
Company's 2008 Stock Incentive Plan (2008 Plan)


On July
29, 2008 at the Annual Meeting of Stockholders, the shareholders of the Company
approved the adoption of the 2008 Plan.  Under the terms of the 2008
Plan, 12,000,000 common shares have been reserved for issuance on exercise of
options granted under the 2008 Plan.  As at June 30, 2009, the Company
had 10,545,000 common shares remaining for the grant of options under the 2008
Plan.  The Board of Directors of the Company may amend or modify the
2008 Plan at any time, subject to any required stockholder
approval.  The 2008 Plan will terminate on the earliest of: (i) May
30, 2018; (ii) the date on which all shares available for issuance under the
2008 Plan have been issued as fully-vested shares; or, (iii) the termination of
all outstanding options in connection with certain changes in control or
ownership of the Company.




Stock-based
Compensation


The
Company adopted SFAS 123(R), using the modified-prospective-transition method on
January 1, 2006.  Under this method, the Company is required to
recognize compensation cost for stock-based compensation arrangements with
employees, non-employee consultants and non-employee directors based on their
grant date fair value using the Black-Scholes option-pricing model, such cost to
be expensed over the compensations’ respective vesting periods.  For
awards with graded vesting, in which portions of the award vest in different
periods, the Company recognizes compensation costs over the vesting periods for
each separate vested tranche.




The
following table summarizes stock-based compensation for employees, non-employee
consultants and non-employee directors:




Three
      months
                ended
                June
      30, 2009
              
              
              Three
      months
                ended
                June
      30, 2008
              
              
              Six
      months
                ended
                June
      30, 2009
              
              
              Six
      months
                ended
                June
      30, 2008
              
              
              Period
      from
                Inception
                August
      21, 2002
                to
      June 30, 2009$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Stock-based
      compensationConsolidated
      Statements of OperationsGeneral
      and administrative
              
              
              215,825
              
              
              
              185,385
              
              
              
              579,170
              
              
              
              366,489
              
              
              
              3,232,020Consulting
      fees
              
              
              10,253
              
              
              
              (45,216
              )
              
              
              26,153
              
              
              
              (53,827
              )
              
              
              3,285,205226,078
              
              
              
              140,169
              
              
              
              605,323
              
              
              
              312,662
              
              
              
              6,517,225Consolidated
      Balance SheetsOil
      and gas interests
              
              
              96,579
              
              
              
              133,632
              
              
              
              378,743
              
              
              
              303,711
              
              
              
              4,873,991322,657
              
              
              
              273,801
              
              
              
              984,066
              
              
              
              616,373
              
              
              
              11,391,216




At June
30, 2009, the total compensation cost related to non-vested awards not yet
recognized was $203,321 (December 31, 2008 – $1,719,349) which will be
recognized over a weighted-average period of 1.7 years.  During the
six months ended June 30, 2009 and June 30, 2008, no stock options were
exercised.




No income
tax benefit has been recognized relating to stock-based compensation expense and
no tax benefits have been realized from the exercise of stock
options.




The fair
value of each option granted was estimated on the date of grant using the
Black-Scholes option-pricing model.  Weighted average assumptions used
in the valuation are disclosed in the following table:




Three
      months
                  ended
                  June
      30, 2009
                
                
                Three
      months
                  ended
                  June
      30, 2008
                
                
                Six
      months ended
                  June
      30, 2009
                
                
                Six
      months ended
                  June
      30, 2008Fair
      value of stock options granted (per option)
                
                
                $  
      0.50
                
                
                
                $  
      1.02
                
                
                
                $  
      0.37
                
                
                
                $  
      1.02Risk-free
      interest rate
                
                
                1.7%
                
                
                
                2.6%
                
                
                
                1.3%
                
                
                
                2.6%Volatility
                
                
                114%
                
                
                
                121%
                
                
                
                108%
                
                
                
                121%Expected
      life
                
                3.2
      years
                
                
                2.2
      years
                
                
                2.8
      years
                
                
                2.2
      yearsDividend
      yield
                
                
                0%
                
                
                
                0%
                
                
                
                0%
                
                
                
                0%





Page
15
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


10.         Stock
Options (continued)




Stock
option table


Activity
with respect to all stock options is presented below for the periods as
noted:




June
      30, 2009
                
                
                December
      31, 2008Shares
                  #
                
                
                Weighted
      Average Exercise Price
                  $
                
                
                Shares
                  #
                
                
                Weighted
      Average Exercise Price
                  $Outstanding
      options at beginning of period
                
                
                5,325,000
                
                
                
                3.67
                
                
                
                4,470,000
                
                
                
                4.04Options
      granted
                
                
                80,000
                
                
                
                1.09
                
                
                
                1,575,000
                
                
                
                1.94Options
      exercised
                
                
                --
                
                
                
                --
                
                
                
                (600,000
                )
                
                
                1.10Options
      expired
                
                
                (35,000
                )
                
                
                6.45
                
                
                
                (110,000
                )
                
                
                6.50Forfeitures
      and other adjustments
                
                
                --
                
                
                
                --
                
                
                
                (10,000
                )
                
                
                7.52Options
      outstanding at end of period
                
                
                5,370,000
                
                
                
                3.64
                
                
                
                5,325,000
                
                
                
                3.69Outstanding
      aggregate intrinsic value
                
                $
                --
                
                
                
                
                
                
                $
                --Exercisable
      at end of period
                
                
                4,182,500
                
                
                
                3.97
                
                
                
                3,610,000
                
                
                
                4.37Exercisable
      aggregate intrinsic value
                
                $
                --
                
                
                
                
                
                
                $
                --





The
weighted average remaining life by exercise price as of June 30, 2009 is
summarized below:




Range of Exercise Prices
                  $
                
                
                Outstanding
      Shares
                  #
                
                
                Weighted
      Average
                  Remaining
      Life
                  Months
                
                
                Exercisable
      Shares
                  #
                
                
                Weighted
      Average Exercise Price
                  $1.00
      - 2.99
                
                
                
                1,455,000
                
                
                
                33.2
                
                
                
                657,500
                
                
                
                1.713.00
      - 4.99
                
                
                
                2,375,000
                
                
                
                52.0
                
                
                
                2,105,000
                
                
                
                3.925.00
      - 5.99
                
                
                
                1,490,000
                
                
                
                37.1
                
                
                
                1,370,000
                
                
                
                5.046.00
      - 6.99
                
                
                
                50,000
                
                
                
                75.2
                
                
                
                50,000
                
                
                
                6.815,370,000
                
                
                
                43.0
                
                
                
                4,182,500
                
                
                
                3.97





11.         Related
Party Transactions




Related
party transactions are measured at the exchange amount which is the amount of
consideration established and agreed by the related parties.




Roy
Group (Mauritius) Inc. (RGM)


In March
2003, the Company entered into a Participating Interest Agreement with RGM (a
party related by a common officer and director), whereby the Company assigned
and holds in trust for RGM 50% of the benefits and obligations of the production
sharing contract covering the KG Offshore Block leaving the Company with a net
5% participating interest in the KG Offshore Block.  The assignment of
this interest is subject to approval by the Government of India.




Under the
terms of the Participating Interest Agreement and until approval by the
Government of India, the Company retains the exclusive right to deal with the
other partners to the KG Offshore Block and is entitled to make all decisions
regarding the interest assigned to RGM.  The Company has a right of
set-off against sums owing to it by RGM.  In the event that the Indian
government consent is delayed or denied, resulting in either RGM or the Company
being denied an economic benefit it would have realized under the Participating
Interest Agreement, the parties agreed to amend the Participating Interest
Agreement or take other reasonable steps to assure that an equitable result is
achieved consistent with the parties' intentions contained in the Participating
Interest Agreement.




Page
16
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


11.         Related
Party Transactions (continued)




Roy
Group (Barbados) Inc. (Roy Group)


Roy Group
is related to the Company by common management and is controlled by an officer
and director of the Company who is also a principal shareholder of the
Company.  On August 29, 2003, the Company entered into a Technical
Services Agreement with Roy Group to provide services to the Company as assigned
by the Company and to bring new oil and gas opportunities to the
Company.  The term of the agreement, as amended, extends through
December 31, 2009 and continues for successive periods of one year
thereafter.  Roy Group receives consideration of $350,000 per year, as
outlined and recorded below:




Three
      months
                ended
                June
      30, 2009
              
              
              Three
      months
                ended
                June
      30, 2008
              
              
              Six
      months
                ended
                June
      30, 2009
              
              
              Six
      months
                ended
                June
      30, 2008
              
              
              Period
      from
                Inception,
                August
      21, 2002
                to
      June 30, 2009$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Consolidated
      Statements of Operations
                and
      Comprehensive LossConsulting
      fees
              
              
              65,625
              
              
              
              43,750
              
              
              
              131,250
              
              
              
              87,500
              
              
              
              574,917Consolidated
      Balance SheetsOil
      & gas interests
              
              
              21,875
              
              
              
              43,750
              
              
              
              43,750
              
              
              
              87,500
              
              
              
              1,293,41687,500
              
              
              
              87,500
              
              
              
              175,000
              
              
              
              175,000
              
              
              
              1,868,333




At June
30, 2009, the Company owed Roy Group $34,817 (December 31, 2008 - $35,800) for
services provided pursuant to the Technical Services Agreement and expenses
incurred on behalf of the Company.  These amounts bear no interest and
have no set terms of repayment.




D.I.
Investments Ltd. (DI)


DI is
related to the Company by common management and is controlled by an officer and
director of the Company.  DI charges consulting fees for management,
financial and accounting services rendered, as outlined and recorded
below:




Three
      months
                ended
                June
      30, 2009
              
              
              Three
      months
                ended
                June
      30, 2008
              
              
              Six
      months
                ended
                June
      30, 2009
              
              
              Six
      months
                ended
                June
      30, 2008
              
              
              Period
      from
                Inception,
                August
      21, 2002
                to
      June 30, 2009$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Consolidated
      Statements of Operations
                and
      Comprehensive LossConsulting
      fees
              
              
              53,187
              
              
              
              53,188
              
              
              
              106,374
              
              
              
              106,375
              
              
              
              1,020,839




At June
30, 2009, the Company owed DI $13,271 (December 31, 2008 – the Company was owed
$16,629) as a result of services provided and expenses incurred on behalf of the
Company.  These amounts bear no interest and have no set terms of
repayment.





