UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.   20549





FORM
10-Q





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


For the quarterly period ended March
31, 2008





/  /
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT


For the transition period from _____
to _____





BONANZA OIL AND GAS,
INC.


(Exact
name of small business issuer as specified in its charger)





Nevada
            000-52411
            47-0877018(State
      or other jurisdiction
              of
      incorporation or
              organization)
            (Commission
      File No.)
            (I.R.S.
      Employer
              Identification
      No.)





3000
      Richmond Avenue
              Suite
      400
              Houston,
      TX   77098
              (Address
      of principal executive offices)
            
            (713)
      333-5808
              (Issuer’s
      telephone number)





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the past 12 month (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 large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o
            Accelerated
      filer o
            Non-accelerated
      filer o





Non
accelerated filer o  (Do not check if
a smaller reporting company)  Smaller reporting company x





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





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





Common Stock, par
      value $0.001
              (Class)
            
            25,809,654
              (Outstanding
      at May 13, 2008)





Transitional
Small Business Disclosure Format (check one): Yes o No x


1


BONANZA
OIL AND GAS, INC. AND SUBSIDIARIES





TABLE
OF CONTENTS




PART
      I – FINANCIAL INFORMATIONItem 1. Financial
      Statements (unaudited)Consolidated
      Balance Sheet as of March 31, 2008 (unaudited) and as of December 31,
      2007
              1Consolidated
      Statement of Operations for the Three Months ended March 31,
      2008
              2Consolidated
      Statement of Cash Flows for the Three Months ended March 31,
      2008
              3Notes
      to Consolidated Financial Statements (unaudited)
              4Item 2. Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              10Item
      3. Quantitative
      and Qualitative Disclosures About Market Risks
              15Item 4. Controls
      and Procedures
              15Item 4T. Controls and
      Procedures
              15PART
      II – OTHER INFORMATIONItem 1. Legal
      Proceedings
              15Item 1A. Risk Factors
              15Item 2. Unregistered
      Sales of Equity Securities and Use of Proceeds
              15Item 3. Default
      upon Senior Securities
              16Item 4. Submission
      of Matters to a Vote of Security Holders
              16Item 5. Other
      Information
              16Item 6. Exhibits
              16Signatures
              17
  2


PART
I. FINANCIAL INFORMATION





Item 1.
Financial Statements





BONANZA
OIL AND GAS, INC.


BALANCE
SHEETS


March
      31,
                2008
              
              
              December
      31, 2007(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              129,640
              
              
              $
              154,357Accounts
      Receivable
              
              
              13,913
              
              
              
              5,488Deferred
      Financing Costs
              
              
              8,905
              
              
              
              12,021Total
      Current Assets
              
              
              152,458
              
              
              
              171,866Property
      and Equipment, at cost (Note 2):Oil
      and gas properties and equipment
              
              
              2,285,703
              
              
              
              1,696,011Other
      property and equipment
              
              
              2,432
              
              
              
              -Total
      property and equipment
              
              
              2,288,135
              
              
              
              1,696,011Less:
      accumulated depletion, depreciationand
      amortization
              
              
              (9,010
              )
              
              
              (5,627
              )2,279,125
              
              
              
              1,690,384Total
      Assets
              
              $
              2,431,583
              
              
              $
              1,862,250LIABILITIES AND
      STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable
              
              $
              61,107
              
              
              $
              33,642Accrued
      expenses
              
              
              -
              
              
              
              1,342Debt,
      net of $107,906 and $10,303 of unamortized discount at March 31,
      2008and
      December 31, 2007, respectively  (Note 3)
              
              
              942,094
              
              
              
              239,697Total
      Current Liabilities
              
              
              1,003,201
              
              
              
              274,681Liability
      for Asset Retirement Obligations (Note 6)Commitments
      and Contingencies (Note 4)Stockholders'
      Equity:Common
      stock, $0.001 par value, 60,000,000 shares authorized;25,809,654
      and 25,649,654 shares issued and outstanding at
              
              
              25,810
              
              
              
              25,650March
      31, 2008 and December 31, 2007, respectivelyPreferred
      Stock Series A, $0.001 par value, 5,000,000 shares
    authorized
              
              
              -
              
              
              
              -0
      shares issued and outstanding at March 31, 2008 andDecember
      31, 2007, respectivelyPreferred
      Stock Series B, $0.001 par value, 5,000,000 shares
    authorized
              
              
              -
              
              
              
              -0
      shares issued and outstanding at March 31, 2008 andDecember
      31, 2007, respectivelyPreferred
      Stock Series C, $0.001 par value, 5,000,000 shares
    authorized
              
              
              -
              
              
              
              -0
      shares issued and outstanding at March 31, 2008 andDecember
      31, 2007, respectivelyAdditional-Paid-in-Capital
              
              
              1,879,004
              
              
              
              1,759,164Accumulated
      Deficit
              
              
              (476,432
              )
              
              
              (197,245
              )1,428,382
              
              
              
              1,587,569Total
      Liabilities and Stockholders' Equity
              
              $
              2,431,583
              
              
              $
              1,862,250
   The
accompanying notes are an integral part of these unaudited consolidated
financial statements.





