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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedNovember 30,
2010

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

Date of event requiring this shell company report
_______________________

For the transition period from ____________to
____________________

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)

Suite 404  999 World Trade CentreVancouver,
British Columbia, Canada V6E 3E2(Address of principal executive
offices)

Richard Coglon, President, 604.641.1367 richard@hipenergycorp.com Suite
404  999 World Trade CentreVancouver, British Columbia, Canada
V6E 3E2(Name, Telephone, E-mail and/or Facsimile number and Address
of Company Contact Person)

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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, 2010.

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.[ ]
YES    [ x ] 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   
[ x ] 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.[ x ] 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 [ x ]
|--------------------------- | --------------------- | ---------------------------

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 [ x ]
|------------- | --------------------------------------------------------------------------------------------------------------------- | -----------

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.[ x ] Item 17    [ ] Item 18

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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    [ x ] 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

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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;

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- discussion regarding any future joint venture agreements;
- the acquisition of future well bores;
- 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.

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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, 2010.
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 US
dollar. This results in all foreign currency impacts of holding non-US 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, 2010 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)

|                                                                                        |   | 2010       |   |   | 2009      |   |   | 2008      |   |   | 2007      |   |   | 2006      |  
|--------------------------------------------------------------------------------------- | - | ---------- | - | - | --------- | - | - | --------- | - | - | --------- | - | - | --------- | -
|CANADIAN GAAP                                                                           |   | (US$)      |   |   | (US$)     |   |   | (CDN$)    |   |   | (CDN$)    |   |   | (CDN$)    |  
|                                                                                        |   |            |   |   |           |   |   |           |   |   |           |   |   |           |  
|Net Sales or Operating Revenue                                                          | $ | -          |   | $ | -         |   | $ | -         |   | $ | -         |   | $ | -         |  
|Total Expenses                                                                          | $ | 759,312    |   | $ | 57,419    |   | $ | 47,508    |   | $ | 61,980    |   | $ | 58,145    |  
|Other Income (Loss)                                                                     | $ | -          |   | $ | (12,588   | ) | $ | -         |   | $ | -         |   | $ | -         |  
|Income (Loss) from Continuing Operations                                                | $ | (759,312   | ) | $ | (57,419   | ) | $ | (47,508   | ) | $ | (61,980   | ) | $ | (58,145   | )
|Net Income (Loss) and Comprehensive (Loss)
      for the Year                           | $ | (759,312   | ) | $ | (70,007   | ) | $ | (47,508   | ) | $ | (61,980   | ) | $ | (58,145   | )
|Total Assets                                                                            | $ | 417,654    |   | $ | 12,795    |   | $ | 4,733     |   | $ | 6,236     |   | $ | 18,020    |  
|Total Stockholders Equity (Deficiency)                                                 | $ | 283,414    |   | $ | (92,389   | ) | $ | (95,267   | ) | $ | (52,759   | ) | $ | 9,221     |  
|Capital Stock                                                                           | $ | 4,409,168  |   | $ | 3,275,168 |   | $ | 4,279,498 |   | $ | 4,279,498 |   | $ | 4,279,498 |  
|Weighted Average Number of Common Shares
      (adjusted to reflect changes in capital) |   | 42,650,696 |   |   | 3,978,774 |   |   | 1,211,651 |   |   | 1,211,651 |   |   | 1,211,651 |  
|Basic and Diluted Net Loss per Common Share                                             | $ | (0.02      | ) | $ | (0.01     | ) | $ | (0.04     | ) | $ | (0.05     | ) | $ | (0.05     | )
|Long-Term Debt                                                                          | $ | -          |   | $ | -         |   | $ | -         |   | $ | -         |   | $ | -         |  
|Cash Dividends per Common Share                                                         | $ | -          |   | $ | -         |   | $ | -         |   | $ | -         |   | $ | -         |  

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Selected Financial Data(Calculated in
accordance with US GAAP)

