UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
  FORM 20-F /A Amendment No. 1
  (Mark One)
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
  OR
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended November 30, 2011
  OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  OR
  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
  Commission file number:                                         000-30972
  HIP ENERGY CORPORATION
 (Exact name of Registrant as specified in its charter)
  Not Applicable
 (Translation of Registrant’s name into English)
  British Columbia, Canada
 (Jurisdiction of incorporation or organization)
  5548 Parthenon Place, West Vancouver, British Columbia, Canada V7V2V7
 (Address of principal executive offices)
  Richard Coglon, President,
 604.377.5515
 richard@hipenergycorp.com
  5548 Parthenon Place, West Vancouver, British Columbia, Canada V7V2V7
 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
  
  Securities registered or to be registered pursuant to Section 12(b) of the Act.
  Title of each class                                         Name of each exchange on which registered
 Not Applicable                                                              Not Applicable
  Securities registered or to be registered pursuant to Section 12(g) of the Act.
  Common Shares Without Par Value
 (Title of Class)
  Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
  Not Applicable
 (Title of Class)
  Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
  There were 60,727,660 common shares, without par value, issued and outstanding as of November 30, 2011.
  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 YES    NO
  If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 YES    NO
  Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 YES   NO
  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 YES   NO
  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
  Large accelerated filer                                                                  Accelerated filer  Non-accelerated filer
  Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
  U.S. GAAP
International Financial Reporting Standards as issued

by the International Accounting Standards Board
Other
  If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
  2
 Item 17   Item 18
  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 YES    NO
  (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
  Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
 YES    NO
  EXPLANATORY NOTE
  We are filing this Form 20-F/A Amendment No.1 to include the audit report of BDO Canada LLP for the Financial Statements for the year ended November 30, 2010.
  3
 PART I
  GENERAL
  In this Annual Report on Form 20-F, references to:
  “Asset Purchase Agreement” means the asset purchase agreement among HIP, HIP Texas, EEL, and HIP Resources dated March 14, 2010;
  “EEL” means Equi Energy LLC, a Texas corporation;
  “HIP Resources” means HIP Energy Resource Limited, a British Virgin Islands corporation;
  “HIP Nevada” means HIP Energy (Nevada) Corporation, a Nevada corporation and a wholly owned subsidiary of HIP;
  “HIP Tech” means HIP Technology Limited, a British Virgin Islands corporation;
  “HIP Texas” means HIP Energy (Texas), Inc., a Texas corporation and a wholly owned subsidiary of HIP;
  “HIP Downhole Process Technology” means the technology relating to the hydrogen inducement down hole oil and gas recovery process acquired by HIP Texas pursuant to the License Agreement, which is described in more detail under the heading “Business Overview - HIP Downhole Process Technology”;
  “Group Rich” means Group Rich Development Limited, a British Virgin Islands corporation;
  “License Agreement” means the license agreement among HIP Tech, Group Rich, HIP Nevada and HIP dated March 14, 2010;
  “We”, “us”, “our”, the “Company”, and “HIP” means HIP Energy Corporation, a British Columbia corporation; and
  “Well Bores” means the rights acquired to various well bores by HIP Nevada pursuant to the Asset Purchase Agreement.
  Certain statements in this annual report are not historical and are forward-looking statements. These statements relate to expectations, beliefs, intentions, plans, objectives, assumptions or future events or performance of HIP. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology. In particular, this annual report contains forward-looking statements pertaining to the following:
  ·
the quantity of potential oil and gas reserves;
  ·
potential oil and gas production levels;
  ·
potential production and operating activities and timing of such activities;
  ·
capital expenditure programs;
  ·
our ability to raise capital;
  ·
projections of market prices and costs;
  ·
discussion regarding any future joint venture agreements;
  ·
the acquisition of future well bores;
  4
  ·
the viability of the HIP Downhole Process Technology; and
  ·
treatment under governmental regulatory regimes and tax laws.
  Readers should read these forward-looking statements carefully because they discuss future expectations, contain projections of future results of operations or of financial condition or state other forward-looking information. Readers should be aware that these forward-looking statements involve known and unknown risks, uncertainties and contingencies and are based on assumptions that may not materialize or occur in the manner assumed. Consequently, actual results may vary from the estimates or predictions stated in the materials and these variations may be material.
  These risks, uncertainties and contingencies which may affect the assumptions underlying these forward-looking statements include, among others:
  ·
risks and uncertainties associated with estimating potential oil and gas reserves including interpreting engineering and geological data;
  ·
risks and uncertainties associated with our ability to establish the economic viability of the HIP Downhole Process Technology;
  ·
incorrect assessment that the Well Bores are suited for the HIP Downhole Process Technology;
  ·
geological, technical, drilling and processing problems;
  ·
liabilities inherent in oil and gas operations;
  ·
inability of HIP Resources to transfer the Louisiana Well Bores;
  ·
volatility in market prices for oil and gas and foreign currency exchange rates;
  ·
possible adverse effects of governmental regulations including changes in environmental and other regulations that may impose restrictions in areas where we operate;
  ·
competition for capital, acquisitions of reserves, undeveloped lands and skilled personnel;
  ·
investors becoming unwilling or unable to complete future private placements;
  ·
risks and uncertainties associated with our ability to raise additional capital; and
  ·
the risks described under the heading “Risk Factors”.
  Further, any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
  Unless otherwise indicated, all dollar amounts referred to herein are in United States dollars. All references to CDN$ are to Canadian dollars and all references to US$ are to United States dollars.
 
  5
 ITEM 1.                   Identity of Directors, Senior Management and Advisers
  Not applicable.
  ITEM 2.                   Offer Statistics and Expected Timetable
  Not applicable.
  ITEM 3.                   Key Information
  A.         Selected Financial Data
  The following financial data summarizes selected financial data for our company prepared in accordance with Canadian generally accepted accounting principles for the five fiscal years ended November 30, 2011. Additional information is presented to show the differences which would result from the application of United States generally accepted accounting principles to our financial information. Prior to March 30, 2010, our functional currency was the Canadian dollar and the reporting currency was the Canadian dollar. Effective March 30, 2010, our functional and reporting currency is the U.S. dollar. This results in all foreign currency impacts of holding non-U.S. dollar denominated financial assets and liabilities being recorded through the statement of earnings. We accounted for this change prospectively. The information presented below for the five year period ended November 30, 2011 is derived from our audited financial statements which were examined by our independent auditor. The information set forth below should be read in conjunction with our audited financial statements and related notes included in this annual report and with the information appearing under the heading “Item 5 Operating and Financial Review and Prospects”.
  Selected Financial Data
 (Calculated in accordance with Canadian GAAP)
  Fiscal Year Ended November 30 (Audited)
  CANADIAN GAAP

2011

(US$)


2010

(US$)


2009

(US$)


2008

(CDN$)


2007

(CDN$)Net Sales or Operating Revenue

$
–


$
–


$
–


$
–


$
–Total Expenses

$
668,208


$
759,312


$
57,419


$
47,508


$
61,980Income (Loss) from Continuing Operations

$
(668,208
)

$
(759,312
)

$
(57,419
)

$
(47,508
)

$
(61,980
)Net Income (Loss) and Comprehensive Income

(Loss) for the Year

$
(668,208
)

$
(759,312
)

$
(70,007
)

$
(47,508
)

$
(61,980
)Total Assets

$
111,705


$
417,654


$
12,795


$
4,733


$
6,236Total Stockholders’ Equity (Deficiency)

$
(384,794
)

$
283,414


$
(92,389
)

$
(95,267
)

$
(52,759
)Capital Stock

$
4,409,168


$
4,409,168


$
3,275,168


$
4,279,498


$
4,279,498Weighted Average Number of Common Shares (adjusted to reflect changes in capital)


60,727,660



42,650,696



3,978,774



1,211,651



1,211,651Basic and Diluted Net Loss per Common Share

$
(0.01
)

$
(0.02
)

$
(0.01
)

$
(0.04
)

$
(0.05
)Long-Term Debt

$
–


$
–


$
–


$
–


$
–Cash Dividends per Common Share

$
–


$
–


$
–


$
–


$
–
 
 
  6
 Selected Financial Data
 (Calculated in accordance with U.S. GAAP)
  Fiscal Year Ended November 30 (Audited)
  UNITED STATES GAAP

2011

(US$)


2010

(US$)


2009

(US$)


2008

(CDN$)


2007

(CDN$)Net Sales or Operating Revenue

$
–


$
–


$
–


$
–


$
–Total Expenses

$
668,208


$
759,312


$
57,419


$
47,508


$
61,980Income (Loss) from Continuing Operations

$
(668,208
)

$
(759,312
)

$
(57,419
)

$
(47,508
)

$
(61,980
)Net Income (Loss) and Comprehensive Income

(Loss) for the Year

$
(668,208
)

$
(759,312
)

$
(70,007
)

$
(47,508
)

$
(61,980
)Total Assets

$
111,705


$
417,654


$
12,795


$
4,733


$
6,236Total Stockholders’ Equity (Deficiency)

$
(384,794
)

$
283,414


$
(92,389
)

$
(95,267
)

$
(52,759
)Capital Stock

$
4,409,168


$
4,409,168


$
3,275,168


$
4,279,498


$
4,279,498Weighted Average Number of Common Shares

(adjusted to reflect changes in capital)


60,727,660



42,650,696



3,978,774



1,211,651



1,211,651Basic and Diluted Net Loss per Common Share

$
(0.01
)

$
(0.02
)

$
(0.01
)

$
(0.04
)

$
(0.05
)Long-term Debt

$
–


$
–


$
–


$
–


$
–Cash Dividends per Common Share

$
–


$
–


$
–


$
–


$
–
  Reconciliation to United States Generally Accepted Accounting Principles
  There are no material differences between Canadian generally accepted accounting principles and United States generally accepted accounting principles on the balance sheets and statements of operations and comprehensive loss and cash flows of our company.
  Disclosure of Exchange Rate History
  Since June 1, 1970, the government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the United States dollar. On April 16, 2012, the exchange rate in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars (based on the noon buying rates listed with the Bank of Canada) was $0.9967. For the past five fiscal years ended November 30, 2011 and for the six monthly periods between October 2011 and March 2012, the following exchange rates were in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars (based on the noon buying rates in New York City, for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York). As the Federal Reserve Bank has discontinued the publication of foreign exchange rates on December 31, 2008 the rates listed after December 31, 2008 are based on the exchange rates in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars (based on the intra-day high/low rates between 08:00 (ET) and 16:00 (ET) listed with the Bank of Canada):
  Year Ended
AverageNovember 30, 2007
$0.9661November 30, 2008
$1.2360November 30, 2009
$1.1644November 30, 2010
$1.0336November 30, 2011
$0.9891
  
