U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended March 31, 2010


OR





 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
transition period from ________ to ________





Commission
File Number:  000-50173





Superior
Oil and Gas Co.


(Exact
name of registrant as specified in its charter)




NEVADA
                  
                  87-0537621(state
      of
                    incorporation)
                  
                  (IRS
      Employer
                    I.D.
      Number)





844 South
Walbaum Road


Calumet,
Ok 73014


405-884-2080


____________________________________________________


(Address
and telephone number of registrant's principal


executive
offices and principal place of business)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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 large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.


Large accelerated filer ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company x





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





As of May
24, 2010, there were 200,000,000 shares of the Registrant's Common Stock, par
value $0.001 per share, outstanding.





TABLE
OF CONTENTS




PagePART
      I - FINANCIAL INFORMATION
                    
                    3Item
      1. Financial Statements
                    
                    3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                    
                    13Item
      4. Controls and Procedures
                    
                    15PART
      II - OTHER INFORMATION
                    
                    15Item
      1. Legal Proceedings
                    
                    15Item
      2. Unregistered Sales of Equity Securities
                    
                    17Item
      6. Exhibits
                    
                    17SIGNATURES
                    
                    18


2


PART
I - FINANCIAL INFORMATION








PAGEItem
      1.               
        Financial StatementsBalance
      Sheets March 31, 2010 and December 31, 2009 (Unaudited)
                        4Statements
      of Operations for the Three Months Ended March 31, 2010 and 2009
      (Unaudited)
                        5Statements
      of Cash Flows for the Three Months Ended March 31, 2010 and 2009
      (Unaudited)
                        6Notes
      to Financial Statements
                        8





3





Superior
Oil and Gas Co.


Balance
Sheets


(unaudited)





March 31,
                      
                      
                      December 31,2010
                      
                      
                      2009ASSETSCurrent
      AssetsCash
                      
                      $
                      976
                      
                      
                      $
                      218Accounts
      receivable
                      
                      
                      12,426
                      
                      
                      
                      1,616Total
      Current Assets
                      
                      
                      13,402
                      
                      
                      
                      1,834Property
      and EquipmentOil
      and gas propertiesPipeline
      Right of Way
                      
                      
                      111,600
                      
                      
                      
                      111,600Oil
      and gas leases undeveloped Unproved property
                      
                      
                      369,371
                      
                      
                      
                      189,581480,971
                      
                      
                      
                      301,181Other
      property and equipmentLeasehold
      improvements
                      
                      
                      553,170
                      
                      
                      
                      553,170Furniture
      and fixtures
                      
                      
                      67,714
                      
                      
                      
                      67,714620,884
                      
                      
                      
                      620,884Less
      accumulated depreciation and amortization
                      
                      
                      (117,042
                      )
                      
                      
                      (100,795
                      )503,842
                      
                      
                      
                      520,089Total
      Property and Equipment
                      
                      
                      984,813
                      
                      
                      
                      821,270Total
      Assets
                      
                      $
                      998,215
                      
                      
                      $
                      823,104LIABILITIES
      AND SHAREHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable
                      
                      $
                      1,373,002
                      
                      
                      $
                      1,438,156Accrued
      salaries
                      
                      $
                      323,975
                      
                      
                      
                      323,975Accrued
      interest
                      
                      $
                      3,021
                      
                      
                      
                      -Notes
      payable
                      
                      $
                      17,500
                      
                      
                      
                      -Debentures
      payable, net of discount of $148,125
                      
                      $
                      1,875
                      
                      
                      
                      -Debtor
      judgment payable
                      
                      $
                      691,030
                      
                      
                      
                      682,588Advances
      from shareholders
                      
                      $
                      160,057
                      
                      
                      
                      293,528Derivative
      liability
                      
                      $
                      386,870
                      
                      
                      
                      -Total
      Liabilities
                      
                      $
                      2,957,330
                      
                      
                      
                      2,738,247Shareholders'
      DeficitCommon
      stock, $0.001 par value per share 200,000,000 shares authorized,
      196,234,082 outstanding at March 31, 2010 and 56,234,082 at December 31,
      2009
                      