Fiscal Year Ended November 30 (Audited)

|                                                                                        |   | 2010       |   |   | 2009      |   |   | 2008      |   |   | 2007      |   |   | 2006      |  
|--------------------------------------------------------------------------------------- | - | ---------- | - | - | --------- | - | - | --------- | - | - | --------- | - | - | --------- | -
|UNITED STATES GAAP                                                                      |   | (US$)      |   |   | (US$)     |   |   | (CDN$)    |   |   | (CDN$)    |   |   | (CDN$)    |  
|                                                                                        |   |            |   |   |           |   |   |           |   |   |           |   |   |           |  
|Net Sales or Operating Revenue                                                          | $ | -          |   | $ | -         |   | $ | -         |   | $ | -         |   | $ | -         |  
|Total Expenses                                                                          | $ | 759,312    |   | $ | 57,419    |   | $ | 47,508    |   | $ | 61,980    |   | $ | 58,145    |  
|Income (Loss) From Operations                                                           |   | ($759,312  | ) | $ | (57,419   | ) | $ | 47,508    |   | $ | 61,980    |   | $ | 58,145    |  
|Other Income                                                                            | $ | -          |   | $ | (12,588   | ) | $ | -         |   | $ | -         |   | $ | -         |  
|Loss from Continuing Operations                                                         | $ | (759,312   | ) | $ | (57,419   | ) | $ | (47,508   | ) | $ | (61,980   | ) | $ | (58,145   | )
|Net loss and comprehensive loss for the year                                            | $ | (759,312   | ) | $ | (70,007   | ) | $ | (47,508   | ) | $ | (61,980   | ) | $ | (58,145   | )
|Total Assets                                                                            | $ | 417,654    |   | $ | 12,795    |   | $ | 4,733     |   | $ | 6,236     |   | $ | 18,020    |  
|Total Stockholders Equity (Deficiency)                                                 | $ | 283,414    |   | $ | (92,389   | ) | $ | (95,267   | ) | $ | (52,759   | ) | $ | 9,221     |  
|Capital Stock                                                                           | $ | 4,409,168  |   | $ | 3,275,168 |   | $ | 4,279,498 |   | $ | 4,279,498 |   | $ | 4,279,498 |  
|Weighted Average Number of Common Shares (adjusted to
      reflect changes in capital) |   | 42,650,696 |   |   | 3,978,774 |   |   | 1,211,651 |   |   | 1,211,651 |   |   | 1,211,651 |  
|Diluted Net Income per Common Share                                                     | $ | (0.02      | ) | $ | (0.01     | ) | $ | (0.04     | ) | $ | (0.05     | ) | $ | (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 21, 2011, 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 $.9519. For the past five fiscal years ended November 30, 2010 and for the
six monthly periods between November 2010 and April 2011, 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        | Average
|----------------- | -------
|November 30, 2006 | $1.1347
|November 30, 2007 | $0.9661
|November 30, 2008 | $1.2360
|November 30, 2009 | $1.1644
|November 30, 2010 | $1.0336

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|Month Ended   | Low/High       
|------------- | ---------------
|November 2010 | $1.0001/$1.0266
|December 2010 | $1.0004/$1.0176
|January 2011  | $0.9864/$1.0020
|February 2011 | $0.9737/$0.9955
|March 2011    | $0.9671/$0.9974
|April 2011    | $0.9450/$0.9722

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, 2010 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 $4,024,165 for the cumulative
period from June 22, 1983 (inception) to November 30, 2010. 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, 2010. 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.

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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.

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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.

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.

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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 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.

11

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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.

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.

12

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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 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.

13

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Principal Office

Our head office is located at Suite 404, 999 World Trade
Centre, Vancouver, British Columbia, V6E 3E2. Our telephone number is
604.641.1367 and our facsimile number is 604.641.1214.

Corporate Information

Our company was incorporated pursuant to the laws of the
Province of British Columbia under the British Columbia Company Actin
June 1983 under the name Bradner Resources Ltd.. On March 29, 2004, the
British Columbia Business Corporations Actcame 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 December 17, 2001, we entered into a share exchange
agreement (the Bestshot Agreement) with Bestshot.com Inc., Bestshot.com Corp.,
John Davis, Richard Coglon and Mark Morrill, pursuant to which, we were to
acquire 100% of the issued and outstanding shares (a total of 20,515,942 common
shares) of Bestshot.com Inc. in exchange for 24,618,590 common shares in the
capital of our company. We elected not to proceed with the completion of the
share exchange due to the fact that Bestshot.com Inc. was unable to obtain
shareholder approval with respect to its continuation from Wyoming, its current
jurisdiction of incorporation, to the province of Alberta. Our obligation to
consummate the transactions contemplated by the Bestshot Agreement was subject
to the fulfilment of a number of conditions precedent, including the
continuation of Bestshot.com Inc.