 Month Ended
Low/HighOctober 2011
$1.0149/$1.0253November 2011
$1.0219/$1.0297December 2011
$1.0197/$1.0240January 2012
$1.0099/$1.0161February 2012
$0.9950/$0.9997March 2012
$0.9915/$0.9963
  B.         Capitalization and Indebtedness
  Not applicable
  C.         Reasons for the Offer and Use of Proceeds
  Not applicable
  D.         Risk Factors
  Much of the information included in this annual report includes or is based upon estimates, projections or other “forward-looking statements”. Such forward-looking statements include any projections or estimates made by our company and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
  Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward-looking statements.
  The common shares of our company are considered speculative. You should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating our company and our business before purchasing shares of our company’s common stock. Our business, operating and financial condition could be harmed due to any of the following risks.
  Risks Relating to our Business
  We are an early-stage oil and gas development company without revenues. Our ability to continue in business depends upon our continued ability to obtain significant financing from external sources and the success of the HIP Downhole Process Technology and any production resulting therefrom, none of which can be assured.
  We are an early-stage oil and gas technology development company without any revenues, and there can be no assurance of our ability to develop and operate our projects profitably. We have historically depended entirely upon capital infusion from the issuance of equity securities and loans from insiders to provide the cash needed to fund our operations, but we cannot assure you that we will be able to continue to do so. Our ability to continue in business depends upon our continued ability to obtain significant financing from external sources and the success of our development efforts and any production efforts resulting therefrom. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and could have a significant negative effect on our business plans and operations, including our ability to continue our current development activities.
  Our auditors’ opinion on our November 30, 2011 financial statements includes an explanatory paragraph in respect of there being substantial doubt about our ability to continue as a going concern.
  We have incurred a net loss of $4,692,373 for the cumulative period from June 22, 1983 (inception) to November 30, 2011. We anticipate generating losses for at least the next 12 months. Therefore, there is substantial doubt about our ability to continue operations in the future as a going concern as described by our auditors with respect to the financial statements for the year ended November 30, 2011. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event that we cannot continue in existence. Our business operations may fail if our actual cash requirements exceed our estimates and we are not able to obtain further financing. If we cannot continue as a viable entity, our shareholders may lose some or all of their investment in our company.
  7
 We will require significant capital to complete the ongoing development of the HIP Downhole Process Technology and any resulting application of the HIP Downhole Process Technology on the Well Bores.
  We anticipate that we will have to seek additional financing to fund the development of the HIP Downhole Process Technology and any resulting application of the HIP Downhole Process Technology on any of the Well Bores. We cannot assure you that our actual cash requirements will not exceed our estimates, and in any case we will require additional financing to bring our interests into commercial operation, finance working capital, and pay for operating expenses and capital requirements until we achieve a positive cash flow. Additional capital also may be required in the event we incur any significant unanticipated expenses.
  In light of our operating history, and under the current capital and credit market conditions, we may not be able to obtain additional equity or debt financing on acceptable terms if and when we need it. Even if financing is available, it may not be available on terms that are favourable to us or in sufficient amounts to satisfy our requirements.
  If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results, and compete effectively. More importantly, if we are unable to raise further financing when required, our planned development of the Well Bores may have to be scaled down or even ceased, and our ability to generate revenues in the future would be negatively affected.
  The economic viability of the HIP Downhole Process Technology is unproven and may not achieve commercialization, widespread market acceptance or economic viability. If the HIP Downhole Process Technology does not prove to be economically viable, our business will suffer and may fail in its entirety.
  Although we have performed initial testing on the viability of the HIP Downhole Process Technology, our assessment of the HIP Downhole Process Technology is primarily based upon historical data provided by the vendors relating to past test results. Further, the HIP Downhole Process Technology has not been proven in a commercial context over any significant period of time. Even if our HIP Downhole Process Technology is proven to be economically viable, it may not achieve widespread market acceptance. Our success will depend on our ability to prove that the HIP Downhole Process Technology is economically viable. We believe that the economic viability of the HIP Downhole Process Technology will depend on many factors, including:
  ·
the effectiveness of the HIP Downhole Process Technology to enhance oil or gas recovery on any one or a series of wells or well bores;
  ·
the safety and efficacy of the HIP Downhole Process Technology generally and on a well or series of well bores;
  ·
direct cost savings resulting from the use or application of the HIP Downhole Process Technology has not been proven on a sustained and ongoing well or well bore;
  ·
direct affect of any long term application of the HIP Downhole Process Technology on a well or series of well bores;
  ·
the pricing and cost effectiveness of the HIP Downhole Process Technology; and
  ·
our ability to respond to changes in regulations.
  We are dependent on a single technology, and if it cannot compete or find market acceptance, our business will suffer.
  Our strategy is dependent on the success of a single technology. Our strategy will be to focus our development on the HIP Downhole Process Technology and the commercialization of the technology on a well or series of well bores. Focus on this single technology leaves us vulnerable to competing products and alternative secondary oil and gas enhancement methods. If the HIP Downhole Process Technology is not proven to be commercially viable or we cannot find market acceptance or cannot compete against other technologies, our business will suffer and may fail in its entirety.
  8
 We rely on patents and proprietary rights to protect our technology.
  We rely on a combination of trade secrets, confidentiality agreements and procedures and patents to protect our proprietary technologies. We have been granted a patent in the U.S. covering the HIP Downhole Process Technology. Additional patent applications will need to be made in the U.S. from time to time. The claims contained in any patent application may not be allowed, or any patent or our patents collectively may not provide adequate protection for our products and technology. In the absence of patent protection, we may be vulnerable to competitors who attempt to copy our products or gain access to our trade secrets and know-how. In addition, the laws of foreign countries may not protect our proprietary rights to this technology to the same extent as the laws of the U.S.
  The HIP Downhole Process Technology may infringe or be challenged for infringement on other technology.
  We have attempted to ensure that our products do not infringe the proprietary rights of others. If a dispute arises concerning our technology, we could become involved in litigation that might involve substantial cost. Such litigation might also divert substantial management attention away from our operations and into efforts to enforce our patents, protect our trade secrets or know-how or determine the scope of the proprietary rights of others. If a proceeding resulted in adverse findings, we could be subject to significant liabilities to third parties. We might also be required to seek licenses from third parties in order to manufacture or sell our products. Our ability to manufacture and sell our products might also be adversely affected by other unforeseen factors relating to the proceeding or its outcome.
  Our lack of diversification increases the risk of an investment in us, and our financial condition and results of operations may deteriorate if we fail to diversify.
  Our business focus is solely related to the ongoing development and application of the HIP Downhole Process Technology on oil and gas wells or well bores. As a result, we lack diversification, in terms of the nature of our business. We will likely be impacted more acutely by factors affecting our industry in which we operate than we would if our business were more diversified. If we cannot diversify our operations, our financial condition and results of operations could deteriorate.
  The potential profitability of oil and gas operations and ventures depends upon factors beyond the control of our company.
  The potential profitability of oil and gas projects on which the HIP Downhole Process Technology is applied and the oil and gas industry generally is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to world-wide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance and the continued economic viability of our company.
  Adverse weather conditions can also hinder or affect the application or continued ability of the HIP Downhole Process Technology to operate or remain viable. A well on which the HIP Downhole Process Technology is applied may be productive but may become uneconomic as a result of severe or unseasonable weather conditions.The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control, including the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. The extent of these factors cannot be accurately predicted but the combination of these factors may result in our company not receiving an adequate return on invested capital.
  Primary and secondary drilling or enhancement of oil and gas wells involves many risks and we may become liable for well abandonment, plugging, pollution or other liabilities which may have an adverse effect on our financial position.
  Any enhanced recovery or drilling for oil and gas generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labour disruptions, blow-outs, sour gas leakage, fire, inability to obtain
  9
 suitable or adequate machinery, equipment or labour, and other risks are involved. We may become subject to liability for pollution or hazards against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.
  Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company. Further, development and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations.
  Oil and gas operations in the United States and Canada are subject to federal, state and provincial laws and regulations relating to the protection of the environment, including, but not limited to, laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations in the United States and Canada are also subject to federal, state and provincial laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling and or enhanced recovery methods and equipment. Various permits from government bodies are required for drilling or secondary well enhancement operations to be conducted; no assurance can be given that such permits will be received. No assurance can be given that environmental standards imposed by federal, state and provincial authorities will not be changed or that any such changes would not have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us.  Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. Our current and anticipated development and enhancement recovery activities are subject to the aforementioned environment regulations. When and if we enter into production we will become subject to additional regulations which do not currently pertain to us or affect our current operations.
  Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of federal, state and provincial authorities. Such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance.
  We may not effectively manage the growth necessary to execute our business plan.
  Any growth will place significant strain on our current personnel, systems and resources. We expect that we will be required to hire qualified consultants and employees to help us manage our growth effectively. We believe that we will also be required to improve our management, technical, information and accounting systems, controls and procedures. We may not be able to maintain the quality of our operations, control our costs, continue complying with all applicable regulations and expand our internal management, technical information and accounting systems to support our desired growth. If we fail to manage our anticipated growth effectively, our business could be adversely affected.
  Risks Relating to our Management
  As a majority of our directors and officers are residents of countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company, directors and officers.
  A majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company, officers, and directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
  Key management employees may fail to properly carry out their duties or may leave which could negatively impact corporate operations and/or share pricing.
  Our company’s financial condition and the success of the HIP Downhole Process Technology on our oil and gas enhanced recovery operations is dependent on our ability to hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. The loss of service of any of our key personnel could have a material adverse effect on our operations or financial condition. We do not have key-man insurance on any of our employees.
  10
 Our Articles contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.
  Our Articles contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by them in a civil, criminal or administrative action or proceeding to which they are made a party by reason of their being or having been a director or officer of our company.
  Risks Relating to Our Stock
  Our common stock is illiquid and shareholders may be unable to sell their shares.
  Our common stock is currently quoted on the Over-the-Counter Bulletin Board and is thinly traded. In the past, our trading price has fluctuated widely, depending on many factors that may have little to do with our operations or business prospects. There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. If a market for our common stock does not develop, our shareholders may not be able to re-sell the shares of our common stock that they have purchased and they may lose all of their investment. Public announcements regarding our company, changes in government regulations, conditions in our market segment and changes in earnings estimates by analysts may cause the price of our common shares to fluctuate substantially. In addition, the Over-the-Counter Bulletin Board is not an exchange and, because trading of securities on the Over-the-Counter Bulletin Board is often more sporadic than the trading of securities listed on an exchange, you may have difficulty reselling any of the shares you purchase from our selling shareholders.
  Securities class-action litigation has often been instituted following periods of volatility in the market price of a company’s securities. Such litigation, if instituted against our company, could result in substantial costs for our company and a diversion of management’s attention and resources.
  Investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.
  Our constating documents authorize the issuance of an unlimited number of common shares and an unlimited number of preference shares. In the event that we are required to issue additional shares or enter into private placements to raise financing through the sale of equity securities, investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause a reduction in the proportionate ownership and voting power of all existing shareholders.
  We have never declared or paid cash dividends on our common shares and do not anticipate doing so in the foreseeable future.
  There can be no assurance that our board of directors will ever declare cash dividends, which action is exclusively within our discretion. Shareholders cannot expect to receive a dividend on our common shares in the foreseeable future, if at all.
  Trading of our stock may be restricted by the Securities and Exchange Commission’s “Penny Stock” regulations which may limit a stockholder’s ability to buy and sell our stock.
  The United States Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized
  11
 risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.
  The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.
  In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
  ITEM 4.                   Information on HIP Energy Corporation.
  A.         History and Development of HIP Energy Corporation
  Name
  Our legal and commercial name is “HIP Energy Corporation”.
  Principal Office
  Our office is located at 5548 Parthenon Place, West Vancouver, British Columbia, Canada  V7V 2V7, our telephone number is 604.377.5515 and our facsimile number is 604.921.4764.
  Corporate Information
  Our company was incorporated pursuant to the laws of the Province of British Columbia under the British Columbia Company Act in June 1983 under the name “Bradner Resources Ltd.”. On March 29, 2004, the British Columbia Business Corporations Act came into effect, replacing the British Columbia Company Act. As required by the Business Corporations Act, our company was “transitioned” under the Business Corporations Act, effective March 31, 2004.
  Our company is currently a reporting issuer under the securities laws of British Columbia and Alberta.
  Important Events
  On December 13, 1999, our name was changed from “Bradner Resources Ltd.” to “Bradner Ventures Ltd.”
  On March 31, 2004, our authorized and issued shares of common stock and preferred stock were consolidated on the basis of one (1) post-consolidated common share for each five (5) pre-consolidated common shares so that our authorized capital consisted of 15,000,000 common shares and 5,000,000 preferred shares with 1,058,256 common shares issued and no preferred shares issued. Our authorized capital was then increased to 75,000,000 common shares and 25,000,000 preferred shares with 1,058,256 common shares issued and no preferred shares issued. The share consolidation was effective with the OTC Bulletin Board on April 21, 2004 and our trading symbol was changed to “BNVLF”.
  12
 On November 17, 2009, we changed our name from “Bradner Ventures Ltd.” to “HIP Energy Corporation” and effected a five (5) for one (1) reverse stock split of our issued and outstanding common stock. The name change and reverse stock split were effected with the OTC Bulletin Board on November 19, 2009. Our trading symbol was changed from “BNVLF” to “HIPCF”. Also effective October 20, 2009 we effected an increase in our authorized capital to an unlimited number of common shares and an unlimited number of preferred shares. We received approval for the increase in authorized capital, reverse split and name change at our annual general meeting of shareholders held on July 31, 2009.
  On March 30, 2010, pursuant to the Asset Purchase Agreement, HIP Texas, a wholly-owned subsidiary of HIP, acquired from HIP Resources ownership of the Well Bores. The Well Bores are described in detail under the heading “Business Overview – The Well Bores”. The consideration for the sale and transfer of the Well Bores was the issuance of 20 million common shares of HIP to EEL.
  On March 30, 2010, pursuant to the License Agreement, HIP Nevada, a wholly-owned subsidiary of HIP, acquired from HIP Tech an exclusive worldwide license for use of the HIP Downhole Process Technology. The HIP Downhole Process Technology is described in detail under the heading “Business Overview – HIP Downhole Process Technology”. The consideration for the acquisition of the HIP Downhole Process Technology was the issuance of 30 million common shares of HIP to Group Rich and a royalty payment, which is described in detailed under the heading “Business Overview – License Agreement”.
  The acquisition of the Well Bores by HIP Texas and the exclusive worldwide right to the HIP Downhole Process Technology by HIP Nevada caused us to cease to be a “shell company”, as defined in Rule 12b-2 of the Exchange Act.
  Current Period Operations
  The plan of the Company in 2011 was to have move its focus from its single test well at Opal Ward, and to assemble a larger control area in which to test the scalability of the HIP Downhole Process Technology. To do this the Company looked to acquire rights covering approximately 6,400 acres covering rights from the surface to the base of the Travis Peak formation. Within this larger control area, the Company had assembled 10 historically producing but dormant wellbores on which to test the HIP Downhole Process Technology. Of these wellbores, three were acquired previously from HIP Energy Resource Limited, and seven were purchased for $60,000 from Peak Energy Corp. of Dallas, Texas. The Company did complete construction of its 3 acre central facilities site on which the equipment necessary to test the HIP Downhole Process Technology (the “HIP Control Unit”) had been assembled. To date, 8 of the 10 test wells have been piped to the HIP Control Unit, but the Company is waiting for the agreement of the Texas Parks and Wildlife Commission (“TWC”) before the well bore modifications and final hook-up of the wells can be completed. All of the wellheads required for each wellbore are also onsite and awaiting final modifications required for the HIP Downhole Process Technology.
  During 2011, the TWC issued a cease work order on the Peak leases due to a dispute between TWC and the Company’s operator, Texla, which arose from the requirement by the TWC that Texla enter into a “surface access agreement” with the TWC after it had acquired the leases from the previous operator.
  To date Texla has had no success in coming to an agreement with TWC with respect to a surface access agreement on the Peak wells. As a result of the delays, the leases held by Texla on the Peak wells have expired subject to Texla being successful in making a claim to the Texas Railway Commission claiming “force majeure” under each of the leases arising from the inaction and delays from TWC. Texla has retained legal counsel to assist with its position and the lease expiry situation arising from delays in the parties coming to an agreement. In the event Texla is unable to come to an agreement with TWC, the entire Peak investment and expenditure may be lost and the Company will have to then focus it’s testing of the HIP Downhole Process Technology in another area. In such an event, the Company will require additional funding to pursue these objectives.
  Assuming Texla is successful in proceeding with the surface access agreement and renewing the leases on the Peak prospect, then the Company estimates that it will require approximately $300,000 to complete construction and assembly of the HIP Control Unit and to connect and finish modifications to the five phase 1 wells. Once completed, the Company
  13
 expects that the cost of adding each of the remaining 5 wells will be approx. $40,000 per well. The Company will have to raise additional funds to pursue this objective. Phase 1 of the Company’s program continues to be to complete and to test at least five of the 10 wells within the next 12 months. If this plan is not feasible, then management will assess focusing its efforts to test the HIP Downhole Process Technology on other wellbores and leases in east Texas proximate to its central facility.
  Capital Expenditures
  Opal and other Well Bores
  On March 30, 2010, we acquired all rights, title and interest in and to 51 well bores located in West Texas, and 1 well bore (the “Opal Well”) located in Central Texas and an additional 41 wells and well bores located in East Texas and 60 wells and well bores located in West Louisiana. We issued 20,000,000 shares of common stock as consideration for the sale and transfer of the initial 52 well bores in West and Central Texas and the 41 East Texas and 60 Louisiana well bores. $5,000 was assigned as the purchase price of the well bores using carryover basis of accounting. In consideration of the transfer of the Opal Well, we agreed to pay consideration totalling $250,000 plus an additional “audited and agreed” amount to be provided by HIPER consisting of accrued development, equipment and lease operating costs incurred by HIPER on the Opal Well. We paid $62,500 and the balance of these costs will be paid on a declining basis from any oil and gas production revenues received by us as generated on the Opal Well in excess of 20 bbl oil or gas equivalent per day, using the HIP Downhole Process Technology. We have not recorded an accrued liability for the balance of the costs owed given that they are contingent on oil and gas production produced from the Opal Well. During the year ended November 30, 2011, the Company recognized an impairment loss of $62,500 related to the Opal Well.
  Peak Well Bores
  On January 1, 2010, we entered into a joint operating agreement with a company to operate and develop the Well Bores using the HIP Downhole Process Technology. We forwarded $60,000 as a deposit and acquired the leases from Peak. During the past year however, the Company’s intention of focusing its operations on the development of its Peak wells and 3 acre central facility was frustrated due to a cease work order implemented by the Texas Parks and Wildlife Commission (TWC) on the Peak leases. The dispute between TWC and the Company’s operator, Texla, arose from the requirement by the TWC that Texla enter into a “surface access agreement” with the TWC after it had acquired the leases from the previous operator.  Neither Texla or the Company believe that the TWC had the rights to cause Texla to cease operations, and that the TWC did so in bad faith and without the legal authority to do so.
  Exploration Advances
  As at November 30, 2010, we had advanced $210,000 to the well bores operator for specific property use but which had yet to be spent as of that date. These funds were spent during the year ended November 30, 2011. Our planned capital expenditures for the next twelve months are summarized below under the heading “Business Overview – Plan of Operation – Use of Funding”. These anticipated expenditures relate to the development of the Well Bores and the implementation of the HIP Downhole Process Technology. Our planned capital expenditures are primarily located in Texas and Louisiana, the location of the Well Bores.
  Takeover offers
  We are not aware of any indication of any public takeover offers by third parties in respect of our common shares during our last and current financial years.
  B.         Business Overview
  For the fiscal years ended November 30, 2011, 2010 and 2009, we incurred net losses of $668,208, $759,312 and $57,419 respectively. We did not generate any revenues during such periods.
  14
 Overview
  Prior to the acquisition of the Well Bores and the exclusive worldwide license to the HIP Downhole Process Technology, our company did not have an operating business. Our sole business was to identify a suitable business opportunity or a suitable business with which to enter into a business combination. Our current business is to increase the recovery from oil wells using the HIP Downhole Process Technology.
  Traditional oil exploration involves acquiring exploration or drilling rights, conducting seismic and other subsurface studies to estimate if oil and gas is present, and then drilling of the properties in order to attempt to discover and extract the oil and gas. The process can be extremely expensive and time consuming. Costs for drilling a single well have escalated dramatically and can run into the hundreds of thousands of dollars. Further, a significant percentage of all traditional exploration wells drilled each year end-up being dry holes. Our business is to increase the production of proven but unproductive wells, or to increase production from damaged, uneconomical, and stripper well bores using the HIP Downhole Process Technology.
  Our initial focus will be to concentrate our operations on applying the HIP Downhole Process Technology to existing and proven well bores and reservoirs that have become non-commercial, uneconomic, depleted or damaged. We intend to demonstrate the value of the HIP Downhole Process Technology by improving the recovery of oil from well bores, after which we intend to acquire additional well bores that we believe, could have an increase in production if the HIP Downhole Process Technology was applied to the well bores. We believe we can generate more revenues by participating in the development of the well bores, rather than by licensing the HIP Downhole Process Technology to third parties. We believe we will benefit from increased industry recognition of the HIP Downhole Process Technology, while generating an ongoing and sustained cash flow from the increased recovery of hydrocarbons.
  HIP Downhole Process Technology
  The HIP Downhole Process Technology was developed over a period of 28 years by Mr. Peter Noonan, who worked extensively with chemical engineers, scientists and oil and gas reservoirs and its associated field applications in the development of the areas in enhanced oil recovery systems. Over time, certain oil and gas wells will experience significant production decreases, as the remaining hydrocarbon molecules become heavier and attract unwanted elements. The HIP Downhole Process Technology stops and reverses the formation of these heavier molecules and prevents the production decrease.
  When material from an oil or gas well is removed too rapidly or when too much material has been removed by production, the remaining hydrocarbon material in the reservoir can change in such a way to become heavier and more resistant to flow. The result is the formation of paraffinic and asphaltic compounds that cause solidification or increase in pour-point temperatures. The viscosity of the hydrocarbon material increases tremendously, as electrochemical potential differences increase molecular attraction. Increased viscosity attracts other elements and compounds, such as entrained water, salts, metallic and foreign materials (silicates, carbonates and oxides), which further increases resistance to flow and leads to decreased production. As the reservoir pressure decreases over time, many wells become blocked and the remaining hydrocarbon compounds become very large molecules that are heavier in weight. As a result, there is a build-up of large molecular structure material which consists of paraffinic, asphaltenes, salt residuals, calcites, sulfites and metallic residuals, which further reduces production output. In many instances the resultant build up of viscous material will completely shut down production before the full availability of proven recoverable reserves is recovered.
  The HIP Downhole Process Technology utilizes a constant injection of formulized heated gaseous fluids through a proprietary method of delivery. This process causes a physical reaction of molecular exchange in such a way that promotes formation of simple hydrogen molecular relationships and eliminates large electrochemical potential differences. This inhibits formation of heavier hydrocarbon molecules. The process works best when the pressure, volume, and temperature of the well are maintained as constant as possible. Elemental and salt residues of the process remain in place in a reservoir since the technology is instrumental in producing molecular exchange to form lighter hydrocarbon molecules similar to those that have been removed from the reservoir formation by production.
  The HIP Downhole Process Technology is intended to increase both oil and gas production and decrease the lifting costs of the well. The decrease in lifting costs is intended to result in an increased revenue stream.
  15
 The Well Bores
  On March 30, 2010, following the closing of the Asset Purchase Agreement, HIP acquired all of HIP Resources rights, title and interest to 51 well bores located in West Texas and 1 well bore located in Opal Ward (collectively, the “Texas Well Bores”). Figure 1 – Location of Well Bores shows the general location of the Texas Well Bores.
  Figure 1- Location of Well Bores
 
