UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB x
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedFebruary 28, 2007 [
        ]
        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from_________to__________ Commission file number000-50375 California Oil & Gas Corporation(Exact name of small business issuer as specified in its charter)  Nevada
        
        98-0389524(State or other jurisdiction of incorporation or organization)
        
        (I.R.S. Employer Identification No.)  #312, 407 - 2nd Street SW, Calgary, Alberta, T2P 2Y3(Address of principal executive offices)  (403) 261-1965(Issuers telephone number)  Not Applicable(Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     YesxNo [   ] State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 40,209,044common shares issued and outstanding as of April 13, 2007. Transitional Small Business Disclosure Format (Check one):
        Yes [
        ]
        Nox Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  (Check one):     YesxNo [   ]      - 2 -    PART I Item 1.  Financial Statements Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.      - 3 - California Oil & Gas Corporation (An Exploration Stage Company)         - 4 - California Oil & Gas Corporation (An Exploration Stage Company)          - 5 - California Oil & Gas Corporation (An Exploration Stage Company)          - 6 - California Oil & Gas Corporation (An Exploration Stage Company)    Notes to the Financial Statements February 28, 2007 (unaudited)  1.
        Basis of Presentation The accompanying unaudited interim financial statements of California Oil & Gas Corporation (formerly Ucluelet Exploration Corp.) (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (SEC), and should be read in conjunction with the audited financial statements and notes thereto contained in the Companys annual report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end November 30, 2006 as reported in Form 10-KSB, have been omitted. 2.
        Common Stock On February 12, 2007 the Company closed a private placement receiving gross proceeds of $500,000 ($475,049 net of financing fees) for 833,333 units. Each unit consists of one share of common stock and one half of one share purchase warrant. A whole warrant entitles the purchaser to purchase an additional common share at a price of $0.60. The Company also collected the subscription receivable of $99,862. As of February 28, 2007 there were 39,299,953 common shares issued and 42,138,573 common shares on a diluted basis (weighted average at February 28, 2007 was 38,614,768). The fair market value of the options, which were originally issued in April 2006, is been expensed ratably of the one year vesting period. Stock based compensation of $40,938 was expensed during the quarter ended February 28, 2007. 3.
        Oil and Gas Properties During three month period ended February 28, 2007 the Company acquired certain non producing oil and gas leases in California Additionally, the Company commenced drilling on the Krotz Springs prospect during the period. $1.08 million of drilling costs associated with Krotz Springs were incurred and have been capitalized as oil and gas properties. 4.
        Subsequent events On April 9, 2007 the Company closed a private placement receiving gross proceeds of $500,000 for 909,091 units at $0.55 per unit. Each unit consists of one share of common stock and one half of one share purchase warrant. A whole warrant entitles the purchaser to purchase an additional common share at a price of $0.65.      - 7 -    Item 2.
        Managements Discussion and Analysis and Plan of Operation. FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements.  Forward-looking statements are statements that relate to future events, future financial performance or are otherwise projections of future results.  In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section of this quarterly report on Form 10-QSB entitled Risk Factors, that may cause our companys or our industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to common shares refer to shares of our common stock. As used in this quarterly report, the terms we, us, our, our Company and California Oil & Gas mean our company, California Oil & Gas Corporation, unless otherwise indicated. Our Current Business We are an exploration stage company engaged in the identification, acquisition and exploration of oil and natural gas properties.  Since transitioning our focus from mineral resource properties to oil and natural gas properties in January of 2006, we have entered into several letters of intent, all of which are discussed below in greater detail, whereby we hope to earn an interest in one or more oil and gas properties located in California, Louisiana and Chile. Plan of Operation and Cash Requirements Overview You should read the following discussion of our financial condition and results of operations together with the consolidated audited financial statements and the notes to consolidated audited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements. California To date, our partners in the East Slopes project have acquired over 14,000 acres of mineral leases in four prospect areas. During the next twelve months, these partners intend to acquire 3-D seismic covering three of these four areas.  Following interpretation of this seismic data, we will have the option to operate and pay 25% of the cost to drill and complete three wells in each of the 3 areas in order to earn our interest.  We anticipate that we will spend approximately $1 million on this project over the next 12 months.      - 8 -   In the North project, basic exploration techniques have identified an area that could be prospective for shallow oil production.  Over the next 12 months we plan to continue our geologic analysis of the area, the acquisition of oil and gas leases in areas considered prospective, and acquisition of 2-D and 3-D seismic data in anticipation of beginning exploratory drilling. We anticipate that we will spend approximately $1,500,000 on this project over the next 12 months. Louisiana At the South Krotz Springs project located in St. Landry Parish, the operator has completed  drilling the Haas-Hirsch 31 (Krotz Springs Unit No. 60) well.  