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.

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.

14

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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

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.

We have assembled a larger control area in which to test the
scalability of the HIP Downhole Process Technology, which is comprised of oil
and gas leases on approximately 6400 acres covering rights from the surface to
the base of the Travis Peak formation. Within this larger control area, we also
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 Resource, and seven were purchased for $60,000 from Peak
Energy Corp. of Dallas, Texas. We have completed construction of our 3 acre
central facilities site on which the equipment necessary to test the HIP
Downhole Process Technology (the HIP Control Unit) is being assembled.
Pipeline connections of the HIP Control Unit to the 10 test wells are ongoing.
To date, 8 of the 10 test wells have been piped to the HIP Control Unit, but we
are waiting for the agreement of the Texas Parks and Wildlife Department 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 Down Hole Process. Phase 1 of the our program
will be to complete and to test at least five of the 10 wells within the next 12
months.

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.

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
Technology. We forwarded $60,000 as a deposit.

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. 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.

15

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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, 2010, 2009 and 2008, we
incurred net losses of US$759,312, US$57,419 and US$45,589 respectively. We did
not generate any revenues during such periods.

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 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.

16

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The HIP Downhole Process 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 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.

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).

17

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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 Depth
|------------------------------------------- | -------------------- | --------------------------- | --------------- | -----------
|West Texas                                  |                      |                             |                 |            
|Cluster 1                                   |                      |                             |                 |            
|Texaco 9-1 (Texaco
      9)               | 33329                | Section 9 Block 56 Range 3  | 1               | 3,700      
|Texaco 9-2                                  | 33329                | Section 9 Block 56 Range 3  | 1               | 3,700      
|Texaco 9-3                                  | 33329                | Section 9 Block 56 Range 3  | 1               | 3,700      
|Texaco 9-4                                  | 33329                | Section 9 Block 56 Range 3  | 1               | 3,700      
|Texaco 9-5                                  | 33329                | Section 9 Block 56 Range 3  | 1               | 3,700      
|Phillips 66 #2 (Phillips 66)                | 32571                | Section 18 Block 56 Range 3 | 1               | 3,700      
|Phillips 66 #3
      (Phillips 66 3A)       | 33149                | Section 18 Block 56 Range 3 | 1               | 3,700      
|Cluster 2                                   |                      |                             |                 |            
|Arco State 14-1                             | 33585                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State 14 #5                      | 33585                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State 14 #2
      (Arco State 14)      | 33585                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State 14 #4                      | 33585                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State 14 - A #1
      (Arco State 14A) | 34155                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State 14 - A #2 (Arco State 14A) | 34155                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State 14 - A #3
      (Arco State 14A) | 34155                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State 14 - A #4 (Arco State 14A) | 34155                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State #2
      Injection (dual Well)   | 25126                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State #3                         | 25126                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State #4                               | 25126                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco
      State #5                         | 25126                | Section 14 Block 56 Range 3 | 1               | 3,700      
|Arco State 24 #2
      (Arco State 24)      | 069586               | Section 24 Block 57 Range 3 | 1               | 3,400      
|Arco
      State 24 #3 (Arco State 24)      | 069779               | Section 24 Block 57 Range 3 | 1               | 3,400      
|Arco State 24 #4
      (Arco State 24)      | 069912               | Section 24 Block 57 Range 3 | 1               | 3,400      
|Cluster 3                                   |                      |                             |                 |            
|Reeves BK HD - 1
      (Horizontal)         | 36100                | Section 15 Block 56 Range 3 | 1               | 4,900      
|Reeves BK FEE # 1                           | 32288                | Section 15 Block 56 Range 3 | 1               | 3,700      
|Reeves BK # 2
      (Reeves-BK-FEE)         | 32288                | Section 15 Block 56 Range 3 | 1               | 3,700      
|Reeves BK # 3                               | 32288                | Section 15 Block 56 Range 3 | 1               | 3,700      
|Reeves BK FEE # 5                           | 32288                | Section 15 Block 56 Range 3 | 1               | 3,700      
|BK #
      4 (Texaco Reeves BK)             | 33947                | Section 15 Block 56 Range 3 | 1               | 3,700      
|Texaco 23 #1 (Texaco
      23)            | 33670                | Section 23 Block 56 Range 3 | 1               | 3,700      
|Texaco 23 #2                                | 33670                | Section 23 Block 56 Range 3 | 1               | 3,700      
|Texaco 23 #3                                | 33670                | Section 23 Block 56 Range 3 | 1               | 3,700      
|Texaco 13-1 HD Horizontal (Penwell)         | 12345                | Section 13 Block 56 Range 3 | 1               | 4,987      
|Cluster 4- Regular 57                       |                      |                             |                 |            
|Anadarko State 14 #5 (Anadarko State A)     | 34376                | Section 14 Block 57 Range 3 | 1               | 3,200      