Page
17
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


11.         Related
Party Transactions (continued)




Amicus
Services Inc. (Amicus)


Amicus is
related to the Company by virtue of being controlled by a brother of an officer
and director of the Company.  Amicus charged consulting fees for IT
and computer related services rendered, as outlined below:




Three
      months
                ended
                June
      30, 2009
              
              
              Three
      months
                ended
                June
      30, 2008
              
              
              Six
      months
                ended
                June
      30, 2009
              
              
              Six
      months
                ended
                June
      30, 2008
              
              
              Period
      from
                Inception,
                August
      21, 2002
                to
      June 30, 2009$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Consolidated
      Statements of Operations
                and
      Comprehensive LossConsulting
      fees
              
              
              10,674
              
              
              
              18,026
              
              
              
              23,977
              
              
              
              42,317
              
              
              
              308,888




The
Company recognized compensation cost or recovery of compensation cost for
stock-based compensation arrangements with the principal of Amicus as outlined
and recorded below:




Consolidated
      Statements of Operations
                  and
      Comprehensive LossConsulting
      fees
                
                
                4,043
                
                
                
                (27,825
                )
                
                
                10,502
                
                
                
                (32,338
                )
                
                
                596,127




At June
30, 2009, the Company owed Amicus $10,855 (December 31, 2008 - $13,745) as a
result of services provided and expenses incurred on behalf of the
Company.  These amounts bear no interest and have no set terms of
repayment.





12.         Per
Share Amounts




The
following table presents the reconciliation between basic and diluted income per
share:




Three
      months
                ended
                June
      30, 2009
              
              
              Three
      months
                ended
                June
      30, 2008
              
              
              Six
      months
                ended
                June
      30, 2009
              
              
              Six
      months
                ended
                June
      30, 2008$
              
              
              
              $
              
              
              
              $
              
              
              
              $Net
      loss and comprehensive loss for the period
              
              
              (1,146,442
              )
              
              
              (4,783,990
              )
              
              
              (2,313,338
              )
              
              
              (5,288,292
              )Stock
      purchase warrant modification
              
              
              (1,754,000
              )
              
              
              --
              
              
              
              (1,754,000
              )
              
              
              --Net
      loss and comprehensive loss applicable to
                common
      stockholders
              
              
              (2,900,442
              )
              
              
              (4,783,990
              )
              
              
              (4,067,338
              )
              
              
              (5,288,292
              )Weighted
      average number of common shares outstanding:Basic
      and diluted
              
              
              67,805,756
              
              
              
              67,205,755
              
              
              
              67,805,756
              
              
              
              67,205,755Per
      share amountsBasic
      and diluted
              
              
              (0.04
              )
              
              
              (0.07
              )
              
              
              (0.06
              )
              
              
              (0.08
              )Securities
      excluded from denominator as anti-dilutive:Stock
      options
              
              
              5,370,000
              
              
              
              3,870,000
              
              
              
              5,370,000
              
              
              
              3,870,000Warrants
              
              
              4,966,200
              
              
              
              4,966,200
              
              
              
              4,966,200
              
              
              
              4,966,200Compensation
      options
              
              
              535,944
              
              
              
              535,944
              
              
              
              535,944
              
              
              
              535,944Compensation
      option warrants
              
              
              97,572
              
              
              
              97,572
              
              
              
              97,572
              
              
              
              97,57210,969,716
              
              
              
              9,469,716
              
              
              
              10,969,716
              
              
              
              9,469,716




In
calculating the weighted average number of common shares outstanding, the
5,000,000 shares which were held in escrow at June 30, 2009 have been
excluded.





Page
18
 GeoGlobal
Resources Inc.
 (a
development stage enterprise)
 Notes
to the Condensed Consolidated Financial Statements
 (Unaudited)
 June
30, 2009


13.         Commitments




Pursuant
to current production sharing contracts, the Company is required to perform
minimum exploration activities that include various types of surveys,
acquisition and processing of seismic data and drilling of exploration
wells.  These obligations have not been provided for in the financial
statements.  The Company has an office lease commitment in Calgary,
Canada.




The
anticipated payments due under these agreements in effect are as
follows:




Operating
      Leases
                
                
                Production
      Sharing Contracts$
                
                
                
                $2009
                
                
                40,000
                
                
                
                10,794,0002010
                
                
                --
                
                
                
                10,175,0002011
                
                
                --
                
                
                
                10,050,0002012
                
                
                --
                
                
                
                --2013
                
                
                --
                
                
                
                --Thereafter
                
                
                --
                
                
                
                --40,000
                
                
                
                31,019,000




The
Company has applied to increase its participating interest under a certain
production sharing contract from 10% to 25%.  If this application is
approved, the Company’s commitments would increase by $3.6 million in 2009, $4.9
million in 2010 and $9.8 million in 2011.  To date, the approval has
not been granted.





14.         Contingencies
- Carried Interest Agreement Dispute




The
Company has been engaged in discussions with GSPC seeking a resolution to this
dispute however, no agreement has been reached as of August 5,
2009.  The Company has been advised by GSPC, that GSPC is seeking
payment of the amount by which the exploration costs attributable to the Company
under the PSC relating to the KG Offshore Block exceeds the amount that GSPC
deems it is obligated to pay on behalf of the Company (including the net 5%
participating interest of RGM) under the terms of the Carried Interest
Agreement.  GSPC asserts that the Company is required to pay 10% of
the exploration expenses over and above gross costs of $59.23 million (10% being
$5.923 million).




Based
upon the most recent correspondence from GSPC dated November 28, 2008, GSPC is
seeking payment in the amount of Rs. 365.9 crore (or approximately $78.7
million) plus interest as of September 30, 2008, of which, 50% is for the
account of RGM.  We estimate the amount of GSPC’s claim as at June 30,
2009 to be approximately $115.0 million plus interest.  The Company
disputes this assertion of GSPC.




The
Company has advised GSPC that, under the terms of the Carried Interest
Agreement, the PSC, and the Joint Operating Agreement dated August 7, 2003, GSPC
has no right to seek the payment and that it believes the payment GSPC is
seeking is in breach of the Carried Interest Agreement.  The Company
further reminded GSPC, that the Company under the terms of the Carried Interest
Agreement shall be carried by GSPC for 100% of its entire share of any costs
during the exploration phase prior to the start of commercial
production.  The Company obtained the opinion of external Indian legal
counsel which supports management's position with respect to the
dispute.




Based
upon a letter dated November 5, 2008 received from GSPC, the Company was advised
that the Minimum Work Program for all exploration phases of the KG Offshore
Block had been completed as of September 30, 2008 which has been noted by the
Directorate General of Hydrocarbons.  As such, GSPC advised the
Company that it has elected to undertake an additional work program over and
above the Minimum Work Program as either Joint Operations or as Exclusive
Operations under the terms of the PSC and that we must elect whether we wish to
participate in these future drilling activities over and above the Minimum Work
Program on this block or alternatively, GSPC would conduct these drilling
activities as Exclusive Operations as defined in the PSC.  GSPC
estimates the cost of such exploratory drilling operations to be approximately
$750.0 million over the period of October 1, 2008 to September 30, 2009 of
which, $75.0 million would be on the Company’s behalf, including the 50% for the
account of RGM.




On
November 13, 2008, the Company advised GSPC that we exercised our right to
participate in the drilling operations proposed in the November 5, 2008 GSPC
letter as a Joint Operation under the terms of the PSC and Joint Operating
Agreement and further that this exercise was done pursuant to the terms of the
Carried Interest Agreement.




The
Company intends to vigorously protect its contractual rights in accordance with
the dispute resolution process under the Carried Interest Agreement, the PSC and
the Joint Operating Agreement as may be appropriate.  In September
2007, the Company commenced discussions with GSPC in an effort to reach an
amicable resolution however, as at August 5, 2009, no agreement has been
reached.




Page
19


ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS




Overview


GeoGlobal
Resources Inc. is engaged, through our subsidiaries and ventures in which we are
a participant, in the exploration for and development of oil and natural gas
reserves.  We initiated these activities in 2003.  We and
our joint participants have been granted exploration rights pursuant to PSCs we
have entered into with the Government of India.  At present, these
activities are being undertaken in four geological basins offshore and onshore
in locations where reserves of oil or natural gas are believed by our management
to exist.  These areas are as follows:




·
            The
      Krishna Godavari Basin offshore and onshore in the State of Andhra Pradesh
      in eastern India;


·
            The
      Cambay Basin onshore in the State of Gujarat in western
    India;


·
            The
      Deccan Syneclise Basin onshore in the State of Maharashtra in west central
      India; and


·
            The
      Rajasthan Basin onshore in the State of Rajasthan in north western
      India.




To date,
we have not earned significant revenue from these activities and are considered
to be in the development stage under Financial Accounting Standards Board
Statement of Accounting Standards No. 7.  The recoverability of the
costs we have incurred to date is uncertain and dependent upon us achieving
commercial production and sale of hydrocarbons, our ability to obtain sufficient
financing to fulfill our obligations under the PSCs in India and upon future
profitable operations.




All of
the exploration activities in which we are a participant should be considered
highly speculative.




All
dollar amounts stated in this Quarterly Report are stated in United States
dollars.




All
meterage of drilled wells referred to in this Quarterly Report are measured
depths unless otherwise stated.




The
following discussion and analysis of our financial condition and results of
operation should be read in conjunction with, and is qualified in its entirety
by, the more detailed information including our Condensed Consolidated Financial
Statements and the related Notes appearing elsewhere in this Quarterly
Report.  This Quarterly Report contains forward-looking statements
that involve risks and uncertainties.  Our actual results may differ
materially from the results and business plans discussed in the forward-looking
statements.  Factors that may cause or contribute to such differences
include those discussed in "Risk Factors" in our Annual Report on Form 10-K for
the year ended December 31, 2008 as well as those discussed elsewhere in this
Quarterly Report.  For further information, refer to the Consolidated
Financial Statements and related Notes and the Management's Discussion and
Analysis thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2008.





Glossary
of Certain Defined Terms:


GSPC –
means Gujarat State Petroleum Corporation Limited, a company organized under the
laws of India.


PSC –
means Production Sharing Contract.


NELP –
means National Exploration Licensing Policy.


MMscfd –
million standard cubic feet per day.