During the next 12 months we hope to complete and test this well.  If the well is a commercial success, we hope to tie it into production facilities and put it on production.  We currently estimate that the final stages of the drilling, the completion and the tie-in for this well should cost our company approximately $2,000,000 over the next 12 months. We believe that further activity in Krotz Springs will involve the purchase and reinterpretation of existing seismic data.  The reinterpretation of these data could result in the selection of other drilling locations in the 4500 acre Krotz Springs Unit, and if so, an election to drill an additional well could be made during the next 6 months with drilling to follow.  It is estimated that the cost to the company over the next 12 months would be approximately $1,500,000. Our E project in Louisiana involves the potential exploration of a subterranean structure.  Current operations involve leasing of acreage over the structure that our partners believe may be prospective for oil, gas and/or condensate.  We expect that a 3-D seismic acquisition program will be considered.  Subsequent to interpretation of the seismic data, and if prospective locations are identified, exploration wells would be planned and drilled.  It is unlikely that a well will be planned during the end of the coming 12 month period.  We anticipate that we will spend approximately $2,000,000 for our share of any leasing and seismic data acquisition and drilling planning over the next 12 months. Chile We anticipate that our partner in this project will obtain final Chilean government approval for the concession within the next 2 months, and that we will begin drilling the two wells on Pica North within 6 months of final approval, with completion of the first well anticipated during the next 12 months.  We anticipate that our share of the costs of this program over the next 12 months should be approximately $8,500,000. Other Activity We expect to continue to investigate other opportunities within the oil and gas sector, both domestic and international, over the next 12 months.  We anticipate that our costs for the investigation and analysis of opportunities over the next 12 months should be approximately $200,000.  If we are successful in identifying a project or projects that are, in our opinion, worth pursuing, it is unlikely that we will incur significant project costs in the coming 12 month period. Cash Requirements We estimate that we will spend approximately $400,000 on general and administrative expenses over the next 12 months and approximately $16,700,000 on oil and gas properties and related drilling activities.Working capital requirements may increase if we identify, assess and acquire one or more new oil and gas exploration or development properties during the year.  The amount of the increase will depend, to a large extent, on the nature of the properties identified, if any. Based on our current plan of operations, we do not have sufficient funds for the next 12 months.  We believe that we will require additional funds to continue our exploration operations.  If we are unable to raise additional financing in the next 12 months, and we fail to otherwise generate any cash flow through operations, we will be required to modify our operations plan accordingly or even to cease operations altogether.  These funds may be raised through equity financing, debt financing or other sources, and may result in substantial dilution of the equity ownership of our shares.  There can be no assurance that we will be able to raise the funds required or maintain operations at a     - 9 -   level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. Financial Condition, Liquidity and Capital Resources From the date of inception on June 21, 2002, to the date we abandoned our mineral exploration business, we were engaged in the acquisition and exploration of mineral properties.  Our principal capital resources have been acquired through the issuance of common stock. At February 28, 2007, we had working capital of $105,145 compared to a working capital deficit of $24,275 at February 28, 2006. At February 28, 2007, our total assets of $2,246,401 consisting of current assets of $290,678 and oil and gas properties and other long term assets of $1,955,723 . This compares with our assets at February 28, 2006 of $75,646 which consisted of cash and a deposit. At February 28, 2007, our total liabilities were $185,533 compared to our liabilities of $99,921 as at February 28, 2006.  These liabilities consisted primarily of audit, legal fees and transfer agent fees. The continuation of our business is dependent upon obtaining financing, a successful program of acquisition and exploration, and, finally, achieving a profitable level of operations.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain funds required for our continued operations.  As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due.  In such event, we will be forced to scale down or perhaps even cease our operations. We have no long-term debt and do not regard long-term borrowing as a good, prospective source of financing at this stage in the development of our company and its business. Results of Operations. We posted a loss of  $127,854 for the three months ended February 28, 2007, as compared to a loss of $11,149 for the three months ended February 28, 2006, and losses of $578,478  from inception to February 28, 2007. The principal component of these losses from inception has been general and administrative expenses.  The principal components of the loss during the three months ended February 28, 2007 were general and administrative expenses and stock based compensation.  Legal costs were $17,597 for the three months ended February 28, 2007, compared to $7,605 for the three months ended February 28, 2006.  Accounting and audit costs were $34,531 for the three months ended February 28, 2007, compared to $3,500 for the three months ended February 28, 2006.  Consulting fees increased to $17,590 during the three months ended February 28, 2007 to nil for the three months ended February 28, 2006.  Office expense