                      $
                      196,235
                      
                      
                      
                      56,235Additional
      paid-in capital
                      
                      $
                      15,445,228
                      
                      
                      
                      6,485,226Accumulated
      deficit
                      
                      $
                      (17,600,578
                      )
                      
                      
                      (8,456,604
                      )Total
      Shareholders' Deficit
                      
                      $
                      (1,959,115
                      )
                      
                      
                      (1,915,143
                      )Total
      Liabilities and Shareholders' Deficit
                      
                      $
                      998,215
                      
                      
                      $
                      823,104





See Accompanying Notes to Financial Statements


4





Superior
Oil and Gas Co.


Statements
of Operations


(unaudited)





Three
                
                
                ThreeMonths Ended
                
                
                Months EndedMarch 31,
                
                
                March 31,2010
                
                
                2009RevenueOil
                
                $
                3,465
                
                
                $
                4,781Gas
                
                
                4,499
                
                
                
                754Total
      Revenue
                
                
                7,964
                
                
                
                5,535Operating
      ExpensesLease
      operating expenses
                
                
                19,447
                
                
                
                3,190Stock
      based compensation
                
                
                9,005,213
                
                
                
                -General
      and administrative
                
                
                84,836
                
                
                
                72,725Interest
                
                
                13,338
                
                
                
                8,442Depreciation
      and amortization
                
                
                16,247
                
                
                
                16,3449,139,081
                
                
                
                100,701Loss
      from operations
                
                
                (9,131,117
                )
                
                
                (95,166
                )Loss
      on derivative
                
                
                (236,870
                )
                
                
                -Gain
      on settlement of liabilities
                
                
                224,013
                
                
                
                -Loss
      before income taxes
                
                
                (9,143,974
                )
                
                
                (95,166
                )Income
      taxes
                
                
                -
                
                
                
                -Net
      loss
                
                $
                (9,143,974
                )
                
                $
                (95,166
                )Basic
      loss per Share:Weighted
      average shares outstanding
                
                
                168,234,082
                
                
                
                25,291,481Loss
      per share
                
                $
                (0.05
                )
                
                $
                (0.00
                )





See
Accompanying Notes to Financial Statements





5





Superior
Oil and Gas Co.


Statements
of Cash Flows


For
the Three Months Ended March 31, 2010 and 2009


(Unaudited)





Three
                
                
                ThreeMonths
      Ended
                
                
                Months
      EndedMarch 31, 2010
                
                
                March 31, 2009Cash
      flows from operating activities:Net
      loss
                
                $
                (9,143,974
                )
                
                $
                (95,166
                )Adjustment
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                16,247
                
                
                
                16,344Gain
      on settlement
                
                
                (224,013
                )
                
                
                -Amortization
      of debt discount
                
                
                1,875
                
                
                
                -Loss
      on derivative liability
                
                
                236,870
                
                
                
                -Stock
      based compensation
                
                
                9,005,213
                
                
                
                -Decrease
      (increase) in accounts receivable
                
                
                (10,810
                )
                
                
                13,126Increase
      in accounts payable
                
                
                98,445
                
                
                
                33,715Increase
      in accrued salaries
                
                
                -
                
                
                
                18,225Increase
      in accrued interest
                
                
                3,021
                
                
                
                -Increase
      in debtor judgment payable
                
                
                8,442
                
                
                
                8,442Net
      cash used in operating activities
                
                
                (8,684
                )
                
                
                (5,314
                )Net
      cash flows from investing activities:
                
                
                -
                
                
                
                -Cash
      flows from financing activities:Increase
      in notes payable
                
                
                17,500
                
                
                
                -Decrease
      loans from officers
                
                
                (8,058
                )
                
                
                4,836Net
      cash flows provided from financing activities
                
                
                9,442
                
                
                
                4,836Increase
      in cash
                
                
                758
                
                
                
                (478
                )Cash
      at beginning of period
                
                
                218
                
                
                
                712Cash
      at end of period
                
                $
                976
                
                
                $
                234





See
Accompanying Notes to Financial Statements





6




Superior
Oil & Gas Co.