Results
of Operations for the Three and Six months ended June 30, 2009 and
2008


For the
quarter ended June 30, 2009, we incurred a net loss of $1,146,000 compared with
a net loss of $4,784,000 for the quarter ended June 30, 2008.  The
$3.7 million decrease was due to an impairment of our oil and gas properties
under full cost accounting guidelines that was charged to the statements of
operations in the second quarter of 2008.




For the
six months ended June 30, 2009, we incurred a net loss of $2,313,000 compared
with a net loss of $5,288,000 for the six months ended June 30,
2008.




Three
      months
                  ended
                  June
      30, 2009
                
                
                Three
      months
                  ended
                  June
      30, 2008
                
                
                Six
      months
                  ended
                  June
      30, 2009
                
                
                Six
      months
                  ended
                  June
      30, 2008Oil
      Production (barrels)
                
                
                3,098
                
                
                
                --
                
                
                
                3,098
                
                
                
                --Oil
      Sales (barrels)
                
                
                3,024
                
                
                
                --
                
                
                
                3,024
                
                
                
                --Average
      Oil Price
                
                $
                62.85
                
                
                
                --
                
                
                $
                62.85
                
                
                
                --Oil
      Revenues
                
                $
                190,000
                
                
                
                --
                
                
                $
                190,000
                
                
                
                --Operating
      Costs per Barrel
                
                $
                27.54
                
                
                
                --
                
                
                $
                27.54
                
                
                
                --Depletion
      per Barrel
                
                $
                14.14
                
                
                
                --
                
                
                $
                14.14
                
                
                
                --


Page
20


Oil
Sales


All of
our revenues are derived from the production of crude oil in
India.  With the approval of the Tarapur 1 field development plan by
the Management Committee, three wells began production in mid May
2009.  There are eleven additional wells which are drilled, tested and
awaiting tie-in to the oil tank storage facilities.  We are currently
receiving the spot price based on the Nigeria Bonny Light Crude bench
mark.  To date, none of our production has been hedged.  In
addition to the crude oil production, a minimal amount of natural gas was
produced and flared off.  Upon the tie-in and production from
additional wells, it is the intention that the natural gas will be contained and
sold.




Interest
Income


Interest
income during the three months ended June 30, 2009 was $84,000 compared with
$243,000 for the same period in 2008.  This decrease is primarily
attributed to a lower interest rate earned on our short term investments as well
as lower cash balances available for investment.  The average cash
balance during the second quarter was $30.1 million compared with $44.8 million
in the second quarter of 2008.




Interest
income during the six months ended June 30, 2009 was $198,000 compared with
$692,000 for the same period in 2008.  Interest rates earned on our
short-term investments declined significantly during the six months ended June
30, 2008.  In addition to lower interest rates, the average cash
balance during the six months was $32.8 million compared with 46.5 million in
the six months ended June, 30, 2008.




Operating


Operating
costs for the three months ended June 30, 2009 were $83,000 or $27.54 per
barrel, as a result of our first production in the Tarapur 1 field.
 Operating costs include handling and processing charges, transportation
costs and utilities.   During the three months ended June 30, 2008, we
did not incur any operating costs.




Operating
costs for the six months ended June 30, 2009 were $83,000 or $27.54 per barrel,
as a result of our first production in the Tarapur 1 field.  During the six
months ended June 30, 2008, we did not incur any operating costs.




General and
Administrative


For the
three months ended June 30, 2009, our general and administrative expenses
increased to $887,000 from $665,000.  Significant items included in
general and administrative expenses include administrative salaries and related
stock-based compensation costs, rental and office costs, insurance and public
company costs including shareholder relations, listing and filing fees and
transfer agent fees and services.




During
the three months ended June 30, 2009, our Board of Directors approved a two year
extension to compensation options and compensation warrants that were set to
expire on June 22, 2009.  A fair value of $264,000 relating to the
extension of compensation options and compensation warrants was charged to the
statement of operations.   Stock-based compensation costs
increased to $216,000 compared with $185,000 for the three months ended June 30,
2008.  The increased stock-based compensation costs are primarily
related to the stock options granted in December 2008.




For the
six months ended June 30, 2009, our general and administrative expenses
increased to $1,720,000 from $1,170,000.  Along with the compensation
options and compensation warrants extension costs of $264,000, stock-based
compensation costs of $579,000 compared with $366,000 for the six months ended
June 30, 2008 account for the majority of the change.  Other
significant costs, including salaries, travel and bank guarantee fees remained
consistent with the six months ended June 30, 2008.




Consulting
Fees


Consulting
fees for the three months ended June 30, 2009, were $169,000, an increase of
$7,000 from $162,000 when compared to the three months ended June 30,
2008.  Significant items included in consulting fee expenses include a
portion of costs paid to Roy Group (Barbados) Inc. for Chief Executive Officer
services, costs paid to D.I. Investments Inc. for Chief Financial Officer
services and the related health care costs and other consulting costs as
incurred.




In the
second quarter of 2009, we incurred costs of $66,000 to Roy Group (Barbados)
Inc. compared with $44,000 in the second quarter of 2008.  We expensed
75% (2008 – 50%) of the costs paid to Roy Group (Barbados) Inc. for CEO related
duties and other general corporate affairs.  The remaining 25% (2008 –
50%) was capitalized for technical geological services.  We evaluate
the payment of these costs annually to determine the appropriate
allocation.  Costs paid to D.I. Investments Inc. remained consistent
at $53,000.




Consulting
fees for the six months ended June 30, 2009, were $352,000, a decrease of
$112,000 from $464,000 when compared to the six months ended June 30,
2008.  In the six months ended 2008, we incurred a onetime cost of
$75,000 paid to a broker in an effort to market and sell our Egypt
blocks.




In the
six months ended June 30, 2009, we incurred costs of $131,000 to Roy Group
(Barbados) Inc. compared with $88,000 in the six months ended June 30,
2008.  We expensed 75% (2008 – 50%) of the costs paid to Roy Group
(Barbados) Inc. for CEO related duties and other general corporate
affairs.  The remaining 25% (2008 – 50%) was capitalized for technical
geological services.  We evaluate the payment of these costs annually
to determine the appropriate allocation.  Costs paid to D.I.
Investments Inc. remained consistent at $106,000.




Page
21


Professional
Fees


Professional
fees for the three months ended June 30, 2009 were $217,000, a decrease of
$187,000 from $404,000 when compared to the three months ended June 30,
2008.  Professional fees include general council, audit and review
costs and tax advisors to assist with compliance.   During the
three months ended June 30, 2008, we completed a multiyear financial restatement
and recorded costs of $238,000.




Professional
fees for the six months ended June 30, 2009 were $448,000 compared with $519,000
for the six months ended June 30, 2008.  During the six months ended
June 30, 2009, we engaged various tax advisors to complete a review of our
corporate structure with a goal to ensure tax strategy and efficiency across all
jurisdictions.  These tax related costs have partially offset the
saving from the prior years’ restatement of our previously filed annual
reports.  We continue to incur costs relating to a review of our
corporate structure.




Impairment


There
were no impairment charges during the three or six months ended June 30,
2009.  During the three and six months ended June 30, 2008, an
impairment charge of $3,765,000 was charged to the statements of operations
relating to Egyptian, Oman and Yemen operations.




Other


We
capitalized certain overhead costs directly related to our exploration
activities in India.  During the three months ended June 30, 2009, we
capitalized overhead costs totaling $202,000 as compared to $365,000 during the
three months ended June 30, 2008.  Included in the amounts above are
stock-based compensation costs of $97,000 for the three months ended June 30,
2009 compared with $134,000 for the three months ended June 30,
2008.




During
the six months ended June 30, 2009, these capitalized overhead costs were
$651,000 as compared to $659,000 during the six months ended June 30,
2008.  Included in the amounts above are stock-based compensation
costs of $379,000 for the six months ended June 30, 2009 compared with $304,000
for the six months ended June 30, 2008.




The
treatment of capitalized overhead costs remained consistent with the comparable
quarter and includes costs relating to personnel, consultants, their travel,
necessary resources and stock-based compensation directly associated with the
advancement of our oil and gas interests.  The total stock-based
compensation capitalized during the six months ended June 30, 2009 was $379,000
compared with $304,000 for the six months ended June 30, 2008.





New
Reserve Report


As a
result of the approval of the Tarapur 1 field development plan by the Management
Committee and the completion of an independent reserve study by Chapman
Petroleum Engineering Ltd. out of Calgary, Alberta, Canada, we claimed our
proved reserves in the Tarapur 1 field as at June 30, 2009 of 245,000 net
barrels of crude oil compared to nil at December 31, 2008.





Liquidity


Liquidity
is a measure of a company's ability to meet potential cash requirements. We have
historically met our capital requirements through the issuance of common stock
as well as proceeds from the exercise of warrants and options to purchase common
equity.




Our
ability to continue as a going concern is dependent upon obtaining the necessary
financing to complete further exploration and development activities and
generate profitable operations from our oil and natural gas interests in the
future. Our condensed consolidated financial statements as at and for the six
months ended June 30, 2009 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business.  We have incurred a
history of operating losses and negative cash flows from
operations.  These matters may raise doubt about our ability to
continue as a going concern.




At June
30, 2009, our cash and cash equivalents were $22.38 million (December 31, 2008 -
$25.43 million).  The majority of this balance is being held in US
funds.  Approximately $22.15 million is held in term deposits earning
interest that will contribute towards covering a portion of our administrative
costs and overhead throughout the next fiscal year.  We have working
capital of approximately $15.61 million which is available for our future
operations.  In addition, we have $6.92 million in restricted deposits
pledged as security against the minimum work program on our exploration blocks,
which will be released upon completion of the minimum work program.




We expect
to incur expenditures to further our exploration programs.  Our
existing cash balance and any cash flow to be generated from operating
activities may not be sufficient to satisfy our current obligations and meet our
exploration commitments of $31.02 million over the next three
years.




Page
22


We are
considering various alternatives with respect to raising additional capital to
remedy any future shortfall in capital but to date have made no specific plans
or arrangements.  We may deem it necessary to raise capital through
equity markets, debt markets or other financing arrangements, including
participation arrangements that may be available for continued exploration
expenditures.  Because of the early stage of our operations, our
absence of any material quantities of oil and natural gas reserves and also as a
result of the current global financial crisis, there can be no assurance this
capital will be available and if it is not, we may be forced to substantially
curtail or cease exploration block acquisition and/or exploration expenditures.
We believe that our available cash resources will be sufficient to maintain our
current level of activities through the next fiscal year.