 
  Figure 1 – Location of Well Bores
  In addition, under the terms of the Asset Purchase Agreement, HIP Resources agreed to transfer to HIP, all of HIP Resources rights, title and interest in 101 well bores located in East Texas and Louisiana (the “Louisiana Well Bores” together with the Texas Well Bores, the “Well Bores”).
  The following is a list of the Texas Well Bores including Oil Lease numbers, number of wells and total depth:
  Lease Name
Oil Lease

Gas ID No.
Location
Number

of Wells
Total DepthWest TexasCluster 1Texaco 9-1 (Texaco “9”)
33329
Section   9 Block 56 Range 3
1
3,700Texaco 9-2
33329
Section   9 Block 56 Range 3
1
3,700Texaco 9-3
33329
Section   9 Block 56 Range 3
1
3,700Texaco 9-4
33329
Section   9 Block 56 Range 3
1
3,700Texaco 9-5
33329
Section   9 Block 56 Range 3
1
3,700Phillips 66 #2 (Phillips 66)
32571
Section 18 Block 56 Range 3
1
3,700Phillips 66 #3 (Phillips 66 3A)
33149
Section 18 Block 56 Range 3
1
3,700Cluster 2Arco State 14-1
33585
Section 14 Block 56 Range 3
1
3,700Arco State 14 #5
33585
Section 14 Block 56 Range 3
1
3,700Arco State 14 #2 (Arco State 14)
33585
Section 14 Block 56 Range 3
1
3,700Arco State 14 #4
33585
Section 14 Block 56 Range 3
1
3,700Arco State 14 - A #1 (Arco State 14A)
34155
Section 14 Block 56 Range 3
1
3,700Arco State 14 - A #2 (Arco State 14A)
34155
Section 14 Block 56 Range 3
1
3,700Arco State 14 - A #3 (Arco State 14A)
34155
Section 14 Block 56 Range 3
1
3,700Arco State 14 - A #4 (Arco State 14A)
34155
Section 14 Block 56 Range 3
1
3,700Arco State #2 Injection (dual Well)
25126
Section 14 Block 56 Range 3
1
3,700Arco State #3
25126
Section 14 Block 56 Range 3
1
3,700Arco State #4
25126
Section 14 Block 56 Range 3
1
3,700Arco State #5
25126
Section 14 Block 56 Range 3
1
3,700Arco State 24 #2 (Arco State 24)
069586
Section 24 Block 57 Range 3
1
3,400Arco State 24 #3 (Arco State 24)
069779
Section 24 Block 57 Range 3
1
3,400Arco State 24 #4 (Arco State 24)
069912
Section 24 Block 57 Range 3
1
3,400Cluster 3Reeves BK HD - 1 (Horizontal)
36100
Section 15 Block 56 Range 3
1
4,900Reeves BK FEE # 1
32288
Section 15 Block 56 Range 3
1
3,700Reeves BK # 2 (Reeves-BK-FEE)
32288
Section 15 Block 56 Range 3
1
3,700Reeves BK # 3
32288
Section 15 Block 56 Range 3
1
3,700Reeves BK FEE # 5
32288
Section 15 Block 56 Range 3
1
3,700BK # 4 (Texaco Reeves BK)
33947
Section 15 Block 56 Range 3
1
3,700Texaco 23 #1 (Texaco “23”)
33670
Section 23 Block 56 Range 3
1
3,700Texaco 23 #2
33670
Section 23 Block 56 Range 3
1
3,700Texaco 23 #3
33670
Section 23 Block 56 Range 3
1
3,700Texaco 13-1 HD Horizontal (Penwell)
12345
Section 13 Block 56 Range 3
1
4,987Cluster 4  - Regular 57Anadarko State 14 #5 (Anadarko State A)
34376
Section 14 Block 57 Range 3
1
3,200Anadarko State 14 #6 (Anadarko State R)
34463
Section 14 Block 57 Range 3
1
3,200Anadarko State 14 #1 (Anadarko State 14)
072948
Section 14 Block 57 Range 3
1
3,200Anadarko State 14 #2 (Anadarko State 14)
074167
Section 14 Block 57 Range 3
1
3,200Anadarko State 14 #3 (Anadarko State 14)
075491
Section 14 Block 57 Range 3
1
3,200Anadarko State 14 #4 (Anadarko State 14)
075724
Section 14 Block 57 Range 3
1
3,200Anadarko State 23 #4 (Anadarko State)
34313
Section 14 Block 57 Range 3
1
3,200Stack State 1
34366
Section 14 Block 57 Range 3
1
3,200Stack State 2
34366
Section 14 Block 57 Range 3
1
3,200Cluster 5Reeves AM 25 #1 (AM Reeves)
34146
Section 25 Block 57 Range 3
1
6,200Reeves AM 25 #1 (Reeves -AM- Fee)
036114
Section 25 Block 57 Range 3
1
3,200Reeves AM 25 #2 (Reeves -AM- Fee)
036115
Section 25 Block 57 Range 3
1
3,200State of Texas 23 # 5 (State 26)
34312
Section 23 Block 56 Range 3
1
3,100State of Texas 26 # 5 (State 23)
34464
Section 26 Block 57 Range 3
1
3,100State of Texas 26 # 1 (State of Texas 26)
066070
Section 26 Block 57 Range 3
1
3,100State of Texas 26 # 3 (State of Texas 26)
069567
Section 26 Block 57 Range 3
1
3,100State of Texas 26 # 4 (State of Texas 26)
069568
Section 26 Block 57 Range 3
1
3,100State of Texas 26 # 7 (Robinson)
36098
Section 26 Block 57 Range 3
1
3,100Cluster 6Meeker 15 -1
30942
Section 15 Block 21 Range 3
1
3,700Opal Ward # 1
1 Leon

1
9,475Total


52
  The following is a list of the Louisiana Well Bores including Oil Lease numbers, number of wells and total depth:
  Lease Name
Oil Lease

Gas ID No.
Location
Number

of Wells
Total DepthEast TexasCluster 1Cowherd # 1
129107

2
6,180Cowherd # 2
12629

2
6,622Cowherd # 3


1
2,500Peggy Ashley 1
129114

1
6,174Chevron # 1


1
6,088Chevron # 3


1
6,150Panola # 1


1
2,500Panola # 2


1
2,500Panola # 3


1
2,500Panola # 4


1
2,500Panola # 5


1
2,500Panola # 6


1
2,500Elysian # 1


1
2,700Elysian # 2


1
2,700Elysian # 3


1
2,700Elysian # 4


1
2,700Elysian # 5


1
2,700Elysian # 6


1
2,700Elysian # 7


1
2,700Elysian # 8


1
2,700Elysian # 9


1
2,700Elysian # 10


1
2,700Elysian # 11


1
2,700Elysian # 12


1
2,700Elysian # 13


1
2,700Elysian # 14


1
2,700Elysian # 15


1
2,700Elysian # 16


1
2,700Elysian # 17


1
2,700Elysian # 18


1
2,700Elysian # 19


1
2,700Elysian # 20


1
2,700Elysian # 21


1
2,700Elysian # 22


1
2,700Laeke A-1


1
2,700Laeke A-2


1
2,700Laeke B-1


1
2,700Laeke B-2


1
2,700Laeke B-3


1
2,700East Texas Total
41LouisianaAbney J. D. Lease
1 Harrison

1
2,475Abney J. D. Lease
2 Harrison

1
2,475Abney J. D. Lease
3 Harrison

1
2,475Abney J. D. Lease
4 Harrison

1
2,475Abney J. D. Lease
5 Harrison

1
2,475Abney J. D. Lease
6 Harrison

1
2,475Abney J. D. Lease
7 Harrison

1
2,475Abney J. D. Lease
8 Harrison

1
2,475Abney J. D. Lease
9 Harrison

1
2,475Abney J. D. Lease
10 Harrison

1
2,475Abney J. D. Lease
11 Harrison

1
2,475Abney J. D. Lease
12 Harrison

1
2,475Abney #1 (460)
103405

1
2,500Abney #3
105607

1
2,500Abney #4
105839

1
2,500Abney #5
106853

1
2,500Abney #6
107873

1
2,500Abney #7
109040

1
2,500Abney #8
110360

1
2,500Abney #9
110361

1
2,500Abney #10
113026

1
2,500Abney #11
131636

1
2,500Abney #12
129650

1
2,500Abney #13
130786

1
2,500Abney #14
133367

1
2,500Abney #15
133412

1
2,500Abney #16
131635

1
2,500Abney #17
130887

1
2,500Abney #18
127779

1
2,500Abney #19
131605

1
2,500Abney #20
128716

1
2,500Abney #21
127217

1
2,500Abney #22
127385

1
2,500Abney D #2 (150)
130119

1
2,500Abney D #3
130138

1
2,500Abney D #4
130640

1
2,500Abney D #5
130752

1
2,500Abney D #6
130923

1
2,500Abney D #7
131025

1
2,500Abney D #8
131104

1
2,500Abney D #9
133427

1
2,500Abney D #10
136179

1
2,500Abney D #11
133466

1
2,500Abney D #12
136343

1
2,500Abney D #14
136702

1
2,500Atkinson A #001


1
2,500Atkinson A #002


1
2,500Atkinson A #003


1
2,500Atkinson B #001


1
2,500Atkinson B #002


1
2,500Atkinson B #003


1
2,500Abney Kirk #001


1
2,500Abney Kirk #002


1
2,500Abney Kirk #003


1
2,500Abney Kirk #004


1
2,500Abney Kirk #005


1
2,500Abney Kirk #006


1
2,500Abney Kirk #007


1
2,500Abney Kirk #008


1
2,500Abney Kirk #009


1
2,500Total


101
  In consideration for the Well Bores, HIP issued 20,000,000 of its common shares to EEL for $5,000 based on the carryover cost. As a condition of the Asset Purchase Agreement, on January 12, 2010, HIP, HIP Texas, and HIP Nevada entered into a joint operating agreement with TexLa Operating Company (“TexLa”), whereby TexLa agreed to develop the Well Bores using the HIP Downhole Process Technology. In consideration for their services, TexLa was granted a 10% working interest in any of the Well Bores that the HIP Downhole Process Technology is applied to. This structure is intended to ensure that TexLa’s interest is aligned with HIP, as TexLa will have an operating interest in the Well Bores. Also as a condition of the Asset Purchase Agreement, the parties agreed to enter into a Non-Competition Agreement dated March 14, 2010 pursuant to which EEL and HIP Resources agreed, among other things, not to compete against the business of HIP for a period of four years from the date of the agreement. In addition, as the License Agreement grants HIP a worldwide exclusive license to the HIP Downhole Process Technology, EEL and HIP Resources will not be able to use the HIP Downhole Process Technology on any well or well bores, except as provided under the License Agreement.
  Current Operations
  During the past year, our focus has been to undertake ongoing testing of our HIP Downhole Process Technology on the Opal Ward #1 Well (the “Opal Well”), which is located in central Texas. We have been making the necessary design changes and modifications to the HIP Control Unit located on the Opal Well. These design modifications were successful in stimulating the well bore and during such testing periods resulted in the production of oil and gas from the Opal Well, which had been a dead or dormant wellbore. Having been encouraged by the testing results using the HIP Downhole Process Technology on the Opal Well, our management proceeded to assemble a larger scale “test” project around various wellbores which it holds and has acquired in East Texas.
  The plan of the Company in 2011 was to have move its focus from its single test well at Opal Ward, and to assemble a larger control area in which to test the scalability of the HIP Downhole Process Technology. To do this the Company looked to acquire rights covering approximately 6,400 acres covering rights from the surface to the base of the Travis Peak formation. Within this larger control area, the Company had assembled 10 historically producing but dormant wellbores on which to test the HIP Downhole Process Technology. Of these wellbores, three were acquired previously from HIP Energy Resource Limited, and seven were purchased for $60,000 from Peak Energy Corp. of Dallas, Texas. The Company did complete construction of its 3 acre central facilities site on which the equipment necessary to test the HIP Downhole Process Technology (the “HIP Control Unit”) had been assembled. To date, 8 of the 10 test wells have been piped to the HIP Control Unit, but the Company is waiting for the agreement of the Texas Parks and Wildlife Commission (“TWC”) before the well bore modifications and final hook-up of the wells can be completed. All of the wellheads required for each wellbore are also onsite and awaiting final modifications required for the HIP Downhole Process Technology.
  During 2011, the TWC issued a cease work order on the Peak leases due to a dispute between TWC and the Company’s operator, Texla, which arose from the requirement by the TWC that Texla enter into a “surface access agreement” with the TWC after it had acquired the leases from the previous operator.
  To date Texla has had no success in coming to an agreement with TWC with respect to a surface access agreement on the Peak wells. As a result of the delays, the leases held by Texla on the Peak wells have expired subject to Texla being successful in making a claim to the Texas Railway Commission claiming “force majeure” under each of the leases arising from the inaction and delays from TWC. Texla has retained legal counsel to assist with its position and the lease expiry situation arising from delays in the parties coming to an agreement. In the event Texla is unable to come to an agreement with TWC, the entire Peak investment and expenditure may be lost and the Company will have to then focus it’s testing of the HIP Downhole Process Technology in another area. In such an event, the Company will require additional funding to pursue these objectives.
  16
 Assuming Texla is successful in proceeding with the surface access agreement and renewing the leases on the Peak prospect, then the Company estimates that it will require approximately $300,000 to complete construction and assembly of the HIP Control Unit and to connect and finish modifications to the five phase 1 wells. Once completed, the Company expects that the cost of adding each of the remaining 5 wells will be approx. $40,000 per well. The Company will have to raise additional funds to pursue this objective. Phase 1 of the Company’s program continues to be to complete and to test at least five of the 10 wells within the next 12 months. If this plan is not feasible, then management will assess focusing its efforts to test the HIP Downhole Process Technology on other wellbores and leases in east Texas proximate to its central facility.
  Plan of Operation
  Financing
  We plan to focus on those areas that will result in the production of oil and gas in the shortest time frame. In pursuing this objective, we plan to raise funds as required with the intent of minimizing dilution and maximizing return on funds deployed. Until such time as the HIP Downhole Process Technology is further developed and results in revenues from production of oil and gas from applied wells, we plan to primarily rely on traditional equity markets and if available, debt instruments to raise our required funding.
  Use of Funding
  Any funds received will, at the discretion of management, be allocated in part to testing the HIP Tech at the Opal Well and then expand the test to additional well locations in other areas testing the scalability of the HIP Tech. If oil and gas production is attained from these low-production or problematic wells using the HIP Downhole Process Technology, we will then continue to expand our commercialization of the HIP Downhole Process Technology.
  We plan on deploying monies in those prospect areas where we have the greatest understanding of the existing well bores and reservoirs. To this end, we plan to focus our initial efforts on using the HIP Process in well bores and basins in such regions as the Woodbine and Austin Chalk region of the U.S. These regions are low-risk and long-term energy producers. We will participate in such regions with landowners or companies that have access to leases located in geological trends that have demonstrated substantial historical production and have potential remaining reserves that can be exploited in a low-risk, systematic fashion.
  Based on our initial project plan and budget, we anticipate that we will require an investment of approximately $500,000 to fund a capital project and operating costs over the next 12 months.
  We estimate that we will require approximately $300,000 to complete construction and assembly of the HIP Control Unit at the Central Facility in East Texas and to connect and finish modifications to the 5 phase 1 wells. If we do not proceed with these Peak wells then such funding will be required to undertake operations on additional leases we will require in east texas to further test the HIP Downhole Process Technology.
  Our sole tangible assets consist of the Well Bores and the exclusive worldwide license to the HIP Downhole Process Technology. It is however a requirement of the application of the HIP Downhole Process Technology that certain equipment and other fixed or other tangible assets be acquired or leased in order that any potential commercialization of the HIP Tech on any of the well bores can be realized. The equipment required as part of the HIP Downhole Process Technology in part forms the basis of the application patent relating to the HIP Downhole Process Technology and in other cases is readily available oilfield equipment. The availability of any specific equipment may affect our ability to carry out its operations in a timely and cost effective manner. As stated earlier, our short-term plan is to apply and test the HIP Downhole Process Technology on a number of wells and wellbores acquired from HIP Resources. The results of these tests and the on-going development and application of the HIP Downhole Process Technology will directly affect our ability to generate revenue and raise additional capital to further expand its programs and acquire any on-going plant and equipment. As with any new technology applications there is inherent risk that the technology itself may not prove commercially viable or result in any economic production.
  17
 China Joint Venture
  We have had preliminary discussions with China Jianghan Oilfield Company (“JOC”) to form a joint venture (a “China Joint Venture”). Our discussion to-date have focussed on the development of an initial pilot program to prove the economic viability of the HIP Downhole Process Technology on an agreed number of “beta” test well bores within the Jianghan Oilfield in China. After the economic viability of the HIP Downhole Process Technology has been proven, the HIP Downhole Process Technology would be applied on a large scale. As of the date of this report, we have not signed any definitive agreements with JOC and they may cease discussions at any time. Further, although we are at an advanced stage of negotiations and agreement as to the financial terms, number of wells and contribution of the respective parties, we have not signed any letters of intent or memorandums of understanding regarding same at this time.
  License Agreement
  Under the License Agreement, HIP Nevada was granted a worldwide exclusive license to the HIP Downhole Process Technology for the purpose of developing, producing, using, selling or otherwise commercially exploiting all subject matter encompassed within the scope of the HIP Downhole Process Technology. The consideration for the acquisition of the HIP Downhole Process Technology was the issuance of 30 million common shares of HIP to Group Rich and the grant of an agreed royalty structure on certain non-China ventures by HIP.
  The royalty payment varies depending on the project. HIP Tech and HIP, collectively, will split any proceeds from a non-China Joint Venture as follows:
  (i)
On all Non-China joint venture related projects or operations on which the HIP Downhole Process Technology are being applied, HIP agrees subject to (ii) below, pay to Group Rich and HIP Tech (together the “Licensor”) a royalty fee equal to 25% of the gross revenue received by HIP from oil and gas wells where cumulative gross production per well exceeds more than 20 barrels of oil equivalences per day (Bblsoepd) for each monthly period. In the event cumulative production per well is equal to or less than 20 Bblsoepd for each monthly period, then the royalty will be reduced to 20% of the gross revenue received by HIP for all such wells.
 
