[As
      adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]





U.S.
      Securities and Exchange Commission





Washington,
      D.C.  20549





**Form
      10-QSB**





(Mark
      One)


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





For
      the quarterly period ended: September 30,
      2007





**[  ]   TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**EXCHANGE
      ACT**





For
      the transition period from __________ to __________


Commission
      file number   333-102930





Silver
      Star Energy, Inc.


(Exact
      name of small business issuer as


specified
      in its charter)





Nevada                                                      90-0220668_______


(State
      or other jurisdiction       (IRS
      Employer


of
      incorporation or organization)    Identification
      No.)





9595
      Wilshire Boulevard, Suite 900, Beverly Hills, California 90212


(Address
      of principal executive offices)





(310)
      477-2211


Issuer's
      telephone number








(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.    Yes
X No








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














APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDING
      DURING THE PRECEDING FIVE YEARS





Check
      whether the registrant filed all
      documents and reports required to be filed by Section 12, 13 or
      15(d)
      of the Exchange Act after the distribution of securities under a plan confirmed
      by a court. Yes


No








APPLICABLE
      ONLY TO CORPORATE ISSUERS





State
      the number of shares outstanding
      of each of the issuer's classes of common equity, as of the latest
      practical date:September 30,
      2007   96,221,035





Transitional
      Small Business Disclosure
      Format (check one). Yes ___
      ;  No X





2


**PART
      I**





**Item
      1.  Financial Statements**





SILVER
      STAR ENERGY, INC.


BALANCE
      SHEETS





(Unaudited)September
                30,
            
            
            December
                31,ASSETS
            
            2007
            
            
            2006Current
                AssetsCash
            
            $
            12,461
            
            
            $
            31,533Accounts
                Receivable
            
            
            20,000
            
            
            
            455,168Prepaid
                Expense
            
            
            26,000
            
            
            
            5,000Other
                Receivable
            
            
            -
            
            
            
            255,218Total
                Current Assets
            
            
            58,461
            
            
            
            746,919Fixed
                AssetsFurniture
                and Fixtures
            
            
            7,751
            
            
            
            7,751Computers
            
            
            6,222
            
            
            
            6,222Vehicles
            
            
            64,087
            
            
            
            64,087Accumulated
                Depreciation
            
            
            (39,763
            )
            
            
            (27,994
            )Net
                Fixed Assets
            
            
            38,297
            
            
            
            50,066Other
                AssetsOil
                and gas properties, full cost method, net of depletion of$127,103
                and $544,633, respectively
            
            
            1,716,546
            
            
            
            3,373,034Unproved
                oil and gas properties
            
            
            -
            
            
            
            627,375Debt
                Issue Costs, net of amortization of $480,200 and $282,706
            
            
            -
            
            
            
            197,494Total
                Other Assets
            
            
            1,716,546
            
            
            
            4,197,903Total
                Assets
            
            $
            1,813,304
            
            
            $
            4,994,888
































3


SILVER
      STAR ENERGY, INC.


BALANCE
      SHEETS


(Continued)











(Unaudited)September
                30,
            
            
            December
                31,2007
            
            
            2006LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                LiabilitiesAccounts
                Payable
            
            $
            5,240
            
            
            $
            92,067Accrued
                Liabilities
            
            
            -
            
            
            
            33,442Convertible
                debentures - current portion
            
            
            -
            
            
            
            3,430,000Accrued
                interest
            
            
            -
            
            
            
            795,335Total
                Current Liabilities
            
            
            5,240
            
            
            
            4,350,844Long-Term
                LiabilitiesAsset
                retirement obligation
            
            
            -
            
            
            
            60,000Derivative
                liability
            
            
            -
            
            
            
            279,074Total
                Long-Term Liabilities
            
            
            -
            
            
            
            339,074Total
                Liabilities
            
            
            5,240
            
            
            
            4,689,918Stockholders'
                EquityPreferred
                stock (Par Value $.001), 5,000,000 sharesauthorized.
                -0- issued at September 30, 2007 andDecember
                31, 2006
            
            
            -
            
            
            
            -Common
                Stock (Par Value $.001), 300,000,000 sharesauthorized.
                96,221,035 issued and outstanding atSeptember
                30, 2007 and December 31, 2006
            
            
            96,221
            
            
            
            96,221Common
                stock to be issued, 49,045,225 shares atSeptember
                30, 2007 and -0- at December 31, 2006
            
            
            49,045
            
            
            
            -Paid
                in Capital in Excess of Par Value
            
            
            8,407,724
            
            
            
            6,119,457Retained
                Deficit
            
            
            (6,744,926
            )
            
            
            (5,910,708
            )Total
                Stockholders' Equity
            
            
            1,808,064
            
            
            
            304,970Total
                Liabilities and Stockholders' Equity
            
            $
            1,813,304
            
            
            $
            4,994,888














See
      accompanying notes.


4


SILVER
      STAR ENERGY, INC.


STATEMENTS
      OF OPERATIONS











(Unaudited)
            
            
            (Unaudited)For
                the Three Months Ended
            
            
            For
                the Nine Months EndedSeptember
                30,
            
            
            September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006Oil
                Revenue
            
            $
            51,406
            
            
            $
            72,101
            
            
            $
            127,205
            
            
            $
            191,491Gas
                Revenue
            
            
            -
            
            
            
            477,852
            
            
            
            668,317
            
            
            
            1,407,797Total
                Income
            
            
            51,406
            
            
            
            549,953
            
            
            
            795,522
            
            
            
            1,599,288ExpensesProduction
                Costs
            
            
            26,236
            
            
            
            82,276
            
            
            
            1,198,590
            
            
            
            289,073Consulting
                and Management Fees
            
            
            105,000
            
            
            
            181,293
            
            
            
            570,085
            
            
            
            3,646,092General
                and Administrative
            
            
            88,922
            
            
            
            190,904
            
            
            
            367,525
            
            
            
            503,889Professional
                Fees
            
            
            11,527
            
            
            
            46,501
            
            
            
            211,745
            
            
            
            184,468Total
                Expenses
            
            
            231,685
            
            
            
            500,974
            
            
            
            2,347,945
            
            
            
            4,623,522Other
                Income ( Expense)Derivative
                valuation gain/loss
            
            
            -
            
            
            
            -
            
            
            
            279,073
            
            
            
            -Gain
                (loss) on disposal of assets
            
            
            -
            
            
            
            -
            
            
            
            1,150,511
            
            
            
            -Interest
                Expense
            
            
            -
            
            
            
            (128,858
            )
            
            
            (606,479
            )
            
            
            (393,015
            )Interest
                Income
            
            
            -
            
            
            
            1,029
            
            
            
            -
            
            
            
            2,581Gain
                (loss) on foreign exchange
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            38,237Financing
                Penalty Payouts
            
            
            -
            
            
            
            (325,849
            )
            
            
            (104,900
            )
            
            
            (394,449
            )Total
                Other Income (Expense)
            
            
            -
            
            
            
            (453,678
            )
            
            
            718,205
            
            
            
            (746,646
            )Net
                Income (Loss)
            
            $
            (180,279
            )
            
            $
            (404,699
            )
            
            $
            (834,218
            )
            
            $
            (3,770,880
            )Income
                (Loss) per Common Share
            
            $
            -
            
            
            $
            -
            
            
            $
            (0.01
            )
            
            $
            (0.04
            )Weighted
                Average Shares Outstanding
            
            
            96,221,035
            
            
            
            96,221,035
            
            
            
            96,221,035
            
            
            
            91,306,959




















See
      accompanying notes.


5


SILVER
      STAR ENERGY, INC.