Should
the going concern assumption not be appropriate and we are not able to realize
our assets and settle our liabilities, commitments and contingencies, as more
fully described in these condensed consolidated financial statements in the
normal course of operations, our consolidated financial statements would require
adjustments to the amounts and classifications of assets and liabilities, and
these adjustments could be significant.  These condensed consolidated
financial statements do not reflect the adjustments or reclassifications of
assets and liabilities that would be necessary if we are unable to continue as a
going concern.




We
believe at this time that the outcome of the GSPC Carried Interest dispute will
not have a material effect on our liquidity.




Our cash
and cash equivalents decreased by $3.06 million to $22.38 million from $25.43
million at December 31, 2008.  The primarily result of the decrease in
funds can be attributed to the following activities:




Our net
cash used in operating activities during the six months ended June 30, 2009 was
$1.49 million as compared to $1.75 million for the six months ended June 30,
2008.  The use of cash is mainly related to general and administrative
costs, consulting fees and professional fees combined with lower interest income
earned on our short-term investments during the six months ended June 30,
2009.




Cash used
by investing activities during the six months ended June 30, 2009 was $1.57
million as compared to $14.64 million during the six months ended June 30,
2008.  This decrease is a result of cash payments of approximately
$3.48 million primarily to our joint venture partners which was then off-set by
a reduction of our restricted deposits totaling $3.87 million.  The
restricted deposits were returned to cash and cash equivalents which are now
available for general corporate purposes.




No cash
was provided by financing activities for the six months ended June 30, 2009 or
June 30, 2008.





Capital
Resources


We expect
our exploration and development activities pursuant to the PSCs we are a party
to, and the related drilling activities in the 10 exploration blocks that we
hold an interest in, will continue through 2009 in accordance with the terms of
those agreements.  During the period July 1, 2009 to June 30, 2010,
based on the estimated current budgets, we anticipate drilling approximately
three exploratory wells in the KG Offshore Block, two exploratory and five
appraisal wells in Sanand/Miroli, six exploration and two appraisal wells in
Ankleshwar and one appraisal and four development wells on our Tarapur
Block.




In
addition, we may seek to participate in joint ventures bidding for the award of
further PSCs for exploration blocks expected to be awarded by the Government of
India in the future.  As of August 5, 2009, we have no specific plans
to bid or join with others in bidding for any specific PSCs in India and
elsewhere.  We expect that our interest in any such ventures would
involve a minority participating interest in the venture.  In
addition, as opportunities arise, we may seek to acquire minority participating
interests in exploration blocks where PSCs have been heretofore
awarded.  The acquisition of any such interests would be subject to
the execution of a definitive agreement and obtaining the requisite government
consents and other approvals.




In
addition, we may require additional funds for the possible acquisition of
further minority participating interests in PSCs in drilling blocks heretofore
awarded and that we may hereafter propose to enter into in India and possibly
elsewhere. We believe it can be expected that our interest in further or
additional PSCs would be a participating interest.  As the holder of a
participating interest in any such activities, it can be expected that we will
be required to contribute capital to any such ventures in proportion to our
percentage interest.




As of
August 5, 2009, the scope of any possible such activities has not been
definitively established and, accordingly, we are unable to state the amount of
any funds that may be required for these purposes. As a result, no specific
plans or arrangements have been made to raise additional capital and we have not
entered into any agreements in that regard. We expect that if we seek to raise
additional capital it will be through the sale of equity securities, debt or
other financing arrangements.  We are unable to estimate the terms on
which any such capital may be raised, the price per share or possible number of
shares involved.





Off-balance
Sheet Arrangements


None.


Page
23


Contractual
Obligations


Our
minimum exploration commitments under our production sharing contracts and other
future lease payments at June 30, 2009 were not substantially different than at
December 31, 2008.





Critical
Accounting Estimates


The
preparation of financial statements under generally accepted accounting
principles (GAAP) in the United States requires management to make estimates,
judgments 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 reporting period.  Actual results could differ from those
estimates.  On a regular basis we evaluate our assumptions, judgments
and estimates.  We also discuss our critical accounting estimates with
the Audit Committee of the Board of Directors.




We
believe that the assumptions, judgments and estimates involved in the accounting
for oil and gas accounting and impairment, asset retirement obligation and
share-based payment arrangements have the greatest potential impact on our
condensed consolidated financial statements.  These areas are key
components of our results of operations and are based on complex rules which
require us to make judgments and estimates, so we consider these to be our
critical accounting estimates. Historically, our assumptions, judgments and
estimates relative to our critical accounting estimates have not differed
materially from actual results.




Our
critical accounting estimates are disclosed in Item 7 of our 2008 Annual Report
on Form 10-K, filed with the Securities and Exchange Commission on March 27,
2009, and have not changed materially since the filing of that
document.





Recent
Exploration Activities


Below is
a summary description of information relating to certain material developments
to our exploration activities subsequent to our last update.  For
additional information and a more complete description of the PSCs to which we
are a party, reference should be made to our Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q as well as our Current Reports on Form
8-K.





Krishna Godavari Offshore
Block


Exploration
activities on the KG Offshore Block are as follows:




KG#21Well


The KG#21
exploratory well commenced drilling on September 22, 2008 using the Perro Negro
3 (PN-3) jack-up drilling rig.  The well is located approximately 1.36
kilometers northwest of the KG#8 discovery in approximately 60 meters of water
depth in the southwestern portion of the KG Offshore Block in the Deen Dayal
North-west fault block.  The well was slightly deviated and was
drilled to a depth of 5,656 meters being a total vertical depth of 5,467
meters.  The objective of the KG#21 location is two main targets with
the primary target being the Lower Cretaceous sequence which was unable to be
tested in the KG#31 exploratory well due to mechanical problems and the
secondary target being the Upper Cretaceous fan deposits.




As at
August 5, four drill stem tests (DST) have been completed on the well, and the
fifth drill stem is currently being conducted.




DST-1,
the first drill stem test was conducted by perforating 37.5 net meters over the
gross interval 5,593.7 to 5,642 meters.  This successful DST-1flowed
during clean-up, on a 36/64 inch choke at a stabilised rate of 20 MMscfd gas and
2,600 barrels per day water with 4,670 psi (pounds per square inch) flowing well
head pressure.  During the main flow, on a 20/64 inch choke, the well
flowed at a stabilised rate of 10 MMscfd gas and 1,200 barrels per day water
with 7,220 pounds per square inch flowing well head pressure.




DST-2,
the second drill stem test was conducted by perforating 25 net meters over the
gross interval 5,517 to 5,567 meters. DST-2 flowed during clean-up, on a 24/64
inch choke at a stabilised rate of 1.5 MMscfd gas and 500 barrels per day water
with 1,000 psi flowing well head pressure.




DST-3 was
conducted by perforating 20 net meters over the gross interval 5,425 to 5,474
meters.  DST-3 flowed during clean-up at a stabilised rate of 0.65
MMscfd of gas with 270 psi flowing well head pressure.




DST-4 was
conducted by perforating 56 net meters over the gross interval 5,193 to 5,321
meters.  DST-4 flowed during clean-up at a stabilised rate of 1.0
MMscfd of gas with 530 psi flowing well head pressure.




DST-5 is
currently being conducted in the Upper Cretaceous by perforating 15 net meters
over the gross interval 3,592.5 to 3,630 meters.  DST-5 flowed during
clean-up at a stabilised rate of 6.5 MMscfd gas and 600 barrels per day
condensate with 2,530 psi flowing well head pressure.





GSPC as
operator originally planned a total of seven drill stem tests on the KG#21 well
in the Lower Cretaceous sequence over the 722 gross meter interval of 4,920.5 to
5,642.5 meters.  GSPC has subsequently settled on four drill stem
tests over the sequence in the Lower Cretaceous and one drill stem test over the
interval 3,592.5 to 3,630 meters in the Upper Cretaceous.




Page
24


KG#33Well


The KG#33
appraisal well commenced drilling on November 4, 2008 using the Atwood Beacon
jack-up drilling rig.  The well is located approximately 6.5
kilometers northeast of the KG#8 discovery in approximately 109 meters of water
depth in the southeastern portion of the KG Offshore Block in the Deen Dayal
East fault block.  The well was directionally drilled to a total depth
of 5,126 meters being a total vertical depth of 4,596 meters.  The
objective of the KG#33 location is to explore the hydrocarbon potential of the
Lower Cretaceous sequence in the Deen Dayal East fault block and correlate to
the KG#16 discovery well.




GSPC as
operator planned three drill stem tests on the KG#33 well over the 313 gross
meter interval of 4,555 to 4,868 meters.




DST-1,
the first drill stem test was conducted by perforating 5.0 net meters over the
gross interval 4,828 to 4,868 meters.  This DST-1 flowed during
clean-up, on a 20/64 inch choke, at a stabilised rate of 0.7 MMscfd gas with 800
pounds per square inch flowing well head pressure.  DST-1 was
subsequently stopped and the operator performed a hydraulic fracture over the
same 5 meter interval.  The result was DST-1A which had an increase in
flow through a 16/64 inch choke to a stabilized rate of 6.3 MMscfd gas with
5,500 psi flowing will head pressure.




DST-2 was
conducted by perforating a net interval of 34.5 meters over a gross interval
from 4,692 to 4,752 meters.  DST-2 recorded flow during clean-up, on a
16/64 inch choke at a stabilised rate of 0.9 MMscfd with a 700 psi flowing well
head pressure.




DST-3 was
conducted by perforating a 5 meter interval from 4,596 to 4,601
meters.  A hydraulic fracture job was conducted over this interval
resulting in a stabilised flow during clean-up through a 24/64 inch choke of 4.8
MMscfd with a 1,730 flowing well head pressure.




With the
successful completion of the drill stem tests on the KG-33, the well has been
suspended and we anticipate GSPC as operator will de-hire the Atwood Beacon
jack-up drilling rig.




KG#19Well


The KG#19
exploratory well is located approximately 11 kilometers northeast of the KG#8
discovery in approximately 198 meters of water depth in the southeastern portion
of the KG Offshore Block in the Deen Dayal East fault block.  The
KG#19 well commenced drilling on May 2, 2008 using the Essar Wildcat self
propelled semi-submersible drilling rig.  The well was suspended after
setting the casing at 889 meters so that the Essar Wildcat rig could be repaired
with a new 15,000 psi blow out preventer.  The Essar Wildcat rig
resumed drilling the KG#19 well on January 1, 2009.  The well was
vertically drilled to a total depth of 5,357 meters being a total vertical depth
of 5,351 meters.  The objective of the KG#19 location is to explore
and probe the hydrocarbon potential of the Lower Cretaceous sequence in the Deen
Dayal East fault block.