3


BONANZA
OIL & GAS, INC.
 CONSOLIDATED
STATEMENT OF OPERATIONS
 For the
three months ended March 31, 2008 (Unaudited)


Operating
      RevenuesOil
      & Gas Sales
            
            $
            13,913Total
      Operating Revenues
            
            
            13,913Operating
      Costs and ExpensesDepreciation,
      Depletion and Accretion
            
            
            3,383General
      and Administrative
            
            
            237,624Total
      Operating Costs and Expenses
            
            
            241,007Operating
      Loss
            
            
            (227,094
            )Other
      Income (Expenses):Interest
      Income
            
            
            1Interest
      Expense
            
            
            (52,094
            )Loss
      before Income Taxes
            
            
            (279,187
            )Provision
      for Income Taxes
            
            
            -Net
      Loss
            
            $
            (279,187
            )Basic
      and Diluted Loss per Share
            
            $
            (0.01
            )Weighted
      average number of common sharesoutstanding
      - basic and dilluted
            
            
            25,755,148





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




4





BONANZA
OIL & GAS, INC.
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 For the
three months ended March 31, 2008 (Unaudited)


Cash
      flows from Operating Activities:Net
      Loss
                
                $
                (279,187
                )Adjustments
      to reconcile net loss to net cashused
      in operating activites:Amortization
      of Shares Issued with Promissory Note
                
                
                22,397Amortization
      of Deferred Financing Costs
                
                
                3,116Depreciation,
      depletion and accretion
                
                
                3,383Changes
      in operating assets and liabitlies:Increase
      in accounts receivable
                
                
                (8,425
                )Increase
      in accounts payable and accrued expenses
                
                
                26,123Net
      cash used in operating activities
                
                
                (232,593
                )Cash
      flows from Investing Activities:Acquisition
      of Office Equipment
                
                
                (2,432
                )Investment
      in Apclark
                
                
                (589,692
                )Net
      cash used in investing activities
                
                
                (592,124
                )Cash
      flows from Financing Activities:Proceeds
      from issuance of Secured Promissory Note
                
                
                800,000Net
      cash provided by financing activities
                
                
                800,000Net
      decrease in cash and cash equivalents
                
                
                (24,717
                )Cash
      and Cash equivalents beginning of the period
                
                
                154,357Cash
      and Cash equivalents at end of period
                
                $
                129,640SUPPLEMENTAL
      CASH FLOW INFORMATION:Cash
      Payments for Interest
                
                $
                26,580Cash
      Payment for Taxes
                
                $
                -Non-Cash
      Investing and Financing Transactions:Shares
      issued with Secured Promissory Note
                
                $
                120,000






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


5


BONANZA
OIL AND GAS, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


March 31,
2008 (unaudited)





1. BASIS
OF PRESENTATION





Bonanza
Oil and Gas, Inc. (“Bonanza” or the “Company”) has prepared the accompanying
unaudited consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Item
310(b) of regulation S-K. These financial statements should be read in
conjunction  with our audited consolidated financial statements and
notes thereto for the year ended December 31, 2007, included in the Company’s
Annual Report on Form 10-KSB filed on March 31, 2008 with the
SEC.  Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted. The accompanying financial statements reflect all adjustments and
disclosures, which, in the Company’s opinion, are necessary for fair
presentation. All such adjustments are of a normal recurring nature. The results
of operations for the interim periods are not necessarily indicative of the
results that might be expected for the future interim periods and for the entire
year.





Going
Concern





The
Company has incurred recurring losses and had negative cash flow from operations
since inception on August 17, 2007 and has an accumulated deficit of $476,432 at
March 31, 2008 (unaudited) and $197,245 at December 31,
2007.  Substantial portions of the losses are attributable to legal
and professional fees as well as interest expense.  The Company's
operating plans require additional funds that may take the form of debt or
equity financings. There can be no assurance that any additional funds will be
available. The Company's ability to continue as a going concern is in
substantial doubt and is dependent upon achieving a profitable level of
operations and obtaining additional financing.





We have
undertaken steps as part of a plan to improve operations with the goal of
sustaining our operations for the next twelve months and beyond. These steps
include (a) raising additional capital and/or obtaining financing, if available,
(b) increasing our current production in the Plantation property (c) continuing
drilling on Apclark and (d) controlling overhead and expenses.





There can
be no assurance that the Company can successfully accomplish these steps and it
is uncertain that the Company will achieve a profitable level of operations and
obtain additional financing. There can be no assurance that any additional
financings will be available to the Company on satisfactory terms and
conditions, if at all. In the event we are unable to continue as a going
concern, we may elect or be required to seek protection from our creditors by
filing a voluntary petition in bankruptcy or may be subject to an involuntary
petition in bankruptcy. To date, management has not considered this alternative,
nor does management view it as a likely occurrence.