STATEMENTS
      OF CASH FLOWS














(Unaudited)For
                the Nine Months EndedSeptember
                30,2007
            
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                Loss
            
            $
            (834,218
            )
            
            $
            (3,770,880
            )Adjustments
                used to reconcile net loss to netcash
                provided by (used in) operating activities:Depreciation,
                Amortization and Depletion
            
            
            356,262
            
            
            
            370,379(Gain)
                loss on disposal of assets
            
            
            (1,150,511
            )
            
            
            -Derivative
                valuation (gain) loss
            
            
            (279,073
            )
            
            
            -Write-off
                of oil and gas properties
            
            
            627,375
            
            
            
            -Expense
                from issuance of warrants
            
            
            375,500
            
            
            
            -Common
                stock to be issued for accrued interest
            
            
            931,811Common
                stock issued for expenses
            
            
            -
            
            
            
            3,074,000(Increase)
                decrease in other assets & prepaids
            
            
            (21,000
            )
            
            
            7,287(Increase)
                decrease in accounts receivable
            
            
            435,168
            
            
            
            122,120(Increase)
                decrease in other receivable
            
            
            255,218
            
            
            
            856,045Increase
                (decrease) in accounts payable
            
            
            (86,827
            )
            
            
            (15,652
            )Increase
                (decrease) in accrued interest
            
            
            (795,335
            )
            
            
            102,330Increase
                (decrease) in accrued liabilities
            
            
            (33,442
            )
            
            
            210,877Net
                cash used in operating activities
            
            
            (219,072
            )
            
            
            956,506CASH
                FLOWS FROM INVESTING ACTIVITIES:Proceeds
                from sale of oil and gas property
            
            
            3,100,000
            
            
            
            -Acquisition
                of oil & gas property interests
            
            
            (500,000
            )
            
            
            (1,387,490
            )Net
                cash used by investing activities
            
            
            2,600,000
            
            
            
            (1,387,490
            )CASH
                FLOWS FROM FINANCINGACTIVITIES:Payments
                on convertible debentures
            
            
            (2,400,000
            )
            
            
            (560,000
            )Net
                Cash Provided by Financing  Activities
            
            $
            (2,400,000
            )
            
            $
            (560,000
            )


























6


SILVER
      STAR ENERGY, INC.


STATEMENTS
      OF CASH FLOWS


(continued)





(Unaudited)For
                the Nine Months EndedSeptember
                30,2007
            
            
            2006Net
                Increase (Decrease) inCash  and
                Cash Equivalents
            
            $
            (19,072
            )
            
            $
            (990,984
            )Cash
                and Cash Equivalents atBeginning
                of the Period
            
            
            31,533
            
            
            
            1,087,163Cash
                and Cash Equivalents atEnd
                of the Period
            
            $
            12,461
            
            
            $
            96,179SUPPLEMENTAL
                DISCLOSURE OF CASHFLOW
                INFORMATION:Interest
            
            $
            -
            
            
            $
            -Income
                Taxes
            
            $
            -
            
            
            $
            -





SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCINGACTIVITIES:





On
      May 7, 2007, the Company agreed to
      issue 49,045,225 shares of common stock in exchange for the remaining debt
      totaling $1,030,000 of principal and $931,811 on its convertible
      debt.   As of September 30, 2007, the common stock has not been
      issued.
























































See
      accompanying notes.






7




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      1
      - NATURE OF OPERATIONS AND GOING CONCERN





The
      accompanying financial statements
      have been prepared on the basis of accounting principles applicable to a “going
      concern”, which assume that the Company will continue in operation for at least
      one year and will be able to realize its assets and discharge its liabilities
      in
      the normal course of operations.





The
      unaudited financial statements as
      of September 30, 2007, and for the three and nine month period then ended,
      reflect, in the opinion of management, all adjustments (which include only
      normal recurring adjustments) necessary to fairly state the financial position
      and results of operations for the three and nine months.  Operating
      results for interim periods are not necessarily indicative of the results which
      can be expected for full years.





Several
      conditions and events cast
      doubt about the Company’s ability to continue as a “going
      concern”.  The Company has a retained deficit of approximately
      $6,700,000, and was in default of  the October 14, 2005 terms of its
      convertible debenture.  As of June 30, 2007,  the Company
      sold its 40% interest North Franklin gas field to repay a portion of its
      convertible debenture, leaving its Canadian oil field as its only revenue
      producing property.  These factors raise substantial doubt about the
      Company's ability to continue as a going concern.





The
      Company’s general business strategy
      is to acquire oil and gas properties either directly or through the acquisition
      of operating entities. The continued operations of the Company and the
      recoverability of oil and gas property acquisition, exploration and development
      costs is dependent upon the existence of economically recoverable reserves
      and
      the ability of the Company to obtain necessary financing to complete the
      development of those reserves, and upon future profitable
      production.  The Company is planning additional ongoing equity
      financing by way of private placements to fund its obligations and
      operations.





The
      Company's future capital
      requirements will depend on many factors, including costs of exploration of
      the
      properties, cash flow from operations, costs to complete well production, if
      warranted, and competition and global market conditions.





These
      financial statements do not
      reflect adjustments that would be necessary if the Company were unable to
      continue as a “going concern”.  While management believes that the
      actions already taken or planned, will mitigate the adverse conditions and
      events which raise doubt about the validity of the “going concern” assumption
      used in preparing these financial statements, there can be no assurance that
      these actions will be successful.





If
      the Company were unable to continue
      as a “going concern”, then substantial adjustments would be necessary to the
      carrying values of assets, the reported amounts of its liabilities, the reported
      revenues and expenses, and the balance sheet classifications used.







8





SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      1
      - NATURE OF OPERATIONS AND GOING CONCERN (continued)





Organization
      and Basis of Presentation





Silver
      Star Energy, Inc. (the
“Company”) was incorporated on September 25, 2002 in the State of Nevada and
      commenced operations on October 3, 2002. During the year ended December 31,
      2003, the Company changed its name from Movito Holdings Ltd. to Silver Star
      Energy Inc.





Nature
      of Business





The
      Company is in the production stage
      of the oil and gas industry.  The Company’s primary objective is to
      identify, acquire and develop significant working interest percentages in
      underdeveloped oil and gas projects that do not meet the requirements of the
      larger producers and developers. During 2003 and 2004 the Company was in the
      development stage and acquired interests in several oil and gas prospects,
      and
      in 2005 and 2006, has set up the extraction process and is further continuing
      that program.





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES





This
      summary of accounting policies for
      Silver Star Energy, Inc. is presented to assist in understanding the Company's
      financial statements.  The accounting policies conform to generally
      accepted accounting principles and have been consistently applied in the
      preparation of the financial statements.





Cash
      Equivalents





For
      the purpose of reporting cash
      flows, the Company considers all highly liquid debt instruments purchased with
      maturity of three months or less to be cash equivalents to the extent the funds
      are not being held for investment purposes.





Pervasiveness
      of Estimates





The
      preparation of financial statements
      in conformity with generally accepted accounting principles requires management
      to make estimates and assumptions that affect the reported amounts of assets
      and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial


statements
      and the reported amounts of revenues and expenses during the reporting
      period.  Actual results could differ from those
      estimates.





Concentration
      of Credit Risk





The
      Company has no significant
      off-balance-sheet concentrations of credit risk such as foreign exchange
      contracts, options contracts or other foreign hedging arrangements.






9




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES (continued)





Earnings
      per Share





Basic
      loss per share has been computed
      by dividing net loss for the year applicable to the common stockholders by
      the
      weighted average number of shares of common shares outstanding during the
      year.  Convertible equity instruments such as stock options, warrants,
      convertible debentures and notes payable are excluded from the computation
      of
      diluted loss per share, as the effect of the assumed exercises would be
      anti-dilutive.





Fixed
      Assets





Fixed
      assets are recorded at cost and
      depreciated using the straight-line method over the estimated useful lives
      of
      the assets which range from three to seven years.  Fixed assets
      consisted of the following at September 30, 2007 and December 31,
      2006:





(Unaudited)September
                30,
            
            
            December
                31,2007
            
            
            2006Furniture
                and Fixtures
            
            $
            7,751
            
            
            $
            7,751Computers
            
            
            6,222
            
            
            
            6,222Vehicles
            
            
            64,087
            
            
            
            64,087Less:
                Accumulated Depreciation
            
            
            (39,763
            )
            
            
            (27,994
            )Total
            
            $
            38,297
            
            
            $
            50,066





One-half
      year depreciation is taken in
      the year of acquisition on certain fixed assets.





Maintenance
      and repairs are charged to
      operations; betterments are capitalized.  The cost of property sold or
      otherwise disposed of and the accumulated depreciation thereon are eliminated
      from the property and related accumulated depreciation accounts, and any
      resulting gain or loss is credited or charged to income.





Total
      depreciation expense for the nine
      months ended September 30, 2007 and 2006 was $11,769 and $12,331,
      respectively.





Intangibles





The
      Company has adopted the provisions
      of the Financial Accounting Standards Board (“FASB”) Statement No. 142,
“Goodwill and Intangible Assets” (“SFAS 142”). Under SFAS 142, goodwill and
      intangible assets with indefinite lives will no longer be amortized and will
      be
      tested for impairment annually. The determination of any impairment would
      include a comparison of estimated future operating cash flows anticipated during
      the remaining life with the net carrying value of the asset as well as a
      comparison of the fair value to the book value of the Company or the reporting
      unit to which the goodwill can be attributed.