 
 Gross Average Production Per Well Per Day, calculated commencing from the day immediately after Well bore Commercialization
Percentage Payable to LicensorUp to 20 barrels per well per day
20% Gross RevenueGreater than 20 barrels per well per day
25% Gross Revenue
  (ii)
Immediately upon HIP completing an equity or debt financing of US$1,000,000 or more, the gross royalty set out in (i) will be reduced to a flat 25% of all net revenue derived by HIP from projects on which the HIP Downhole Process Technology is being applied.
  C.         Organizational Structure
  Our organizational structure is as follows:
  
  18
 HIP Energy (Texas) Corp. is a wholly owned subsidiary that is governed by the laws of the state of Texas. HIP Texas was incorporated for the purposes of holding title to the Well Bores.
  HIP Energy (Nevada) Corp.is a wholly owned subsidiary that is governed by the laws of the state of Nevada. HIP Nevada was incorporated for the purposes of holding our license to the HIP Downhole Process Technology.
  D.         Property, Plant and Equipment
  We currently have an office located at 5548 Parthenon Place, West Vancouver, British Columbia, Canada V7V2V7. We believe that our current office arrangements provide adequate space for our foreseeable future needs.
  We also have an interest in the Well Bores, as described in more detail under the heading “Business Overview – The Well Bores”.
  ITEM 4.A                Unresolved Staff Comments
  Not applicable.
  ITEM 5.                   Operating and Financial Review and Prospects
  The information in this section is presented in accordance with Canadian generally accepted accounting principles and has not been reconciled to United States generally accepted accounting principles.
  A.         Operating Results
  Quarterly Financial Information
  The following table provides selected quarterly financial information for 2011 for our company:
   2011November 30


August 31


May 31


February 28(Unaudited – US$)Revenues


Nil



Nil



Nil



NilNet loss


(156,763
)


(300,610
)


(113,698
)


(97,137
)Basic and Diluted loss per share


(0.00
)


(0.00
)


(0.00
)


(0.01
)
 The following table provides selected quarterly financial information for 2010 for our company:
  2010November 30


August 31


May 31


February 28(Unaudited – US$)Revenues


Nil



Nil



Nil



NilNet loss


(192,806
)


(354,099
)


(203,575
)


(8,832
)Basic and Diluted loss per share


(0.00
)


(0.01
)


(0.00
)


(0.00
)
  Yearly Financial Information
  The following table provides selected yearly financial information for the last three years of our company:
  2011


2010


2009(Audited – US$)Revenues


Nil



Nil



NilNet loss


(668,208
)


(759,312
)


(57,419
)Basic and Diluted loss per share


(0.01
)


(0.02
)


(0.01
)Expenses


(668,208
)


(759,312
)


(57,419
)Net Cash Inflow (Outflow) for the year


(27,503
)


23,775



7,787
  Narrative Discussion
  We did not generate any revenues during the fiscal years of 2011, 2010 and 2009. Expenses were $668,208 for the fiscal year ended November 30, 2011, compared to $759,312 for fiscal 2010 and $57,419 for fiscal 2009. The increase in net loss and expenses in the fiscal years ended November 30, 2011 and 2010 were primarily due to costs associated with the acquisition of the HIP Downhole Process Technology, the implementation and testing of the HIP Downhole Process Technology at the Opal Well; and our continued review of additional oil and gas well bore and leasing opportunities.
  Net loss was $668,208 or $(0.01) per share for the fiscal year ended November 30, 2011, compared to $759,312 or $(0.02) per share in the same period in 2010 and $57,419 or $(0.01) per share in the same period in 2009. The decrease in the net loss of fiscal 2011 as compared to fiscal 2010 was due mainly to a decrease in consulting and professional fees. Consulting fees decreased to $12,000 in fiscal 2011 as compared to $151,278 in fiscal 2010, due to less work of consultants to work with our interests in the well bore technologies. Professional fees decreased to $66,723 in fiscal 2011 as compared to $169,137 in fiscal 2010, due to less contracts signed. Oil and gas exploration, and other related expenses increased to $272,500 in fiscal 2011 as compared to $98,374 in fiscal 2010. Management fees increased to $289,992 in fiscal 2011 as compared to $169,644 in fiscal 2010, as we continued paying or accruing monthly fees to directors, officers and private companies controlled by them, upon the commencement of the current business utilizing the HIP Downhole Process Technology. During the fiscal year ended November 30, 2010, we entered into several management and consulting agreements with directors and officers in which we agreed to pay aggregate monthly fees of $24,166. The monthly fees will increase to an aggregate of $56,666 within 30 days of us completing a private placement of $4,000,000 or having achieved 30 days of continuous production of an average of 20 bbls of oil per day per well, or a combined oil and gas equivalent, from a minimum of 10 wells forming part of a 10 well unit on which we successfully applied the HIP Downhole Process Technology. The term of all the agreements is 2 years, with the exception with the President’s agreement, which is 3 years. During the year none of the directors or officers received any compensation for management services due to the limited capital in the Company. Management are however committed to see the Company through to its beta testing of the HIP Downhole Process Technology and to determine its viability as economic down hole oil and gas enhancement recovery process.
  19
 B.         Liquidity and Capital Resources
  Overview
  We had cash of $7,787 as at November 30, 2011, compared to $35,290 as at November 30, 2010. We estimate that we will require $500,000 in the next 12 months (for additional information on our projected budget for the next 12 months, please see “Plan of Operation – Use of Funding”.)
  We presently believe that subject to obtaining additional financing of $500,000 we will have sufficient capital resources to fund our initial plan of operations for the next twelve months, as described in detail under the heading “Business Overview – Plan of Operations”. However, if we are not successful in generating revenues from any associated or increased oil and gas production on the tested well bores during the initial period or we do not receive all the funds from equity financings we complete, then we will require additional funds to continue advanced development of the Well Bores and to undertake any additional operations.
  On April 30, 2010, we closed two separate private placements each at the offering price of $0.25 per share for total combined aggregate proceeds of $1,129,000. The first placement was for $629,000 representing 2,516,000 common shares and the second for $500,000 representing 2,000,000 common shares. As a condition of the second $500,000 placement, the placee contractually committed and agreed to provide additional funding to our company of $2,000,000 at a price of $0.50 per share if we achieve 30 consecutive days of average daily oil production (or gas equivalent) of an average of 100 bbl oil per day for 30 consecutive days from five well bores using the HIP Downhole Process Technology; and $4,000,000 at $1.00 per share if we achieve 30 consecutive days of average daily oil production (or gas equivalent) of 200 bbl per day from 10 wells using the HIP Downhole Process Technology excluding any production from the production wells. We will have to undertake an additional equity financing to meet its ongoing development plans. During the fiscal year ended November 30, 2011, we did not receive any proceeds through the sale of equity securities.
  Cash on hand is currently our only source of liquidity. Subsequent to the year end, the Company received a loan of $400,000 under a Loan Agreement dated March 1, 2012, from Group Rich Limited – a company controlled by two directors of the Company, bearing interest at the Prime Rate plus 1%. The Prime Rate is the floating annual rate of interest based upon the HSBC Bank of Canada rate. The loan matures in March 2014.
  Operating Activities
  Operating activities used cash of $27,503 for the year ended November 30, 2011 compared to $733,725 for the year ended November 30, 2010. This decrease was due to less activities related to the operation of the oil wells due to less funding.
  Investing Activities
  Investing activities used no cash for the year ended November 30, 2011, compared to $371,500 for the year ended November 30, 2010.
  Financing Activities
  Financing activities provided no cash for the year ended November 30, 2011, compared to $1,129,000 for the year ended November 30, 2010. This decrease in net cash was due to no funds raised through sale of equity securities as discussed above under “Overview”.
  Capital Resources
  We anticipate that we will incur approximately $100,000 for operating expenses over the next twelve months. These expenses include professional legal and accounting expenses associated with our company being a reporting issuer in the United States under the Securities Exchange Act of 1934 and a reporting issuer in Canada.
  20
 Going Concern
  We have incurred a net loss of $4,692,373 for the cumulative period from June 22, 1983 (inception) to November 30, 2011. We anticipate generating losses for at least the next 12 months. Therefore, there is substantial doubt about our ability to continue operations in the future as a going concern as described by our auditors with respect to the financial statements for the year ended November 30, 2011. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event that we cannot continue in existence.
  There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.
  Application of Critical Accounting Policies
  The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant areas requiring the use of management estimates relate to the impairment of mineral property interests and the determination of reclamation obligations. Actual results could differ from those estimates. By their nature, such estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below.
  Change in Functional Currency
  On March 30, 2010, we completed the acquisition of certain Well Bores and a Technology License, both of which are located in the United States. Subsequent to the acquisitions, the Company’s operations, fundraising activities, and any future revenues will be denominated in United States (“U.S.”) dollars. As a result of this change in circumstances, the Company undertook a review of the functional currency exposures of all of its business units according to Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 1651, “Foreign Currency Translation” and concluded that the currency exposures of its Canadian and foreign operations are now predominantly in U.S. dollars. Prior to March 30, 2010, the Company’s functional currency was the Canadian dollar and the reporting currency was the Canadian dollar. Effective March 30, 2010, the Company’s functional and reporting currency is the U.S. dollar. This results in all foreign currency impacts of holding non-U.S. dollar denominated financial assets and liabilities being recorded through the statement of earnings. The Company accounted for this change prospectively. The translated amounts on March 29, 2010 become the historical basis for all balance sheet items at March 30, 2009, except for shareholders’ equity at historical cost.
  Change in reporting currency
  Prior year’s financial statements and all comparative financial information contained herein have been recast to reflect the Company’s results as if they had been historically reported in U.S. dollars. All revenues, expenses and cash flows for each period were translated into the reporting currency using average rates for the period, or the rates in effect at the date of the transaction for significant transactions. Assets and liabilities were translated using the exchange rate at the applicable balance sheet dates and stockholders’ equity was translated at historical rates. The resulting translation adjustment was recorded as accumulated foreign currency translation adjustment in accumulated other comprehensive income.
  Foreign Currency Translation
  Monetary items denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date. Gains and losses arising from the translations are included in operations.
  21
 Stock – Based Compensation
  The value of stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option and stock price volatility. The expected term of options granted is determined based on historical data on the average holding period before exercise, expiry or cancellation. Expected volatility is based on the historical volatility of the share price of the Company. These estimates involve inherent uncertainties and the application of management judgment. The Company does not estimate stock option forfeitures but rather, accounts for forfeitures as they occur. When stock options are exercised, the proceeds, together with the amount recorded in contributed surplus are recorded in share capital.
  Capital Disclosures
  Effective December 1, 2007, the Company adopted the new CICA guidelines of Section 1535, “Capital Disclosures”, which requires companies to disclose their objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital, and whether companies have complied with externally imposed capital requirements and, if not in compliance, the consequences of such non-compliance.
  In the management of capital, the Company includes cash in the definition of capital.
  The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to seek and identify suitable business opportunities or business combinations in Canada or the United States of America. The board of directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
  The Company places its cash with institutions of high creditworthiness. At November 30, 2011, the Company had cash of $7,787 (2010 – $35,290).
  The Company has identified business opportunities as noted in Section B – Business Overview. The Company will continue to assess new opportunities and seek to acquire business if it feels there are sufficient benefits to the Company and if it has adequate financial resources to do so.
  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There have been no changes made to the capital management policy during the year.
  Recent Accounting Pronouncements
  The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
  C.         Research and Development, Patents and Licenses etc.
  We do not currently, and did not previously, have research and development policies in place. Over the past three fiscal years, no funds were expended by our company on research and development activities.
  D.         Trend Information
  As we have just implemented a new business plan, we do not currently know of any trends that would be material to our operations other than the risks and uncertainties set out above under the heading “Risk Factors”.
  22
 E.         Off-Balance Sheet Arrangements
  We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
  F.         Contractual Obligations
  As at November 30, 2011, our contractual obligations included $352,517 payable to related parties in respect of accrued fees for management services and $63,707 in respect of advances from a director and a company owned by a shareholder. All of the contractual obligations are payable within the next fiscal year.
  ITEM 6.                   Directors, Senior Management and Employees
  A.         Directors and Senior Management
  The following table sets forth the names and business experience of each of our directors and officers, as of the date hereof:
  Name and Age
Present Position with our Company
Date of

Commencement of

Office with our

CompanyRichard Coglon(1) (51)
Director,

President,

Chief Executive Officer,

Secretary and

Chief Financial Officer
November 26, 2001

May 26, 2004Peter Noonan(1) (70)
Director (Chairman)
March 30, 2010James Chui(1) (48)
Director,

Executive Vice President, Business Development

and Chief Operating Officer
November 19, 2009

June 15, 2010
  (1)  Member of our audit committee.
  Richard Coglon
  Mr. Coglon graduated from the University of Alberta in 1982 with a Bachelor of Commerce degree. In 1983, he attended the University of Victoria and received his Bachelor of Laws degree in 1986. Mr. Coglon was called to the Bar in British Columbia, Canada in 1987 and practiced in the areas of corporate finance and securities law until January 1, 2003 when Mr. Coglon ceased the active practice of law to concentrate on his other business ventures.
  From 2003 to present, Mr. Coglon carries on business under a privately owned venture capital firm which is involved in initiating and funding early stage growth companies in the energy, mining, technology and real estate sectors. Over the past 10 years, Mr. Coglon has raised or assisted in raising in excess of $100 million for private and public early-stage companies. During 1995 to 2006, Mr. Coglon served as a director and officer of various reporting issuers including TransGlobe Energy Corp. where he was responsible for initiating TransGlobe’s transition in 1995 to 1997 from a junior mining company to an international oil exploration and production company. In 1999, Mr. Coglon co-founded and served as president and chief executive officer of Heartland Oil and Gas Corp. From September 18, 2002 to January 1, 2006, Mr. Coglon served as president and a director of Heartland. During this period, Heartland turned its Kansas coal bed methane projects into commercial production. In 1995, Mr. Coglon co-founded Velvet Exploration Ltd., a start-up oil exploration and production company. Velvet was listed on the Toronto Stock Exchange and sold for US$430 million in August of 2001 in a “friendly takeover transaction” with El Paso Energy.
  23
 Peter Noonan
  Mr. Noonan went through private schools and graduated from one of the finest college preparatory schools in the United States. He continued his education in pre-mechanical engineering by attending South Texas College. He attended the U.S. Naval Academy and presently holds a position of inactive service as an Officer in the US Navy due to an injury that was suffered in the line of duty. He is a life-time alumnus with U.S. Naval Academy Alumni Association and the Disabled American Veterans. He continued his education at the University of Houston, University of Texas of Austin and Nichols State University. Mr. Noonan has achieved numerous certificates from University of South Carolina in Management Seminars and Executive Management Seminars.
  Mr. Noonan has been working in the oil and gas sector for over 40 years on the on-going development of various industry inventions with particular focus on the Hydrogen Inducement Process (HIPTM), which was originally referred to as the NooParTM Process.
  Mr. Noonan has been successful in developing technologies, such as a “systems controller program” for the merchandising inventory purchase control system for light manufacturing; the development and completion of an offshore logistics supply system for world-wide operation on 26 rigs; a vapor recovery system for oil and gas recovery; a high intensity heating and control unit for wells, a innovated new gas lift injection system and/or pipelines operations; a desalinization unit, waste treatment units, and surface process in the primary cleanse of crude oil to very extreme high quality value, and a technical application program for spill prevention used by the EPA for oil field use.  Mr. Noonan has acted as a director and officer of various private companies in the oil and gas sector and has been a consultant in this sector for some 35 years in the areas of building and construction of roads, bridges, well site locations, workover, coil tubing units, land and offshore drilling units which includes the drilling of numerous wells and the operations thereof.
  Mr. Noonan holds the U.S. Methods Patent to the HIP Process and in addition to his vast oilfield experience, Mr. Noonan has been a presenter and speaker before the U.S. Department of Energy Technology Center and the U.S. Congress on hearings relating to various issues in the oil and gas sector as well a lecturer to a market group at the University of Texas.
  James Chui
  Mr. Chui graduated from the Shanghai University of Science and Technology in 1985 with a bachelor’s degree in Applied Technology. In addition, he attended courses during 2004 to 2006 towards an Executive MBA from Beijing University and continues to attend numerous ongoing courses in “Continuing Education” from the University of British Columbia in the areas of law and business.
  Mr. Chui currently serves as the co-founder and chief executive officer of HIP Energy Resource Limited and HIP Technology Limited. He is also currently the president and chief executive officer of HRJC Enterprises Inc. Mr. Chui also served as the president and chief executive officer of various successful internationally based companies in the high-tech manufacturing and software design and application sectors. From 1988 to 1996, Mr. Chui was the president and chief executive officer of James-Contact Limited with offices in Hong Kong, Germany and Japan. From 1996 to 2006, he served as president of World Trade Development Limited (HK) and World Trade Electronics Limited with offices in Hong Kong and Japan. From 2006 to 2008, Mr. Chui served as the chief financial officer of Global Microgene Holdings Group Limited (HK) and as vice president of Digital Video Systems Inc. (USA).
  Relationships
  There are no family relationships among any of the directors or executive officers of our company.
  There are no arrangements or understandings between any of the directors and/or executive officers and any other person pursuant to which that director and/or executive officer was selected.
  24
 B.         Compensation
  Pursuant to various compensation agreements entered into with our directors and officers, we paid the following cash compensation to the following individuals for their services during the year ended November 30, 2011:
  Chairman – Peter J. Noonan