Statements
of Cash Flows


(unaudited)




ThreeMonths
      Ended
              
              
              Months
      EndedMarch
      31,
              
              
              March
      31,2010
              
              
              2009Supplemental
      Disclosure of Cash Flow InformationCash
      paid during the period for:Interest
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -Non
      Cash Investing and Financing ActivitiesCommon
      stock issued for undeveloped wells
              
              $
              94,790
              
              
              $
              -Debenture
      issued for unproved properties & AP settlement
              
              $
              150,000
              
              
              $
              -




See
Accompanying Notes to Financial Statements


7


Superior
Oil and Gas Co.
 Notes
to Financial Statements
 (unaudited)
 
 NOTE
1:  BASIS OF PRESENTATION
 
 The
accompanying unaudited interim financial statements of Superior Oil and Gas Co.,
(the Company) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission, and should be read in conjunction with the
audited financial statements and notes thereto contained in Superior's Annual
Report on Form 10-K filed with the SEC. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which substantially duplicate
the disclosure contained in the audited financial statements for fiscal 2009 as
reported in the Form 10-K have been omitted.
 
 Recently
Issued Accounting Pronouncements
 
 In
January 2010, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value
Measurements (ASU 2010-06). This update provides amendments to Subtopic 820-10
and requires new disclosures for 1) significant transfers in and out of Level 1
and Level 2 and the reasons for such transfers and 2) activity in Level 3 fair
value measurements to show separate information about purchases, sales,
issuances and settlements. In addition, this update amends Subtopic 820-10 to
clarify existing disclosures around the disaggregation level of fair value
measurements and disclosures for the valuation techniques and inputs utilized
(for Level 2 and Level 3 fair value measurements). The provisions in ASU 2010-06
are applicable to interim and annual reporting periods beginning subsequent to
December 15, 2009, with the exception of Level 3 disclosures of purchases,
sales, issuances and settlements, which will be required in reporting periods
beginning after December 15, 2010. The adoption of ASU 2010-06 did not impact
the Company’s operating results, financial position or cash flows, but did
impact the Company’s disclosures on fair value measurements. See Note 6, “Fair
Value Measurements.”
  In
February 2010, FASB issued ASU No. 2010-09, Amendments to Certain
Recognition and Disclosure Requirements (ASU 2010-09). This update amends
Subtopic 855-10 and gives a definition to SEC filer, and requires SEC filers to
assess for subsequent events through the issuance date of the financial
statements. This amendment states that an SEC filer is not required to disclose
the date through which subsequent events have been evaluated for a reporting
period. ASU 2010-09 becomes effective upon issuance of the final update. The
Company adopted the provisions of ASU 2010-09 for the period ended
March 31, 2010.
  8
  Superior
Oil and Gas Co.
 Notes
to Financial Statements
 (unaudited)
 
 In April
2010, the FASB issued ASU No. 2010-12, Accounting for Certain Tax Effects
of the 2010 Health Care Reform Acts (ASU 2010-12). This update clarifies
questions surrounding the accounting implications of the different signing dates
of the Health Care and Education Reconciliation Act (signed March 30, 2010)
and the Patient Protection and Affordable Care Act (signed March 23, 2010).
ASU 2010-12 states that the FASB and the Office of the Chief Accountant at the
SEC would not be opposed to view the two Acts together for accounting purposes.
The Company is currently assessing the impact, if any, the adoption of ASU
2010-12 will have on the Company’s disclosures, operating results, financial
position and cash flows.
 
 NOTE
2:  GOING CONCERN CONSIDERATIONS
 
 The
Company neither has sufficient cash on hand nor is it generating sufficient
revenues to cover its operating overhead.  These facts raise
substantial doubts as to the Company’s ability to continue as a going
concern.  The Company has been operating over the past year based on
loans, stock sales, sales of oil and gas properties and increases in its
accounts payable.  There is no guarantee that such sources of
financing will continue to be available for operations to the
Company.  In order to be able to complete the wells it is in the
process of drilling and completing and to produce those wells, the Company will
be required to obtain significant funding.  Management’s plans include
attempting to find partners for its drilling prospects.  Management
intends to make every effort to identify and develop sources of
funds.  There is no assurance that Management’s plans will be
successful.
  NOTE
3:  STOCK TRANSACTIONS
  On March
13, 2010, the Company issued the 140 million common shares of stock to two
shareholders for a partial interest in an oil and gas leases and three
marginally producing oil and gas wells. The value was $0.065 per share or a
total of $9,100,000.
  All but
$94,000 was for compensation of the two shareholders for their past investment
in the Company. $94,000 was the fair value of the properties purchased based on
replacement costs.
  9
 