10




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES (continued)





Oil
      and Gas Properties





The
      Company follows the full cost
      method of accounting for its oil and gas properties.  Under this
      method, all costs associated with acquisition, exploration, and development
      of
      oil and gas properties are capitalized.  Such costs include land and
      lease acquisition costs, annual carrying charges of non-producing properties,
      geological and geophysical costs, costs of drilling and equipping productive
      and
      non-productive wells, asset retirement costs, and direct exploration salaries
      and related benefits.  Capitalized costs are categorized as being
      subject to amortization or not subject to amortization.  The Company
      operates in two cost centers, being Canada and the U.S.A.





The
      capitalized costs of oil and gas
      properties are amortized on the unit-of-production method using estimates of
      proved reserves as determined by independent engineers.  Investments
      in unproved properties are not amortized until proved reserves associated with
      projects can be determined or until impairment occurs.  If the results
      of an assessment indicate that the properties are impaired, the amount of the
      impairment is added to the capitalized costs to be
      amortized.  Depletion expense for the nine months ended September 30,
      2007 and 2006 was $147,000 and $184,155, respectively.





The
      Company applies a ceiling test to
      capitalized costs to ensure that such costs do not exceed estimated future
      net
      revenues from production of proven reserves at year end market prices less
      future production, administrative, financing, site restoration, and income
      tax
      costs plus the lower of cost or estimated market value of unproved properties.
      If capitalized costs are determined to exceed estimated future net revenues,
      a
      write-down of carrying value is charged to depletion in the period.





Proceeds
      from the sale of oil and gas
      properties are recorded as a reduction of the related capitalized costs without
      recognition of a gain or loss unless such sales involve a significant change
      in
      the relationship between costs and the value of proved reserves or the
      underlying value of unproved properties, in which case a gain or loss is
      recognized.





The
      Company is in the process of
      exploring its unproved oil and natural gas properties and has not yet determined
      whether these properties contain reserves that are economically recoverable.
      The
      recoverability of amounts shown for oil and natural gas properties is dependent
      upon the discovery of economically recoverable reserves, confirmation of the
      Company’s interest in the underlying oil and gas leases, the ability of the
      Company to obtain necessary financing to complete their exploration and
      development and future profitable production or sufficient proceeds from the
      disposition thereof.











11








SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES (continued)





Asset
      Retirement Obligations





Effective
      January 1, 2003, the Company
      adopted Statement of Financial Accounting Standards No. 143, *Accounting for
      Asset Retirement Obligations*“SFAS 143”). This statement applies to
      obligations associated with the retirement of tangible long-lived assets that
      result from the acquisition, construction and development of the assets. SFAS
      143 requires that the fair value of a liability for a retirement obligation
      be
      recognized in the period in which the liability is incurred. For oil and gas
      properties, this is the period in which an oil or gas well is acquired or
      drilled. The asset retirement obligation is capitalized as part of the carrying
      amount of our oil and gas properties at its discounted fair value. The liability
      is then accreted each period until the liability is settled or the well is
      sold,
      at which time the liability is reversed.





Fair
      Value of Financial Instruments





In
      accordance with the requirements of
      SFAS No. 107, the Company has determined the estimated fair value of financial
      instruments using available market information and appropriate valuation
      methodologies. The fair value of financial instruments classified as current
      assets or liabilities approximate carrying value due to the short-term maturity
      of the instruments.





Foreign
      currency transactions





The
      financial statements are presented
      in United States dollars. In accordance with Statement of Financial Accounting
      Standards No. 52, “Foreign Currency Translation”, foreign denominated monetary
      assets and liabilities are translated to their United States dollar equivalents
      using foreign exchange rates that prevailed at the balance sheet date. Revenue
      and expenses are translated at average rates of exchange during the year.
      Related translation adjustments are reported as a separate component of
      stockholders’ equity, whereas gains or losses resulting from foreign currency
      transactions are included in results of operations.





Stock-based
      compensation





Effective
      January 1, 2006, the company
      adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) requires
      employee equity awards to be accounted for under the fair value method.
      Accordingly, share-based compensation is measured at grant date, based on the
      fair value of the award. Prior to January 1, 2006, the company accounted for
      awards granted to employees under its equity incentive plans under the intrinsic
      value method prescribed by Accounting Principles Board (APB) Opinion
      No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related
      interpretations, and provided the required pro forma disclosures prescribed
      by
      SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS
      No. 123), as amended.  No stock options were granted to employees
      during the year ended December 31, 2006 or 2005 and accordingly, no compensation
      expense was recognized under APB No. 25 for the year ended December 31, 2006
      or
      2005. In addition, no compensation expense is required to be recognized under
      provisions of SFAS No. 123(R) with respect to employees.






12




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES (continued)





Under
      the modified prospective method
      of adoption for SFAS No. 123(R), the compensation cost recognized by the
      company beginning on January 1, 2006 includes (a) compensation cost for all
      equity incentive awards granted prior to, but not yet vested as of January
      1,
      2006, based on the grant-date fair value estimated in accordance with the
      original provisions of SFAS No. 123, and (b) compensation cost for all
      equity incentive awards granted subsequent to January 1, 2006, based on the
      grant-date fair value estimated in accordance with the provisions of SFAS
      No. 123(R). The company uses the straight-line attribution method to
      recognize share-based compensation costs over the service period of the award.
      Upon exercise, cancellation, forfeiture, or expiration of stock options, or
      upon
      vesting or forfeiture of restricted stock units, deferred tax assets for options
      and restricted stock units with multiple vesting dates are eliminated for each
      vesting period on a first-in, first-out basis as if each vesting period was
      a
      separate award. To calculate the excess tax benefits available for use in
      offsetting future tax shortfalls as of the date of implementation, the company
      followed the alternative transition method discussed in FASB Staff Position
      No. 123(R)-3.





Recent
      accounting pronouncements





In
      June, 2006 the FASB issued FIN 48,
“Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement
      No. 109”. This Interpretation clarifies, among other things, the accounting for
      uncertainty in income taxes recognized in an enterprise’s financial statements
      in accordance with FASB Statement No. 109, Accounting for Income Taxes. This
      Interpretation prescribes a recognition threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This Interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition is effective for fiscal years beginning
      after December 15, 2006. Earlier application is encouraged if the enterprise
      has
      not yet issued financial statements, including interim financial statements,
      in
      the period the Interpretation is adopted. FIN 48, Accounting for Uncertainty
      in
      Income Taxes—an interpretation of FASB Statement No. 109, is effective for
      fiscal years beginning after December 15, 2006. Earlier application is
      encouraged if the enterprise has not yet issued financial statements, including
      interim financial statements, in the period the Interpretation is
      adopted.  Management is evaluating the financial impact of this
      pronouncement.





In
      September 2006, the FASB issued SFAS
      No. 157, "Accounting for Fair Value Measurements." SFAS No. 157 defines fair
      value, and establishes a framework for measuring fair value in generally
      accepted accounting principles and expandsdisclosure about fair value
      measurements. SFAS No. 157 is effective for the Company for financial statements
      issued subsequent to November 15, 2007. The Company does not expect the new
      standard to have any material impact on the financial position and results
      of
      operations.





In
      September 2006, the staff of the
      Securities and Exchange Commission issued Staff Accounting Bulletin No. 108
      (“SAB 108”) which provides interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. SAB 108 becomes effective in fiscal
      2007. Management is evaluating the financial impact of this
      pronouncement.






13




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      2
      - SUMMARY OF ACCOUNTING POLICIES (continued)





In
      February 2007, the FASB issued SFAS
      no, 159, “The Fair Value Option for Financial Assets and Financial Liabilities”
(“SFAS 159”).  SFAS 159 provides companies with an option to report
      selected financials assets and liabilities at fair value.  The
      objective of SFAS 159 is to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently.  Generally accepted accounting principles
      have required different measurement attributes for different assets and
      liabilities that can create artificial volatility in earnings.  The
      FASB has indicated it believes that SFAS 159 helps to mitigate this type of
      accounting-induced volatility by enabling companies to report related assets
      and
      liabilities at fair value, which would likely reduce the need for companies
      to
      comply with detailed rules for hedge accounting.  SFAS 159 also
      establishes presentation and disclosure requirements designed to facilitate
      comparisons between companies that choose different measurement attributes
      for
      similar types of assets and liabilities.  SFAS 159 does not eliminate
      disclosure requirements included in other accounting standards, including
      requirements for disclosures about fair value measurements included in SFAS
      157
      and SFA No. 107, “Disclosures about Fair Value of Financial Instruments.”SFAS
      159 is effective for the Company as of the beginning of fiscal year
      2008.  The adoption of this pronouncement is not expected to have an
      impact on the Company’s financial position, results of operations or cash
      flows.