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|Lease Name                                      | Oil Lease Gas ID No. | Location                    | Number of Wells | Total Depth
|----------------------------------------------- | -------------------- | --------------------------- | --------------- | -----------
|Anadarko State 14 #6 (Anadarko State R)         | 34463                | Section 14 Block 57 Range 3 | 1               | 3,200      
|Anadarko State 14 #1
      (Anadarko State 14)  | 072948               | Section 14 Block 57 Range 3 | 1               | 3,200      
|Anadarko State 14 #2 (Anadarko State 14)        | 074167               | Section 14 Block 57 Range 3 | 1               | 3,200      
|Anadarko State 14 #3
      (Anadarko State 14)  | 075491               | Section 14 Block 57 Range 3 | 1               | 3,200      
|Anadarko State 14 #4 (Anadarko State 14)        | 075724               | Section 14 Block 57 Range 3 | 1               | 3,200      
|Anadarko State 23 #4
      (Anadarko State)     | 34313                | Section 14 Block 57 Range 3 | 1               | 3,200      
|Stack State 1                                   | 34366                | Section 14 Block 57 Range 3 | 1               | 3,200      
|Stack State 2                                   | 34366                | Section 14 Block 57 Range 3 | 1               | 3,200      
|Cluster 5                                       |                      |                             |                 |            
|Reeves AM 25 #1 (AM
      Reeves)               | 34146                | Section 25 Block 57 Range 3 | 1               | 6,200      
|Reeves AM 25 #1 (Reeves -AM- Fee)               | 036114               | Section 25 Block 57 Range 3 | 1               | 3,200      
|Reeves AM 25 #2
      (Reeves -AM- Fee)         | 036115               | Section 25 Block 57 Range 3 | 1               | 3,200      
|State of Texas 23 # 5 (State 26)                | 34312                | Section 23 Block 56 Range 3 | 1               | 3,100      
|State of Texas 26 #
      5 (State 23)          | 34464                | Section 26 Block 57 Range 3 | 1               | 3,100      
|State of Texas 26 # 1 (State of Texas 26)       | 066070               | Section 26 Block 57 Range 3 | 1               | 3,100      
|State of Texas 26 #
      3 (State of Texas 26) | 069567               | Section 26 Block 57 Range 3 | 1               | 3,100      
|State of Texas 26 # 4 (State of Texas 26)       | 069568               | Section 26 Block 57 Range 3 | 1               | 3,100      
|State of Texas 26 #
      7 (Robinson)          | 36098                | Section 26 Block 57 Range 3 | 1               | 3,100      
|Cluster 6                                       |                      |                             |                 |            
|Meeker 15 -1                                    | 30942                | Section 15 Block 21 Range 3 | 1               | 3,700      
|Opal
      Ward # 1                             | 1 Leon               |                             | 1               | 9,475      
|Total                                           |                      |                             | 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 Depth
|-------------- | ---------------------------------- | -------- | --------------- | -----------
|East Texas     |                                    |          |                 |            
|Cluster 1      |                                    |          |                 |            
|Cowherd # 1    | 129107                             |          | 2               | 6,180      
|Cowherd # 2    | 12629                              |          | 2               | 6,622      
|Cowherd # 3    |                                    |          | 1               | 2,500      
|Peggy Ashley 1 | 129114                             |          | 1               | 6,174      
|Chevron # 1    |                                    |          | 1               | 6,088      
|Chevron # 3    |                                    |          | 1               | 6,150      
|Panola # 1     |                                    |          | 1               | 2,500      
|Panola # 2     |                                    |          | 1               | 2,500      
|Panola # 3     |                                    |          | 1               | 2,500      
|Panola # 4     |                                    |          | 1               | 2,500      
|Panola # 5     |                                    |          | 1               | 2,500      