 Superior
Oil and Gas Co.
 Notes
to Financial Statements
 (unaudited)
 
 In order
to maintain control of the Company in its present controlling shareholders, the
Company  is to amend its articles of incorporation (i) to increase the
number of authorized shares of common stock and (ii) to authorize a new class of
stock - a Preferred Stock - with a 10 million-share Series A Voting Convertible
Preferred Stock, each share of which can cast 14 votes and also be convertible
into 14 shares of Common Stock. The Company is expected to issue these 10
million shares to friends of the present management of the Company and thereby
achieve a balancing of the voting power of  the two shareholders
mentioned above, on the one hand, and Superior's present management (and the
controlling shareholder), on the other hand.
 
 In order
to maintain a balance in the voting power of the controlling shareholders and
the two shareholders, in consideration of the Company’s agreeing to order the
issuance of the 140 million shares of common stock to the two shareholders, the
two shareholders agree that, until after the 10 million shares of Series A
Preferred Stock have been authorized and issued and delivered to the owners of
those shares, the two shareholders will only exercise the voting power of its
shares consistent with the written instructions of the Company’s management
(controlling shareholders).
 
 Due to
the above, the issuance of the 140 million shares of common stock to the two
shareholders did not result in change of control of the Company.
 
 Subsequent
to March 31, 2010, the Company issued 3,765,918 shares of common stock to five
persons for services.  The value was $0.03 per share or a total of
$112,978.
 
 NOTE
4:  NOTE PAYABLE
 
 The note
payable is a promissory note to an unrelated individual due March 31, 2011 with
interest at 8% per annum.
 
 NOTE
5:  DEBENTURE PAYABLE AND DERIVATIVE LIABILITY
 
 On March
13, 2010 the company entered into a convertible, 15% debenture to an unrelated
individual.  The debenture is due with interest on October 9, 2010 and
is convertible into 15 million shares of the Company’s common
stock.
 
 As of the
date of this report for the three months ended March 31, 2010, we have
determined that we currently could potentially have the following shares of
common stock issued:
 
 Common
      shares issued and outstanding
                    
                    
                    200,000,000Common
      shares convertible from debenture
                    
                    
                    15,000,000Total
      Common Shares Outstanding and Accounted For
                    
                    
                    215,000,000
  10
  Superior
Oil and Gas Co.
 Notes
to Financial Statements
 (unaudited)
 
 Accordingly,
given the fact that the Company currently has 200,000,000 shares of common stock
authorized, the Company could exceed its authorized shares of common stock by
approximately 15,000,000 shares if the financial instrument described in the
table above were exercised or converted into shares of common
stock.  As a result, we determined that there is an embedded
derivative.
 
 The
valuation of our embedded derivatives are determined primarily by the
Black-Scholes option pricing model. To determine the fair value of our
derivatives, management evaluates assumptions regarding the probability of
certain future events. Other factors used to determine fair value include our
period end stock price $0.03, historical stock volatility 339%, risk free
interest rate 0.24% and derivative term 0.4 year.
 
 NOTE
6:  FAIR VALUE MEASUREMENT
 
 FASB ASC
820, Fair Value Measurements and Disclosures defines fair value as the exchange
price that would be received for an  asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. FASB ASC 820 also establishes a fair value hierarchy which
requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. FASB ASC 820 describes three
levels of inputs that may be used to measure fair value:
 Level 1– Quoted prices in
active markets for identical assets or liabilities.
 Level 2– Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or
liabilities; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or
liabilities. Our derivative liabilities are classified as Level 2.
 Level 3– Unobservable inputs
that are supported by little or no market activity and that are financial
instruments whose values are determined using pricing models, discounted cash
flow methodologies, or similar techniques, as well as instruments for which the
determination of fair value requires significant judgment or
estimation.
 