Revenue
      Recognition





The
      Company recognizes oil and gas
      revenue from its interests in producing wells as oil and gas is produced and
      sold from those wells. Oil and gas sold is not significantly different from
      the
      Company's share of production. Revenues from the purchase, sale and
      transportation of natural gas are recognized upon completion of the sale and
      when transported volumes are delivered. Shipping and handling costs in
      connection with such deliveries are included in production costs. Revenue under
      carried interest agreements is recorded in the period when the net proceeds
      become receivable, measurable and collection is reasonably assured. The time
      the
      net revenues become receivable and collection is reasonably assured depends
      on
      the terms and conditions of the relevant agreements and the practices followed
      by the operator. As a result, net revenues may lag the production month by
      one
      or more months.





NOTE
      3
      - OIL AND GAS PROPERTIES





The
      Company entered into agreements to
      acquire interests in various unproven oil and gas properties as
      follows:














14




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      3
      - OIL AND GAS PROPERTIES (continued)





Alberta
      Prospects, Canada





In
      October 2003, the Company entered
      into two agreements with 1048136 Alberta Ltd.  Pursuant to these
      agreements, the Company acquired the right to participate and earn an interest
      in two oil and gas exploration and development projects located in the province
      of Alberta, Canada  known respectively as the Evi prospect and the
      Verdigris prospect.  In February 2004, the Company entered into two
      agreements with 1048136 Alberta Ltd. to acquire the right to participate and
      earn an interest in two additional oil and gas exploration and development
      projects located in the province of Alberta known as the Joarcam prospect and
      the Buffalo Lake prospect.  1048136 Alberta Ltd. is a private Alberta
      company (see Note 6).





Pursuant
      to the agreements, the Company
      shall advance funds, as required, in connection with the drilling, testing,
      completion, capping and/or abandonment of up to three wells on each of the
      properties.  Once the Company has completed its funding obligation, it
      will have earned the following interest in each prospect:





Evi
                Prospect
            
            66.67%Verdigris
                Prospect
            
            66.67%Joarcam
                Prospect
            
            70.00%Buffalo
                Lake Prospect
            
            70.00%




In
      the event the Company does not
      provide the funds as required, the Company will retain no interest in the
      prospects.





During
      the year ended December 31,
      2004, the Company paid $1,283,149 towards the exploration and development of
      the
      oil and gas prospects in Alberta.  During the year ended December 31,
      2005, the Company paid $730,822 towards the exploration and development of
      the
      oil and gas prospects in Alberta. For the year ended December 31, 2006, $285,975
      was spent to install the production facilities at the EVI well.  All
      of these costs have been capitalized.





During
      2006, EVI property was
      determined to have proved oil reserves.  Total capitalized costs for
      the EVI property were removed from the unproved properties and classified as
      proved properties.  For the year ended December 31, 2006, the Company
      received revenues of $213,398 from the EVI property.  For the three
      months ended March 31, 2007, the Company received revenues of $50,852 from
      the
      EVI property.  As of December 31, 2006, the total capitalized costs
      related to the EVI property, net of depletion of $75,103 was
      1,262,298.  As of June 30, 2007, the total capitalized costs related
      to the EVI property, net of depletion of $127,103 was $1,216,546.











15





SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      3
      - OIL AND GAS PROPERTIES (continued)





During
      2005, the Joarcam property in
      Alberta was determined to have proved oil reserves.  The total
      capitalized costs for the Joarcam property were removed from the unproved
      properties and classified as proved properties.  For 2005, the Company
      received $305,235 in revenues from the Joarcam property.  On November
      10, 2005, the Company sold its interest in the Joarcam property for
      $1,930,225.  Total capitalized costs relating to the Joarcam property
      at November 10, 2005 were $962,545, and total depletion expense relating to
      the
      Joarcam property at November 10, 2005 was $73,811.  The Company
      recognized a gain on the sale of the Joarcam property of
      $1,041,491.  The Company received proceeds of $965,108 and recorded a
      receivable of $965,117 related to the sale of the property.  During
      the period ended June 30, 2006, the receivable of $965,117 related to the sale
      of the Joarcam property was received by the Company.





During
      the quarter ended June 30, 2007,
      the Company executed an agreement with MB Gas, Inc. (“MB”), a private Alberta,
      Canada, oil and gas exploration company, whereby the Company acquired an
      interest in the revenues generated by MB from its oil and gas
      operations.  The Company advanced $500,000 to MB in return for the
      assignment of revenue from MB’s oil and gas operations.  The $500,000
      has been capitalized as part of proved oil and gas properties.





California
      Prospects, U.S.A.





On
      December 5, 2003, the Company
      entered into two option agreements with Archer Exploration, Inc. (Archer) to
      acquire Archer’s interest in certain unproven oil and gas prospects located in
      the State of California, U.S.A., known as North Franklin Prospect and Winter
      Pinchout Prospect.





To
      earn an assignment of 100% of
      Archer’s interests in the North Franklin Prospect, being a 100% working interest
      (76% net revenue interest), the Company made an initial cash payment of $85,000
      and is required to pay $15,000 at spud of the initial test well and $25,000
      at
      completion of the initial test well. In addition, the Company is responsible
      for
      all expenses for lease extensions and rental of existing leases (including
      a 20%
      fee), acquisition of any additional leases (including a 20% fee) and costs
      in
      connection with drilling and completion of the initial test well.





Pursuant
      to the agreement, Archer
      retained a 2.5% overriding royalty, a 5% working interest through the completion
      of the initial test well and the right to participate in a 5% working
      interest.





The
      Company had an agreement to
      farm-out a 35% working interest in the North Franklin Project to Fidelis Energy,
      Inc. (see Note 6).  Under the terms of the agreement, Fidelis
      would  contribute $500,000 towards the drilling and completion of the
      Archer-Whitney #1 well and participate as a full working interest partner on
      all
      further costs including drilling of any additional wells on the
      project.














16








SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      3
      - OIL AND GAS PROPERTIES (continued)





To
      earn an assignment of 100% of
      Archer’s interests in the Winter Pinchout Prospect, being a 100% working
      interest (76% net revenue interest), the Company made an initial cash payment
      of
      $100,000 and is required to pay $15,000 at spud of the initial test well of
      the
      first three prospects drilled and $25,000 at completion of the initial test
      well
      of each prospect drilled. In addition, the Company is responsible for all
      expenses for acquisition of leases acquired (including a 20% fee), acquisition
      and analysis of seismic data, drilling and completion of the initial test well
      on the first prospect drilled and a monthly management fee in the amount of
      $10,000 commencing January 2004.





Pursuant
      to the agreement, Archer
      retains a 2.5% overriding royalty, a 5% working interest through the completion
      of the initial test well and the right to participate in a 10% working
      interest.





In
      August 2004, the Company executed
      acquisition and joint operating agreements on five natural gas prospects in
      California with Archer Exploration, Inc.  Pursuant to the agreements,
      the Company has acquired a 7.5% carried working interest on four of the
      prospects and has acquired a 25% carried working interest in the fifth
      prospect.  The Company is carried on all costs related to the prospect
      through the licensing, permitting, drilling and completion of the first well
      on
      each project. In the event of a successful gas well being drilled, the Company,
      following testing and completion, would be responsible for the working interest
      costs of well tie-in and pipeline. The Company would also be a working interest
      participant on any additional gas wells drilled.





During
      the year ended December 31,
      2003, the Company incurred a total of $405,000 in acquisition and exploration
      costs relating to the California prospects.  During the year ended
      December 31, 2004, the Company incurred a total of $898,204 in acquisition,
      exploration and development costs relating to the California
      prospects.  During the year ended December 31, 2005, the Company
      incurred a total of $756,675 in acquisition, exploration and development costs
      relating to the California prospects.   During the year ended
      December 31, 2006, the Company incurred a total of $1,081,515 in acquisition,
      exploration and development costs relating to the California
      prospects.





During
      2005, the North Franklin
      property was determined to have proved gas reserves.  Total
      capitalized costs for the North Franklin property were removed from the unproved
      properties and classified as proved properties.  For 2005, the Company
      received revenues of $1,372,675 from the North Franklin property.  As
      of December 31, 2005, the total capitalized costs related to the North Franklin
      property, net of depletion of $132,121 was $1,345,384.  For the three
      months ended March 31, 2007 and 2006, the Company received revenues of $569,495
      and $505,754 from the North Franklin Property.  As of December 31,
      2006, the total capitalized costs related to the North Franklin property, net
      of
      depletion of $469,530 was $2,110,736.





On
      May 7, 2007, the Company sold its
      40% interest North Franklin property for $3,100,000.  As of the date
      of the sale, the Company had capitalized $2,514,019 in costs related to the
      North Franklin property and had recorded total depletion of
      $564,530.  The Company recognized a gain of $1,150,511 on the sale of
      the North Franklin property.