19

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|Lease Name        | Oil Lease Gas ID No. | Location         | Number of Wells | Total Depth
|----------------- | -------------------- | ---------------- | --------------- | -----------
|Panola # 6        |                      |                  | 1               | 2,500      
|Elysian # 1       |                      |                  | 1               | 2,700      
|Elysian # 2       |                      |                  | 1               | 2,700      
|Elysian # 3       |                      |                  | 1               | 2,700      
|Elysian # 4       |                      |                  | 1               | 2,700      
|Elysian # 5       |                      |                  | 1               | 2,700      
|Elysian # 6       |                      |                  | 1               | 2,700      
|Elysian # 7       |                      |                  | 1               | 2,700      
|Elysian # 8       |                      |                  | 1               | 2,700      
|Elysian # 9       |                      |                  | 1               | 2,700      
|Elysian # 10      |                      |                  | 1               | 2,700      
|Elysian # 11      |                      |                  | 1               | 2,700      
|Elysian # 12      |                      |                  | 1               | 2,700      
|Elysian # 13      |                      |                  | 1               | 2,700      
|Elysian # 14      |                      |                  | 1               | 2,700      
|Elysian # 15      |                      |                  | 1               | 2,700      
|Elysian # 16      |                      |                  | 1               | 2,700      
|Elysian # 17      |                      |                  | 1               | 2,700      
|Elysian # 18      |                      |                  | 1               | 2,700      
|Elysian # 19      |                      |                  | 1               | 2,700      
|Elysian # 20      |                      |                  | 1               | 2,700      
|Elysian # 21      |                      |                  | 1               | 2,700      
|Elysian # 22      |                      |                  | 1               | 2,700      
|Laeke A-1         |                      |                  | 1               | 2,700      
|Laeke A-2         |                      |                  | 1               | 2,700      
|Laeke B-1         |                      |                  | 1               | 2,700      
|Laeke B-2         |                      |                  | 1               | 2,700      
|Laeke B-3         |                      |                  | 1               | 2,700      
|                  |                      | East Texas Total | 41              |            
|Louisiana         |                      |                  |                 |            
|Abney J. D. Lease | 1 Harrison           |                  | 1               | 2,475      
|Abney J. D. Lease | 2
      Harrison     |                  | 1               | 2,475      
|Abney J. D. Lease | 3 Harrison           |                  | 1               | 2,475      
|Abney J. D. Lease | 4
      Harrison     |                  | 1               | 2,475      
|Abney J. D. Lease | 5 Harrison           |                  | 1               | 2,475      
|Abney J. D. Lease | 6
      Harrison     |                  | 1               | 2,475      
|Abney J. D. Lease | 7 Harrison           |                  | 1               | 2,475      
|Abney J. D. Lease | 8
      Harrison     |                  | 1               | 2,475      
|Abney J. D. Lease | 9 Harrison           |                  | 1               | 2,475      