The KG#19
well was successfully logged and a seven inch liner was run to total
depth.  GSPC had originally identified two zones for testing covering
the intervals 4,440 to 4,535 meters and 4,800 to 4,960 meters.  GSPC
subsequently chose to conduct only one drill stem test.  DST-1 was
conducted by perforating 33 net meters over the gross interval 4,455 to 4,530
meters.  DST-1 successfully flowed during clean-up at a stabilized
flow rate of 3.8 MMscfd gas and 70 barrels per day of condensate with a 2,440
psi flowing well head pressure.




GSPC, as
operator has elected to temporarily suspend the KG-19 well and move the Essar
Wildcat to a new location yet to be decided to appraise further the KG-19
results.




Q-Marine
Seismic Data Acquisition


GSPC, as
operator has recently completed a 240 square kilometre Q-Marine Seismic Data
Acquisition over the Deen Dayal structure to image Lower Cretaceous sequences up
to 7,000 meters depth for planning the development in this area.




GSPC as
operator is currently preparing the work program and budget for the fiscal year
April 1, 2009 to March 31, 2010.  We believe the program will entail
retaining only two of the drilling rigs, specifically the PN-3 and Essar
Wildcat, with each rig drilling two exploratory wells at an estimated
expenditure of approximately $384 million.  GSPC is currently
proposing one appraisal well in the Deen Dayal East fault block to be drilled by
the Essar Wildcat in deeper water and one exploratory well in the Deen Dayal
North fault block to be drilled by the PN-3 in shallow waters.




Deen
Dayal West Field Development Plan


On June
18, 2009 GSPC submitted the Deen Dayal West field development plan in accordance
with the provisions of the PSC to the Management Committee for
approval.  We anticipate that the Deen Dayal West field development
plan will encompass six wells, which will include KG#8, KG#15, KG#17, KG#21,
KG#28 and KG#31.




Five
wells (KG#16 KG#33, KG#22, KG#32 and KG#19) are awaiting further appraisal
before the preparation and submission of a declaration of commerciality pursuant
to the PSC can be supported.




As at
August 5, 2009, a total of fifteen wells have been drilled on this
block.   Of these fifteen wells, four exploratory wells in the
northern portion of the block have been abandoned.




Page
25


Carried Interest Dispute on
the KG Offshore Block


GSPC, the
operator of the KG Offshore Block in which we have a net 5% carried interest,
has advised us that it is seeking from us our pro rata portion of the amount by
which the sums expended by GSPC under all phases for the Minimum Work Program as
set forth in the PSC for the KG Offshore Block in carrying out exploration
activities on the block exceeds the amount that GSPC deems to be our pro rata
portion of a financial commitment under all phases included in the parties’
joint bid for the award of the KG Offshore Block by the Government of
India.




GSPC
contends that this excess amount is not within the terms of the Carried Interest
Agreement.  GSPC asserts that we are required to pay 10% of the
exploration expenses over and above gross costs of $59.23 million (10% being
$5.92 million) (including the net 5% interest of Roy Group (Mauritius) Inc.)
plus interest.




Based
upon the most recent correspondence from GSPC dated November 28, 2008, GSPC
asserts that the amount payable is Rs. 365.9 crore (approximately $78.7 million)
plus interest as of September 30, 2008, of which 50% is for the account of Roy
Group (Mauritius) Inc..  We estimate that the amount of GSPC’s claim
as of June 30, 2009 to be approximately $115.0 million plus
interest.  We dispute this assertion of GSPC.




We have
advised GSPC that, under the terms of the Carried Interest Agreement, the terms
of which are also incorporated into the PSC and the Joint Operating Agreement,
it has no right to seek the payment and that we believe the payment GSPC is
seeking is in breach of the Carried Interest Agreement.  We further
reminded GSPC that over the past six years we have fulfilled our obligations
under the Carried Interest Agreement to provide extensive technical assistance
without any further remuneration other than the carried interest, all in
accordance with the terms of the Carried Interest Agreement.  In
furtherance of our position, we have obtained the opinion of Indian legal
counsel who has advised us that, among other things, under the terms of the
agreements between the parties, and in particular the Carried Interest
Agreement, we are not liable to pay any amount to GSPC for either costs and
expenses incurred or otherwise before reaching the stage of commercial
production.




We
continue to be of the view that, under the terms of the Carried Interest
Agreement, we have a carried interest in the exploration activities conducted by
the parties on the KG Offshore Block for 100% of our share (including the share
of Roy Group (Mauritius) Inc.) of costs during the exploration phase prior to
the start date of initial commercial production on the KG Offshore
Block.  To date, commercial production has not been achieved on the
block.  As such, we are of the view that the proposed additional $75.0
million of the costs of drilling future exploration wells over and above the
Minimum Work Program on the KG Offshore Block as proposed by GSPC under the PSC,
shall be subject to the Carried Interest Agreement and shall be carried by
GSPC.




We intend
to vigorously protect our contractual rights in accordance with the dispute
resolution process under the Carried Interest Agreement, the PSC and the Joint
Operating Agreement as may be appropriate.  In September 2007, we
commenced discussions with GSPC in an effort to reach an amicable resolution
however no agreement has been reached as of August 5, 2009.




GSPC by
letter dated August 27, 2008 advised the Director General of Hydrocarbons that
the Minimum Work Program for all phases under the PSC relating to the KG
Offshore Block has been fulfilled.  On November 5, 2008 GSPC advised
us that the Minimum Work Program for all Exploration Phases of the KG Offshore
Block had been completed as of September 30, 2008 and same has been noted by
Directorate General of Hydrocarbons.  As such, GSPC advised us that it
has elected to undertake an additional work program over and above the Minimum
Work Program as either Joint Operations or as Exclusive Operations under the
terms of the PSC and that we must elect whether we wish to participate in these
future exploration activities over and above the Minimum Work Program on the KG
Offshore Block or alternatively, GSPC will conduct these drilling activities as
Exclusive Operations, as defined in the PSC.  GSPC estimates the cost
of such exploratory drilling operations to be approximately $750.0 million over
the period October 1, 2008 to September 30, 2009 of which $75.0 million would be
on our behalf, including the 50% for the account of Roy Group (Mauritius)
Inc.




On
November 13, 2008 we advised GSPC that we exercised our right to participate in
the drilling operations proposed in the November 5, 2008 GSPC letter as a Joint
Operation under the terms of the PSC and Joint Operating
Agreement.  Further, we advised GSPC, among other things, that our
exercise was done pursuant to the terms of our Carried Interest Agreement with
GSPC, and as such we would be carried for 100% of all of our share of any costs
during the exploration phase prior to the start of initial commercial production
and that the Carried Interest Agreement extends through the exploration period
of the PSC.




Krishna Godavari Onshore
Block


In a
recent Technical Committee meeting held July 8, 2009, it was agreed among the
parties to pursue the 3D seismic and drilling commitments simultaneously, by
identifying prospects and locations based upon the available reprocessed 2D
seismic data and related geoscientific information allowing us the ability to
meet our Minimum Work Program commitment for Phase I within the necessary
timelines, being February 15, 2012.




Three
priority locations have been proposed by us to Oil India Ltd. as
operator.  These locations have been reviewed by and agreed to by Oil
India Ltd, as well as a third party engineering firm.  All of these
locations have multiple prospects in both the shallower (Eocene – Miocene) and
the deeper (Cretaceous – Jurassic) zones.




Page
26


All
necessary steps are currently being undertaken by Oil India Ltd. as operator in
an effort to commence the drilling of the first of twelve exploration wells by
the first quarter of 2010.




Tarapur
Block


Tarapur
1 Discovery Area


As
previously reported, in a meeting held on May 4, 2009, the Management Committee
approved the Tarapur 1 field development plan which covers an area of
approximately 2.14 square kilometers within the Tarapur 1 Discovery Area of
approximately 9.7 square kilometers and includes three existing discovery wells
(Tarapur 1, Tarapur P and Tarapur 5) and three development wells (TD-1, TD-2 and
TD-3).  Five of these six wells are tied into the oil tank storage
facilities by way of a gathering system.  A Chapman Petroleum
Engineering Ltd. reserve report for these six wells indicates total proved oil
reserves of 0.245 net MMSTB (million stock tank barrels) at December 31,
2008.




First
production from the three discovery wells commenced in May
2009.  Average gross production for the month of June from these three
wells was approximately 466 Bbls/d of oil and 0.42 MMscf/d of natural gas for
total gross production since commencement of production to June 30, 2009 of
22,125 Bbls of oil and 16.1 MMscf of natural gas.  The Company’s
participating interest share of this production is 14%.




As at
August 5, 2009, it is expected that the three development wells will come on
stream during the third quarter of 2009.  There are eleven additional
wells which are drilled, tested and awaiting tie-in to the oil tank storage
facilities.  GSPC as operator is currently in the process of preparing
and filing the necessary declarations of commerciality and field development
plans pursuant to the provisions of the PSC in order to bring these additional
eleven wells within the Tarapur 1 Discovery Area onto production before the end
of the fourth quarter of 2009.




Other
Areas of Tarapur Block


Exploration
activities on the remaining areas of the Tarapur Block are conducted in three
separate areas based on their relative location on the block as
follows:




·
            Tarapur
      South


As at
August 5, 2009 five wells have been drilled in the Tarapur South
area.  One well (TS-10) is currently being tested.  To date
three tests have been conducted over the gross interval 2,740 to 2,779 meters
resulting in mostly water flow.  The well initially flowed at a rate
of approximately 1,000 barrels of oil per day, however upon extended production
testing the oil production declined and the water production
increased.  At present, we believe the occurrence of water coning
combined with communication behind the casing across the productive zones is
resulting in the water production from these zones.  All three test
objects have been cement squeezed and sealed as there were signatures of
channeling behind the casing which may account for the mostly water production
from the first three objects.  A fourth object between 2,707 and
2714.5 meters is now being tested.  Four wells (TS-1, TS-4 TS-5 &
TS-7) have been tested.  The four suspended wells are awaiting further
appraisal before the submission of a declaration of commerciality pursuant to
the terms of the PSC.  The Tarapur South area is located approximately 40
kilometers to the southeast of the Tarapur 1 Discovery Area.