These
consolidated financial statements do not give effect to any adjustments which
would be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying consolidated financial statements.





The
Company was incorporated on August 17, 2007 and thus no comparative statements
of operations and cash flows are presented on this quarterly unaudited
consolidated financial statements.





IMPACT OF
RECENT ACCOUNTING PRONOUNCEMENTS




6





Recent Accounting
Pronouncements





Effective
January 1, 2008, we adopted Statement of Financial Accounting Standards
(“SFAS”) No. 157, “Fair
Value Measurements”(“SFAS No. 157”)
and SFAS No. 159,“The Fair Value Option
for Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115” (“SFAS No. 159”).  In February 2008,
the Financial Accounting Standards Board (the “FASB”) issued FASB Staff Position
(“FSP”) 157-2,“Effective Date of FASB Statement
No. 157”(“FSP 157-2), which delayed the
effective date of SFAS No. 157 for all non-financial assets and liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis, until January 1, 2009.   We
have not yet determined the impact that the implementation of FSP 157-2 will
have on our non-financial assets and liabilities which are not recognized on a
recurring basis; however, we do not anticipate the adoption of this standard
will have a material impact on our consolidated financial position, results of
operations or cash flows.  The partial adoption of SFAS No. 157 and
the adoption of SFAS No. 159 did not have a material impact on the Company’s
condensed consolidated financial statements.





In
June 2007, the Accounting Standards Executive Committee issued Statement of
Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide
Investment Companies and Accounting by Parent Companies and Equity Method
Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1
provides guidance for determining whether an entity is within the scope of the
AICPA Audit and Accounting Guide Investment Companies (the “Audit Guide”). SOP
07-1 was originally determined to be effective for fiscal years beginning on or
after December 15, 2007, however, on February 6, 2008, FASB issued a
final Staff Position indefinitely deferring the effective date and prohibiting
early adoption of SOP 07-1 while addressing implementation issues.




In
December 2007, the FASB issued SFAS No. 141(R),"Business Combinations"
("SFAS No. 141(R)"), which establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS No. 141(R) is effective as of the beginning of the
first fiscal year beginning on or after December 15,
2008.  Earlier adoption is prohibited and the Company is currently
evaluating the effect, if any, that the adoption will have on its financial
position, results of operations or cash flows.




In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest
in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS
No. 160"), which will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity within the consolidated balance sheets. SFAS
No. 160 is effective as of the beginning of the first fiscal year beginning on
or after December 15, 2008. Earlier adoption is prohibited and the Company
is currently evaluating the effect, if any, that the adoption will have on its
financial position, results of operations or cash flows.





In
December 2007, the FASB ratified the consensus in EITF Issue No. 07-1,
“Accounting for Collaborative
Arrangements” (EITF 07-1). EITF 07-1 defines collaborative
arrangements and requires collaborators to present the result of activities for
which they act as the principal on a gross basis and report any payments
received from (made to) the other collaborators based on other applicable
authoritative accounting literature, and in the absence of other applicable
authoritative literature, on a reasonable, rational and consistent accounting
policy is to be elected. EITF 07-1 also provides for disclosures regarding
the nature and purpose of the arrangement, the entity’s rights and obligations,
the accounting policy for the arrangement and the income statement
classification and amounts arising from the agreement. EITF 07-1 will be
effective for fiscal years beginning after December 15, 2008, and will be
applied as a change in accounting principle retrospectively for all
collaborative arrangements existing as of the effective date. The Company has
not yet evaluated the potential impact of adopting EITF 07-1 on its
financial position, results of operations or cash flows.





In March
2008, the FASB” issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment to FASB Statement No. 133”(“SFAS No. 161”).  SFAS No. 161 is
intended to improve financial standards for derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity's financial position, financial
performance, and cash flows.  Entities are required to provide
enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  It is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged.  The Company has not yet evaluated the
potential impact of adopting SFAS No. 161 on its financial position, results of
operations or cash flows.




7





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.





2. OIL AND GAS PROPERTIES





Oil and
gas properties consisted of the following as of March 31, 2008 (unaudited) and
December 31, 2007.





March 31, 2008
            
            
            December 31, 2007(unaudited)Properties
      subject to amortization
            
            $
            750,000
            
            
            $
            750,000Properties
      not subject to amortization
            
            
            1,535,703
            
            
            
            946,011Capitalized
      asset retirement costs
            
            
            -
            
            
            
            -Accumulated
      depreciation and depletion
            
            
            (8,856
            )
            
            
            (5,627
            )Oil
      and gas properties, net
            
            $
            2,276,847
            
            
            $
            1,690,384





Depreciation
and depletion expense totaled $3,383 for the three months ended March 31, 2008,
which included depreciation expense on other property and
equipment.





3. NOTES
PAYABLE





On
September 19, 2007, Plantation entered into a Promissory Note (the "Promissory
Note”) agreement with Viewpoint Securities, LLC ("Viewpoint") in the principal
amount of $25,000.  The Promissory note was non interest bearing and
principal amount was due on the earlier to occur of (i) September 30, 2007 or
(ii) date on which Plantation would receive $950,000 through the issuance of LLC
membership interests.  The note was repaid in full on September 20,
2007.