 If the
inputs used to measure the financial assets and liabilities fall within more
than one level described above, the categorization is based on the lowest level
input that is significant to the fair value measurement of the
instrument.
  11
  Superior
Oil and Gas Co.
 Notes
to Financial Statements
 (unaudited)
 
 The
following table provides a summary of the fair value of our derivative
liabilities measured on a recurring basis:
 
 Fair
      value measurements on a
                            recurring
      basis March 31, 2010Level
      1
                          
                          
                          Level
      2
                          
                          
                          Level
      3LiabilitiesEmbedded
      derivatives related to Convertible debentures
                          
                          $
                          -
                          
                          
                          $
                          386,870
                          
                          
                          $
                          -
  12




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





The following discussion and analysis
should be read in conjunction with the financial statements and the accompanying
notes thereto for the period ended March 31, 2010 and is qualified in its
entirety by the foregoing and by more detailed financial information appearing
elsewhere.  See "Item 1.  Financial
Statements."  The discussion includes management’s expectations for
the future.





Such expressions of expectation are not
historical in nature and are considered forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995.  Forward-looking statements are subject to risks and
uncertainties that may cause actual future results to differ materially from
those expressed in any forward-looking statement.  Such risks and
uncertainties are discussed in the Risk Factors section of our Annual Report on
Form 10-K.  Copies of that filing may be obtained by contacting Gayla
McCoy of our company at 844 South Walbaum Road, Calumet, OK 73014, telephone
(405) 884-2080.





Results of Operations –
First Three Months Ended March 31, 2010 Compared to the Three Months Ended March
31, 2009





We had oil and gas revenue of $3,465
and $4,499, respectively for our interest in three oil and gas wells for the
three months ended March 31, 2010 compared to $4,781 and $754 revenue in the
same period in 2009.





Late in 2006 we drilled two oil and gas
wells which were initially completed in 2007.  The neutron log on the
Windy Vista #1 well in Garfield County, Oklahoma indicated numerous formations
which may contain oil or natural gas.  Initial completion attempts on
the Wilcox Formation were not commercially successful, we believe, due to a poor
cement job.  We have now completed the well in the Mississippi zone.
That well was lost due to a legal judgment in the third quarter of
2009.





Initial completion attempts in the
Wilcox Formation on the Lonesome River #1 well in Blaine County, Oklahoma
indicated substantial amounts of water.  The well has now been
completed in the Viola  zone.  The company also fractured
the Hunton and Mississippi zones to enhance production on this
well.  We have only been able to get minimal production from this well
and it has been shut in and the lease lost due to non-production.





We drilled the Chickie #1 and Gayla #1
wells in Logan County, Oklahoma in late 2007 and early 2008.  In
addition we did a recompletion on the Lindsey on the same lease during that time
frame.  Due to completion problems on the wells we have only been able
to get minimal production on the wells.





The revenue of $5,535 in the three
months in 2009 was from our working interest from sporadic production in these
wells.  They were shut in most of the time due to lack of funds for
operations.  The gas revenue of $4,499 for the three months ended
March 31, 2010 was from held payments by the gas gatherer for gas produced in
2009. The revenue for oil production for the same period in 2010 was for oil
produced in the Logan County wells.  These wells were shut in most of
the time due to lack of funds necessary to pay for cost of
production.


13





Lease operating expensesfor
the three months ended March 31, 2010 were $19,447 compared to $3,190 for the
same period in 2009.  Our water hauler billed us for some 2009
invoices in 2010 which should have been billed in the third period of 2009
accounting for the increase over the prior year.





Stock based compensation for
the three months ended March 31, 2010 was $9,005,213. This was for the shares
issued to compensate two shareholders for their past investment in the
Company.





General and administrative
expenses were $84,836 for the three months ended March 31, 2010 compared to
$72,725 for the same period in 2009, an increase of $12,111 in 2010 from the
same period in 2009.  The increase was mostly due to increases in
legal and accounting fees in 2010 compared to the same period in
2009.