$                  0CEO – Richard Coglon

0VP Business Development – James Chui

0Total – Management fees paid in 2011

$                0Consultant – EHS Administrative Services

$                  0
  Due to the lack of financial resources, no management fees were paid to the directors during the year ended November 30, 2011. We do not have a formal stock option plan or any informal plan to pay compensation to directors, officers or employees by way of option, however a plan is likely in which case such directors are expected in the future to receive stock options to purchase common shares as awarded by our board or a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board. Our board may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.
  As at the fiscal year ended November 30, 2011, we have no options outstanding.. Despite having no formal stock option plan, we have historically issued stock options to our officers and directors in lieu of cash compensation and as an incentive to continue to achieve the objectives of our shareholders.
  As of the date of this annual report, other than the compensation agreements referred to above, we have no other compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer’s employment with our company, from a change in control of our company or a change in such officer’s responsibilities following a change in control.
  C.         Board Practices
  Our directors are re-elected and our officers are re-appointed at the annual general meeting of our shareholders. The last annual general meeting was held on September 23, 2010 and each of our current directors and officers will continue to hold his respective office until his successor is elected or appointed, unless his office is earlier vacated under any of the relevant provisions of our Articles or of the British Columbia Business Corporations Act.
  There are no service contracts between our company and any of our officers, directors or employees providing for benefits upon termination of employment. As of the date of this annual report, our entire board functions as our audit committee. The audit committee reviews and approves the scope of the audit procedures employed by our independent auditors, reviews the results of the auditor’s examination, the scope of audits. The audit committee also recommends the selection of independent auditors.
  D.         Employees
  During the fiscal years ended November 30, 2011, 2010 and 2009, we did not have any employees other than our officers. We do not currently have any paid employees and we have not experienced a significant change in the number of people we employ.
  25
 E.         Share Ownership
  As of April 16, 2012, there are 60,727,660 common shares of our company issued and outstanding. Our directors and officers owned, directly or indirectly, the following common shares:
  Name and Office Held
Number of Common Shares

Beneficially Owned
Percentage(1)Richard Coglon

President, Chief Executive Officer
5,142,788
8.5%Peter Noonan

Director (Chairman)
50,000,000(2)
82.3%(2)James Chui

Executive Vice-President

Business Development and Director
50,000,000(2)
82.3%(2)
  Notes
  (1)         Based on 60,727,660 shares of common stock issued and outstanding as of April 16, 2012. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.
 (2)         In connection with the Asset Purchase Agreement, EEL received 20,000,000 shares of HIP and under the License Agreement Group Rich received 30,000,000 shares of HIP. EEL is owned 100% by HIP Energy Resources Limited (HIP Resources) and Group Rich is owned 100% by HIP Technology Limited (HIP Tech). Peter Noonan beneficially owns 40% of the voting securities of each of HIP Tech and HIP Resources. Speedy Growth Holding Limited owns 40% of the voting securities of each HIP Tech and HIP Resources. Mr. Chui has sole investment and voting power of with respect to the securities of Speedy Growth Holding Limited. Mr. Chui has 35% voting and investment power over the shares of HIP owned by EEL and Group Rich and Mr. Noonan has 45% voting and investment power over the shares of HIP owned by EEL and Group Rich.
  ITEM 7.                    Major Shareholders and Related Party Transactions
  As of April 16, 2012, there were 60,727,660 common shares of our company issued and outstanding. The following table sets forth persons known to us to be the beneficial owner of more than five (5%) of our common shares as of April 16, 2012:
  Name
Number of Common Shares

Beneficially Owned
Percentage(1)Richard Coglon
5,142,788
8.5%Equi Energy LLC
20,000,000(2)
32.9%(2)Group Rich Development Limited
30,000,000(2)
49.4%(2)
  Notes
  (1)         Based on 60,727,000 shares of common stock issued and outstanding as of April 16, 2012. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.
 (2)         In connection with the Asset Purchase Agreement, EEL received 20,000,000 shares of HIP and under the License Agreement Group Rich received 30,000,000 shares of HIP. EEL is owned 100% by HIP Energy Resources Limited (HIP Resources) and Group Rich is owned 100% by HIP Technology Limited (HIP Tech). Peter Noonan beneficially owns 40% of the voting securities of each of HIP Tech and HIP Resources. Speedy Growth Holding Limited owns 40% of the voting securities of each HIP Tech and HIP Resources. Mr. Chui has sole investment and voting power of with respect to the securities of Speedy Growth Holding Limited. Mr. Chui has 35% voting and investment power over the shares of HIP owned by EEL and Group Rich and Mr. Noonan has 45% voting and investment power over the shares of HIP owned by EEL and Group Rich.
  The voting rights of our major shareholders do not differ from the voting rights of holders of our company’s shares who are not major shareholders.
  26
 As of April 16, 2012, Computershare Trust Company, our registrar and transfer agent, reported that our company’s 60,727,660 common shares are held as follows:
  Location
Number of Shares
Percentage

of Shares
Number of Registered

Shareholders of RecordCanada
7,437,651
12.25%
25United States
21,029,951
34.63%
24British Virgin Islands
30,000,000
49.40%
1Other
2,260,058
3.72%
8Total
60,727,660
100%
58
  *      Less than 1%.
  We are directly controlled by Group Rich and EEL, as they are affiliated and collectively own 82.3% of our issued and outstanding common shares.
  There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the control of our company.
  B.         Related Party Transactions
  Other than as disclosed herein, to the best of our knowledge, there have been no material transactions or loans from November 30, 2011 up to the date of this annual report between our company and: (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, our company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of our company that gives them significant influence over our company, and close members of any such individual’s family; (d) key management personnel of our company, including directors and senior management of our company and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.
  1.
During the year ended November 30, 2011, we incurred $289,992 (2010 – $169,644; 2009 – $1,736) for management fees to directors, officers and private companies controlled by them.
  2.
During the year ended November 30, 2011, we incurred $12,000 (2010 – $1,000) in consulting fees to an officer.
  3.
As at November 30, 2011, we owe $49,005 (CDN$50,000) (2010 – $49,010 (CDN$50,000)) to a former director for advances, which are unsecured, non-interest bearing and payable on demand. This was the largest amount outstanding during the fiscal year ended November 30, 2011.
  4.
As at November 30, 2011, we owe $352,517 (2010 – $25,762) to our directors for accrued management fees, which are unsecured, non-interest bearing and payable on demand. As at April 16, 2012, we owe $152,597 to our directors.
  5.
As at November 30, 2011, we owe $14,702 (CDN$15,000) (2010 – $14,704 (CDN$15,000)) to a private company owned by a shareholder, Donald Sharpe (Das Petroleum) for advances, which are unsecured, non-interest bearing and payable These transactions were in the normal course of operations.
  ITEM 8.                   Financial Information
  A. Financial Statements and Other Financial Information
  Our financial statements are stated in United States dollars and are prepared in accordance with Canadian generally accepted accounting principles. In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars.
  27
 Financial Statements filed as part of this Annual Report
  1.
Independent Auditor’s Report of MaloneBailey, LLP May 1, 2012 on the Financial Statements as at November 30, 2011;
  2.
Balance Sheets at November 30, 2011 and 2010;
  3.
Statements of Operations and Comprehensive Loss for the years ended November 30, 2011, 2010 and 2009;
  4.
Statements of Cash Flows for the years ended November 30, 2011, 2010 and 2009;
  5.
Statement of Shareholder’s Equity (Deficiency) from June 22, 1983 (Date of Inception) to November 30, 2011; and
  6.
Notes to the Financial Statements.
  The audited financial statements for the years ended November 30, 2011, 2010 and 2009 can be found under Item 17 “Financial Statements”.
  Legal Proceedings
  There are no pending legal proceedings to which we are a party or of which any of our property is the subject. There are no legal proceedings to which any director, officer or affiliate of our company or any associate of any such director, officer or affiliate of our company is a party or has a material interest adverse to us.
  Dividend Distributions
  Holders of our common shares are entitled to receive such dividends as may be declared from time to time by our board, in its discretion, out of funds legally available for that purpose. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future.
  B. Significant Changes
  None.
  ITEM 9.                   The Offer and Listing
  A.         Offer and Listing Details
  Our common shares were traded on the TSX Venture Exchange until they were voluntarily delisted on June 20, 2001. Since April 19, 2001, our common shares have been quoted exclusively on the Over-the-Counter Bulletin Board, under the symbol “BNVLF”. On November 19, 2009, our symbol changed from “BNVLF” to “HIPCF”.
  Our authorized capital consists of unlimited common shares without par value and unlimited preference shares without par value. Our preference shares may be issued in one or more series and our directors may fix the number of shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series.
  Holders of our common shares are entitled to vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote, receive any dividend declared by our company’s board of directors and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares, receive the remaining property of our company upon dissolution.
  28
 The annual high and low market prices for our common shares for the five most recent full fiscal years were as follows:
  OTC Bulletin BoardYear Ended
High
LowNovember 30, 2007
US $2.50
US $0.15November 30, 2008
US $0.075
US $0.005November 30, 2009*
US $0.05
US $0.0005November 30, 2010
US $1.01
US $0.02November 30, 2011
US $0.99
US $0.05
  * After giving effect to the five (5) for one (1) reverse stock split of our issued and outstanding common stock on November 19, 2009
  The high and low market prices for our common shares for each full financial quarter for the two most recent full fiscal years on the Over-the-Counter Bulletin Board were as follows:
  OTC Bulletin BoardQuarter Ended
High
LowFebruary 28, 2010
US $1.01
US $0.02May 31, 2010
US $1.01
US $0.15August 31, 2010
US $0.02
US $0.02November 30, 2010
US $0.20
US $0.10February 28, 2011
US $0.11
US $0.10May 31, 2011
US $0.99
US $0.09August 31, 2011
US $0.50
US $0.05November 30, 2011
US $0.05
US $0.05
  The high and low market prices of our common shares for each of the most recent six months, from October, 2011 through March, 2012, on the Over-the-Counter Bulletin Board were as follows:
   OTC Bulletin BoardMonth
High
LowOctober, 2011
US $0.05
US $0.05November, 2011
US $0.05
US $0.05December, 2011
No tradesJanuary, 2012
No tradesFebruary, 2012
US $0.03
US $0.03March, 2012
No trades
  B.         Plan of Distribution
  Not applicable.
  C.         Markets
  Since April 19, 2001, our common shares have been quoted exclusively on the Over-the-Counter Bulletin Board.
  D.         Selling Shareholders
  Not applicable.
 29
 E.         Dilution
  Not applicable.
  F.         Expenses of the Issue
  Not applicable.
  ITEM 10.                Additional Information
  A.         Share Capital
  Not applicable.
  B.         Memorandum and Articles of Association
  We are incorporated under the laws of the Province of British Columbia, Canada and have been assigned incorporation number 265693.
  On March 29, 2004, the Business Corporations Act came into force in British Columbia. The new act impacted British Columbia companies by modernizing and streamlining company law in British Columbia. In order to take advantage of the provisions under the Business Corporations Act, our company sought and obtained shareholder approval at our shareholders meeting on April 21, 2005 for the removal of our pre-existing company provisions in our former Articles and the adoption of new Articles under the Business Corporations Act.
  Our Articles do not contain a description of our objects and purposes.
  Our Articles do not restrict a director’s power to (a) vote on a proposal, arrangement or contract in which the director is materially interested, (b) to vote compensation to themselves or any other members of their body in the absence of an independent quorum, or (c) exercise borrowing powers. Under our Articles, there is no mandatory retirement age for our directors and our directors are not required to own securities of our company in order to serve as directors.
  Our authorized capital consists of an unlimited number of common shares without par value and an unlimited number of preference shares without par value. Our preference shares may be issued in one or more series and our directors may fix the number of shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series.
  Holders of our common shares are entitled to vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote, receive any dividend declared by our company’s board of directors and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares, receive the remaining property of our company upon dissolution.
  Our Articles state that the rights attaching to our common shares and preference shares may be altered, amended, repealed, suspended or changed by the affirmative vote of the holders of not less than two-thirds of our common and preference shares.
  At each annual general meeting of our company, all of our directors retire and the shareholders elect a new board of directors. Each director holds office until our next annual general meeting, or until his office is earlier vacated in accordance with our Articles or with the provisions of the British Columbia Business Corporations Act. A director appointed or elected to fill a vacancy on our board also holds office until our next annual general meeting.
  Our Articles provide that our annual meetings of shareholders must be held at such time in each calendar year and not more than 15 months after the last annual general meeting and at such place as our board of directors may from time to time determine.
 30
 Under our Articles, the holders of not less than five percent of our issued shares that carry the right to vote at a meeting may requisition our directors to call a meeting of shareholders for the purposes stated in the requisition.
  Under our Articles, and subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of our shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting.
  Our Articles state that our directors, the President, the Secretary, and any lawyer or auditor of our company are entitled to attend any meeting of our shareholders.
  Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote our common shares under the laws of Canada or British Columbia, or in our charter documents.
  There are no provisions in our Articles that would have the effect of delaying, deferring or preventing a change in control of our company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our company.
  Our Articles do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed. Securities legislation in Canada, however, requires that we disclose in our annual general meeting proxy statement, holders who beneficially own more than 10% of our issued and outstanding shares, and United States Federal securities laws require the disclosure in our annual report on Form 20-F of holders who own more than 5% of our issued and outstanding shares.
  C.         Material Contracts
  The material contracts to which we are a party which were entered into during the last two years are as follows:
  1.
The Asset Purchase Agreement dated March 14, 2010 among HIP, HIP Texas, HIP Resources, and EEL, whereby HIP Texas, a wholly-owned subsidiary of HIP, acquired the Well Bores in consideration for the issuance of 20 million of our common shares. The Well Bores are described in detail under the heading “The Well Bores”.
  2.
The License Agreement dated March 14, 2010 among HIP, HIP Nevada, HIP Tech, and Great Rich, whereby HIP Nevada, a wholly-owned subsidiary of HIP, acquired the exclusive worldwide license for the HIP Downhole Process Technology in consideration for the issuance of 30 million of our common shares. The HIP Downhole Process Technology is described in detail under the heading “Business Overview - HIP Downhole Process Technology”.
  3.
Joint operating agreement dated January 12, 2010 among TexLa Operating Company, HIP, HIP Texas, and HIP Nevada, whereby TexLa will provide services relating to the application of the HIP Downhole Process Technology to the Well Bores and HIP’s oil and gas leases in consideration for a 10% operating working interest in the Well Bores and oil and gas leases.
  4.
Non-Competition Agreement between HIP Resources, EEL, HIP and HIP Texas dated March 14, 2010 pursuant to which EEL and HIP Resources agreed, among other things, not to compete against the business of our company for a period of four years from the date of the agreement.
  5.
Management Agreements between HIP and each of Richard Coglon, James Chui, Peter Noonan, and Michael Hines.
  D.         Exchange Controls
  There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident holders of our common shares. Any remittances of dividends to United States residents and to other non-residents are, however, subject to withholding tax. See “Taxation” below.
 31
 E.         Taxation
  We consider that the following general summary fairly describes the principal Canadian federal income tax consequences applicable to a holder of our common shares who is a resident of the United States, who is not, will not be and will not be deemed to be a resident of Canada for purposes of the Income Tax Act (Canada) and any applicable tax treaty and who does not use or hold, and is not deemed to use or hold, his common shares in the capital of our company in connection with carrying on a business in Canada (a “non-resident holder”).
  This summary is based upon the current provisions of the Income Tax Act (Canada), the regulations thereunder (the “Regulations”), the current publicly announced administrative and assessing policies of the Canada Customs and Revenue Agency and the Canada-United States Tax Convention as amended by the Protocols thereto (the “Treaty”). This summary also takes into account the amendments to the Income Tax Act (Canada) and the Regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that all such Tax Proposals will be enacted in their present form. However, no assurances can be given that the Tax Proposals will be enacted in the form proposed, or at all. This summary is not exhaustive of all possible Canadian federal income tax consequences applicable to a holder of our common shares and, except for the foregoing, this summary does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax consequences described herein.
  This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular holder or prospective holder of our common shares, and no opinion or representation with respect to the tax consequences to any holder or prospective holder of our common shares is made. Accordingly, holders and prospective holders of our common shares should consult their own tax advisors with respect to the income tax consequences of purchasing, owning and disposing of our common shares in their particular circumstances.
  Dividends
  Dividends paid on our common shares to a non-resident holder will be subject under theIncome Tax Act (Canada) to withholding tax at a rate of 25% subject to a reduction under the provisions of an applicable tax treaty, which tax is deducted at source by our company. The Treaty provides that the Income Tax Act (Canada) standard 25% withholding tax rate is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as our company) to residents of the United States, and also provides for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation resident in the United States that owns at least 10% of the voting shares of the corporation paying the dividend.
  Capital Gains
  A non-resident holder is not subject to tax under the Income Tax Act (Canada) in respect of a capital gain realized upon the disposition of a common share of our company unless such share represents “taxable Canadian property”, as defined in the Income Tax Act (Canada), to the holder thereof. Our common shares generally will be considered taxable Canadian property to a non-resident holder if:
  -
the non-resident holder;-
persons with whom the non-resident holder did not deal at arm’s length; or-
the non-resident holder and persons with whom such non-resident holder did not deal at arm’s length,
  owned, or had an interest in an option in respect of, not less than 25% of the issued shares of any class of our capital stock at any time during the 60 month period immediately preceding the disposition of such shares. In the case of a non-resident holder to whom shares of our company represent taxable Canadian property and who is resident in the United States, no Canadian taxes will generally be payable on a capital gain realized on such shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada.
 32
 Certain United States Federal Income Tax Consequences
  The following is a general discussion of certain possible United States federal foreign income tax matters under current law, generally applicable to a U.S. Holder (as defined below) of our common shares who holds such shares as capital assets. This discussion does not address all aspects of United States federal income tax matters and does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. See “Certain Canadian Federal Income Tax Consequences” above.
  The following discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. No assurance can be given that the IRS will agree with such statements and conclusions, or will not take, or a court will not adopt, a position contrary to any position taken herein.
  The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any holder or prospective holder of our common shares, and no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of common shares should consult their own tax advisors with respect to federal, state, local, and foreign tax consequences of purchasing, owning and disposing of our common shares.
  U.S. Holders
  As used herein, a “U.S. Holder” includes a holder of less than 10% of our common shares who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity which is taxable as a corporation for U.S. tax purposes and any other person or entity whose ownership of our common shares is effectively connected with the conduct of a trade or business in the United States. A U.S. Holder does not include persons subject to special provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our common shares is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their shares through the exercise of employee stock options or otherwise as compensation.
  Distributions
  The gross amount of a distribution paid to a U.S. Holder will generally be taxable as dividend income to the U.S. Holder for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions which are taxable dividends and which meet certain requirements will be “unqualified dividend income” and taxed to U.S. Holders at a maximum U.S. federal rate of 15%. Distributions in excess of our current and accumulated earnings and profits will be treated first as a tax-free return of capital to the extent of the U.S. Holder’s tax basis in the common shares and, to the extent in excess of such tax basis, will be treated as a gain from a sale or exchange of such shares.
  Capital Gains
  In general, upon a sale, exchange or other disposition of common shares, a U.S. Holder will generally recognize a capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on the sale or other distribution and the U.S. Holder’s adjusted tax basis in such shares. Such gain or loss will be U.S. source gain or loss and will be treated as a long-term capital gain or loss if the U.S. Holder’s holding period of the shares exceeds one year. If the U.S. Holder is an individual, any capital gain will generally be subject to U.S. federal income tax at preferential rates if specified minimum holding periods are met. The deductibility of capital losses is subject to significant limitations.
 33
 Foreign Tax Credit
  A U.S. Holder who pays (or has had withheld from distributions) Canadian income tax with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign income taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the tax credit, among which are an ownership period requirement and the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his or its worldwide taxable income. In determining the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as “passive income”, “high withholding tax interest”, “financial services income”, “shipping income”, and certain other classifications of income. The availability of the foreign tax credit and the application of these complex limitations on the tax credit are fact specific and holders and prospective holders of our common shares should consult their own tax advisors regarding their individual circumstances.
  F.         Dividends and Paying Agents
  Not applicable.
  G.         Statements by Experts
  Not applicable.
  H.         Documents on Display
  Documents concerning our company referred to in this annual report may be viewed by appointment during normal business hours at our registered and records office at Suite 800 - 885 West Georgia Street, Vancouver, British Columbia, Canada, V6C 3H1.
  I.         Subsidiary Information
  Our organizational structure is as follows:
  