On
December 27, 2007, Bonanza entered into a Securities Purchase Agreement with
Phoenix Capital Opportunity Fund, L.P. ("Phoenix") for its 14% senior asset
backed secured promissory note in the principal amount of $250,000 (the
"Debenture").  In addition to the Debenture, Phoenix also received
74,999 shares of common stock of the Company.  The Debenture matures
on the first anniversary of the date of issuance (the "Maturity Date") and
interest associated with the Debenture is 14% per annum which is payable on a
quarterly basis commencing March 31, 2008. The Company's obligations under the
Debenture are secured by the Plantation assets which consist of an interest in
oil and gas wells in Gonzales County, Texas.  The shares issued in
conjunction with the Debenture were valued at $10,714 based on the price of the
stock issued at the most recent private placement offering and were recorded as
additional paid in capital.  The discount of $10,714 is being
amortized using the effective interest rate method over the term of the
indebtedness and had balances of $7,632 and $10,303, as of March 31, 2008
(unaudited) and December 31, 2007, respectively.  The interest rate
will increase to 24% APR plus all enforcement costs as per the term of the
Debenture if default.  During the three months ended March 31, 2008,
the Company paid $8,726 in interest on this Debenture.





In
January 2008, the Company entered into a Securities Purchase Agreement with 3
institutions and accredited investors for its 14% senior asset backed secured
promissory note in the principal amount of $800,000 (the "2008
Debentures").   In addition, the investors received a total of 160,000
shares of common stock of the Company.  The 2008 Debentures mature on
the first anniversary of the date of issuance and interest associated with the
2008 Debentures is 14% per annum, payable on a monthly basis commencing March
31, 2008. The Company's obligations under the 2008 Debentures are secured by the
assets held by Bonanza Exploration, one of its wholly owned subsidiaries and are
subject to a rate increase if default.     The shares
issued in conjunction with the 2008 Debentures were valued at $120,000 based on
the price of the stock issued at the time of issuance and were recorded as
additional paid in capital.  The discount of $120,000 is being
amortized using the effective interest rate method over the term of the
indebtedness and as of March 31, 2008 (unaudited), the discount had a balance of
$100,274.  During the three months ended March 31, 2008, the Company
paid $17,854  in interest on the 2008 Debentures.




8





4.  COMMITMENTS
AND CONTINGENCIES





Bonanza
leases approximately 5,100 square feet of office space in Houston, Texas from
United Production & Exploration, Inc., a company majority-owned by Mr.
Wiseman and Mr. Teague, that serves as its corporate office. The lease is at
market rates and is on a month to month basis for $3,315 per
month.   Total rent expense was $9,945 for the three months ended
March 31, 2008 (unaudited).





We are
responsible for any contamination of land we own or lease. However, we carry
pollution liability insurance policies, which may limit some potential
contamination liabilities as well as claims for reimbursement from third
parties.





ENVIRONMENT





Bonanza,
as owner and operator of oil and gas properties, is subject to various federal,
state, and local laws and regulations relating to discharge of materials into,
and protection of, the environment. These laws and regulations may, among other
things, impose liability on the owner of real property and the lessee under oil
and gas leases for the cost of pollution clean-up resulting from operations,
subject the owner/lessee to liability for pollution damages and impose
restrictions on the injection of liquids into subsurface strata.





Although
Company environmental policies and practices are designed to ensure compliance
with these laws and regulations, future developments and increasing stringent
regulations could require the Company to make additional unforeseen
environmental expenditures





The
Company maintains insurance coverage that it believes is customary in the
industry, although it is not fully insured against all environmental
risks.





The
Company is not aware of any environmental claims existing as of March 31, 2008,
that would have a material impact on its consolidated financial position or
results of operations. There can be no assurance, however, that current
regulatory requirements will not change, or past non-compliance with
environmental laws will not be discovered on the Company's
property.





LEGAL
PROCEEDINGS





The
Company is not a party to any litigation that has arisen in the normal course of
its business and that of its subsidiaries.





5. MAJOR
CUSTOMERS





During
the three months ended March 31, 2008 (unaudited) , one customer, Gulfmark
Energy, Inc., accounted for 100.0% of our total oil and gas sales.





6. ASSET
RETIREMENT OBLIGATIONS





In
accordance with SFAS 143, “Accounting for Asset Retirement Obligations” Bonanza
records the fair value of a liability for asset retirement obligations (“ARO”)
in the period in which it is incurred and a corresponding increase in the
carrying amount of the related long-lived asset. The present value of the
estimated asset retirement cost is capitalized as part of the carrying amount of
the long-lived asset and is depreciated over the useful life of the asset.
Bonanza accrues an abandonment liability associated with its oil and gas wells
when those assets are placed in service. The ARO is recorded at its estimated
fair value and accretion is recognized over time as the discounted liability is
accreted to its expected settlement value. Fair value is determined by using the
expected future cash outflows discounted at Bonanza's credit-adjusted risk-free
interest rate. No market risk premium has been included in Bonanza's calculation
of the ARO balance.  As of March 31, 2008 and December 31, 2007, the
Company’s only producing property is Plantation where the operator, and not
Bonanza, is responsible for costs associated with the abandonment of the
property.  As such, the Company has not recognized an ARO balance at
March 31, 2008 or December 31, 2007.