Interest expensewas $13,338
in the three months ended March 31, 2010 compared to $8,442 in the same period
in 2009.  The increase of $4,896 was for interest on the $150,000
debenture the company entered into in February of 2010 and also the amortization
of debt discount related to $150,000 debenture.





Depreciation and amortization expensewas $16,247 for the three months ended March 31, 2010 compared to $16,344
for the same period in 2009.  The depreciable assets of the company
did not change materially between the periods.





Gain on settlement issue in
2010 is for the forgiveness of debt by a large shareholder during the
period.





Loss on derivativein 2010 is
in relation to $150,000 debenture that the company obtained in Q1 2010. The
debenture has a conversion feature in which the holder has the right to convert
the debenture at $0.01 conversion price. This would result in a $236,870 loss on
derivative in 2010.





Net
Income (Loss)





We
suffered a net loss of $9,143,974 for the three months ended March 31, 2010 as
compared to a loss of $95,166 for the same three month period in 2009, an
increase in loss of $9,048,808 for the three months ended March 31, 2010 as
compared to the same period in 2009.  The increase in net loss in the
three months ended March 31, 2010 as compared to the same period in 2009 was
primarily attributable to a decrease in oil and gas sales net of operating
expenses of $13,828; increase in impairment expense, $9,048,808; increase in
general and administrative costs, $12,111; increase in interest expense, $4,986;
decrease in depreciation, $97; increase in loss on derivative of $236,870, and
an increase in gain on settlement issue of $224,013.





We
financed our loss of $9,713,974 for the three months ended March 31, 2010
primarily with depreciation and amortization expense, $16,247; stock based
compensation  expense, $9,005,213; increase in accrued expenses,
$3,021; notes payable, $17,500; and an increase in debtor judgment payable,
$8,442.  These sources of funds were offset by increase in accounts
receivable, $10,810; decrease in accounts payable, $155; decrease in loans from
officers, $8,058 and an increase in cash of $758.


14





There
were nomaterial changes in
financial conditionduring the three months ended March 31,
2010.





Material changes in results of
operations.  The results of operations obtained during the
first three months of 2010 differ markedly from those of the first three months
of 2009.  The 2010 results reflect stock based compensation expense of
$9,005,213, a gain on settlement issue of $224,013, and loss on derivative of
$236,870.





Item
4.                   Controls
and Procedures





Evaluation of disclosure
controls and procedures.





As of
March 31, 2010, under the direction of our Chief Executive Officer who is also
our Chief Financial Officer, we evaluated our disclosure controls and procedures
as of March 31, 2010 and concluded that our disclosure controls and procedures
were ineffective as of March 31, 2010 due to a material weakness because of the
lack of segregation of duties. The lack of segregation of duties results from
lack of accounting staff with accounting technical expertise necessary for an
effective system of internal control. At any time, if it appears that any
control can be implemented to continue to mitigate such weaknesses, it is
immediately implemented. As soon as our finances allow, we will hire sufficient
accounting staff and implement appropriate procedures for monitoring and review
of work performed by our Chief Executive Officer.





Changes in
Internal Control Over Financial Reporting.





There
were no changes in our internal control over financial reporting during the
fiscal quarter ended March 31, 2010, that have materially affected, or are
likely to materially affect, our internal control over financial
reporting.





PART
II - OTHER INFORMATION





ITEM
3.                  LEGAL
PROCEEDINGS.





Following is a synopsis of lawsuits
that have a potential impact on Superior Oil and Gas Company.





We are a judgment debtor in the case
of  Gotz
Werner & Roman Werner v. Daniel Lloyd, McCoy Energy Co., Superior Oil and
Gas Co., and Big Daddy’s BBQ Sauce & Spices Co., Superior Court of
Arizona, Maricopa County, No. CV 99-11813.  The principal amount of
the judgment is $337,686 with ten percent interest accruing from and after
October 14, 1999.  As of March 31, 2010, the amount of the judgment
including interest was $691,030.