  HIP Energy (Texas) Corp. is a wholly owned subsidiary that is governed by the laws of the state of Texas. HIP Texas was incorporated for the purposes of holding title to the Well Bores.
  HIP Energy (Nevada) Corp. is a wholly owned subsidiary that is governed by the laws of the state of Nevada. HIP Nevada was incorporated for the purposes of holding our license to the HIP Downhole Process Technology.
  ITEM 11.                 Quantitative and Qualitative Disclosures About Market Risk
  Not applicable.
 34
 ITEM 12.                 Description of Securities Other Than Equity Securities
  None.
  PART II
  ITEM 13.                 Defaults, Dividend Arrearages and Delinquencies
  Not applicable.
  ITEM 14.                 Material Modifications to the Rights of Security Holders and Use of Proceeds
  Not applicable.
  ITEM 15.                 Controls and Procedures
  Disclosure Controls and Procedures
  Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.
  As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures as of the end of the period covered by this annual report, being November 30, 2011. This evaluation was carried out by our CEO (being our principal executive officer) and CFO (being our principal financial officer).
  Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are ineffective to ensure that (i) information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission rules and forms and (ii) that such information is accumulated and communicated to our management, including our CEO and CFO in order to allow timely decisions regarding required disclosure.
  Management’s Annual Report on Internal Control Over Financial Reporting
  Our Board has overall responsibility for reviewing our disclosure to ensure we provide full and plain disclosure to shareholders and other stakeholders. Our Board discharges its responsibilities through its committees, specifically with respect to financial disclosure. The Audit Committee is responsible for reviewing our financial reporting procedures and internal controls to ensure full and accurate disclosure of our financial position.
  Our CEO and CFO are responsible for designing internal controls over financial reporting or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. Based on this evaluation the CEO and CFO have concluded that our internal controls over financial reporting as of November 30, 2011 (the “Evaluation Date”) are ineffective.Management has used the framework set forth in the report entitled Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting.
 35
 Based on such evaluation, he has concluded that as of the Evaluation Date, certain material weaknesses exist in our internal controls and procedures, however, our CEO and CFO believe that these material weaknesses would not prevent him from becoming aware, on a timely basis, of material information relating to us required to be included in our reports filed or submitted under the Exchange Act due to his involvement in all of our operations. Such weaknesses are:
  (i)
due to our limited number of staff, it is not feasible to achieve complete segregation of incompatible duties;
  (ii)
due to our limited number of staff, we do not have a sufficient number of finance personnel with all the technical accounting knowledge to address all complex and non-routine accounting transactions that may arise; and
  (iii)
we did not have a Whistle Blower Policy in place during the period.
  These weaknesses in our internal controls are not pervasive and we have attempted to mitigate their effects. However, these weaknesses impact our internal controls over financial reporting by reducing the effectiveness of the internal controls over financial reporting we have in place. The weaknesses in our internal control also affect financial reporting by increasing the likelihood that a material misstatement would not be prevented or detected.
  During the review period ending November 30, 2011, management had nominal financial resources to retain independent management and thus much of the financial oversight was handled by one individual holding the office of both CEO and CFO. Although financial recording and preparation of internal and filed financial statements were undertaken by other third parties, all material financial transactions were not routinely reviewed by independent directors or officers.
  During fiscal 2011, we took steps to address weaknesses in our internal controls over financial reporting including expanding our board of directors, and increasing our internal financial oversight review and approval process, including establishing an audit committee and the requirement of two signatories on all transactions in excess of $5,000. In addition, all internally prepared general ledgers are reviewed by the company’s CFO before submission to our independent accountants.
  Attestation Report of Registered Public Accounting Firm
  The annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting, pursuant to the exemption found in Section 404(c) of the Sarbanes-Oxley Act of 2002, as added by Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  Changes in Internal Control Over Financial Reporting
  There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.
  ITEM 16.                 [Reserved]
  ITEM 16A.              Audit Committee Financial Expert
  Our board has determined that we do not have a member of our audit committee that qualifies as an “audit committee financial expert” as defined in Item 16A(b) of Form 20-F. We believe that the members of our audit committee, are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
  Our board of directors has determined that Peter Noonan qualifies as an “independent” member of our audit committee as that term is defined in Rule 4350(d) of the Marketplace Rules of the FINRA. Richard Coglon and James Chui are not “independent” as defined in Rule 4200(a)(15)of the Marketplace Rules of the FINRA. We believe that having an audit committee financial expert and an audit committee that consists entirely of independent directors would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.
 36
 ITEM 16B.             Code of Ethics
  Effective May 27, 2004, our company’s board adopted a Code of Business Conduct and Ethics that applies to, among other persons, our company’s president, being our principal executive officer, and our company’s chief financial officer, as well as persons performing similar functions. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
  1.
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between

personal and professional relationships;2.
full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or

submit to, the Securities and Exchange Commission and in other public communications made by us;3.
compliance with applicable governmental laws, rules and regulations;4.
the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate

person or persons identified in the Code of Business Conduct and Ethics; and5.
accountability for adherence to the Code of Business Conduct and Ethics.
  Our Code of Business Conduct and Ethics requires, among other things, that all of our company’s personnel shall be accorded full access to our president and chief financial officer with respect to any matter which may arise relating to the Code of Business Conduct and Ethics. Further, all of our company’s personnel are to be accorded full access to our company’s board if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our president or chief financial officer.
  In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company’s president or chief financial officer. If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the president or secretary, the incident must be reported to any member of our board. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company’s Code of Business Conduct and Ethics by another.
  We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to our offices at Suite 404 – 999 World Trade Centre, Vancouver, British Columbia, Canada, V6C 3H1.
  ITEM 16C.             Principal Accountant Fees and Services
  Audit Fees
  Our board appointed BDO Canada LLP, Chartered Accountants, as independent auditors to audit our financial statements for the fiscal year ended November 30, 2010, and in 2011 we appointed MaloneBailey, LLP, Certified Public Accountants. The aggregate of fees billed by BDO Canada LLP, Chartered Accountants, for professional services rendered for the audit of our annual financial statements for the fiscal year ended 2010 were $30,000, and the aggregate of fees billed by Malone Bailey LLP, Certified Public Accountants for professional services rendered for the audit of our annual financial statements included in this annual report for the fiscal year ended 2011 were $16,900.
  Audit Related Fees
  For the fiscal years ended November 30, 2010 and November 30, 2011, the aggregate fees billed for assurance and related services by both BDO Canada LLP, Chartered Accountants, and MaloneBailey, LLP, Certified Public Accountants, relating to our quarterly financial statements which are not reported under the caption “Audit Fees” above, were $Nil for both years.
  Tax Fees
  For the fiscal years ended November 30, 2010 and November 30, 2011, the aggregate fees billed for tax compliance, tax advice and tax planning by both BDO Canada LLP, Chartered Accountants, and MaloneBailey, LLP, Certified Public Accountants, was $Nil for both years.
 37
 All Other Fees
  For the fiscal years ended November 30, 2010 and November 30, 2011, the aggregate fees billed by both BDO Canada LLP, Chartered Accountants, and MaloneBailey, LLP, Certified Public Accountants, for other non-audit professional services, other than those services listed above, totalled $Nil and $Nil, respectively.
  Pre-Approval Policies and Procedures
  Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our independent auditors are engaged by us to render any auditing or permitted non-audit related service, the engagement be:
  ·
approved by our audit committee; or·
entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the

policies and procedures are detailed as to the particular service, the audit committee is informed of each service,

and such policies and procedures do not include delegation of the audit committee’s responsibilities

to management.
  The audit committee pre-approves all services provided by our independent auditors. The pre-approval process has been implemented in response to the new rules. Therefore, the audit committee does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the audit committee either before or after the respective services were rendered.
  The audit committee has considered the nature and amount of the fees billed by both BDO Canada LLP, Chartered Accountants and MaloneBailey, LLP, Certified Public Accountants, and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining the independence of both BDO Canada LLP, Chartered Accountants, and MaloneBailey, LLP, Certified Public Accountants.
  ITEM 16D.              Exemption from the Listing Standards for Audit Committees
  Not Applicable.
  ITEM 16E.              Purchases of Equity Securities the Company and Affiliated Purchasers
  Not Applicable.
  ITEM 16F.              Change in Registrant’s Certifying Accountant
  BDO Canada LLP resigned as our company’s auditor effective March 6, 2012.  Other than a qualification as to the company’s ability to continue operations in the future as a going concern, BDO Canada LLP’s report on our company’s financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles.
  The resignation of BDO Canada LLP and the appointment of MaloneBailey LLP was considered and approved by our company’s audit committee and board of directors.
  During the two most recent fiscal years, there were no disagreements with BDO Canada LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
  MaloneBailey LLP was appointed as our company’s independent accountant effective March 6, 2012.  Our company did not consult MaloneBailey LLP regarding the application of accounting principles or the type of audit opinion that might be rendered on our financial statements.
  ITEM 16G.              Corporate Governance
  Not Applicable.
 38
 ITEM 16H               Mine Safety Disclosure
  Not Applicable.
  39
 PART III
  ITEM 17                  Financial Statements
  Financial Statements Filed as Part of this Annual Report:
  ·
Independent Auditor’s Report of MaloneBailey, LLP May 1, 2012 on the Financial Statements as atNovember 30, 2011 and 2010·
Consolidated Balance Sheets at November 30, 2011 and 2010·
Consolidated Statements of Operations and Comprehensive Loss for the years ended November 30, 2011,2010 and 2009·
Consolidated Statements of Cash Flows for the years ended November 30, 2011, 2010 and 2009·
Consolidated Statement of Stockholders’ Equity (Deficiency) for the years ended November 30, 2011,2010 and 2009·
Notes to the Consolidated Financial Statements
  
  
  40
   
  HIP ENERGY CORPORATION
 (A Development Stage Company)
  Consolidated Financial Statements
 (Expressed in U.S. dollars)
  November 30, 2011
 
  
  
  41
  
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors
 HIP Energy Corporation
 Vancouver, British Columbia
  We have audited the accompanying consolidated balance sheet of HIP Energy Corporation and its subsidiaries (collectively, the “Company”) as of November 30, 2011, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
  We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
  In our opinion, the accompanying consolidated financial statements of the Company present fairly, in all material respects, its consolidated financial position as of November 30, 2011, and the results of its consolidated operations and cash flows for the year then ended, in conformity with Canadian generally accepted accounting principles.
  The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has incurred a series of net losses resulting in negative working capital as of November 30, 2011. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  /s/ Malone Bailey, LLP
 MaloneBailey, LLP
 Houston, Texas
 May 1, 2012
  
  42
 
 Tel: 604  688 5421

Fax: 604  688 5132

www.bdo.ca
BDO Canada LLP

600 Cathedral Place

925 West Georgia Street

Vancouver BC  V6C 3L2  Canada
 
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Shareholders of
 HIP Energy Corporation
 (A Development Stage Company)
  We have audited the consolidated balance sheets of HIP Energy Corporation as at November 30, 2010 and the consolidated statements of operations and comprehensive loss, cash flows and stockholders’ equity (deficiency) for the years ended November 30, 2010 and 2009.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States of America).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
  In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2010 and the results of its operations , cash flows and stockholders’ equity (deficiency) for the years ended November 30, 2010 and November 30, 2009 in accordance with Canadian generally accepted accounting principles.
 