9




Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operation.




This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 that include, among others, statements of: expectations, anticipations,
beliefs, estimations, projections, and other similar matters that are not
historical facts, including such matters as: future capital requirements,
development and exploration expenditures (including the amount and nature
thereof), drilling of wells, reserve estimates (including estimates of future
net revenues associated with such reserves and the present value of such future
net revenues), future production of oil and gas, repayment of debt, business
strategies, and expansion and growth of business operations. These statements
are based on certain assumptions and analyses made by our management in light of
past experience and perception of: historical trends, current conditions,
expected future developments, and other factors that our management believes are
appropriate under the circumstances. We caution the reader that these
forward-looking statements are subject to risks and uncertainties, including
those associated with the financial environment, the regulatory environment, and
trend projections, that could cause actual events or results to differ
materially from those expressed or implied by the statements. Such risks and
uncertainties include those risks and uncertainties identified
below.





Significant
factors that could prevent us from achieving our stated goals include: declines
in the market prices for oil and gas, adverse changes in the regulatory
environment affecting us, the inherent risks involved in the evaluation of
properties targeted for acquisition, our dependence on key personnel, the
availability of capital resources at terms acceptable to us, the uncertainty of
estimates of proved reserves and future net cash flows, the risk and related
cost of replacing produced reserves, the high risk in exploratory drilling and
competition. You should consider the cautionary statements contained or referred
to in this report in connection with any subsequent written or oral
forward-looking statements that may be issued. We undertake no obligation to
release publicly any revisions to any forward-looking statement to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.





Bonanza
Oil & Gas, Inc. ("Bonanza" or "the Company") is an independent energy
company engaged primarily in the acquisition, development, production and the
sale of oil, gas and natural gas liquids. The Company's production activities
are located in the United States of America. The principal executive offices of
the Company are located at 3000 Richmond Avenue, Suite 400, Houston, TX
77046.   Bonanza was originally incorporated as Plantation
Working Interests, LLC (“Plantation”) in the State of Texas on August 17, 2007
to acquire a working interest (22.5% pre-payout, 15% post-payout) in 8 oil and
gas wells in Gonzales County, TX.





On
October 23, 2007, Plantation merged with National Filing Agents, Inc., which was
the entity that survived the merger, by entering into an Acquisition Agreement
and Plan of Merger (the "Acquisition Agreement"), pursuant to which the Company
acquired, through an exchange transaction, all of the issued and outstanding
capital stock of privately held, Plantation, a 25% interest in a lease on
Cadillac Prospect in Mercedes field in Hidalgo County, TX and 25% interest in a
lease on Point Bar Prospect in the Damon Mound Field in Brazoria County, TX and
other properties and assets from its members in exchange for 10,766,667 shares
of Common Stock.  In addition, on October 23, 2007 in conjunction with
the Acquisition Agreement, the Company entered into an Asset Purchase Agreement
(the “Asset Purchase Agreement”) with Lucas Energy, Inc. to acquire a 25% stake
in ApClark, an oil, gas and mineral leasehold working interest in Borden County,
Texas through the issuance of 6,300,000 shares of Common
Stock.   Immediately after the merger and further to the
Acquisition Agreement, two affiliated shareholders of National Filing Agents,
Inc cancelled 6,180,000 shares of common stock. The merger has been accounted
for as a recapitalization of Bonanza rather than a business
combination.  Accordingly, no pro forma disclosure is
made.  The historical financial statements are those of
Bonanza.





National
Filing Agents, Inc. was incorporated under the laws of the State of Nevada on
December 24, 2002, under the name National Filing Agents, Inc.  In
conjunction with the transaction, National Filing Agents, Inc. amended its
Articles of Incorporation to change the Company's name to Bonanza Oil & Gas,
Inc., forward split its common stock on a 2.1 to 1 ratio, and changed its
trading symbol on the Over-the-Counter Bulletin Board to "BGOI".  All
share amounts reflect the 2.1:1 forward stock split.




10





We have
undertaken steps as part of a plan to improve operations with the goal of
sustaining our operations for the next twelve months and beyond. These steps
include (a) raising additional capital and/or obtaining financing, if available,
(b) increasing our current production in the Plantation property (c) continuing
drilling on Apclark and (d) controlling overhead and expenses.