Daniel Lloyd, McCoy Energy Co. and Big
Daddy’s BBQ Sauce & Spices Co. are also judgment debtors in this litigation,
each to the same extent and in the same amount as our company.  Daniel
Lloyd was the chief executive officer, chief financial officer and a director of
our company until his death in July 2008.  McCoy Energy Co. is under
the control of Gayla McCoy, the secretary and treasurer of our
company.  Big Daddy’s BBQ Sauce & Spices Co. is under the control
of Mr. Dan Lloyd, Jr. and Ms. McCoy.


15





Brooks Investments, LLC, et
al. v. Blue Quail Resources, Inc., et al., Case No. CJ-2006-595, District
Court of Canadian County, State of Oklahomawherein Superior Oil
and Gas Company, Daniel H. Lloyd and Gayla McCoy are named as
co-defendants.  Plaintiffs have alleged that Blue Quail Resources,
Inc. committed securities fraud when it sold interests in the Lonesome River #1
oil and gas project and are seeking rescission of their contract and actual and
punitive damages against Blue Quail and the other co-defendants.  The
primary plaintiff, an attorney, has testified that no one from Superior Oil and
Gas Company nor Dan Lloyd nor Gayla McCoy ever made any representations to him
regarding the Lonesome River #1 oil and gas project.  Furthermore, it
has been admitted by the plaintiffs that neither Superior Oil and Gas Company,
Daniel Lloyd or Gayla McCoy have ever had a contractual relationship with any of
the plaintiffs and that the only reason they have been named as defendants was
on the basis of their attorney’s advice.  That attorney has now been
terminated from further representation and a Motion for Summary Judgment is now
pending before the Court which Superior’s attorneys anticipate will result in a
dismissal as to Superior Oil and Gas Company, Daniel H. Lloyd and Gayla
McCoy.





HOCO Drilling, LLC v.
Superior Oil and Gas Company, et al., Case No. CJ-2007-59-01, District
Court of Garfield County, State of Oklahoma wherein Superior Oil and Gas Company
is being sued for breach of contract by HOCO Drilling, LLC for $179,263.23, plus
costs and attorneys fees.  Superior filed an answer and counterclaim
against HOCO for breach of contract and negligence in an amount in excess of
that claimed by HOCO, plus costs and attorney’s fees.  Subsequent to
December 31, 2008, this lawsuit was settled with the agreement that the Company
will pay to the plaintiff $100,000 within one year from May 1,
2009.  The $100,000 amount is included in the accounts payable at
March 31, 2010.





Midwest Mortgage Brokers and
Paul Gee v. Hershey S. Baum, et al., Case No. CJ-2004-7796, District
Court of Tulsa County, State of Oklahoma  wherein Superior Oil and Gas
Company is a named co-defendant involves a loan that was made by Paul Gee and
Midwest Mortgage Brokers and Paul Gee to Hershey S. Baum and others for which
Superior Oil and Gas purportedly agreed to repurchase 100,000 shares of stock
from plaintiffs as part of the consideration for making the loan.  The
court granted summary judgment against Superior Oil and Gas Company in the
amount of $286,448.39 on April 23, 2008 and Superior has filed an appeal from
this judgment with the Oklahoma Supreme Court.  The attorneys for
Superior believe they will be successful in overturning the summary judgment and
ultimately prevailing in the lawsuit.





James B. Jackson v. Superior
Oil & Gas Co., District Court, Canadian County, Case No. CJ-2008-87.
The plaintiff’s claims relate to geological service provided to Superior for
which he has not been paid.  A default judgment was entered against
Superior in the amount of $14,578.29 plus costs and attorney’s
fees.  Sufficient amounts have been recorded in accounts payable at
the balance sheet date to cover the cost of this judgment.





Eagle Well Services, Inc. v.
Superior Oil and Gas Co., District Court, Oklahoma County, Case No.
CJ-2009-773 involves a claim by Eagle Well Services d/b/a Bronco Energy Services
for $94,649.69 for services performed by it for the company.  The
amount of the claim is in accounts payable at March 31, 2010.