increased to $13,889 for the three months ended February 28, 2007 to nil for the three months ended February 28, 2006.  Stock based compensation for the three months ended February 28, 2007 was $40,938  compared to nil for the three months ended February 28, 2006.  Corporate expenses, including transfer agent fees, news release costs and stock exchange filing fees were $3,309  for the three months ended February 28, 2007 compared to nil for the three months ended February 28, 2006.  These increases are due primarily tothe increase in activity commencing upon the abandonment of our mineral resource properties and the shift in focus towards oil and gas properties, as well as the change in management at the beginning of calendar year 2006.      - 10 -   Product Research and Development Our business plan is focused on a strategy of acquiring and maximizing the long-term exploration and development of oil and gas opportunities.  To date, execution of our business plan has largely focused on assessing prospective oil and gas interests and acquiring the interests that we have acquired in California, Louisiana and Chile.  As our plans for these properties continue to develop based on leasing progress, results of initial wells and other exploration, the progress of government approvals in Chile and related events that will evolve over time, we hope to structure and implement an exploration and development plan.  In addition, we continue to look for additional properties of interest. Purchase of Significant Equipment We do not intend to purchase any significant equipment (excluding oil and gas activities) over the next twelve months. Employees We do not currently have any employees (other than our directors and officers who, at present, have not signed an employment or consulting agreement with us).  We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officers or directors). We do and will continue to outsource contract employment as needed. Going Concern Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended November 30, 2006, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. There are no assurances that we will be able to obtain further funds required for our continued operations.  As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due.  In such event, we will be forced to scale down or perhaps even cease our operations. Recently Issued Accounting Standards In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements.  SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007.  Management is currently evaluating the impact SFAS No. 157 will have on our financial position, results of operations, and cash flows. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FASB statement No. 115. This Statement permits all entities to choose, at specified election dates, to measure eligible items at fair value (the fair value option). A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. If an entity elects the fair value option for a held-to-maturity or available-for-sale security in conjunction with the adoption of this Statement, that security shall be reported as a
trading security under Statement 115, but the accounting for a transfer to the trading category under paragraph 15(b) of Statement 115 does not apply. Electing the fair value option for an existing held-to-maturity security will not call into question the intent of an     - 11 -   entity to hold other debt securities to maturity in the future. This statement is effective as of the first fiscal year that begins after November 15, 2007.  We are currently analyzing the effects of SFAS 159 but do not expect its implementation will have a significant impact on our financial condition or results of operations. In July 2006, the FASB issued FASB Interpretation (FIN) No. 48 Accounting for Uncertainly in Income Taxes - An Interpretation of FASB Statement No. 109.  FIN 48 prescribes detailed guidance for the financial statement recognition, measurement, and disclosure of uncertain tax positions recognized in an enterprises financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.  Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods.  FIN 48 will be effective for fiscal years beginning after December 15, 2006, and the provisions of FIN 48 will be applied to all positions upon the adoption of the Interpretation.  The cumulative effect of this applying the provisions of this Interpretation will be reported as an adjustment to the opening
balance of retained earnings for that fiscal year.  Management is currently evaluating the impact of FIN 48 on the financial statements but does not believe that its adoption will have a material effect on our financial position, results of operations, or cash flows. In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 requires companies to evaluate the materiality of identified unadjusted errors on each financial statement and related financial statement disclosure using both the rollover approach and the iron curtain approach, as those terms are defined in SAB 108. The rollover approach quantifies misstatements based on the amount of the error in the current year financial statement, whereas the iron curtain approach quantifies misstatements based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatements year(s) of origin. Financial statements would require adjustment when either approach