20

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|Lease Name        | Oil Lease Gas ID No. | Location | Number of Wells | Total Depth
|----------------- | -------------------- | -------- | --------------- | -----------
|                  | 10                   |          |                 |            
|Abney J. D. Lease | Harrison             |          | 1               | 2,475      
|                  | 11                   |          |                 |            
|Abney J. D. Lease | Harrison             |          | 1               | 2,475      
|                  | 12                   |          |                 |            
|Abney J. D. Lease | Harrison             |          | 1               | 2,475      
|Abney #1 (460)    | 103405               |          | 1               | 2,500      
|Abney #3          | 105607               |          | 1               | 2,500      
|Abney #4          | 105839               |          | 1               | 2,500      
|Abney #5          | 106853               |          | 1               | 2,500      
|Abney #6          | 107873               |          | 1               | 2,500      
|Abney #7          | 109040               |          | 1               | 2,500      
|Abney #8          | 110360               |          | 1               | 2,500      
|Abney #9          | 110361               |          | 1               | 2,500      
|Abney #10         | 113026               |          | 1               | 2,500      
|Abney #11         | 131636               |          | 1               | 2,500      
|Abney #12         | 129650               |          | 1               | 2,500      
|Abney #13         | 130786               |          | 1               | 2,500      
|Abney #14         | 133367               |          | 1               | 2,500      
|Abney #15         | 133412               |          | 1               | 2,500      
|Abney #16         | 131635               |          | 1               | 2,500      
|Abney #17         | 130887               |          | 1               | 2,500      
|Abney #18         | 127779               |          | 1               | 2,500      
|Abney #19         | 131605               |          | 1               | 2,500      
|Abney #20         | 128716               |          | 1               | 2,500      
|Abney #21         | 127217               |          | 1               | 2,500      
|Abney #22         | 127385               |          | 1               | 2,500      
|Abney D #2 (150)  | 130119               |          | 1               | 2,500      
|Abney D #3        | 130138               |          | 1               | 2,500      
|Abney D #4        | 130640               |          | 1               | 2,500      
|Abney D #5        | 130752               |          | 1               | 2,500      
|Abney D #6        | 130923               |          | 1               | 2,500      
|Abney D #7        | 131025               |          | 1               | 2,500      
|Abney D #8        | 131104               |          | 1               | 2,500      
|Abney D #9        | 133427               |          | 1               | 2,500      
|Abney D #10       | 136179               |          | 1               | 2,500      
|Abney D #11       | 133466               |          | 1               | 2,500      
|Abney D #12       | 136343               |          | 1               | 2,500      
|Abney D #14       | 136702               |          | 1               | 2,500      
|Atkinson A #001   |                      |          | 1               | 2,500      
|Atkinson A #002   |                      |          | 1               | 2,500      

21

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|Lease Name      | Oil Lease Gas ID No. | Location | Number of Wells | Total Depth
|--------------- | -------------------- | -------- | --------------- | -----------
|Atkinson A #003 |                      |          | 1               | 2,500      
|Atkinson B #001 |                      |          | 1               | 2,500      
|Atkinson B #002 |                      |          | 1               | 2,500      
|Atkinson B #003 |                      |          | 1               | 2,500      
|Abney Kirk #001 |                      |          | 1               | 2,500      
|Abney Kirk #002 |                      |          | 1               | 2,500      
|Abney Kirk #003 |                      |          | 1               | 2,500      
|Abney Kirk #004 |                      |          | 1               | 2,500      
|Abney Kirk #005 |                      |          | 1               | 2,500      
|Abney Kirk #006 |                      |          | 1               | 2,500      
|Abney Kirk #007 |                      |          | 1               | 2,500      
|Abney Kirk #008 |                      |          | 1               | 2,500      
|Abney Kirk #009 |                      |          | 1               | 2,500      
|Total           |                      |          | 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.

We have assembled a larger control area in which to test the
scalability of the HIP Downhole Process Technology, which is comprised of oil
and gas leases on approximately 6400 acres covering rights from the surface to
the base of the Travis Peak formation. Within this larger control area, we also
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 Resource, and seven were purchased for $60,000 from Peak
Energy Corp. of Dallas, Texas. We have completed construction of our 3 acre
central facilities site on which the equipment necessary to test the HIP
Downhole Process Technology (the HIP Control Unit) is being assembled.
Pipeline connections of the HIP Control Unit to the 10 test wells are ongoing.
To date, 8 of the 10 test wells have been piped to the HIP Control Unit, but we
are waiting for the agreement of the Texas Parks and Wildlife Department 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 Down Hole Process. Phase 1 of the our
program will be to complete and to test at least five of the 10 wells within the
next 12 months.

22

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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, 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 - $1 million to
fund a capital project and operating costs over the next 12 months.

We estimate that we will require approximately $500,000 to
complete construction and assembly of the HIP Tech Unit at the Central Facility
in East Texas and to connect and finish modifications to the 5 phase 1 wells.
Once completed, we expect that the cost of adding each of the remaining 5 wells
will be approx $40,000 per well.

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 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 ongoing 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 ongoing 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.