16





Superior Oil and Gas Co. v.
Vince Freechea, District Court, Oklahoma County, Case No. CJ-2009-1793
involves a claim by Superior against an individual who operated a company known
as High Plains
Tubular.  The claim arises out of that individual’s procurement
of casing and tubing on behalf of Superior.  Mr. Freechea subsequently
wrongfully sold this casing and tubing to a third party and refused to remit the
proceeds of the sale to Superior.  Superior paid Mr. Freechea in
excess of $220,000 for the product and is seeking to recover its cost plus the
profit for a total of $350,000.





Item
2.                    Unregistered
Sales of Equity Securities





Since our last report of sales of
unregistered equity securities (Form 10-K for period ended December 31, 2009),
we have sold, in transactions exempt from registration pursuant to Regulation D,
Rule 506, the following securities to the following persons.  All
sales were made to accredited investors with preexisting relationships with our
company.





Date
                            
                            Purchaser
                            
                            No. of shares
                            
                            
                            Value
                            
                            Consideration Paid for Shares3-29-10
                            
                            Sam
      Guttman
                            
                            
                            39,000,000
                            
                            
                            $
                            0.03
                            
                            Asset
      purchase3-29-10
                            
                            Weiss
      Family Trust
                            
                            
                            101,000,000
                            
                            
                            $
                            0.03
                            
                            Asset
      purchase4-14-10
                            
                            Marilyn
      C. Kenan, Trustee
                            
                            
                            816,480
                            
                            
                            $
                            0.02
                            
                            Legal
      Services4-14-10
                            
                            Daniel
      Lloyd, Jr.
                            
                            
                            816,480
                            
                            
                            $
                            0.02
                            
                            Payroll4-14-10
                            
                            Douglas
      A. Newman
                            
                            
                            816,479
                            
                            
                            $
                            0.02
                            
                            Accounting
      Services4-14-10
                            
                            Gayla
      McCoy
                            
                            
                            816,479
                            
                            
                            $
                            0.02
                            
                            Payroll4-14-10
                            
                            Masterline
      Group
                            
                            
                            500,000
                            
                            
                            $
                            0.02
                            
                            Financial
      consulting





Item
      6.
            Exhibits





The following exhibits are filed, by
incorporation by reference, as part of this Form 10-Q:





3(i)
              
              Articles
      of Incorporation
              
              *3(ii)
              
              Bylaws
              
              *10.5
              
              Purchase
      and Sale Agreement entered into December 13, 2005 between Superior Oil and
      Gas Co. and William H. Foster.
              
              **10.6
              
              Purchase
      and Sale Agreement entered into April 24, 2006 between Enerhance Energy,
      Inc. and Superior Oil and Gas Co.
              
              **10.7
              
              Assignment
      of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to
      Superior Oil and Gas Co. covering lands in Kingfisher County,
      Oklahoma
              
              ***10.8
              
              Assignment
      of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to
      Superior Oil and Gas Co. covering lands in Canadian County,
      Oklahoma
              
              ***


17





10.9
              
              Assignment
      of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to
      Superior Oil and Gas Co. covering lands in Pushmataha County,
      Oklahoma
              
              ***14
              
              Code
      of Ethics for the Chief Executive Officer and Senior Financial
      Officers.
              
              +++16
              
              Letter
      on Change in Certifying Accountant
              
              *31.1
              
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
              
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
              
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





*
            Previously
      filed with Form 10-SB on January 31, 2003, EDGAR Accession
      #0001060830-03-000019; incorporated
herein.





+++
            Previously
      filed with Form 10-KSB, SEC #000-50173, on April 19, 2005; incorporated
      herein.





**
            Previously
      filed with Form 10-QSB 03-31-06 on May 22, 2006, EDGAR Accession
      #0001010549-06-000326; incorporated
herein.





***
            Previously
      filed with Form 8-K Current Report 05-23-06 on May 30, 2006, EDGAR
      Accession #0001010549-06-000348; incorporated
  herein.





SIGNATURES





Pursuant to the requirements of the
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.





Date:  May
      24, 2010
                  Superior
      Oil and Gas Co.By
                  /s/
      B.J. SparksB.J.
      Sparks,
President


18