 (signed) “BDO CANADA LLP”
 
 Chartered AccountantsVancouver, CanadaMarch 30, 2011
 43
 HIP Energy Corporation
 (A Development Stage Company)
 Consolidated Balance Sheets
 (Expressed in U.S. dollars)
 
 November 30


November 302011


2010$



$ASSETSCurrent AssetsCash


7,787



35,290HST recoverable


9,928



8,074Prepaid expenses


547



547Total Current Assets


18,262



43,911Equipment (Note 3)


28,443



36,243Exploration Advances (Note 4)


–



210,000Oil and Gas Properties (Note 4)


65,000



127,500Total Assets


111,705



417,654LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY) EQUITYCurrent LiabilitiesAccounts payable and accrued liabilities


80,275



44,764Due to related parties (Note 8)


352,517



25,762Advances payable – related parties (Note 8)


63,707



63,714Total Liabilities


496,499



134,240Stockholders’ (Deficiency) EquityCapital Stock (Note 6)

Authorized: unlimited number of common shares, without par value

unlimited number of preferred shares, without par value

Issued: 60,727,660 common shares


4,409,168



4,409,168Contributed Surplus


10,346



10,346Accumulated other comprehensive loss


(111,935
)


(111,935
)Deficit accumulated during the development stage


(4,692,373
)


(4,024,165
)Total Stockholders’ (Deficiency) Equity


(384,794
)


283,414Total Liabilities and Stockholders’ (Deficiency) Equity


111,705



417,654Nature of operations and ability to continue as a going concern (Note 1)Commitments (Notes 4, 5 and 9)
 
 Approved on behalf of the Board:
 
 
 
 “Richard Coglon”

“James Chui”Director

Director
 
  44
  HIP Energy Corporation
 (A Development Stage Company)
 Consolidated Statements of Operations and Comprehensive Loss
 (Expressed in U.S. dollars)
  Years ended November 30,$
2011


$
2010


$
2009EXPENSESAmortization


7,800



2,757



–Bank charges and interest


3,691



4,731



407Consulting and secretarial (Note 8)


12,000



151,278



–Finders’ fees


–



800



–Foreign exchange loss (gain)


(310
)


8,897



18Impairment of oil and gas property


62,500



–



–Management fees (Note 8)


289,992



169,644



1,736Oil and gas exploration expenses


210,000



–



–Office and miscellaneous


8,760



57,191



6,226Professional fees


66,723



169,137



43,904Shareholder information


680



10,608



622Transfer agent and regulatory fees


2,980



6,800



4,506Travel and promotion


3,392



79,095



–Well bore technology expenses


–



98,374



–Net loss for the period


(668,208
)


(759,312
)


(57,419
)Other comprehensive lossForeign currency translation adjustment


–



–



(12,588
)Comprehensive loss for the year


(668,208
)


(759,312
)


(70,007
)Basic and diluted loss per share


(0.01
)


(0.02
)


(0.01
)Weighted average shares outstanding


60,727,660



42,650,696



3,978,774
 
  45
  HIP Energy Corporation
 (A Development Stage Company)
 Consolidated Statements of Cash Flows
 (Expressed in U.S. dollars)
 
 Years ended November 30,$
2011


$
2010


$
2009CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:OPERATINGNet loss for the period


(668,208
)


(759,312
)


(57,419
)Adjustments to reconcile net loss to net cash used in operating activities:Amortization


7,800



2,757



–Donated services


–



1,115



4,433Foreign exchange


(31
)


2,509



3,532Exploration advances expensed


210,000



–



–Impairment of oil and gas property


62,500



–



–Changes in non-cash working capital itemsHST recoverable


(1,854
)


(6,794
)


(1,084
)Due to related parties


326,755



25,762



–Prepaid expenses


24



(547
)


–Accounts payable and accrued liabilities


35,511



785



31,865Net cash used in operating activities


(27,503
)


(733,725
)


(18,673
)INVESTINGAcquisition of equipment


–



(39,000
)


–Exploration advances


–



(210,000
)


–Acquisition of oil and gas properties


–



(122,500
)


–Net cash flows used in investing activities


–



(371,500
)


–FINANCINGAdvances payable – related parties


–



–



(23,540
)Capital stock issued for cash


–



1,129,000



50,000Net cash flows provided by financing activities


–



1,129,000



26,460NET CASH (OUTFLOWS) INFLOWS


(27,503
)


23,775



7,787CASH, BEGINNING OF PERIOD


35,290



11,515



3,728CASH, ENDING OF PERIOD


7,787



35,290



11,515Cash paid for income taxes during the period


–



–



–Cash paid for interest during the period


–



–



–
  46
 HIP Energy Corporation
 (A Development Stage Company)
 Consolidated Statement of Stockholders’ Equity (Deficiency)
 (Expressed in U.S. dollars)
  DeficitAccumulated


AccumulatedOther


During theContributed


Comprehensive


DevelopmentShares


Amount


Surplus


loss


Stage


Total#


$



$



$



$



$Balance – November 30, 2008


1,211,660



3,225,168



4,798



(99,347
)


(3,207,434
)


(76,815
)Private placement at $0.01 per share


5,000,000



50,000



–



–



–



50,000Donated services


–



–



4,433



–



–



4,433Foreign currency translation adjustment


–



–



–



(12,588
)


–



(12,588
)Net loss for the year


–



–



–



–



(57,419
)


(57,419
)Balance – November 30, 2009


6,211,660



3,275,168



9,231



(111,935
)


(3,264,853
)


(92,389
)Shares issued for the acquisition of oil and gas properties – Note 4


20,000,000



5,000



–



–



–



5,000Shares issued for the acquisition of an intangible asset – Note 5


30,000,000



–



–



–



–



–Shares issued for cash at $0.25 per share


2,416,000



604,000



–



–



–



604,000Shares issued for cash at $0.25 per share


2,100,000



525,000



–



–



–



525,000Donated Services


–



–



1,115



–



–



1,115Net loss for the year


–



–



–



–



(759,312
)


(759,312
)Balance – November 30, 2010


60,727,660



4,409,168



10,346



(111,935
)


(4,024,165
)


283,414Net loss for the year


–



–



–



–



(668,208
)


(668,208
)Balance – November 30, 2011


60,727,660



4,409,168



10,346



(111,935
)


(4,692,373
)


(384,794
)
 
  47
 HIP Energy Corporation
 (A Development Stage Company)
 Notes to the Consolidated Financial Statements
 November 30, 2011
 (Expressed in U.S. dollars)
  1.
NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN
  HIP Energy Corporation (the “Company”) was incorporated on June 22, 1983, and on November 17, 2009, the Company changed its name from Bradner Ventures Ltd. to HIP Energy Corporation. The Company is currently a reporting issuer under the security laws of British Columbia and Alberta, Canada and its common shares are listed on the OTC Bulletin Board under the trading symbol "HIPCF". The Company is a development stage company. The Company’s current business is to increase the production of proven but unproductive wells, or to increase production from damaged, uneconomical, and stripper well bores using the HIP Downhole Process Technology (“the Technology”) (Notes 4 and 5). The Company did not previously have an operating business.
  Basis of Presentation
  These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in Canada, and are expressed in U.S. dollars. The Company incorporated a wholly-owned subsidiary HIP Energy (Texas), Inc. (“HIP Texas”), on February 12, 2010 in Texas to facilitate the acquisition of the Well Bores as described in Note 4. The Company also incorporated a wholly-owned subsidiary HIP Energy (Nevada) Corporation (“HIP Nevada”), on March 11, 2010 in Nevada to facilitate the acquisition of the exclusive worldwide license for use of the Technology as described in Note 5. The financial statements include accounts of the Company and its wholly-owned subsidiaries, HIP Texas and HIP Nevada. As a result of these transactions, there was a change in control of the Company; the transferors of the well bores together control 65.8% of the Company. All intercompany transactions and balances have been eliminated. The Company’s fiscal year-end is November 30.
  These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At November 30, 2011, the Company has negative working capital, has accumulated operating losses of $4,692,373 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company's ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
  The operations of the Company have primarily been funded by the issuance of capital stock. Continued operations of the Company are dependent on the Company's ability to raise funds through debt financing, complete equity financings or generate profitable operations in the future. Management's plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms. The consolidated financial statements contain no adjustments that reflect the outcome of this uncertainty.
  Oil and gas properties are recognized in these financial statements in accordance with accounting policies outlined in Note 2. Accordingly, their carrying amounts represent costs incurred to date and do not necessarily reflect present or future values.
  Change in Functional Currency
  On March 30, 2010, the Company completed the acquisition of certain Well Bores and a Technology License, both of which are located in the United States. Subsequent to the acquisitions, the Company’s operations, fundraising activities, and any future revenues will be denominated in United States (“U.S.”) dollars. As a result of this change in circumstances, the Company undertook a review of the functional currency exposures of all of its business units according to CICA Section 1651 Foreign Currency Translation and concluded that its functional currency is now predominantly the U.S. dollar. Prior to March 30, 2010, the Company’s functional currency was the Canadian dollar. The change in functional currency is accounted for prospectively from March 30, 2010 and prior period financial statements have not been re-measured for the change in functional currency. As a result of this change, the operations of the Company and its subsidiaries have been translated to U.S. dollars on a prospective basis. Monetary assets and liabilities are translated into U.S. dollars using the exchange rate in effect at the balance sheet date, and non-monetary assets and liabilities are translated into U.S. dollars using the historical exchange rates. Revenues and expenses are translated at the average exchange rate during the period. Foreign exchange gains and losses are included in the consolidated statement of operations.
 
  48
 1.      NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN (Continued)
  Change in Reporting Currency
  The Company elected to adopt the U.S. dollar as its reporting currency effective March 30, 2010 to better reflect its business. Prior year’s financial statements and all comparative financial information contained herein have been recast to reflect the Company’s results as if they had been historically reported in U.S. dollars. All revenues, expenses and cash flows for each period were translated into the reporting currency using average rates for the period, or the rates in effect at the date of the transaction for significant transactions. Assets and liabilities were translated using the exchange rate at the applicable balance sheet dates and stockholders’ equity was translated at historical rates. The resulting translation adjustment was recorded as accumulated foreign currency translation adjustment in accumulated other comprehensive income.
  The cumulative impact of the change in reporting currency was to increase accumulated other comprehensive loss by $111,935 at March 30, 2010.
  2.      SIGNIFICANT ACCOUNTING POLICIES
  These consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Significant measurement differences between those principles and the requirements promulgated by the Financial Accounting Standards Board and the Securities and Exchange Commission (collectively U.S. GAAP), as they affect the Company, are disclosed in note 13.
  The consolidated financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:
  Use of Estimates
  The preparation of the consolidated financial statements requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the assessment for impairment and useful life of oil and gas properties, plant and equipment, site restoration costs, valuation of future income tax assets and assumptions used in determining the fair value of non-cash stock-based compensation. Due to the inherent uncertainty involved with making such estimates, actual results reported in future years could differ from these estimates.
  Foreign Currency Translation
  Monetary items denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date. Gains and losses arising from the translations are included in operations.  (Note 1)
  Oil and Gas Properties
  The Company follows the full cost method of accounting whereby all costs incurred in exploring for and developing oil and gas reserves are capitalized. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, lease rentals on undeveloped properties, costs of drilling both productive and non-productive wells and general and administration costs directly related to exploration and development activities.
  Capitalized costs are accumulated and depleted on the unit-of-production method based on estimated proven reserves as determined by independent petroleum engineers. No amortization of capitalized costs has been recorded in the year ended November 30, 2011 as the Company has not yet established any proven reserves.
  Costs associated with properties having unproven reserves are excluded from the depletion and amortization calculation. These costs are assessed periodically to determine whether impairment has occurred. When proven reserves are assigned or if the property is considered to be impaired, the costs associated with the property are added to the costs subject to depletion and amortization.
 
  48
 2.      SIGNIFICANT ACCOUNTING POLICIES (Continued)
  Equipment
  Equipment is stated at cost, net of accumulated depreciation. Depreciation is computed by using the straight-line method at rates based on the estimated useful lives of the various classes of property, plant and equipment. The current estimated useful life of the equipment is 5 years. Estimates of useful lives are based upon a variety of factors including durability of the asset, the amount of usage that is expected from the asset, the rate of technological change and the Company’s business plans for the asset. Should the Company change its plans with respect to the use and productivity of the equipment, it may require a change in the useful life of the asset or incur a charge to reflect the difference between the carrying value of the asset and the proceeds expected to be realized upon the asset’s sale or abandonment. Expenditures for maintenance and repairs are expensed as incurred and significant major improvements are capitalized and depreciated over the estimated useful life of the asset.
  Impairment of Long-lived Assets
  The Company reviews oil and gas properties for impairment on a periodic basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment losses on long-lived assets are recognized when these events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Management does not have any future plans to continue development on the Opal Well and therefore recognized an impairment loss of $62,500 during the year ended November 30, 2011.
  Asset Retirement Obligations
  The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, and development and (or) normal use of the assets. The amount of the obligation is included in the carrying value of the asset and is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.  The asset retirement obligation for the wellbores owned by the Company rests solely with the operator of the respective wellbores and thus no asset retirement obligation was accrued at November 30, 2011 and 2010.
  Income Taxes
  The Company follows the asset and liability method for determining income taxes. Under this method, future income tax assets and liabilities are recognized for temporary differences between the carrying amounts for financial statement purposes and the tax basis for certain assets and liabilities. Future income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be settled. The tax effects of changes in these temporary differences are recognized in income in the period in which they occur.
  Stock-Based Compensation
  The value of stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option and stock price volatility. The expected term of options granted is determined based on historical data on the average hold period before exercise, expiry or cancellation. Expected volatility is based on the historical volatility of the share price of the Company. These estimates involve inherent uncertainties and the application of management judgment.  The Company does not estimate stock option forfeitures but rather, accounts for forfeitures as they occur. When stock options are exercised, the proceeds, together with the amount recorded in contributed surplus are recorded in share capital.
  Basic and Diluted Loss per Share
  Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, potentially dilutive common shares are excluded from the loss per share calculation, as the effect would be anti-dilutive. Basic and diluted loss per share are the same for the years presented.
  For the years ended November 30, 2011, 2010 and 2009, there were no potentially dilutive common shares relating to stock options and warrants outstanding.
 
  50
 2.      SIGNIFICANT ACCOUNTING POLICIES (Continued)
  Comprehensive Income
  The Company follows CICA Handbook Section 1530 “Comprehensive Income” which establishes standards for reporting and presenting comprehensive income, which is defined as the change in equity from transactions and other events from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income that are excluded from net income calculated in accordance with Canadian generally accepted accounting principles.
  Financial Instruments – Recognition and Measurement
  This standard requires all financial instruments within its scope, including derivatives, to be included on the balance sheet and measured either at fair value or, in certain circumstances when fair value may not be considered most relevant, at cost or amortized cost. Changes in fair value are to be recognized in either the Consolidated Statements of Operations or Comprehensive Loss.
  In accordance with this standard, the Company has classified its financial instruments as follows:
  The Company classifies and measures its financial instruments as follows:
  ·
Cash is classified as “held-for-trading” which is measured at fair value initially and in subsequent periods;
  ·
Accounts payable, accrued liabilities, due to related parties and advances payable are classified as other financial liabilities and are measured at fair value at inception. Subsequent valuations are recorded at amortized cost using the effective interest rate method.
  Financial Instruments – Disclosures
  In June 2009, the CICA amended Section 3862, “Financial Instruments – Disclosures”, to include additional disclosure requirements about fair value measurement for financial instruments and liquidity risk disclosures. These amendments require a three level hierarchy that reflects the significance of the inputs used in making the fair value measurements. Fair value of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level 2 include valuations using inputs other than quoted prices for which all significant inputs are based on observable market data, either directly or indirectly. Level 3 valuations are based on inputs that are not based on observable market data. The amendments to Section 3862 apply for annual financial statements relating to fiscal years ending after September 30, 2009. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.
  Recent Accounting Pronouncements
  In 2006, the Accounting Standards Board of Financial Reporting and Assurance Standards Canada (
  AcSB”) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with International Financial Reporting Standards (“IFRS”) over an expected five-year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s own GAAP. The date is for and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended November 30, 2011. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time. The Company is currently assessing the impact of the above new accounting standards on the Company’s financial positions and results of operations.
  The CICA Handbook Section 1601, “Consolidated Financial Statements”, and Section 1602, “Non-controlling Interests”, replaces Section 1600. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. Section 1602 is equivalent to the corresponding provisions of International Financial Reporting Standard IAS 27, “Consolidated and Separate Financial Statements”. These standards are effective for the Company for and annual financial statements beginning on January 1, 2011. Early adoption is permitted. The Company has not yet determined the impact of the adoption of these changes on its financial statements.
  The CICA Handbook Section 1582, “Business Combinations”, which replaces Section 1581, “Business Combinations”, establishes standards for the accounting for a business combination. It is the Canadian GAAP equivalent to International Financial Reporting Standard IFRS 3, “Business Combinations”. This standard is effective for and annual financial statements beginning on January 1, 2011. Early adoption is permitted. The Company has not yet determined the impact of the adoption of these changes on its financial statements.
  