results in quantifying a misstatement that is material. Correcting prior year financial statements for immaterial errors would not require previously filed reports to be amended.  If a company determines that an adjustment to prior year financial statements is required upon adoption of SAB 108 and does not elect to restate its previous financial statements, then it must recognize the cumulative effect of applying SAB 108 in fiscal 2006 beginning balances of the affected assets and liabilities with a corresponding adjustment to the fiscal 2006 opening balance in retained earnings. SAB 108 is effective for interim periods of the first fiscal year ending after November 15, 2006, and will be adopted by our company in the first quarter of 2007.  We do not expect the adoption of this interpretation to have an impact on its financial position or results of operations. APPLICATION OF CRITICAL ACCOUNTING POLICIES Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managements application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials. We have historically incurred losses, and through February 28, 2007 have incurred losses of $578,478  since inception. Because of these historical losses, we will require additional working capital to develop our business operations.  We do not anticipate that we will derive any revenues from operations unless and until we establish the existence of a reserve on any of our properties and put a well into production.  There can be no assurance that we can do so or that, even if we are successful in doing so that we will be able to operate profitably. We intend to raise additional working capital as and when we need it through private placements, public offerings and/or bank financing.   We have historically raised working capital through the sale of equity securities but there can be no assurance that we will be able to continue to do so.  As of the date of this quarterly report on Form 10-QSB, we are not engaged in any discussions with prospective investors and we have no definitive agreements for the investments of any funds in our company..      - 12 -   There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. RISK FACTORS GENERAL STATEMENT ABOUT RISKS An investment in our common stock involves a number of very significant risks.  You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and our business before purchasing shares of our company's common stock.  Our business, operating results and financial condition could be seriously harmed due to any of the following risks.  You could lose all or part of your investment due to any of these risks. This quarterly report on Form 10-QSB contains forward-looking statements.  Forward-looking statements are statements that relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by the use of terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  Examples of forward-looking statements made in this quarterly report include statements about: 
        Our future operating results, 
        Our future capital expenditures, 
        Our expansion and growth of operations, and 
        Our future investments in and acquisitions of oil and natural gas properties. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including: 
        General economic and business conditions, 
        Exposure to market risks in our financial instruments, 
        Fluctuations in worldwide prices and demand for oil and natural gas, 
        Fluctuations in the levels of our oil and natural gas exploration and development activities, 
        Risks associated with oil and natural gas exploration and development activities, 
        Competition for raw materials and customers in the oil and natural gas industry, 
        Technological changes and developments in the oil and natural gas industry, 
        Regulatory uncertainties and potential environmental liabilities, and      - 13 -   
        the risks in the section of this quarterly report entitled "Risk Factors", any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our common shares are considered speculative during the development of our new business operations. Prospective investors should consider carefully the risk factors set out below. Risks Relating to Our Business: Our independent auditors have expressed substantial doubt about our ability to continue as a going concern. We have not generated any revenues from operations since incorporation.  We incurred a net loss of $127,854  for the three months ended February 28, 2007 and $11,149 for the three months ended February 28, 2006.  We anticipate that we will continue to incur operating expenses without revenues unless and until we find oil or natural gas in sufficient quantities as will enable us to either begin producing of sell a property for a profit.  On February 28, 2007, we had cash of $111,966 . At February 28, 2007, we had working capital of approximately $105,145.  We estimate our average monthly operating expenses to be approximately $33,000 each month, excluding exploration but including general and administrative expense and investor relations expenses.  We estimate that we will need approximately $16,700,000 for drilling, exploration, leasing and other exploration and development costs arising from our exploration
activities during the next 12 months. Therefore, we believe that we will require approximately $17,100,000 to fund our continued operations for the 12 month period ending February 28, 2008.  As a result, we believe that we will have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months.  As we cannot assure a lender that we will be able to successfully acquire, explore and develop oil and gas properties, we will probably find it difficult to raise debt financing from traditional lending sources.  We have traditionally raised our operating capital from sales of equity securities, but there can be no assurance that we will continue to be able to do so.  If we cannot raise the money that we need to continue to acquire, explore and develop oil and gas properties, we may be forced to delay, scale back, or eliminate our activities.  If any of these were to occur, there is a substantial risk that our business would fail. These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors' report on our consolidated financial statements for the year ended November 30, 2006, which are included in our annual report on Form 10-KSB.  Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business. If we are able to obtain additional funding by selling our equity securities, our existing shareholders may suffer substantial dilution. We believe that we will require approximately $16,700,000 in additional funds to maintain or expand our oil and gas exploration activities over the next 12 months.  We have historically raised funds required for this purpose from the sale of equity securities.  While there can be no assurance that we will be able to raise any additional funds through the sale of our equity securities, any success may result in substantial dilution to our existing shareholders. We are an exploration stage company with a limited operating history implementing a new business plan We are an exploration stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects, and we have just begun to implement our business plan, having started in the     - 14 -   oil and gas exploration and development industry in February of 2006.  Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history.  If we cannot successfully implement our business plan and we are not able to operate profitably, you could lose some or all of your investment in our company. If we are unable to retain the services of our directors and executive officers or if we are unable to successfully recruit qualified managerial and field personnel having experience in oil and natural gas exploration, we may not be able to continue our operations. Our success depends to a significant extent upon the continued service of John McLeod, our President, Treasurer, Secretary and a director.  Loss of the services of Mr. McLeod could have a material adverse effect on our growth, revenues, and prospective business.  We do not maintain key-man insurance on the life of Mr. McLeod.  In addition, in order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified managerial and field personnel having experience in the oil and natural gas exploration business.  Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms. Our directors and executive officers are employed elsewhere and their time and efforts will not be devoted to our company full-time. With the exception of John McLeod, who works for our company on a full-time basis, our directors and executive officers are employed in other positions with other companies.  As a result, they will manage our company on a part-time basis. Because of this fact, the management of our company may suffer and our company could under-perform or fail. The oil and natural gas industry is highly competitive and there is no assurance that we will be successful in acquiring leases. The oil and natural gas industry is intensely competitive.  Although we do not compete with other oil and gas companies for the sale of any oil and gas that we may produce, as there is sufficient demand in the world market for these products, we compete with numerous individuals and companies, including many major oil and natural gas companies which have substantially greater technical, financial and operational resources and staff. Accordingly, there is a high degree of competition for desirable oil and natural gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds.  We cannot predict if the necessary funds can be raised or that any projected work will be completed. There can be no assurance that we will identify and acquire an oil and natural gas exploration property. Even if we do acquire such a property, there can be no assurance that we will discover oil or natural gas in any commercial quantity thereon. Exploration for economic reserves of oil and natural gas is subject to a number of risks. There is competition for the acquisition of available oil and natural gas properties. Even if we are able to acquire an oil and natural gas exploration property, few properties that are explored are ultimately developed into producing oil and/or natural gas wells. If we cannot acquire one or more oil and natural gas exploration properties and discover oil or natural gas in any commercial quantity thereon, our business will fail. Even if we acquire an oil and natural gas exploration property and establish that it contains oil or natural gas in commercially exploitable quantities, the potential profitability of oil and natural gas ventures depends upon factors beyond the control of our company. The potential profitability of oil and natural gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and natural gas are un predictable, highly volatile, potentially subject to governmental fixing, pegging, controls or any combination of these and other factors, and respond to changes in domestic, international, political, social and economic environments. Additionally, due to worldwide economic     - 15 -   uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. In addition, adverse weather conditions can hinder drilling operations. These changes and events may materially affect our future financial performance. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital. In addition, a productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or natural gas from the well. Production from any well may be unmarketable if it is impregnated with water or other deleterious substances. Also, the marketability of oil and natural gas which may be acquired or discovered will be affected by numerous related factors, including the proximity and capacity of oil and natural gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection, all of which could result in greater expenses than revenue generated by the well. The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable. The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and natural gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the  importing and exporting of oil and natural gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable. Oil and natural gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company. Oil and natural gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and natural gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we