There can
be no assurance that we will successfully accomplish these steps and it is
uncertain we will achieve a profitable level of operations and/or obtain
additional financing. There can be no assurance that any additional financings
will be available to us on satisfactory terms and conditions, if at all. In the
event we are unable to continue as a going concern, we may elect or be required
to seek protection from our creditors by filing a voluntary petition in
bankruptcy or may be subject to an involuntary petition in bankruptcy. To date,
management has not considered this alternative, nor does management view it as a
likely occurrence.





Results
of Operations





Three
Months ended March 31, 2008 (unaudited)





Three
      Months Ended
              March
      31, 2008Amount
            
            
            PercentageOil
      & Gas Sales
            
            $
            13,913
            
            
            
            100.0
            %Depreciation
      , Depletion and Accretion
            
            
            3,383
            
            
            
            24.3
            %General
      & Administrative Expenses
            
            
            237,624
            
            
            
            1,707.9
            %Total
      Operating Costs and Expenses
            
            
            241,007
            
            
            
            1,732.2
            %Operating
      Loss
            
            
            (227,094
            )
            
            
            -1,632.2
            %Other
      Expenses
            
            
            (52,093
            )
            
            
            -374.4
            %Net
      Loss
            
            
            (279,187
            )
            
            
            -2,006.7
            %





We were
incorporated on August 17, 2007 and thus no prior year comparisons are
provided.





All of
our current revenues are derived from oil sales from our Plantation
property.  We generated net revenues of $13,913 during the three
months ended March 31, 2008.  During the quarter ended March 31, 2008,
we produced a total of 1,167 barrels of oil ("BOE"), of which our 15.75% share
was 184 BOE that were sold at an average price of $96.07 per BOE, while total
operating expenses were $26,268 (or approximately $22.51 per BOE) of which our
22.5% share was $5,910.





For the
three months ended March 31, 2008, general and administrative expenses totaled
$237,624 and consisted primarily of $169,055 of professional fees and $37,500 of
insurance expense.





Depreciation,
depletion and accretion were $3,383 for the quarter ended March 31, 2008, most
of which is attributable to depletion on our Plantation property.





Loss from
operations was $227,094 for the quarter ended March 31, 2008.





Interest
expense for the quarter ended March 31, 2008 was $52,094 and consisted of
interest on our $800,000 related to 2008 Debentures and interest on the $250,000
Debenture.




11





Net loss
was $279,187 for the quarter ended March 31, 2008.





Liquidity
and Capital Resources





At March
31, 2008, we had working capital deficit of $850,743 consisting primarily of
$942,094 of debt, representing $1,050,000 face value less $107,906 of
unamortized discount, offset mainly by $129,640 of cash.





We have
raised in excess of $2,000,000 in gross proceeds through various debt and equity
financings since date of inception (August 17, 2007) and have used the majority
of the net proceeds to acquire the Plantation Property and investments in the
Apclark property, as well as for working capital purposes and professional
fees.





Net cash
used in operating activities for the quarter ended March 31, 2008 totaled
$232,593 and consisted primarily of the net loss of $279,187, offset by $26,123
increase in accounts payable and accrued expenses and $22,397 for the
amortization of shares issued with the various debenture offerings.





Net cash
used in investing activities for the quarter ended March 31, 2008 totaled
$592,124 and consisted primarily of $589,692 investment in the Apclark
property.





Net cash
provided by financing activities for the quarter ended March 31, 2008 totaled
$800,000 and consisted of the gross proceeds of the 2008
Debentures.





Net
operating revenues from our oil production are very sensitive to changes in the
price of oil, which is making it very difficult for management to predict
whether or not we will be profitable in the future.





We
conduct no product research and development.





Any
expected purchase of significant equipment is directly related to drilling
operations and the completion of successful wells.  We will not
undertake to drill wells for which we do not already possess the funds needed to
complete and to equip the wells.  Should we not have all the funds
needed to drill and complete a well before we commence drilling the well, we
will sell an interest in the well to another oil company or to investors that
buy interests in oil prospects.





We are
responsible for any contamination of land we own or lease. However, we carry
pollution liability insurance policies, which may limit some potential
contamination liabilities as well as claims for reimbursement from third
parties.





We
currently sell all of our oil production to Gulfmark Energy,
Inc.  However, in the event this customer discontinued oil purchases,
we believe we can replace this customer with other customers who would purchase
the oil at terms standard in the industry.





Quantitative
and Qualitative Disclosures about Market Risk





We have
no material exposure to interest rate changes.  We are subject to
changes in the price of oil, which are out of our control.  Since our
formation, in August 2007, we have sold oil at various prices ranging from
$79.62 to $103.99 per barrel.





Effect
of Changes in Prices





Changes
in prices during the past few years have been a significant factor in the oil
and gas industry. The price received for the oil produced by us fluctuated
significantly during the last year. Changes in the price that we receive for our
oil and gas is set by market forces beyond our control as well as governmental
intervention. Average price received by us for a BOE was $96.07 and $87.91 for
the quarter ended March 31, 2008 and from August 17, 2007 (date of inception) to
March 31, 2008, respectively.  The volatility and uncertainty in oil
and gas prices have made it more difficult for a company like us to increase our
oil and gas asset base and become a significant participant in the oil and gas
industry.