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 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.

23

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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:



HIP Energy (Texas) Corp. (HIP Texas) 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.

24

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HIP Energy (Nevada) Corp. (HIP Nevada) 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 Suite 404  999 World
Trade Centre, Vancouver, British Columbia, Canada V6E 3E26. 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 4A 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 2010 for our company:

|                                 |   |             |   |   | 2010              |   |   |              |  
|-------------------------------- | - | ----------- | - | - | ----------------- | - | - | ------------ | -
|                                 |   | November 30 |   |   | August 31         |   |   | May
      31 |  
|                                 |   |             |   |   | (Unaudited  US$) |   |   |              |  
|Revenues                         | $ | Nil         |   | $ | Nil               |   | $ | Nil          |  
|Net loss                         |   | (192,806    | ) |   | (354,099          | ) |   | (203,575     | )
|Basic and Diluted loss per share |   | (0.00       | ) |   | (0.01             | ) |   | (0.00        | )

The following table provides selected quarterly financial
information for 2009 for our company:

25

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|                                 |   |             |   |  | 2009              |   |   |              |  
|-------------------------------- | - | ----------- | - |  | ----------------- | - | - | ------------ | -
|                                 |   | November 30 |   |  | August 31         |   |   | May
      31 |  
|                                 |   |             |   |  | (Unaudited  US$) |   |   |              |  
|Revenues                         | $ | Nil         |   |  | Nil               |   | $ | Nil          |  
|Net loss                         |   | (18,355     | ) |  | (9,321            | ) |   | (21,231      | )
|Basic and Diluted loss per share |   | (0.00       | ) |  | (0.00             | ) |   | (0.00        | )

Yearly Financial Information

The following table provides selected yearly financial
information for the last three years of our company:

|                                       |   | 2010            |   |   | 2009    |   |   | 2008    |  
|-------------------------------------- | - | --------------- | - | - | ------- | - | - | ------- | -
|                                       |   | (Audited  US$) |  
|Revenues                               | $ | Nil             |   | $ | Nil     |   | $ | Nil     |  
|Net loss                               |   | (759,312        | ) |   | (57,419 | ) |   | (45,589 | )
|Basic and Diluted loss per share       |   | (0.02           | ) |   | (0.01   | ) |   | (0.04   | )
|Expenses                               |   | (759,312        | ) |   | (57,419 | ) |   | (45,589 | )
|Net Cash Inflow (Outflow) for the year |   | 23,775          |   |   | 7,787   |   |   | 2,817   |  

Narrative Discussion

We did not generate any revenues during the fiscal years of
2010, 2009 and 2008. Our increase in net loss and expenses in the fiscal year
ended November 30, 2010 were primarily due to costs associated with the
acquisition of the HIP 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 $759,312 or $(0.02) per share for the fiscal year
ended November 30, 2010, compared to $57,419 or $(0.01) per share in the same
period in 2009 and $45,589 or $(0.04) per share in the same period in 2008. The
increase in the net loss of fiscal 2010 as compared to fiscal 2009 was due to
increased activities in 2010 as a result of the acquisition of the oil wells.
Consulting fees increased to $151,278 in fiscal 2010 as compared to $nil in
fiscal 2009, as we hired consultants to work with our interests in the well bore
technologies. Management fees increased to $169,644 in fiscal 2010 as compared
to $1,736 in fiscal 2009, as we commenced paying monthly fees to directors,
officers and private companies controlled by them, upon the commencement of the
current business utilizing the HIP Downhole Process Technology. 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.

26

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B. Liquidity and Capital Resources

Overview

We had cash of $35,290 as at November 30, 2010, compared to
$11,515 as at November 30, 2009. We estimate that we will require $500,000 - $ 1
million 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 $1 million, 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.

Cash on hand is currently our only source of liquidity. We do
not have any lending arrangements in place with banking or financial
institutions and we do not anticipate that we will be able to secure these
funding arrangements in the near future.

Operating Activities

Operating activities used cash of $733,725 for the year ended
November 30, 2010 compared to $18,673 for the year ended November 30, 2009. This
increase was due to increased activities related to the acquisition of the oil
wells and the HIP Downhole Process Technology.