  51
  3.
EQUIPMENT
  Cost


Accumulated

Amortization


November 30,

2011


November 30,

2010$
39,000


$
10,557


$
28,443


$
36,243
  The Company recognized amortization expense of $7,800 (2010 - $2,757; 2009 - $0) during the year ended November 30, 2011.
  4.
OIL AND GAS PROPERTIES
  Texas Well BoresOpal


Other


Peak Wells


TotalAcquisitionCash

$
62,500


$
–


$
60,000


$
122,500Shares


–



5,000



–



5,000Impairment


(62,500
)


–



–



(62,500
)$
–


$
5,000


$
60,000


$
65,000
  Opal and other Well Bores
  On March 30, 2010, the Company acquired all rights, title and interest in and to 50 well bores located in West Texas, and 1 well bore (the “Opal Well”) located in Central Texas. In addition, the Company will, within 12 months, be transferred title to an additional 41 wells and well bores located in East Texas and 60 wells and well bores located in West Louisiana. The Company issued 20,000,000 shares of common stock as consideration for the sale and transfer of the initial 52 well bores in West and Central Texas and the 41 East Texas and 60 Louisiana well bores. $5,000 was assigned as the purchase price of the well bores using carryover basis of accounting (being the amount that the well bores were carried in the accounts of the transferor) as the transferor, together with the transferor in the transaction discussed in Note 5, control the Company subsequent to the transactions. In consideration of the transfer of the Opal Well, the Company agreed to pay consideration totaling $250,000 consisting of accrued development, equipment and lease operating costs incurred on the Opal Well. The Company paid $62,500 and the balance of these costs will be paid on a declining basis from any oil and gas production revenues received by the Company as generated on the Opal Well in excess of 20 bbl oil or gas equivalent per day, using the HIP Downhole Process Technology. The Company has not recorded an accrued liability for the balance of the costs owed given that they are contingent on oil and gas production. During the year ended November 30, 2011, the Company recognized an impairment loss of $62,500 related to the Opal Well.
  Peak Well Bores
  On January 1, 2010, the Company entered into a joint operating agreement with a company to operate and develop the Well Bores using the HIP Downhole Technology. The Company forwarded $60,000 as a deposit on the Peak Well Bores (the “Peak Wells”).
  Exploration Advances
  As of November 30, 2010, the Company had advanced $210,000 to the well bores operator for specific property use but which had yet to be spent as of that date. These funds were spent during the year ended November 30, 2011.
  5.
HIP DOWNHOLE PROCESS TECHNOLOGY
  On March 30, 2010, the Company completed the acquisition of the worldwide exclusive rights to the proprietary HIP Downhole Process Technology (“the Technology”). The Technology is proprietary downhole oil and gas technology designed and developed to increase oil and gas production from non-commercial, uneconomic, depleted or damaged well bores and oil and gas reservoirs. In consideration for the grant of the License Agreement, the Company issued 30,000,000 shares of common stock and agreed to pay an annual royalty fee equal to 25% of net revenue from income associated with its use and application. The purchase price allocated to the technology was assigned a value of $Nil using carryover basis of accounting (being the amount that the technology was carried in the accounts of the transferor) as the transferor, together with the transferor in the transaction discussed in Note 3, control the Company subsequent to the transactions.
  In April 2010, the Company entered into a joint operating agreement with an operator to develop the Well Bores using the Technology. In consideration for their services, the operator will be granted a 10% working interest in any of the Well Bores that the HIP Downhole Process Technology is applied to.
  52
  6.
CAPITAL STOCK
  On October 20, 2009, the Company increased its authorized capital to an unlimited number of common shares and an unlimited number of preferred shares.
  Common Shares
  The common shares of the Company are all of the same class, are voting and entitle stockholders to receive dividends. Upon liquidation or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets or any dividends which may be declared.
  a)
On May 12, 2009, the Company completed a private placement with a director of the Company for the purchase of 5,000,000 common shares for proceeds of $50,000.
  b)
On November 19, 2009, the Company undertook a 5:1 reverse stock split of the issued and outstanding common and preferred stock.
  c)
On March 29, 2010, the Company issued 30,000,000 shares of common stock for the worldwide exclusive rights to the proprietary “HIP Down Hole Oil and Gas Enhancement Technology”. (Note 5)
  d)
On March 29, 2010, the Company issued 20,000,000 shares of common stock to acquire all rights, title and interest in and to various oil and gas assets in Texas and Louisiana. (Note 4)
  e)
On April 16, 2010, the Company issued 2,416,000 shares of common stock pursuant to a private placement. The Company received $0.25 per share of common stock for total proceeds of $604,000.
  f)
On April 30, 2010, the Company issued 2,100,000 shares of common stock pursuant to a private placement. The Company received $0.25 per share of common stock for total proceeds of $525,000.
  Preferred Shares
  The preferred shares of the Company may be issued in one or more series and may be designated as voting or non-voting and cumulative or non-cumulative. Upon liquidation or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets before any distribution is made to the holders of the common shares. The Company had no preferred shares outstanding at November 30, 2011 and 2010.
  Stock Options
  The Company, from time to time, allows officers, key employees and non-employee directors to be granted options to purchase shares of the Company’s authorized but un-issued common stock. Options currently expire no later than 10 years from the grant date and generally vest on the date of grant. These options are granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant. The Company had no options outstanding as at November 30, 2011 and 2010.
  7.
CAPITAL DISCLOSURES
  In the management of capital, the Company includes cash in the definition of capital.
  The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to seek and identify suitable business opportunities or business combinations in Canada or the United States of America. The board of directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
  The Company places its cash with institutions of high creditworthiness. At November 30, 2011, the Company had cash of $7,787 (2010 – $35,290).
  The Company has identified business opportunities as noted in Notes 4 and 5. The Company will continue to assess new opportunities and seek to acquire business if it feels there are sufficient benefits to the Company and if it has adequate financial resources to do so.
  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There have been no changes made to the capital management policy during the year.
 
  53
  8.
RELATED PARTY TRANSACTIONS
  The Company entered into the following transactions with related parties, which are measured at the exchange amount, being the amount established and agreed to by the related parties.
  a)
During the year ended November 30, 2011, the Company incurred $289,992 (2010 – $169,644, 2009 – $1,736) for management fees to directors, officers and private companies controlled by them.
  b)
During the year ended November 30, 2011, the Company incurred $12,000 (2010 – $1,000, 2009 - $Nil) in consulting fees to officers.
  c)
As at November 30, 2011, the Company owes $49,005 (CDN$50,000) (2010 – $49,010 (CDN$50,000)) to a director for advances, which are unsecured, non-interest bearing and payable on demand.
  d)
As at November 30, 2011, the Company owes $352,517 (2010 – $25,762) to directors for accrued management fees, which are unsecured, non-interest bearing and payable on demand.
  e)
As at November 30, 2011, the Company owes $14,702 (CDN$15,000) (2010 – $14,704 (CDN$15,000)) to a private company owned by a shareholder for advances, which are unsecured, non-interest bearing and payable.
  9.
COMMITMENTS
  a)
Pursuant to the acquisitions of the Well Bores and the HIP Downhole Process Technology, the Company entered into an agreement with an individual to issue 80,000 shares of common stock as a finders’ fee. As at November 30, 2011, the shares had not been issued.
  b)
The Company entered into several management and consulting agreements with directors and officers in which the Company agreed to pay aggregate monthly fees of $24,166. The monthly fees will increase to an aggregate of $56,666 within 30 days of the Company completing a private placement of $4,000,000 or the Company having achieved 30 days of continuous production of an average of 20 bbls of oil per day per well, or a combined oil and gas equivalent, from a minimum of 10 wells forming part of a 10 well unit on which the Company has successfully applied the HIP Downhole Process Technology. The term of all the agreements is 2 years, with the exception with the President’s agreement, which is 3 years. In addition, stock options will be granted to acquire up to 4,000,000 shares of common stock at $0.25 per share for a period of five years.
  10.
NON-CASH TRANSACTIONS
  Years Ended November 30,$
2011


$
2010


$
2009Shares issued for acquisition of intangible assets (Note 5)


–



–



–Shares issued for acquisition of Oil and gas properties (Note 4)


–



5,000



–Donated services


–



1,115



4,433
  11.
RISK MANAGEMENT
  Overview
  The Company is engaged primarily in the oil and gas drilling and exploration field and accordingly it may be at risk for environmental issues and fluctuations in commodity pricing relating to the oil and gas drilling and exploration industry. The Company is subject to state and federal environmental regulations. Management has designed procedures and policies to provide for environmental compliance however, due to the diversity of environmental laws and regulations, compliance at all times cannot be assured.
  Although management has taken steps to verify title on the properties on which it conducts exploration and in which it has an interest, these procedures may not guarantee the Company’s title. Property title may be at risk from unregistered prior agreements, unregistered claims, other land claims and non-compliance with regulatory and environmental requirements.
  The Company has exposure to the following risks from its use of financial instruments:
  ·  Credit risk
  ·  Liquidity and funding risk
  ·  Market risk
 
  54
  11.
RISK MANAGEMENT (Continued)
  The Board of Directors approves and monitors the risk management processes.
  a)
Credit Risk
  Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk is on its cash and amounts receivable.
  Cash consists of cash bank balances. The Company manages the credit exposure related to cash by holding its funds with reputable financial institutions.
  Amounts receivable consist of harmonized sales tax recoverable. The Company’s maximum credit exposure for cash and amounts receivable is the carrying value of $17,715 (2010 - $43,364).
  b)
Liquidity and Funding Risk
  Liquidity and funding risk is the risk that the Company will not have sufficient capital to meet short-term operating requirements, after taking into account the Company’s holdings of cash.
  As at November 30, 2011, the Company’s working capital deficiency is $478,237. In the case of cash deficits arising from exploration commitments and general operating budgets, the Company will have to seek debt or equity financing. There are no assurances that such financing will be available on terms acceptable to the Company.
  The Company determined that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company’s holdings of cash. The Company’s cash is invested in business accounts and is available on demand.
  c)
Market Risk
  i)
Interest Rate Risk:
  Interest rate risk is the risk arising from the effect of changes in prevailing interest rates on the Company’s financial instruments.
  The Company had $7,787 in cash at November 30, 2011. The bank account is not an interest bearing bank account and currently the Company does not hold any investments or financial liabilities on which interest accrues, and is therefore not subject to a significant amount of interest rate risk.
  ii)
Foreign Currency Risk:
  Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in the foreign exchange rates. The Company’s functional and reporting currency is the U.S. dollar. The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has offices in United States of America and Canada and holds cash in U.S. and Canadian dollar currencies in line with forecasted expenditures. The Company’s main risk is associated with fluctuations in the Canadian dollar and assets and liabilities are translated based on the foreign currency translation policy.
  The Company’s net exposure to the Canadian dollar on financial instruments is as follows:
  November 30,

2011


November 30,

2010Cash

$
4,465


$
69HST recoverable


9,928



8,074Accounts payable and accrued liabilities


(61,974
)


(43,530
)$
(47,581
)

$
(35,387
)
  The Company has determined that an effect of a 10% increase or decrease in the Canadian dollar against the U.S. dollar on financial assets and liabilities, as at November 30, 2011, including cash, HST recoverable, accounts payable and accrued liabilities, due to related parties and advances payable denominated in Canadian dollar, would result in an insignificant change to the net loss and comprehensive loss for the year ended November 30, 2011. At November 30, 2011, the Company had no hedging agreements in place with respect to foreign exchange rates.
 
  55
  11.
RISK MANAGEMENT (Continued)
  iii)
Commodity Price Risk:
  Commodity price risk is the risk of financial loss resulting from movements in the price of the Company’s commodity inputs and outputs. The Company’s risk relates primarily to the expected output to be produced at its oil and gas properties described in Note 4 of these consolidated financial statements of which significant production is not expected in the near future.
  12.
INCOME TAXES
  A reconciliation of income tax recovery at statutory rates with the reported income tax recovery is as follows:
  2011


2010


2009Basic statutory federal and provincial income tax rate


26.67
%


28.63
%


30.04
%Net loss

$
(668,208
)

$
(759,312
)

$
(57,419
)Expected income tax recovery on net loss, before income tax

$
178,000


$
217,000


$
17,000Differences due to recognition of items for tax purposes:Foreign income taxed at other than CAD stat rate


23,000



22,000



–Effects of reduction in statutory rate


(6,000
)


(4,000
)


(19,000
)Permanent differences


–



–



(3,000
)Expiry of non-capital loss carry forward


–



–



(37,000
)Change in valuation allowance


(195,000
)


(235,000
)


42,000Total income tax recovery

$
–


$
–


$
–
  The significant components of the Company’s future income tax assets and liabilities are as follows:
  2011


2010Future income tax assets:Non-capital losses carried forward

$
498,000


$
303,000Exploration expenses


237,000



237,000Capital loss carry-forwards


91,000



91,000826,000



631,000Valuation allowance


(826,000
)


(631,000
)Net future income tax assets

$
–


$
–
  As at November 30, 2011, the Company has accumulated Canadian and foreign exploration costs totaling $898,000 and non-capital losses totaling $1,818,000. The Company also has $758,000 of capital losses which may be applied to future capital gains, which may be carried forward to apply against future years’ income for Canadian income tax purposes. As at November 30, 2011, the Company has accumulated net operating losses in United States totaling $619,000. Potential benefits of these losses and exploration costs have not been recognized in these financial statements because the Company cannot be assured it is more likely than not they will be utilized in future years. The non-capital losses expire as follows:
  Canada


United States


Total2014

$
49,000


$
–


$
49,0002015


70,000



–



70,0002026


57,000



–



57,0002027


61,000



–



61,0002028


47,000



–



47,0002029


65,000



–



65,0002030


457,000



344,000



801,0002031


393,000



275,000



668,000$
1,199,000


$
619,000


$
1,818,000
 
 
  56
  12.
INCOME TAXES (Continued)
  For income tax purposes, the Company reports certain transactions in different periods than reported for financial statement purposes. The Company has incurred operating losses since its inception and, therefore, no tax liabilities have been incurred for the years presented.
  13.
SUBSEQUENT EVENT
  The Company received a loan of $400,000 under a Loan Agreement dated March 1, 2012, bearing interest at the Prime Rate plus 1%. The Prime Rate is the floating annual rate of interest based upon the HSBC Bank of Canada rate. The loan matures in March 2014.
  14.
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  These consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada. There are no material differences between Canadian GAAP and United States GAAP on the balance sheets and statements of operations and comprehensive loss, and cash flows.
  Development Stage Company
  Pursuant to U.S. GAAP, the Company would be subject to the disclosure requirements applicable to a development stage enterprise as the Company is devoting its efforts to establishing commercial viability related to the Hip Downhole Process Technology. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied to these consolidated financial statements.
  Income Taxes
  Under U.S. GAAP the provisions prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation requires that the Company recognize the impact of a tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The requirement also provides guidance on de-recognition, classification, interest and penalties, accounting in periods and disclosure. In accordance with the provisions, any cumulative effect resulting from the change in accounting principle is to be recorded as an adjustment to the opening balance of deficit. The accounting policy did not result in a material impact on the Company's consolidated financial position or results of operations.
  The Company’s tax returns are subject to tax examinations by tax authorities until the respective statute of limitation. It is subject to tax examinations by tax authorities for all taxation years commencing on or after 2006. Management’s analysis of Accounting Standards Codification Topic 740 supports the conclusion that the Company does not have any accruals for uncertain tax positions as of November 30, 2011. As a result, tabular reconciliation of beginning and ending balances would not be meaningful. If interest and penalties were to be assessed, the Company would charge interest to interest expense, and penalties to other operating expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.
  Recent Accounting Pronouncements
  The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
 
 
  57
 ITEM 18                    Financial Statements
  Refer to Item 17 - Financial Statements.
  ITEM 19                    Exhibits
  The following exhibits are being filed as part of this annual report, or are incorporated by reference where indicated:
  1.1         Articles of Incorporation, effective June 22, 1983 (incorporated by reference from our Form 20-F/A, filed on January 22, 2001).
  1.2         Altered Memorandum, dated December 13, 1999 (incorporated by reference from our Form 20-F/A, filed on January 22, 2001).
  1.3         Certificate of Change of Name, dated December 13, 1999 (incorporated by reference from our Form 20-F/A, filed on January 22, 2001).
  1.4         Notice of Alteration of Articles, effective March 31, 2004 (incorporated by reference from our Form 20-F, filed on June 1, 2004).
  1.5         Notice of Alteration of Articles, effective March 31, 2004 (incorporated by reference from our Form 20-F, filed on June 1, 2004).
  1.6         Notice of Articles, effective October 20, 2009 (incorporated by reference from our Form 20-F, filed on April 5, 2010).
  4.         Material Agreements
  4.1         Asset Purchase Agreement dated March 14, 2010 among HIP Energy Corporation, HIP Energy (Texas), Inc., HIP Energy Resource Limited, and Equi Energy LLC (incorporated by reference from our Form 20-F, filed on April 5, 2010).
  4.2          License Agreement dated March 14, 2010 among HIP Energy Corporation, HIP Energy (Nevada) Corporation, HIP Technology Limited, and Group Rich Development Limited (incorporated by reference from our Form 20-F, filed on April 5, 2010).
  4.3.         Joint operating agreement dated January 12, 2010 among TexLa Operating Company, HIP Energy Corporation, HIP Energy (Texas), Inc., and HIP Energy (Nevada) Corporation (incorporated by reference from our Form 20-F, filed on April 5, 2010).
  4.4         Non-Competition Agreement dated March 14, 2010 among HIP Energy Corporation, HIP Energy (Texas), Inc., HIP Energy Resource Limited and Equi Energy LLC (incorporated by reference from our Form 20-F, filed on April 5, 2010).
  4.5         Form of Subscription Agreement. (U.S. Subscriber) (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  4.6         Form of Subscription Agreement. (Offshore Subscriber) (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  4.7         Management Agreement dated May 4, 2011 between HIP Energy Corporation and Richard Coglon (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  4.8         Management Agreement dated May 4, 2011 between HIP Energy Corporation and James Chui (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  4.9         Management Agreement dated May 4, 2011 between HIP Energy Corporation and Peter Noonan (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  58
   4.10         Management Agreement dated May 4, 2011 between HIP Energy Corporation and Michael Hines (incorporated by reference from our Form 20-F, filed on May 5, 2011).
  8.            List of Subsidiaries
  8.1          HIP Energy (Nevada) Corporation, a Nevada corporation and HIP Energy (Texas), Inc., a Texas corporation.
  11.         Code of Ethics
  11.1        Code of Ethics (incorporated by reference from our Registration Statement on Form 20-F, filed on June 1, 2004).
  12.         Certification
  12.1*      Section 302 Certification under Sarbanes-Oxley Act of 2002 for Richard Coglon.
  13.         Certification
  13.1*     Section 906 Certification under Sarbanes-Oxley Act of 2002 for Richard Coglon.
  15.         Additional Exhibits
  15.1*      Letter from BDO Canada LLP.
  *  Filed herewith
 
 
 
  59
 SIGNATURES
  The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
  HIP ENERGY CORPORATION
  /s/ Richard L. Coglon
 Richard L. Coglon
 President, Chief Executive Officer, Secretary and Chief Financial Officer
 (Principal Executive Officer
 and Principal Financial Officer)
  Date:  May 4 , 2012
  60