12





Critical
Accounting Policies and Estimates





Management's
Discussion and Analysis of Financial Condition and Results of Operations
discusses our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates our estimates and judgments, including those related to
revenue recognition, recovery of oil and gas reserves, financing operations, and
contingencies and litigation.  For a summary of our critical
accounting policies, please refer to our Annual Report on Form 10-KSB for the
year ended December 31, 2007 filed with the SEC on Mrach 31, 2008.





Oil
and Gas Properties





We follow
the full cost method of accounting for oil and gas producing activities. Costs
to acquire mineral interests in oil and gas properties, to drill and equip
exploratory wells used to find proved reserves, and to drill and equip
development wells including directly related overhead costs and related asset
retirement costs are capitalized.





Under
this method, all costs, including internal costs directly related to
acquisition, exploration and development activities are capitalizable as oil and
gas property costs.  Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. Bonanza assesses the
realizability of unproved properties, if any, on at least an annual basis or
when there has been an indication that impairment in value may have occurred.
 Impairment of unproved properties is assessed based on management's
intention with regard to future exploration and development of individually
significant properties and the ability of Bonanza to obtain funds to finance
such exploration and development. 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.





The
provision for depreciation and depletion of oil and gas properties is computed
on the unit-of-production method. Under this method, we compute the provision by
multiplying the total unamortized costs of oil and gas properties including
future development, site restoration, and dismantlement abandonment costs, but
excluding costs of unproved properties by an overall rate determined by dividing
the physical units of oil and gas produced during the period by the total
estimated units of proved oil and gas reserves. This calculation is done on a
country-by-country basis. As of March 31, 2008, all of our oil production
operations are conducted in the United States of America. The cost of
unevaluated properties not being amortized, to the extent there is such a cost,
is assessed quarterly to determine whether the value has been impaired below the
capitalized cost. The cost of any impaired property is transferred to the
balance of oil and gas properties being depleted. The costs associated with
unevaluated properties relate to projects which were undergoing exploration or
development activities or in which we intend to commence such activities in the
future. We will begin to amortize these costs when proved reserves are
established or impairment is determined.





In
accordance with SFAS No. 143, "Accounting for Asset Retirement Obligations," we
report a liability for any legal retirement obligations on our oil and gas
properties. The asset retirement obligations represent the estimated present
value of the amounts expected to be incurred to plug, abandon, and remediate the
producing properties at the end of their productive lives, in accordance with
state laws, as well as the estimated costs associated with the reclamation of
the property surrounding. The Company determines the asset retirement
obligations by calculating the present value of estimated cash flows related to
the liability. The asset retirement obligations are recorded as a liability at
the estimated present value as of the asset's inception, with an offsetting
increase to producing properties. Periodic accretion of the discount related to
the estimated liability is recorded as an expense in the statement of
operations.





The
estimated liability is determined using significant assumptions, including
current estimates of plugging and abandonment costs, annual inflation of these
costs, the productive lives of wells, and a risk-adjusted interest rate. Changes
in any of these assumptions can result in significant revisions to the estimated
asset retirement obligations. Revisions to the asset retirement obligations are
recorded with an offsetting change to producing properties, resulting in
prospective changes to depletion and depreciation expense and accretion of the
discount. Because of the subjectivity of assumptions and the relatively long
lives of most of the wells, the costs to ultimately retire the Company's wells
may vary significantly from prior estimates.




13





Revenue
Recognition




Bonanza
recognizes oil and natural gas revenue under the sales method of accounting for
its interests in producing wells as oil and natural gas is produced and sold
from those wells. Oil and natural gas sold by Bonanza is not significantly
different from Bonanza’s share of production.   We recognize
revenue upon transfer of ownership of the product to the customer which occurs
when (i) the product is physically received by the customer, (ii) an invoice is
generated which evidences an arrangement between the customer and us, (iii) a
fixed sales price has been included in such invoice and (iv) collection from
such customer is probable.




Off-Balance
Sheet Arrangements




Our
company has not entered into any transaction, agreement or other contractual
arrangement with an entity unconsolidated with us under which we
have





·
            an
      obligation under a guarantee
contract,


·
            a
      retained or contingent interest in assets transferred to the
      unconsolidated entity or similar arrangement that serves as credit,
      liquidity or market risk support to such entity for such
      assets,


·
            any
      obligation, including a contingent obligation, under a contract that would
      be accounted for as a derivative instrument,
or


·
            any
      obligation, including a contingent obligation, arising out of a variable
      interest in an unconsolidated entity that is held by us and material to us
      where such entity provides financing, liquidity, market risk or credit
      risk support to, or engages in leasing, hedging or research  and
      development services with us.





Plan of
Operations





We have
undertaken steps as part of a plan to improve operations with the goal of
sustaining our operations for the next twelve months and beyond. These steps
include (a) raising additional capital and/or obtaining financing, if available,
(b) increasing our current production in the Plantation property (c) continuing
drilling on Apclark and (d) controlling overhead and expenses.