17







SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      3
      - OIL AND GAS PROPERTIES (continued)





During
      the quarter ended June 30, 2007,
      capitalized costs of $627,375 in unproved properties related to the Winter
      Pinchout Prospect was written-off and expensed.





As
      of June 30, 2007, the Company no
      longer had any properties in California.





Kansas
      Prospects, U.S.A.





During
      2005, the Company acquired an
      interest in some oil and gas properties in Kansas.  As of December 31,
      2005, the Company had spent $54,286 on these properties.  During the
      year ended December 31, 2006, the Company incurred $20,000 in costs related
      to
      this property.  These costs were capitalized as part of unproved
      properties.  In June 2006, the Company abandoned the Kansas property,
      and the capitalized cost of $74,286 was expensed.





NOTE
      4
      - ASSET RETIREMENT OBLIGATION





Effective
      January 1, 2003, the Company
      adopted Statement of Financial Accounting Standards No. 143, *Accounting for
      Asset Retirement Obligations*(“SFAS 143”). This statement applies to
      obligations associated with the retirement of tangible long-lived assets that
      result from the acquisition, construction and development of the
      assets.





SFAS
      143 requires that the fair value
      of a liability for a retirement obligation be recognized in the period in which
      the liability is incurred. For oil and gas properties, this is the period in
      which an oil or gas well is acquired or drilled. The asset retirement obligation
      is capitalized as part of the carrying amount of the asset at its discounted
      fair value. The liability is then accreted each period until the liability
      is
      settled or the asset is sold, at which time the liability is
      reversed.





The
      Company identified and estimated
      all of its asset retirement obligations for tangible, long-lived assets as
      of
      January 1, 2003. These obligations were for plugging and abandonment costs
      for
      depleted oil and gas wells.  The Company had no proved reserves in
      2003 or 2004, therefore the Company did not record an asset retirement
      obligation.   During the year ended December 31, 2005, the
      Company estimated its asset retirement obligation to be $45,000, for three
      gas
      wells at the North Franklin property.  Upon recognition of this asset
      retirement obligation, a liability of $45,000 was recorded and the capitalized
      costs of proved properties was increased by $45,000.





During
      the year ended December 31,
      2006, a fourth producing gas well was operating at the North Franklin property.
      The Company estimated the asset retirement obligation for this well to be
      $15,000.  Upon recognition of this asset retirement obligation, an
      additional liability of $15,000 was recorded in the asset retirement obligation
      and the capitalized costs of the proved properties was increased by
      $15,000.





During
      the quarter ended June 30, 2007,
      the Company sold the North Franklin property and the asset retirement obligation
      of $60,000 was reversed and removed from capitalized costs.  At June
      30, 2007 and December 31, 2006, the asset retirement obligation was $0 and
      $60,000, respectively.






18




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      5
      - CONCENTRATIONS





As
      of September 30, 2007, approximately
      100% of the Company’s revenues are from oil property in Canada.  The
      loss of these wells, or a disruption in production from these wells, would
      adversely effect the operations of the Company.





NOTE
      6
      - COMMON STOCK





On
      November 20, 2003, the Company
      restructured its share capital whereby the total common shares presently issued
      and outstanding was forward split on a 1 (old) to 12 (new)
      basis.  Effective January 5, 2004 the Company restructured its share
      capital whereby the total common shares presently issued and outstanding was
      forward split on a 1 (old) to 2 (new) basis.  All references to common
      stock, common shares outstanding, average numbers of common shares outstanding
      and per share amounts in these Financial Statements and Notes to Financial
      Statements


prior
      to
      the effective date of the forward stock splits have been restated to reflect
      the
      12:1 and the 2:1 common stock splits on a retroactive basis.





On
      December 5, 2003, the Company
      received $500,000 in subscription proceeds from a director and officer for
      the
      purchase of 444,444 common shares of the company’s stock pursuant to a
      Regulation S Private Placement Financing which was announced on November 25,
      2003 and whereby the Company plans to issue up to 3,555,556 common shares of
      its
      capital stock.  During the three months ended March 31, 2004, the
      Company received subscription proceeds of $750,000 pursuant to the Private
      Placement Financing.  During the three months ended March 31, 2004,
      1,112,102 shares were issued in accordance with the $1,250,000 in subscription
      proceeds received.





On
      March 23, 2004, the Company entered
      into an agreement with two shareholders for the shareholders to surrender for
      cancellation 24,600,000 regulation 144 restricted shares of the Company’s common
      stock.





During
      the three months ended June 30,
      2004, the Company received subscription proceeds of $630,000 pursuant to the
      Private Placement Financing.  During the three months ended June 30,
      2004, 661,915 shares were issued in accordance with the $630,000 in subscription
      proceeds received.





On
      June 30, 2004, the Company received
      share subscription proceeds of $275,000 for 500,000 shares of restricted common
      stock pursuant to the Private Placement Financing announced on November 25,
      2003.   During the three months ended September 30, 2004, 500,000
      shares were issued in accordance with the $275,000 in subscription proceeds
      received.





On
      August 18, 2004, the Company issued
      250,000 restricted shares of common stock for $25,000 in accounts
      payable.





On
      October 18, 2004, the Company issued
      156,000 restricted shares of common stock for consulting expense of
      $15,600.






19




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      6
      - COMMON STOCK (continued)





On
      November 23, 2004, the Company
      issued 362,394 shares of common stock for debt issue costs of $350,000
      associated with the Company’s issuance of convertible debt.





On
      April 28, 2006, the Company issued
      1,200,000 shares of common stock for consulting services valued at
      $324,000.





On
      May 3, 2006, the Company issued
      10,000,000 shares of common stock to its officers and directors for services
      valued at $2,750,000.





On
      May 7, 2007, the Company agreed to
      issue 49,045,225 shares of common stock in exchange for the remaining debt
      totaling $1,030,000 of principal and $931,811 on its convertible
      debt.   As of September 30, 2007, the common stock has not been
      issued.





As
      of June 30, 2007, the Company has
      not adopted a stock option plan or granted any stock options and accordingly
      has
      not recorded any stock-based compensation.





NOTE
      7- RELATED PARTY TRANSACTIONS





Pursuant
      to consulting agreements dated
      November 15, 2003 and renegotiated July 1, 2005 the Company agreed to pay
      $15,000 per month to the CFO and director of the Company and $20,000 per month
      to the President and director of the Company.





During
      2003 and 2004, the Company
      entered into several acquisition agreements with 1048136 Alberta Ltd. (see
      Note
      4).  The Company's current president, Robert McIntosh, was a director
      of 1048136 Alberta Ltd. and had resigned from that position prior to his
      involvement with the Company.  Sak Narwal, a shareholder of the
      Company, was also a director of 1048136 Alberta Ltd and Scott Marshall, the
      majority shareholder of 1048136 Alberta Ltd., is the spouse of Naomi Patricia
      Johnston, owner of a 11.76% interest in the Company. Despite the existence
      of
      these related parties, the consideration exchanged under the Agreements
      described above was negotiated at "arms length," and the directors and executive
      officers of the Company used criteria used in similar uncompleted proposals
      involving the Company in comparison to those of 1048136 Alberta
      Ltd.





The
      Company has a “working interest”
relationship with joint venture partner Fidelis Energy Inc. (FDEI: OTC: BB)
      (see
      Note 4).  Both companies have an interest in the North Franklin gas
      project in Sacramento, California. More recently, in January 2005, Fidelis
      entered into an agreement to acquire an interest in two oil wells at the Joarcam
      Project located in Alberta Canada. The Company was earning a 70% working
      interest in the entire Joarcam Project.  Fidelis  also
      entered into an agreement for the first right of refusal to acquire the
      remaining 30% working interest on all future drilling locations at Joarcam.
      Silver Star and Fidelis collectively acquired a 100% working interest at
      Joarcam. On October 6, 2005 the 100% working interest at Joarcam was sold to
      Enermark, Inc.








20





SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      7- RELATED PARTY TRANSACTIONS (continued)





In
      addition, Silver Star and Fidelis
      management work closely in the evaluation of other potential, jointly feasible
      exploration prospects. Also, the two companies share a common origin in that
      certain beneficial shareholders of both companies have contributed to their
      formation.





NOTE
      8
      - INCOME TAXES





As
      of December 31, 2006, the Company
      had a net operating loss carry forward for income tax reporting purposes of
      approximately $5,552,391 that may be offset against future taxable income
      through 2026.  Current tax laws limit the amount of loss available to
      be offset against future taxable income when a substantial change in ownership
      occurs.  Therefore, the amount available to offset future taxable
      income may be limited.  No tax benefit has been reported in the
      financial statements, because the Company believes there is a 50% or greater
      chance the carry-forwards will expire unused.  Accordingly, the
      potential tax benefits of the loss carry-forwards are offset by a valuation
      allowance of the same amount.