·
            Tarapur
      North


As at
August 5, 2009 thirteen wells have been drilled and three previously drilled
wells have been re-entered in the Tarapur North area.  Of these sixteen
wells, seven have been reported by GSPC as oil discoveries and are currently
suspended along with two others, and seven have been abandoned.  The
nine suspended wells are awaiting further appraisal before the submission of a
declaration of commerciality pursuant to the terms of the PSC.  The
Tarapur North area is located adjacent to and extending approximately thirty
kilometers to the northeast of the Tarapur 1 Discovery Area.




·
            Tarapur
      East


There are
no wells drilled to date in the Tarapur East area.  The consortium has
applied for an 18 month extension of the exploration phase to May 22, 2010 in
order to acquire 330 square kilometers of 3D seismic and drill five exploration
wells.  Approval for the extension is still pending.  The Tarapur East
area is located approximately forty kilometers to the east of the Tarapur 1
Discovery Area.




GSPC, as
operator is currently preparing the work program and budget for the fiscal year
April 1, 2009 to March 31, 2010.  We believe the program will entail
the drilling of a number of appraisal and development wells to focus on
increasing production from the Tarapur Block.




Sanand/Miroli
Block


During
the six months ended June 30, 2009 the M-8 exploratory well was drilled to a
total depth of 3,405 meters.  This well is the first of the two well
drilling commitment for Phase III.  As at August 5, 2009, GSPC as
operator is evaluating the location of the second exploratory well as well as
further appraisal wells to be drilled and budgeted for the fiscal year April 1,
2009 to March 31, 2010.




Page
27


As at
August 5, 2009 nineteen wells have been or are being drilled on this
block.  Of these nineteen wells, sixteen are exploration wells and
three are appraisal wells.  There is one exploratory well remaining to
be drilled in the third quarter of 2009 which will complete our Minimum Work
Program commitment for the final phase of the exploration period covering this
block.




Six wells
are discovery wells as reported by GSPC to the Director General of Hydrocarbons
under the terms of the PSC.  Eight wells are currently suspended
awaiting further appraisal and five wells have been abandoned.




Ankleshwar
Block


On
February 26, 2009, GSPC as operator applied for a six month extension of Phase I
to September 30, 2009 to complete the exploratory drilling commitments under
Phase I on this block, which approval has been granted.  Drilling of
three exploratory wells (Ank-34, Ank-36 and Ank-37) commenced during the second
quarter of 2009, leaving six exploratory wells to be drilled under the Phase I
Minimum Work Program.




As at
August 5, 2009, eight exploratory wells have been drilled or are being drilled
on this block.  Of the eight wells; GSPC as operator is currently
preparing an appraisal plan for the Ank-21 to be submitted as an oil discovery
under the terms of the PSC.  Of the remaining seven wells, three are
drilling and four are to be abandoned.




Mehsana
Block


During
the six months ended June 30, 2009, the CB-3E well was drilled to a total depth
of 2,450 meters to appraise the CB-3A discovery.  As at August 5,
2009, the CB-3E was tested and has been suspended as no significant quantities
of hydrocarbons have been noted.




Jubilant
Offshore Drilling Pvt. Ltd. continues to await the approval from the Directorate
General of Hydrocarbons requesting an extension of six months to Phase I from
the date of approval of such request to complete a testing and stimulation
program on the remaining four existing wells (CB-3A, 4, 5A &
6).  As at August 5, 2009 this approval is pending.




As at
August 5, 2009, eight wells have been drilled on this block.   Of
these eight wells, seven are exploration wells which fulfill our Phase I Minimum
Work Program commitment and one is an appraisal well.




DS03 and DS04
Blocks


During
the six months ended June 30, 2009, approximately two-thirds of the field work
for the acquisition, processing and interpretation of the gravity magnetic
survey on these blocks was completed.  The remaining field work for
the survey is expected to be completed by end of the third quarter.




RJ20 and RJ21
Blocks


During
the six months ended June 30, 2009, the consortium completed the processing of
the recently acquired 3D seismic program of approximately 1,300 square
kilometers on both of these blocks.  Interpretation of all 3D seismic
to date is currently being conducted with the intention of identifying drilling
locations to commence drilling in the first quarter of 2010.





ITEM
3.                QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Market
risk is the potential loss arising from changes in market rates and
prices.  We are exposed to the impact of market fluctuations
associated with the following:





Interest
Rate Risk


We
consider our exposure to interest rate risk to be immaterial.  Interest
rate exposures relate entirely to our investment portfolio, as we do not have
short-term or long-term debt.  Our investment objectives are focused on
preservation of principal and liquidity.  We manage our exposure to market
risks by limiting investments to high quality bank issuers at short-term rates,
or government securities of the United States or Canadian federal governments
such as Guaranteed Investment Certificates or Treasury Bills.  We do not
hold any of these investments for trading purposes.  We do not hold equity
investments.  We do not expect any material loss from cash equivalents
and therefore we believe our interest rate exposure on invested funds is not
material.





Foreign
Currency Exchange Risk


Substantially,
all of our cash and cash equivalents are held in U.S. dollars or U.S. dollar
denominated securities.  Certain of our expenses are fixed or
denominated by foreign currencies including the Canadian dollar and the Indian
Rupees.  We are exposed to market risks associated with fluctuations
in foreign currency exchange rates related to our transactions denominated in
currencies other than the U.S. dollar.




At June
30, 2009, we had not entered into any market risk sensitive instruments relating
to our foreign currency exchange risk.





Page
28


Commodity
Price Risk


With
respect to our oil and gas revenues, cash flow, profitability and future rate of
growth we achieve will be greatly dependent upon prevailing prices for oil and
natural gas.  Our ability to obtain or maintain any borrowing capacity
and to obtain additional capital on attractive terms is also expected to be
dependent on oil and natural gas prices.  Historically, oil and
natural gas prices are subject to wide fluctuations and market uncertainties due
to a variety of factors that are beyond our control.  These factors
include the level of global demand for petroleum products, international supply
of oil and gas, the establishment of and compliance with production quotas by
oil exporting countries, weather conditions, the price and availability of
alternative fuels, and overall world economic conditions.





We cannot
predict future oil and natural gas prices with any degree of
certainty.  Lower oil and natural gas prices may not only decrease our
revenues on a per unit basis, but may also reduce the amount of oil and natural
gas we can produce economically, if any.  A substantial or extended
decline in oil and natural gas prices may materially affect our future business,
financial condition, results of operations, and capital resources and we may
require a reduction in the carrying value of our oil and gas
properties.  Similarly, an improvement in oil and gas prices can have
a favorable impact on our financial condition, results of operations and capital
resources, exploration and production costs and acquisition costs for additional
properties may also increase.





At June
30, 2009, we had not entered into any market risk sensitive instruments as such
term is defined in Item 305 of Regulation S-K, relating to oil and natural
gas.





Trading
Risks


We have
no market risk sensitive instruments held for trading purposes.





ITEM
4.              CONTROLS
AND PROCEDURES





Disclosure
Controls


Our
management, with participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures as of June 30, 2009. Disclosure controls and procedures are
defined under SEC rules as controls and other procedures that are designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include controls and
procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Securities Exchange
Act of 1934 is accumulated and communicated to the company's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate, to allow timely decisions
regarding required disclosure. There are inherent limitations to the
effectiveness of any system of disclosure controls and procedures, including the
possibility of human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls and procedures
can only provide reasonable assurance of achieving their control
objectives.




Based on
the identification of the material weaknesses in our internal control over
financial reporting described in our Annual Report on Form 10-K for the year
ended December 31, 2008, the Chief Executive Officer and the Chief Financial
Officer have concluded that our disclosure controls and procedures were not
effective as of June 30, 2009, however, along with the Plan as disclosed in our
Form 10-K for the year ended December 31, 2008, we continue to take steps to
correct this situation.





Changes
in Internal Controls


During
the three months ended June 30, 2009, an independent director was appointed to
the Audit Committee to provide guidance and to steward management towards
strengthening the control environment.  The newly appointed director
practices law, with an emphasis on corporate governance and business
valuations.




The
appointment of an additional independent director to the Audit Committee is
reasonably likely to materially affect our internal control over financial
reporting, as defined in Rule 13a-15(f) under the Exchange Act.




Although
we have implemented the control above that we believe will remediate some of the
material weaknesses as described in our Form 10-K for the year ended December
31, 2008, we are unable to conclude the material weaknesses have been remediated
as of June 30, 2009 until the new internal control operates for a sufficient
period of time, is tested and management concludes that the control is operating
effectively. We expect to complete our analysis by the end of this fiscal year
ending December 31, 2009.




There
were no other changes in our internal control over financial reporting during
the second quarter of 2009, other than those described above that materially
affected, or is reasonably likely to materially affect our internal control over
financial reporting.





Page
29


PART
II


OTHER
INFORMATION





ITEM
1A.                  RISK
FACTORS





Risks
relating to us are described in detail in Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2008 filed on March 27,
2009.  Changes or additions to certain of those risk factors which may
be deemed to be material have been included in this quarterly
report.  Reference should be made to our Annual Report as well as to
the following for complete information regarding all risk factors material to
investors.




We
Have A History Of Losses And Our Liquidity Position Imposes Risk To Our
Operations


To date,
we have not earned any material revenues from our operations and we are
considered to be in the development stage of our operations.  We have
incurred negative cash flows from our operations, and at this time all
exploration activities and overhead expenses have been financed by way of the
issue and sale of equity securities and interest income on our cash
balances.  The recoverability of the costs we have incurred to date is
uncertain and is dependent upon achieving substantial commercial production or
sale.  Our prospects must be considered in light of the risks,
expenses and difficulties which are frequently encountered by companies in their
early stage of operations, particularly companies in the oil and gas exploration
industry.




Our
ability to continue as a going concern is dependent upon obtaining the necessary
financing to complete further exploration and development activities and
generate profitable operations from oil and natural gas interests in the
future.  Our condensed consolidated financial statements as at and for
the period ended June 30, 2009 have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. During the six months ended
June 30, 2009, we incurred a net loss of approximately $1.1 million, used
approximately $1.5 million of cash flow in its operating activities, used
approximately $1.6 million in its investing activities and had an accumulated
deficit of approximately $26.6 million.  These matters raise doubt
about our ability to continue as a going concern.