may be subject to liability for pollution or other environmental damages. To date, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations. Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuation of our operations. In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuation of a given operation. Specifically, we will be subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry. Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position. Drilling operations generally involve a high degree of risk.  Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour natural gas leakage, fire, inability to obtain suitable or     - 16 -   adequate machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations. There are significant title risks associated with the properties subject to our farmout agreements. In the event that we or our operating partners do not meet regulated expenditure requirements or development conditions to convert permits to leases or obtain an extension of such development requirements, the right to explore for bitumen or oil shale, as applicable, may be lost. We believe that we or our operating partners have good and proper right, title and interest in and to the permits and leases that we intend to exploit.  However, we have not obtained title opinions on all of our interests.  Even with respect to interests where we have obtained title opinions, the opinions may be subject to unregistered claims.  Accordingly, ownership of our oil and natural gas exploration rights could be subject to prior unregistered agreements or interests or undetected claims or interests. We have not yet established any reserves and resources and we cannot assure you that we will ever establish any reserve or resource on the properties subject to our farmout agreements. There are numerous uncertainties inherent in estimating quantities of oil and natural gas resources, including many factors beyond our control, and no assurance can be given that the recovery of oil and natural gas resources will be realized. In general, estimates of recoverable oil and natural has resources are based upon a number of factors and assumptions made as of the date on which the resource estimates were determined, such as geological and engineering estimates which have inherent uncertainties and the assumed effects of regulation by governmental agencies and estimates of future commodity prices and operating costs, all of which may vary considerably from actual results. All such estimates are, to some degree, uncertain and classifications of oil and natural gas resources are only attempts to define the degree of uncertainty involved. For these reasons, estimates of the recoverable oil and
natural gas resources, the classification of oil and natural gas resources based on risk of recovery, prepared by different engineers or by the same engineers at different times, may vary substantially. No estimates of commerciality or recoverable oil and natural gas resources can be made at this time, if ever. Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability. The business of oil and natural gas exploration and development is subject to substantial regulation under various countries laws relating to the exploration for, and the development, upgrading, marketing, pricing, taxation, and transportation of oil and natural gas and related products and other matters. Amendments to current laws and regulations governing operations and activities of oil and natural gas exploration and development operations could have a material adverse impact on our business. In addition, there can be no assurance that income tax laws, royalty regulations and government incentive programs related to the properties subject to our farmout agreements and the oil and natural gas industry generally will not be changed in a manner which may adversely affect our progress and cause delays, inability to explore and develop or abandonment of these interests. Permits, leases, licenses, and approvals are required from a variety of regulatory authorities at various stages of exploration and development.  There can be no assurance that the various government permits, leases, licenses and approvals sought will be granted in respect of our activities or, if granted, will not be cancelled or will be renewed upon expiry. There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely affect our exploration and development activities. Risks Relating to Our Shares of Common Stock Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock. Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny     - 17 -   stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock
rules discourage investor interest in and limit the marketability of our common stock. National Association of Securities Dealers Inc. sales practice requirements may also limit a stockholders ability to buy and sell our shares of common stock. In addition to the penny stock rules described above, the National Association of Securities Dealers Inc. has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information. Under interpretations of these rules, the National Association of Securities Dealers Inc. believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The National Association of Securities Dealers Inc. requirements make it more difficult for broker-dealers to recommend that