2006
            
            
            2005Net
                Operating Losses
            
            $
            832,852
            
            
            $
            173,082Valuation
                Allowance
            
            
            (832,852
            )
            
            
            (173,082
            )$
            -
            
            
            $
            -





The
      provision for income taxes differs
      from the amount computed using the federal US statutory income tax rate as
      follows:





2006
            
            
            2005Provision
                (Benefit) at US Statutory Rate
            
            $
            659,770
            
            
            $
            (8,727
            )Increase
                (Decrease) in Valuation Allowance
            
            
            (659,770
            )
            
            
            8,727$
            -
            
            
            $
            -





The
      Company evaluates its valuation
      allowance requirements based on projected future operations.  When
      circumstances change and causes a change in management's judgment about the
      recoverability of deferred tax assets, the impact of the change on the valuation
      is reflected in current income.





NOTE
      9
      - LEASE COMMITMENT





On
      December 1, 2005, the Company
      entered into a lease agreement for approximately 129 square feet of office
      space
      at 9595 Wilshire Blvd., Suite 900, in Beverly Hills, California.  The
      lease expired November 30, 2006 and continues on a month to month basis after
      that date.  The lease payments were $1,814 per
      month.   On December 1, 2006, the Company has contracted a
      Business Identity Plan Agreement (BIP) at the same address for a fee of $300
      per
      month.  This is an annual contract and replaces the former lease
      agreement.






21







SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      9
      - LEASE COMMITMENT (continued)





The
      minimum future lease payments under
      these leases for the next five years are:





Year
                Ended December 31,2007
            
            $
            3,6002008
            
            
            -2009
            
            
            -2010
            
            
            -2011
            
            
            -Total
                minimum future lease payments
            
            $
            3,600





NOTE
      10 - CONVERTIBLE DEBENTURES





On
      March 10, 2005, the Company executed
      a Convertible Debenture for $550,000.  The note is due and payable in
      full on or before March 10, 2006 and carries an interest rate of 5% per
      annum.  The notes are convertible, at the discretion of the holder,
      into shares of common stock of the Company at a conversion price of $1.00 per
      share.  On March 30, 2005, the Company executed a Convertible
      Debenture for $200,000.  The note is due and payable in full on or
      before March 10, 2006 and carries an interest rate of 5% per
      annum.  The notes are convertible, at the discretion of the holder,
      into shares of common stock of the Company at a conversion price of $1.00 per
      share.  On December 13, 2005, the Company paid $134,424 towards this
      note.  On June 30, 2006, this note was paid in full.





On
      April 8, 2005, the Company executed
      a Convertible Debenture for $160,000.  The note is due and payable in
      full on or before April 8, 2006 and carries an interest rate of 5% per
      annum.  The notes are convertible, at the discretion of the holder,
      into shares of common stock of the Company at a conversion price of $1.00 per
      share.  On May 17, 2005, the Company executed a Convertible Debenture
      for $150,000.  The note is due and payable in full on or before May
      17, 2006 and carries an interest rate of 5% per annum.  The notes are
      convertible, at the discretion of the holder, into shares of common stock of
      the
      Company at a conversion price of $1.00 per share.  On December 13,
      2005, this note was paid in full.  The Company paid a total of
      $319,880 for principal and interest.





On
      October 14, 2005, we entered into a
      securities purchase agreement with H.C. Wainwright for a PIPE Offering which
      is
      a private investment opportunity in a public company for an aggregate purchase
      price of $3,430,000, of which we have issued (i) a $3,430,000 secured
      convertible debenture, convertible into shares of our common stock at a fixed
      conversion price of $.315, par value $0.001, and (ii) a warrant to purchase
      an
      aggregate of 34,408,717 additional shares of our common stock at an exercise
      price of $.315 and $.63 per share and are exercisable until October 14,
      2010.











22





SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      10 - CONVERTIBLE DEBENTURES (continued)





Beginning
      on the six (6) month
      anniversary of the Closing, and on the first business day of each month
      thereafter until the Notes are no longer outstanding the Company shall pay
      1/18th of the
      original principal amount of the Notes and all accrued and unpaid interest.
      The
      Company shall elect to make such payments in shares of the Company’s common
      stock.  Each share of the Company’s common stock will be valued at
      92.5% of the five (5) day VWAP immediately prior to the payment date. The
      interest on the convertible debenture shall accrue on the outstanding principal
      balance at a rate of 8% per annum. For the three months ended March 31, 2007,
      $67,660 has been charged as interest expense related to this debt.





The
      Warrants to purchase 34,408,717 of
      the Company’s common stock will expire on October 14, 2010. The exercise price
      of the warrant is fixed at $.315 and $.63 and has an exercise period of five
      years.****The Company accounts for the fair value of these
      outstanding warrants to purchase common stock and the conversion feature of
      its
      convertible notes in accordance with SFAS No. 133 "Accounting For Derivative
      Instruments And Hedging Activities" and EITF Issue No. 00-19 "Accounting For
      Derivative Financial Instruments Indexed To And Potentially Settled In A
      Company's Own Stock;" which requires the Company to bifurcate and separately
      account for the conversion feature and warrants as embedded derivatives
      contained in the Company's convertible notes.





Pursuant
      to SFAS No. 133, the Company
      bifurcated the fair value of the conversion feature from the convertible notes,
      since the conversion feature was determined to not be clearly and closely
      related to the debt host, and since the effective registration of the securities
      underlying the conversion feature and warrants is an event outside of the
      control of the Company, pursuant to EITF 00-19.   The Company
      recorded the fair value of the conversion feature and warrants as long-term
      liabilities as it was assumed the Company would be required to net-cash settle
      the underlying securities.





The
      Company is required to carry these
      derivatives on its balance sheet at fair value and unrealized changes in the
      values of these derivatives are reflected in the statement of operation as
      "derivative valuation gain (loss)”.
































23








SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      10 - CONVERTIBLE DEBENTURES (continued)





In
      addition 8,711,084 warrants have
      been issued to H.C. Wainwright, John R. Clarke, Scott F. Koch, Ari Fuchs, Jason
      A. Stein and First SB Inc. respectively,****with series A,
      and C each exercisable at $.315 and series B and D each exercisable at $.63
      with
      terms of 1 year from October 14, 2005.





WarrantsH.C.
                Wainwright & Co. Ltd.
            
            $
            2,177,768John
                R. Clarke
            
            
            947,328Scott
                F. Koch
            
            
            947,328Ari
                J. Fuchs
            
            
            217,776Jason
                A. Stein
            
            
            65,3321st
                SB Partners
                Ltd.
            
            
            4,355,552Total
            
            $
            8,711,084





For
      2005, the value of the conversion
      feature and warrants was calculated using the Black–Scholes method as
      of  December 31, 2005 based on the following assumptions: an average
      risk free****rate of 4.25; a dividend yield of 0.00%; and an
      average volatility factor of the expected market price of the Company’s common
      stock of 102.61%.  The market value of the common stock at December
      31, 2005 was $.22 per share.  At December 31, 2005, the derivative
      liability was $6,458,056 and the loss on derivative valuation was
      $5,622,741.





For
      2006, the value of the conversion
      feature and warrants was calculated using the Black-Scholes method as of
      December 31, 2006 based on the following assumptions:  an average risk
      free****rate of 4.85; a dividend yield of 0.00%; and an
      average volatility factor of the expected market price of the Company’s common
      stock of 93.8%.   The market value of the common stock at
      December 31, 2006 was $.047 per share.  At December 31, 2006, the
      derivative liability was $279,074 and the gain on derivative valuation was
      $6,178,983.  On May 7, 2007, the remaining derivative liability of
      $279,074 was written off and a derivative valuation gain of $279,074 was
      recognized, due to the amended agreements relating to the convertible
      debt.





On
      October 14, 2005, the Company paid
      $480,000 in cash for debt issue costs related to the convertible debenture
      of
      $3,430,000.  These debt issue costs were capitalized in the financial
      statements and are being amortized over two years using the interest
      method.  On May 7, 2007, the remaining debt issue costs of $136,835
      were expensed, due to the payoff of the convertible debt as part of the amended
      agreements relating to the convertible debt.  At September 30, 2007
      and December 31, 2006, net debt issue costs related to these convertible
      debentures were $0 and $197,494, respectively.