We expect
to incur substantial expenditures to further our exploration programs and our
existing cash balance and any cash flow from operating activities may not be
sufficient to satisfy the current obligations and meet our exploration
commitments.  We are considering various alternatives to remedy any
future shortfall in capital.  We may deem it necessary to raise
capital through equity markets, debt markets or other financing arrangements,
including participation arrangements that may be available for continued
exploration expenditures.  Because of the early stage of our
operations, our limited current revenues and also as a result of the current
global financial crisis and lack of liquidity in the banking system, there can
be no assurance this capital will be available and if it is not, we may be
forced to substantially curtail or cease exploration block acquisition and/or
exploration expenditures which could lead to our inability to meet all of our
commitments under all our PSCs.




Should
the going concern assumption not be appropriate and we are not able to realize
our assets and settle our liabilities, commitments and contingencies, as more
fully described in our condensed consolidated financial statements in the normal
course of operations, our consolidated financial statements would require
adjustments to the amounts and classifications of assets and liabilities, and
these adjustments could be significant.  Our condensed consolidated
financial statements do not reflect the adjustments or reclassifications of
assets and liabilities that would be necessary if we are unable to continue as a
going concern.




GSPC
Is Seeking a Payment From Us In the Amount Of Approximately $115.0 Million Plus
Interest As Of June 30, 2009 On Account Of GSPC’s Exploration Costs On the KG
Offshore Block


GSPC, the
operator of the KG Offshore Block in which we have a net 5% carried interest,
has advised us that it is seeking from us our pro rata portion of the amount by
which the sums expended by GSPC under all phases for the Minimum Work Program as
set forth in the PSC for the KG Offshore Block in carrying out exploration
activities on the block exceeds the amount that GSPC deems to be our pro rata
portion of a financial commitment under all phases included in the parties’
joint bid for the award of the KG Offshore Block by the Government of
India.




GSPC
contends that this excess amount is not within the terms of the Carried Interest
Agreement.  GSPC asserts that we are required to pay 10% of the
exploration expenses over and above gross costs of $59.23 million (10% being
$5.92 million) (including the net 5% interest of Roy Group (Mauritius) Inc.)
plus interest.




Based
upon the most recent correspondence from GSPC dated November 28, 2008, GSPC
asserts that the amount payable is Rs. 365.9 crore (approximately $78.7 million)
plus interest as of September 30, 2008, of which 50% is for the account of Roy
Group (Mauritius) Inc..  We estimate that the amount of GSPC’s claim
as of June 30, 2009 to be approximately $115.0 million plus
interest.  We dispute this assertion of GSPC.




Page
30


We have
advised GSPC that, under the terms of the Carried Interest Agreement, the terms
of which are also incorporated into the PSC and the Joint Operating Agreement,
it has no right to seek the payment and that we believe the payment GSPC is
seeking is in breach of the Carried Interest Agreement.  We further
reminded GSPC that over the past six years we have fulfilled our obligations
under the Carried Interest Agreement to provide extensive technical assistance
without any further remuneration other than the carried interest, all in
accordance with the terms of the Carried Interest Agreement.  In
furtherance of our position, we have obtained the opinion of Indian legal
counsel who has advised us that, among other things, under the terms of the
agreements between the parties, and in particular the Carried Interest
Agreement, we are not liable to pay any amount to GSPC for either costs and
expenses incurred or otherwise before reaching the stage of commercial
production.




We
continue to be of the view that, under the terms of the Carried Interest
Agreement, we have a carried interest in the exploration activities conducted by
the parties on the KG Offshore Block for 100% of our share (including the share
of Roy Group (Mauritius) Inc.) of costs during the exploration phase prior to
the start date of initial commercial production on the KG Offshore
Block.  To date, commercial production has not been achieved on the
block.  As such, we are of the view that the proposed additional $75.0
million of the costs of drilling future exploration wells over and above the
Minimum Work Program on the KG Offshore Block as proposed by GSPC under the PSC,
shall be subject to the Carried Interest Agreement and shall be carried by
GSPC.




We intend
to vigorously protect our contractual rights in accordance with the dispute
resolution process under the Carried Interest Agreement, the PSC and the Joint
Operating Agreement as may be appropriate.  However, there can be no
assurance that GSPC will not institute arbitration or other proceedings seeking
to recover the sum it claims we owe or otherwise contend we are in breach of the
PSC or that the effect of GSPC seeking payment of this sum may not hinder our
capital raising and other activities.  In September 2007, we commenced
discussions with GSPC in an effort to reach an amicable resolution however no
agreement has been reached as of August 5, 2009.




GSPC by
letter dated August 27, 2008 advised the Director General of Hydrocarbons that
the Minimum Work Program for all phases under the PSC relating to the KG
Offshore Block has been fulfilled.  On November 5, 2008 GSPC advised
us that the Minimum Work Program for all Exploration Phases of the KG Offshore
Block had been completed as of September 30, 2008 and same has been noted by
Directorate General of Hydrocarbons.  As such, GSPC advised us that it
has elected to undertake an additional work program over and above the Minimum
Work Program as either Joint Operations or as Exclusive Operations under the
terms of the PSC and that we must elect whether we wish to participate in these
future exploration activities over and above the Minimum Work Program on the KG
Offshore Block or alternatively, GSPC will conduct these drilling activities as
Exclusive Operations, as defined in the PSC.  GSPC estimates the cost
of such exploratory drilling operations to be approximately $750.0 million over
the period October 1, 2008 to September 30, 2009 of which $75.0 million would be
on our behalf, including the 50% for the account of Roy Group (Mauritius)
Inc.




On
November 13, 2008 we advised GSPC that we exercised our right to participate in
the drilling operations proposed in the November 5, 2008 GSPC letter as a Joint
Operation under the terms of the PSC and Joint Operating
Agreement.  Further, we advised GSPC, among other things, that our
exercise was done pursuant to the terms of our Carried Interest Agreement with
GSPC, and as such we would be carried for 100% of all of our share of any costs
during the exploration phase prior to the start of initial commercial production
and that the Carried Interest Agreement extends through the exploration period
of the PSC..




Our
Internal Control Over Financial Reporting Was Not Effective As Of June 30, 2009
And Continuing Weaknesses In Our Internal Controls And Procedures Could Have A
Material Adverse Effect On Us


During
our management’s assessment of the effectiveness of our internal control over
financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act in
connection with the preparation of our Annual Report on Form 10-K for the year
ended December 31, 2008 we identified material weaknesses in those controls as
identified in Item 9A. - Controls and Procedures of our Annual
Report.




As a
result of management’s philosophy and operating style, we did not maintain an
effective control environment.  We did not effectively communicate and
emphasize controls and enforce corporate strategy and objectives, we did not
define roles and responsibilities for employees and management; we did not
effectively communicate and enforce policies and procedures for limiting
authorization of significant transactions; we did not have a formal process to
monitor the competencies and performance of consultants, employees and
management to ensure that roles and responsibilities are properly evaluated on a
timely basis; and, we did not have sufficient resources with appropriate
knowledge in generally accepted accounting principles to allow for an
independent review in complex areas of financial reporting.




This
control deficiency, which is pervasive in nature, could contribute to a material
misstatement in the financial statements not being prevented or detected on a
timely basis.




Page
31


We have
limited accounting personnel with appropriate knowledge of generally accepted
accounting principles.  Specifically, internal controls did not
provide reasonable assurance that transactions related to the following areas
were accounted for in accordance with generally accepted accounting
principles:




·
            Impairment
      Assessment Under Full Cost Method of Accounting for Petroleum and Natural
      Gas Properties


This
resulted in a material adjustment to our 2008 annual financial statements prior
to issuance.




·
            Income
      Taxes


This did
not result in an adjustment to our 2008 annual financial
statements.




As a
result of these material weaknesses as at December 31, 2008, our chief executive
officer and our chief financial officer concluded that our internal control over
financial reporting and our disclosure controls and procedures continue to be
ineffective as of June 30, 2009, due to the conditions that led to the
identification of the material weaknesses.  Prior to the filing of this
report, we took certain steps to remediate these material
weaknesses.  Although these actions are continuing, we anticipate that
these actions when completed will remediate the material weaknesses we
identified and strengthen our internal controls over financial
reporting.  However we cannot assure you that the finalized measures
that we implement will effectively address such material weaknesses or that
additional material weaknesses may not develop in the future.




Remedying
the currently existing material weaknesses, as well as any additional
significant deficiencies or material weaknesses that we or our independent
auditors may identify in the future, may require us to incur significant costs
and expend significant time and management resources.  If we fail to
timely remedy any current or additional material weaknesses or significant
deficiencies that we or our auditors may identify or if we cannot produce
reliable financial reports, we may be unable to comply with our periodic
reporting requirements, accurately report our financial results, detect fraud or
comply with the requirements of Section 404 of the Sarbanes-Oxley Act all of
which could result in a loss of investor confidence in the accuracy, timeliness
and completeness of our financial reports. As a consequence, the market price of
our common stock could decline significantly, we may be unable to obtain
additional financing to operate and expand our business and financial condition
could be materially harmed.  In addition, we can give no assurance
that our independent auditors will agree with our management’s assessment of the
effectiveness of our internal control over financial reporting at that
time.




We
Expect to Have Substantial Requirements For Additional Capital That May Be
Unavailable To Us Which Could Limit Our Ability To Participate In Our Existing
and Additional Ventures Or Pursue Other Opportunities.  Our Available
Capital is Limited


In order
to participate under the terms of our PSCs as well as in further joint venture
arrangements leading to the possible grant of exploratory drilling
opportunities, we will be required to contribute or have available to us
material amounts of capital.  Under the terms of our Carried Interest
Agreement relating to the KG Offshore Block, after the start date of initial
commercial production on the KG Offshore Block, and under the terms of the nine
other PSCs we are parties to, we are required to bear our proportionate share of
costs during the exploration phases of those agreements.  There can be
no assurance that our currently available capital will be sufficient for these
purposes or that any additional capital that is required will be available to us
in the amounts and at the times required.  Such capital also may be
required to secure bonds in connection with the grant of exploration rights, to
conduct or participate in exploration activities or be engaged in drilling and
completion activities.  We intend to seek the additional capital to
meet our requirements from equity and debt offerings of our securities or other
financing arrangements, including participation arrangements that may be
available for continued exploration expenditures.  Our ability to
access additional capital will depend in part on the success of the ventures in
which we are a participant in locating reserves of oil and gas and developing
producing wells on the exploration blocks, the results of our management in
locating, negotiating and entering into joint venture or other arrangements on
terms considered acceptable, as well as the status of the capital markets at the
time such capital is sought.