their customers buy our shares of common stock, which may limit your ability to buy and sell our shares of common stock and have an adverse effect on the market for its shares. Our directors and executive officers beneficially own a total of 7,992,860 shares of our company. They may sell some of these shares in the future, which could cause the price of our common stock to fall, which will reduce the value of your shares. Our directors and executive officers beneficially own a total of 7,992,860shares of stock, which is 20.34% of the number of our shares of common stock that are currently issued and outstanding. Subject to all holding periods under applicable securities laws, our directors and executive officers will likely sell a portion or all of their stock in the future. If they do sell their stock into the market, the sales may cause the market price of the stock to drop. We do not intend to pay dividends on any investment in the shares of stock of our company. We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stocks price. This may never happen and investors may lose all of their investment in our company. We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our directors or executive officers.      - 18 -   Our by-laws contain provisions indemnifying our directors and executive officers against all costs, charges and expenses incurred by them. Our by-laws contain provisions with respect to the indemnification of our directors and executive officers against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or executive officers. In the future, the trading price of our common shares may be subject to wide fluctuations. In the future, the trading price of our common shares may be subject to wide fluctuations. Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our control. In addition, the stock market in general, and the market for oil and natural gas exploration and development companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. Market and industry factors may adversely affect the market price of the common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a companys securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs and a diversion of managements attention and resources. Item 3. Controls and Procedures As required under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures as of the end of the period covered by this quarterly report, being February 28, 2007.  This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president.  Based upon that evaluation, our company's presidentconcluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report.  There have been no changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures  designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president as appropriate, to allow timely decisions regarding required disclosure. PART II - OTHER INFORMATION Item 1.  Legal Proceedings. We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. On February 9, 2007, we closed a private placement of 833,333 Units for gross proceeds of $499,999.80. Each Unit consists of one common share and one-half of one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $0.75 per warrant share for a period of eighteen months.      - 19 -   We issued the Units to one non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction in which we relied on Regulation S promulgated under the Securities Act of 1933. On April 9, 2007, we closed a private placement of 909,091 Units for gross proceeds of $500,000.05. Each Unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $0.65 per warrant share for a period of twenty-four months. We issued the Units to one non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction in which we relied on Regulation S promulgated under the Securities Act of 1933. Item 3.  Defaults Upon Senior Securities. None. Item 4.  Submission of Matters to a Vote of Security Holders. None. Item 5.  Other Information. None. Item 6.  Exhibits. Exhibits Required by Item 601 of Regulation S-B. Exhibit Number and Exhibit Title (3) Articles of Incorporation and Bylaws 3.1           Articles of Incorporation (incorporated by reference to the Companys SB-2 Registration Statement filed January 23, 2003). 3.2
        Bylaws (incorporated by reference to the Companys SB-2 Registration Statement filed January 23, 2003). 3.3          Certificate of Change filed with the Nevada Secretary of State on December 21, 2004 (incorporated by reference to our Current Report on Form 8-K filed on December 22, 2004). 3.4          Certificate of Change filed with the Nevada Secretary of State on January 18, 2006 (incorporated by reference to our Current Report on Form 8-K filed on January 26, 2006). 3.5           Articles of Merger filed with the Nevada Secretary of State on January 31, 2006 (incorporated by reference to our Current Report on Form 8-K filed on February 6, 2006). (4)
        Instruments Defining the Rights of Security Holders 4.1           2006 Stock Option Plan (incorporated by reference from our Current Report on Form 8-K filed on April 26, 2006). (10) Material Contracts 10.1         Form of Subscription Agreement (incorporated by reference from our Current Report on Form 8-K filed on March 21, 2006).      - 20 -   10.2        Letter of Intent with Nomad Hydrocarbons LLC (incorporated by reference from our Annual Report on Form 10-KSB filed on March 15, 2007) 10.3        Letter of Intent with Nomad Hydrocarbons LLC (incorporated by reference from our Quarterly Report on Form 10-QSB filed on April 13, 2006). 10.4         Investor Relations Consulting Agreement dated April 10, 2006 with Cypress Point Capital Inc. (incorporated by reference from our Current Report on Form 8-K filed on April 26, 2006). 10.5        Letter of Understanding with March Resources Corp. dated September 11, 2006 (incorporated by reference from our Current Report on Form 8-K filed on September 12, 2006). 10.6         Purchase and Sale Agreement with Aspire Capital, Inc. dated November 14, 2006 (incorporated by reference from our Annual Report on Form 10-KSB filed on March 15, 2007) (14) Code of Ethics 14.1        Code of Business Conduct and Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed on February 27, 2004) (31) Section 302 Certifications 31.1
        Section 302 Certification of John G.F. McLeod (filed herewith)31.2
        Section 302 Certification of Norman S. Johnson (filed herewith). (32) Section 906 Certification 32.1
        Section 906 Certification of John G.F. McLeod (filed herewith)32.2
        Section 302 Certification of Norman S. Johnson (filed herewith).      - 21 -    SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CALIFORNIA OIL & GAS CORPORATION By: /s/ John McLeod John McLeod, President, Treasurer, Secretary and Director (Principal Executive Officer) Date:  April 25, 2007 By: /s/ Norman S. Johnson Norman S. Johnson, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date:  April 25, 2007