Silver
      Star Energy is in default of the
      October 14, 2005 terms of the convertible debenture. This Company has been
      unable to have the Registration Statement on Form SB2 declared effective within
      the 90 days after closing as was required. Liquidated damages in the amount
      of
      $68,600 or 2% of the offering amount of $3,430,000 have been paid.  Further
      liquidated damages of 1% per month of the offering amount, totaling $531,649
      have been accrued. This represents the default period from January 14, 2006
      to
      March 31, 2007.






24




SILVER
      STAR ENERGY, INC.


NOTES
      TO FINANCIAL STATEMENTS





NOTE
      10 - CONVERTIBLE DEBENTURES (continued)





Amortization
      payments of 1/18th of the
      original
      amount of $3,430,000 is required to be paid on the six month anniversary of
      the
      closing and on the first business day of each month thereafter until the notes
      are no longer outstanding. The company may elect to make these payments in
      cash
      or in payments of the company’s stock.





On
      March 8, 2007 three of our creditors
      from our October 14, 2005 financing filed a claim for monies owed under the
      Note
      and Warrant Purchase Agreement in the United States Bankruptcy Court Central
      District of California. These three creditors represent $950,000 of the
      $3,430,000 that was raised.  The Company and its legal counsel have
      since reached a negotiated settlement that all of the lenders have now accepted.
      The settlement resulted in the sale of the Company’s 40% interest North Franklin
      Gas Field to an arm’s-length third party, the repayment of $2.4 million pro-rata
      to the lenders and the purchase of a revenue interest in the MB Gas Inc., a
      private Alberta, Canada, oil and gas exploration company.  The Company
      sold its interest in the Franklin gas field for a total of $3,100,000 and repaid
      in cash $2,400,000 of the approximately $3,429,885 of principal and $931,926
      of
      accrued interest that was owing to the Lenders. This Asset Sale Agreement closed
      on May 7, 2007.  In order to settle the balance, the Company amended
      the related lending documents to allow for conversion of such debt into common
      shares at a deemed conversion price of $0.04 per share.  The remainder
      of the debt totaling $1,961,811 will be converted to 49,045,225 shares of common
      stock.  As of June 30, 2007, the common stock has not been
      issued.





The
      Company also re-priced 12,500,000
      outstanding warrants to allow exercise at a price of $0.04.  The value
      of the new warrants was calculated using the Black-Scholes method as of May
      7,
      2007 based on the following assumptions:  an average risk
      free****rate of 4.70; a dividend yield of 0.00%; and an
      average volatility factor of the expected market price of the Company’s common
      stock of 117.8%.   The market value of the common stock at May 7,
      2007 was $.04 per share.  The warrants were valued at
      $375,501.  As of June 30, 2007, the Company recognized $375,501 of
      interest expense related to the warrants.












































25




**Item
      2.****Management's Discussion and Analysis or Plan of
      Opera­tion**.





**General**
      - This discussion should be read in conjunction with Management's Discussion
      and
      Analysis of Financial Condition and Results of Operations in the Company's
      annual report on Form 10-KSB for the year ended December 31, 2006.





**Plan
      of Operations**





Silver
      Star Energy, Inc. on May 9th, reported
      on a
      series of corporate developments meant to favorably restructure the Company's
      debt and allow it to continue as a going concern in the oil and gas
      sector.





We
      had been in default with its lenders
      pursuant to the convertible note and warrant purchase agreement of October
      2005.
      Three lenders, representing $950,000 of the $3,430,000 that was raised under
      the
      financing, filed a claim for monies owed in the United States Bankruptcy Court
      Central District of California. The Company and its legal counsel have since
      reached a negotiated settlement that all of the Lenders have now accepted.
      The
      Settlement will result in the sale of the Company's 40% interest in the North
      Franklin Gas Field to an arm's-length third party; the repayment of $2.4 million
      pro-rata to the Lenders and the purchase of a revenue interest in MB Gas Inc.,
      a
      private Alberta, Canada oil and gas exploration company, on the terms detailed
      below.





We
      sold our interest in the Franklin
      gas field for a total of $3,100,000 and will repay in cash $2,400,000 of the
      approximately $3,429,885 that is presently owing to the Lenders. In order to
      settle the balance, we amended the related lending documents to allow for
      conversion of the debt into common shares at a conversion price of $0.04 share.
      We re-priced all of the lenders' 12,500,000 outstanding warrants to allow
      exercise at a price of $0.04. No registration statement will be required or
      filed.





The
      Company had commissioned an
      independent reservoir engineering report on the fair market value of the Proved
      Developed Producing ("PDP") reserves at North Franklin from the four producing
      gas wells. Having cumulatively to-date produced a total of 1,944,328 Mcf gas
      (1.94 Bcf), the remaining reserves to the 100% working interest were calculated
      at 2,694,781 Mcf (2.69 Bcf) of gas. The four wells in the reservoir are
      declining in pressure and additional costs are expected for pipeline
      compression. The Report valued 100% of the interest in the North Franklin field
      at $9,226,619 (or $3,706,647 to Silver Star's 40% working interest) on a PV
      10
      for the Proved Developed Producing reserves. The value of the Company's 32%
      net
      revenue interest is $2,952,518 and therefore the purchase price of $3,100,000
      represents a premium to current value.





Silver
      Star and MB Gas Inc., a private
      Alberta company, have concluded an agreement whereby Silver Star will acquire
      an
      interest in the revenues generated by MB from its oil and gas operations. Silver
      Star has agreed to advance loans of $500,000 (minimum) to $1 million (maximum)
      to MB in return for the assignment of revenue from MB's oil and gas operations.
      The Loan advances will be repaid from MB's revenues, at 12.5% to Silver Star
      until payout; thereafter 5% to 10%, pro-rated above 5% for amounts loaned in
      excess of $500,000.





MB
      owns a majority interest in a gas
      processing facility and pipeline located in the Province of Alberta that is
      linked to a transporting pipeline that runs south to Encana's Hub near the
      U.S.
      - Canada border. MB is presently connecting 3 Sawtooth formation natural gas
      wells to the pipeline and this work is scheduled to be completed within the
      next
      six months. Flow tests on the wells indicate that they should produce a minimum
      of 1,300 Mcf per day when






26




they
      are
      connected, on which MB will earn up to a 67.5% net revenue interest before
      payout and 45.0% after payout. MB also controls certain prospective lands in
      the
      area targeting mostly middle and deeper gas-bearing formations. These are in
      relatively close proximity to the pipeline system, and MB expects that the
      gas
      from any new commercial grade discoveries made by MB on those lands, together
      with gas from a number of previously plugged gas wells in the area, once
      tied-in, will be carried in MB's pipeline.


On
      May
      10th, we
      reported on the completion and testing results from three Sawtooth formation
      gas
      wells at the MB Gas Project, located in the Manyberries area of Alberta, Canada.
      The Company and MB Gas Inc., based on the recently announced participation
      by
      the Company under the loan agreement, are currently working to tie in three
      natural gas wells owned and operated by Provident Energy Trust.





The
      11-17 gas well was flow tested at
      rates of 600 Mcf per day with no water in well tests conducted between October
      27 and November 24, 2006. Southridge Petroleum Consulting Ltd. of Calgary has
      estimated the potential for 2.4 Bcf gas at this location. The 11-17 wellhead
      is
      less than 1.5 miles from a pipeline in which MB Gas owns a majority
      interest.





The
      second well, the 6-7, is
      approximately 1.7 miles from the 11-17 well and was tested at flow rates that
      were held back to 300 Mcf per day to prevent damage to the well. A remedial
      cement squeeze is planned for the well and when tied-in to pipeline, an
      additional 1.7 Bcf has been estimated for this location.





The
      last Provident well is located 6
      miles to the southeast of the 6-7 and requires re-completion and testing. Based
      on the observed pay in the well log, it has been estimated by Southridge
      Petroleum to have the potential to produce gas at rates between 700 and 2,000
      Mcf per day. The well may contain 3.0 Bcf. Analogous wells in the area producing
      from Sawtooth formation reservoirs commonly produce somewhere between 1,000
      and
      2,000 Mcf.





The
      three wells are projected, when
      tied-in to pipeline, to produce gas at rates of between 1,300 and 3,000 Mcf
      per
      day and may have a combined potential of 7.1 Bcf.





On
      June 18, we reported on the progress
      of pipeline construction and ultimate tie-in of gas wells at the MB Gas Project,
      located in the Manyberries area of Alberta, Canada. The Company and MB Gas
      Inc.,
      recently announced participation under a loan agreement, and are currently
      working to tie-in three natural gas wells owned and operated by Provident Energy
      Trust.