Going
Concern





We
anticipate that we will need to raise a minimum of $10,000,000 to provide the
cash requirements for the next twelve months to continue our investment in
Apclark and our other leases.  There can be no assurance the Company
can successfully accomplish these steps and it is uncertain the Company will
achieve a profitable level of operations and obtain additional financing. There
can be no assurance that any additional financings will be available to the
Company on satisfactory terms and conditions, if at all. In the event we are
unable to continue as a going concern, we may elect or be required to seek
protection from our creditors by filing a voluntary petition in bankruptcy or
may be subject to an involuntary petition in bankruptcy.  To date,
management has not considered this alternative, nor does management view it as a
likely occurrence.





These
consolidated financial statements do not give effect to any adjustments which
would be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying consolidated financial statements.





Recent Accounting
Pronouncements





See Note
1 of Notes to Consolidated Financial Statements included in Part I – Financial
Information, Item 1 of this Form 10-Q.





14





Item
3. Quantitative and Qualitative Disclosures About Market Risks





Smaller
reporting companies are not required to provide the information required by Item
305.





Item
4. Controls and Procedures





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item.





Item
4T. Controls and Procedures





We
maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended the "Exchange
Act) that are designed to ensure that information required to be disclosed in
our reports filed under the Exchange Act, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.





We
carried out an evaluation under the supervision and with the participation of
management, including our Chief Executive Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of March 31,
2008, the end of the period covered by this report. Based on that evaluation,
our Chief Executive Officer concluded that our disclosure controls and
procedures were effective at the reasonable assurance level as of March 31,
2008.





There
have been no changes in our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
quarter ended March 31, 2008 that materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.





PART
II – OTHER INFORMATION





Item
1. Legal Proceedings





We are
not a party to, or the subject of, any material pending legal proceedings other
than ordinary, routine litigation incidental to our business.





Item
1A. Risk Factors





Our
company is a Smaller Reporting Company.  A Smaller Reporting Company
is not required to provide the risk factor disclosure required by this
item.





Further,
there have been no material changes to the risks to our business described in
our Annual Report on Form 10-KSB for the year ended December 31, 2007 filed with
the SEC on March 31, 2008.




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





In
January 2008, the Company entered into a Securities Purchase Agreement with 3
institutions and accredited investors for its 14% senior asset backed secured
promissory note in the principal amount of $800,000 (the "2008
Debentures").   In addition, the investors received a total of 160,000
shares of common stock of the Company.  The 2008 Debentures mature on
the first anniversary of the date of issuance and interest associated with the
2008 Debentures is 14% per annum, payable on a quarterly basis commencing March
31, 2008.  The offering and sale was deemed to be exempt under Rule
506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as
amended. No advertising or general solicitation was employed in offering the
securities. The offerings and sales were made to a limited number of persons,
all of whom were accredited investors or a limited number of unaccredited
investors, business associates of the Company or executive officers of the
Company, and transfer was restricted by the Company in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, the Company has made independent determinations
that all of the above-referenced persons were accredited or sophisticated
investors, and that they were capable of analyzing the merits and risks of their
investment, and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.





15





Item
3. Default upon Senior Securities





None





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





None





Item
5. Other Information





None





Item
6. Exhibits





See
Exhibit Index attached hereto.


16





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf of the undersigned thereunto
duly authorized.








BONANZA
      OIL AND GAS, INC.
                (Registrant)Date: 
      May 14, 2008
              By:
              /s/ Bill
      WisemanBill
      WisemanPresident
      and Chief Executive Officer




Date: 
      May 14, 2008
                By:
                /s/ Ran
      FurmanRan
      FurmanPrincipal
      Financial Officer








17


EXHIBIT
INDEX








The
following is a list of Exhibits required by Item 601 of Regulation
S-K.  Except for these exhibits indicated by an asterisk which are
filed herewith, the remaining exhibits below are incorporated by reference to
the exhibit previously filed by us as indicated.








Exhibit No.
            
            Description3.1
            
            Articles
      of Incorporation of Bonanza Oil and Gas, Inc. (1)3.2
            
            Bylaws
      of Bonanza Oil and Gas, Inc. (1)31.1
      (*)
            
            Certification
      pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002, signed by Bill Wiseman, President and
      Chief Executive Officer (Principal Executive Officer)31.2
      (*)
            
            Certification
      pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002, signed by Ran Furman, Chief Financial
      Officer (Principal Financial Officer).32.1
      (*)
            
            Certification
      pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002, signed by Bill Wiseman, President and
      Chief Executive Officer (Principal Executive Officer) and Ran Furman
      (Principal Financial Officer).





(1)
            Incorporated
      herein by reference to Exhibit 3.1 to the Bonanza Oil and Gas, Inc. Form
      SB-2 filed December 18, 2006.


(2)
            Incorporated
      herein by reference to Exhibit 3.2 to the Bonanza Oil and Gas, Inc. Form
      SB-2 filed December 18, 2006.













18