There can
be no assurance that capital will be available to us from any source or that, if
available, it will be at prices or on terms acceptable to us.  Should
we be unable to access the capital markets or should sufficient capital not be
available, our activities could be delayed or reduced and, accordingly, any
future exploration opportunities, revenues and operating activities may be
adversely affected and could also result in our breach of the terms of a PSC
which could result in the loss of our rights under the contract.




As of
June 30, 2009, we had cash and cash equivalents of approximately $22.4
million.  We believe that our available cash resources will be
sufficient to meet all our expenses and cash requirements during the next twelve
months for our present level of operations on the ten exploration blocks in
which we are currently a participant in.  Although exploration
activity budgets are subject to ongoing review and revision, our present
estimate of our commitments of capital pursuant to the terms of our PSCs
relating to our ten exploration blocks totals approximately $9.4 million during
the next twelve months.  We anticipate our expenditures on the KG
Onshore Block to be $2.5 million based upon a 10% participating
interest.  Upon receipt of approval from the Government of India for
the increase to a 25% participating interest, these expenditures will increase
to $6.2 million.  Any further PSCs we may seek to enter into or any
expanded scope of our operations or other transactions that we may enter into
may require us to fund our participation or capital expenditures with amounts of
capital not currently available to us.  We may be unsuccessful in
raising the capital necessary to meet these capital requirements.




Page
32


We
Have Commenced Production From The Tarapur Field During The Second Quarter Of
2009 Which May Give Rise To Certain Additional Risks To Our
Operations




The
commencement of production in May 2009 from the Tarapur Field for our account
may give rise to certain additional risks as follows:


·
            Unless
      we successfully replace the oil and natural gas reserves that we produce,
      our reserves will decline, resulting eventually in a decrease in the
      quantities of oil and natural gas we are able to produce and lower
      revenues and cash flow from operations. We intend to replace reserves
      through exploitation, development and exploration.  We may not
      be able to replace reserves from our exploitation, development and
      exploration activities at acceptable
costs.


·
            Our
      revenues, operating results, and cash flow from our production of oil and
      gas depend substantially upon prevailing prices for oil and gas.
      Historically, oil and gas prices and markets have been volatile, and they
      are likely to continue to be volatile in the future.   A
      significant decrease in oil and gas prices could have a material adverse
      effect on our cash flow and profitability and would adversely affect our
      financial condition and the results of our operations.  Prices
      for oil and gas fluctuate in response to relatively minor changes in the
      supply of and demand for oil and gas, market uncertainty and a variety of
      additional factors that are beyond our
control.


·
            Reserve
      information that we may provide will represent estimates based on reports
      prepared by our independent petroleum engineers, as well as internally
      generated reports. Petroleum engineering is not an exact
      science.  Information relating to proved oil and gas reserves is
      based upon engineering estimates derived after analysis of information we
      furnish or furnished to us by the operator of the
      property.  Estimates of economically recoverable oil and gas
      reserves and of future net cash flows necessarily depend upon a number of
      variable factors and assumptions, such as historical production from the
      area compared with production from other producing areas, the assumed
      effects of regulations by governmental agencies and assumptions concerning
      future oil and gas prices, future operating costs, severance and excise
      taxes, capital expenditures and workover and remedial costs, all of which
      may in fact vary considerably from actual results.  Oil and gas
      prices, which fluctuate over time, may also affect proved reserve
      estimates.  For these reasons, estimates of the economically
      recoverable quantities of oil and gas attributable to any particular group
      of properties, classifications of such reserves based on risk of recovery
      and estimates of the future net cash flows expected there from prepared by
      different engineers or by the same engineers at different times may vary
      substantially.  Actual production, revenues and expenditures
      with respect to our reserves will likely vary from estimates, and such
      variances may be material.  Either inaccuracies in estimates of
      proved undeveloped reserves or the inability to fund development could
      result in substantially reduced reserves.  In addition, the
      timing of receipt of estimated future net revenues from proved undeveloped
      reserves will be dependent upon the timing and implementation of drilling
      and development activities estimated by us for purposes of the reserve
      report.


·
            Quantities
      of proved reserves are estimated based on economic conditions in existence
      in the period of assessment. Lower oil and gas prices may have the impact
      of shortening the economic lives on certain fields because it becomes
      uneconomic to produce all recoverable reserves on such fields, thus
      reducing proved property reserve estimates. If such revisions in the
      estimated quantities of proved reserves occur, it will have the effect of
      increasing the rates of depreciation, depletion and amortization on the
      affected properties, which would decrease earnings or result in losses
      through higher depreciation, depletion and amortization expense. The
      revisions may also be sufficient to trigger impairment losses on certain
      properties that would result in a further non-cash charge to
      earnings.





Cautionary
Statement For Purposes Of The “Safe Harbor” Provisions Of The Private Securities
Litigation Reform Act Of 1995


With the
exception of historical matters, the matters discussed in this Report are
“forward-looking statements” as defined under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, that involve risks
and uncertainties.  Forward-looking statements made herein include,
but are not limited to:




·
            the
      statements in this Report regarding our plans and objectives relating to
      our future operations,


·
            plans
      and objectives regarding the exploration, development and production
      activities conducted on the exploration blocks in India in which we have
      interests,


·
            plans
      regarding drilling activities intended to be conducted through the
      ventures in which we are a participant, the success of those drilling
      activities and our ability and the ability of the ventures to complete any
      wells on the exploration blocks, to develop reserves of hydrocarbons in
      commercially marketable quantities, to establish facilities for the
      collection, distribution and marketing of hydrocarbons, to produce oil and
      natural gas in commercial quantities and to realize revenues from the
      sales of those hydrocarbons,


·
            our
      ability to maintain compliance with the terms and conditions of our PSCs,
      including the related work commitments, to obtain consents, waivers and
      extensions from the Director General of Hydrocarbons or Government of
      India as and when required, and our ability to fund those work
      commitments,


·
            our
      plans and objectives to join with others or to directly seek to enter into
      or acquire interests in additional PSCs with the Government of India and
      others,


·
            our
      assumptions, plans and expectations regarding our future capital
      requirements,


·
            our
      plans and intentions regarding our plans to raise additional
      capital,


Page
33





·
            the
      costs and expenses to be incurred in conducting exploration, well
      drilling, development and production activities, our estimates as to the
      anticipated annual costs of those activities and the adequacy of our
      capital to meet our requirements for our present and anticipated levels of
      activities are all forward-looking
statements.




These
statements appear, among other places, in Part I under the caption “Item 2. -
Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and in Part II under the caption “Item 1A. - Risk
Factors”.  If our plans fail to materialize, your investment will be
in jeopardy.


·
            We
      cannot assure you that our assumptions or our business plans and
      objectives discussed herein will prove to be accurate or be able to be
      attained.


·
            We
      cannot assure you that any commercially recoverable quantities of
      hydrocarbon reserves will be discovered on the exploration blocks in which
      we have an interest.


·
            Our
      ability to realize revenues cannot be assured.  Our ability to
      successfully drill, test and complete producing wells cannot be
      assured.


·
            We
      cannot assure you that we will have available to us the capital required
      to meet our plans and objectives at the times and in the amounts required
      or we will have available to us the amounts we are required to fund under
      the terms of the PSCs we are a party
to.


·
            We
      cannot assure you that we will be successful in joining any further
      ventures seeking to be granted PSCs by the Government of India or that we
      will be successful in acquiring interests in existing
      ventures.


·
            We
      cannot assure you that we will obtain all required consents, waivers and
      extensions from the Director General of Hydrocarbons or Government of
      India as and when required to maintain compliance with our PSCs , that we
      may not be adversely affected by any delays we may experience in receiving
      those consents, waivers and extensions, that we may not incur liabilities
      under the PSCs for our failure to maintain compliance with and timely
      complete the related work programs, or that GSPC may not be successful in
      its efforts to obtain payment from us on account of exploration costs it
      has expended on the KG Offshore Block for which it asserts we are liable
      or otherwise seek to hold us in breach of that PSC or commence arbitration
      proceedings against us.


·
            We
      cannot assure you that the outcome of testing of one or more wells on the
      exploration blocks under our PSCs will be satisfactory and result in
      commercially-productive wells or that any further wells drilled will have
      commercially-successful results.




An
investment in shares of our common stock involves a high degree of
risk.  There can be no assurance that the exploratory drilling to be
conducted on the exploration blocks in which we hold an interest will result in
any discovery of reserves of hydrocarbons or that any hydrocarbons that are
discovered will be in commercially recoverable quantities.  In
addition, the realization of any revenues from commercially recoverable
hydrocarbons is dependent upon the ability to deliver, store and market any
hydrocarbons that are discovered.




Our
inability to meet our goals and objectives or the consequences to us from
adverse developments in general economic or capital market conditions, events
having international consequences, or military or terrorist activities could
have a material adverse effect on us.  We caution you that various
risk factors accompany those forward-looking statements and are described, among
other places, under the caption “Risk Factors” herein.  They are also
described in our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q
and our Current Reports on Form 8-K.  These risk factors could cause
our operating results, financial condition and ability to fulfill our plans to
differ materially from those expressed in any forward-looking statements made in
this Report and could adversely affect our financial condition and our ability
to pursue our business strategy and plans.  The company updates
forward-looking information related to operations, production and capital
spending on a quarterly basis and updates reserves, if any, on an annual
basis.








ITEM
6.                EXHIBITS





31.1*
            Certification of President and Chief Executive Officer
      Pursuant to Rule 13a-14(a)




31.2*
            Certification of Chief Financial Officer Pursuant to
      Rule 13a-14(a)




32.1*
            Certification of President and Chief Executive Officer
      Pursuant to Section 1350 (furnished, not
  filed)




32.2*
            Certification of Chief Financial Officer Pursuant to
      Section 1350 (furnished, not
filed)





* filed
or furnished herewith


Page
34











SIGNATURES





In
accordance with the requirements 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.











GEOGLOBAL
RESOURCES INC.








August 5,
2009                                     By:  /s/
Allan J. Kent


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


Allan J. Kent


Executive Vice President and Chief
Financial Officer


(Signing on behalf of the
registrant and as


Principal Financial and Accounting
Officer)