We
      were informed by the operator that
      permitting has been processed and the 1.5 mile pipeline construction is
      scheduled to commence on or around July 15th. Pipeline
      tie-in
      of the 11-17 well is anticipated to take 10 days. The 11-17 gas well was flow
      tested at rates of 600 Mcf per day and Southridge Petroleum Consulting Ltd.
      of
      Calgary has estimated the potential for 2.4 Bcf gas at this
      location.





The
      6-7 well that is located
      approximately 1.7 miles from the 11-17 well will be the next well to be tied
      in
      and the line survey and permitting has commenced. An additional 1.7 Bcf has
      been
      estimated for this location.






27




This
      program is part of the 2007
      development and operations plan to tie-in and produce natural gas from three
      Provident Energy wells and conduct well surveys to determine the geological
      potential of up to twenty (20) Sawtooth Formation locations in the immediate
      vicinity of the pipeline. MB Gas Inc. plans to tie-in five (5) currently shut-in
      or abandoned gas wells in the 2007 calendar year with the aim of producing
      in
      the 800 BOEPD range. Silver Star and its partner, MB Gas Inc. (a private Alberta
      oil and gas exploration company), are focused on the exploitation of targeted,
      low risk natural gas development opportunities in southeastern
      Alberta.





At
      our EVI project in Alberta Canada,
      we continue to look for potential partners in the drilling of another Granite
      Wash test on the leases at EVI.





**Results
      of Operations**





**Revenue**





Revenue
      decreased to $51,406 for the
      quarter ended September 30, 2007, down from $549,953 in the same period in
      2006.  This decrease is a result of the sale of the North Franklin
      property on May 7, 2007.





**Productions
      Costs**





The
      Company recorded production costs
      and depletion of $26,236 during the quarter ended September 30, 2007 down from
      $82,276 during the quarter ended September 30, 2006. This decrease is a result
      of the sale of the North Franklin property on May 7, 2007.





**General
      and Administrative Expenses**





General
      and administrative expenses consist primarily of accounting, legal, depreciation
      and selling and marketing expenses. The general and administrative expenses
      for
      the quarter ended September 30, 2007 are $88,922. This is a decrease from 2006
      of $101,982. Professional fees which include legal and accounting were $11,527
      for the quarter ended September 30, 2007 compared to $46,501 for the quarter
      ended September 30, 2006 and this decrease is due to a decrease in legal fees
      for the quarter.





Consulting
      and Management fees were
      $105,000 for the quarter ended September 30, 2007 and decreased over the same
      period in 2006 by $76,293. This decrease was due to a decrease in operations
      during the quarter.  We expect to continue to incur general and
      administrative expenses to support the business.





**Interest
      Expense**





Interest
      expense decreased for the
      quarter ended September 30, 2007 with $0 compared to $128,858 for the quarter
      ended September 30, 2006. The decrease was mainly due to the Company’s
      convertible debt being converted to common stock.








28





**Net
      Loss**





The
      Company ended the third quarter of
      September 30, 2007 with a net loss of ($180,279) compared to ($404,699) for
      the
      same period in 2006.





**Liquidity
      and Capital Resources**





Cash
      and cash equivalents from
      inception have been insufficient to provide the operating capital necessary
      to
      operate the Company. The necessary capital to operate the Company was initially
      provided by the principals and founders of the Company in the form of both
      debt
      and capital stock issuances as set forth in the financial statements
      incorporated herein.  The working capital necessary to operate the
      Company and provide for acquisition capital came from the proceeds of loans,
      a
      credit line and production revenue as previously disclosed.





The
      Company had cash and cash
      equivalents of $12,461 and working capital of $53,221 at September 30, 2007.
      This compares to cash and cash equivalents of $31,533 and working capital
      deficit of $3,603,925 at December 31, 2006.





During
      the nine months ended September
      30, 2007, the Company used cash of $219,072 in operating activities compared
      to
      being provided cash of $956,506 in the prior year. At September 30, 2007 the
      company had an outstanding receivable of $20,000.





Net
      cash provided by investing
      activities was $2,600,0000 for the nine months ended September 30, 2007, which
      compares to cash used of $1,387,490 for the same period in 2006.  Net
      cash provided by investing activities is primarily from the sale of North
      Franklin gas property.  Net cash used in investing activities is
      primarily from acquisition of oil and gas property interests.





Net
      cash provided by (used by)
      financing activities was ($2,400,000) for the nine months ended September 30,
      2007, which compares to ($560,000) for the same period in 2006.  Net
      cash used by financing activities was due to payments on convertible
      debt.





**Item
      3.  Controls and Procedures**





The
      Company's Chief Executive Officer
      and Chief Financial Officer are responsible for establishing and maintaining
      disclosure controls and procedures for the Company.





(a)
      Evaluation of Disclosure Controls
      and Procedures





As
      of the end of the period covered by
      this report, the Company carried out an evaluation, under the supervision and
      with the participation of the Company's management, including the Company's
      President, of the effectiveness of the design and operation of the Company's
      disclosure controls and procedures pursuant to Rule 13a-15 under the Securities
      Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the
      evaluation, the Company's President concluded that, as of the end of the period,
      the Company's disclosure controls and procedures were effective in timely
      alerting him to material information relating to the Company required to be
      included in the reports that the Company files and submits pursuant to the
      Exchange Act.





(b)
      Changes in Internal
      Controls






29







Based
      on his evaluation as of September
      30, 2007, there were no significant changes in the Company's internal controls
      over financial reporting or in any other areas that could significantly affect
      the Company's internal controls subsequent to the date of his most recent
      evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.





**PART
      II - OTHER INFORMATION**





**Item
      1.  Legal Proceedings**





There
      are no legal proceedings pending
      or threatened against us.





**Item
      2.  Changes in Securities**





None.





**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 and Reports on Form 8-K**


Exhibit


Number          Title
      of Document





4.15
            Escrow
                Agreement between the Company and Greenberg Taurig, LLP, dated May
                7,
                2007, filed on June 8, 2007 on Form
                8-K.





4.16
            Amended
                and Restated Senior Secured Convertible Promissory Note, filed on
                June 8,
                2007 on Form 8-K.





4.17
            Form
                of Warrant to Purchase Shares of Common Stock of Silver Star Energy,
                Inc.,
                filed on June 8, 2007 on Form 8-K.





4.18
            Form
                of Series A Warrant to Purchase Shares of Common Stock of Silver
                Star
                Energy, Inc., filed on June 8, 2007 on Form
                8-K.





10.1
            Robert
                McIntosh’s Consulting Agreement dated November 15, 2003, filed on April
                21, 2004 on Form 10KSB/A.





10.15
            Amendment
                Agreement between the Company and Various Creditors, dated May 7,
                2007,
                filed June 8, 2007 on Form 8-K.








30





10.16
            Asset
                Sale Agreement between the Company and Archer Exploration, Inc.,
                dated
                April 1, 2007, filed on June 8, 2007 on Form
                8-K.





10.2
            David
                Naylor’s Consulting Agreement dated November 15, 2003, filed on April 21,
                2004 on Form 10KSB/A.





10.3
            Robert
                McIntosh’s Loan Agreement dated December 31, 2003, filed on April 21, 2004
                on Form 10KSB/A.





10.4
            Agreement
                dated October 21, 2003 between the Company and Adil Dinani disposing
                of
                657333 BC Ltd. (Netcash), filed on November 13, 2003 on Form
                8-K.





10.5
            Agreement
                dated October 29, 2003 between the Company and 1048136 Alberta, Ltd.
                respecting the acquisition of the Evi oil and gas prospect, filed
                on
                November 13, 2003 on Form 8-K.





10.6
            Agreement
                dated October 29, 2003 between the Company and 1048136 Alberta, Ltd.
                respecting the acquisition of the Verdigris oil and gas prospect,
                filed on
                November 13, 2003 on Form 8-K.


10.7
            Agreement
                dated December 5, 2003 between the Company and Archer Exploration,
                Inc.
                respecting the North Franklin oil and gas prospect, filed on December
                23,
                2003 on Form 8-K.





10.8
            Agreement
                dated December 5, 2003 between the Company and Archer Exploration,
                Inc.
                respecting the Winter Pinchout oil and gas project, filed on December
                23,
                2003 on Form 8-K.





31.1
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.


31.2
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.


32.1
            Certification
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.


32.2
            Certification
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





(b)


No
      reports were filed on Form 8-K during the quarter ended September 30,
      2007.



































31





**SIGNATURES**





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








Silver
      Star Energy, Inc.


(Registrant)





DATE:November
      8, 2007








By:
      /s/ Robert McIntosh


Robert
      McIntosh


President,
      CEO & Director


(Principal
      Executive Officer)








By:
      /s/ David Naylor


David
      Naylor


Treasurer,
      Director


(Principal
      Financial Officer)




















32