Investing Activities

Investing activities used cash of $371,500 for the year ended
November 30, 2010, compared to providing no cash for the year ended November 30,
2009. This increase was due to purchase of equipment, acquisition of the oil and
gas properties and exploration advances.

Financing Activities

Financing activities provided net cash of $1,129,000 for the
year ended November 30, 2010, compared to $26,460 for the year ended November
30, 2009. This increase in net cash was due to the completion of two private
placements, as discussed above under Overview.

Capital Resources

We anticipate that we will incur approximately $250,000 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
1934and a reporting issuer in British Columbia.

Going Concern

We have incurred a net loss of $4,024,165 for the cumulative period from June 22, 1983 (inception) to November 30, 2010. 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, 2010. 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.

27

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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 (US)
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
the currency exposures of its Canadian and foreign operations are now
predominately in US 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 US dollar. This results in all foreign currency impacts of
holding non-US 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 as 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 US 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.

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.

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.

28

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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 credit
worthiness. At November 30, 2010, the Company had cash of $35,290 (2009 
$11,515).

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

In 2006, the 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 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 interim 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 interim 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.

Recent New Accounting Standards under United States
Generally Accepted Accounting Principles Not Yet Effective

In April 2010, the FASB issued Accounting Standards Update
2010-13, Compensation  Stock Compensation (Topic 718). The objective of this
update is to address the classification of an employee share-based payment award
with an exercise price denominated in the currency of a market in which the
underlying equity security trades. It provides guidance on the classification of
a share-based payment award as either equity or a liability. A share-based
payment award that contains a condition that is not a market, performance, or
service condition is required to be classified as a liability. The amendments in
this update are effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2010. The amendments in this
update should be applied by recording a cumulative-effect adjustment to the
opening balance of retained earnings. The cumulative-effect adjustment should be
calculated for all awards outstanding as of the beginning of the fiscal year in
which the amendments are initially applied, as if the amendments had been
applied consistently since the inception of the award. The cumulative-effect adjustment should be presented
separately. Earlier application is permitted. The Company is currently
evaluating the impact of this update on the financial statements.

29

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In February 2010, the FASB issued Accounting Standards Update
2010-09, Subsequent Events. This Update clarifies the financial statement
issuance dates that potentially conflict with some of the Securities and
Exchange Commissions guidance. The amendment is effective for interim or annual
periods ending after June 15, 2010. The adoption of this guidance had no
material effect on the consolidated financial statements.

In January 2010, FASB issued ASU 2010-06, Fair Value
Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair
Value Measurements. This ASU requires some new disclosures and clarifies some
existing disclosure requirements about fair value measurement as set forth in
Accounting Standards Codification (ASC) 820. ASU 2010-06 amends ASC 820 to now
require: (1) a reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers; and (2) in the reconciliation for
fair value measurements using significant unobservable inputs, a reporting
entity should present separately information about purchases, sales, issuances,
and settlements. In addition, ASU 2010-06 clarifies the requirements of existing
disclosures. ASU 2010-06 is effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in the roll forward of activity in Level 3
fair value measurements. Those disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal
years. Early application is permitted. The Company will comply with the
additional disclosures required by this guidance upon its adoption in fiscal
2012.

In January 2010, the FASB issued ASU 2010-03, Extractive
Activities - Oil and Gas - Oil and Gas Reserve Estimation and Disclosures. This
ASU amends the Extractive Industries - Oil and Gas Topic of the Codification
to align the oil and gas reserve estimation and disclosure requirements in this
Topic with the SEC's Release No. 33-8995, Modernization of Oil and Gas
Reporting Requirements (Final Rule), discussed below. The amendments are
effective for annual reporting periods ending on or after December 31, 2009. The
adoption of these provisions did not have a material impact on the consolidated
financial statements.

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.

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, 2010, our contractual obligations included $25,762 payable to related parties in respect of accrued fees for management services and $63,714 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:

30

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|                        |                                                      | Date of          
|----------------------- | ---------------------------------------------------- | -----------------
|                        |                                                      | Commencement of  
|                        |                                                      | Office with our  
|Name and
      Age      | Present Position with our Company                    | Company          
|                        |                                                      |                  
|                        | Director,                                            | November 26, 2001
|                        | President, and                                       | May 26, 2004     
|Richard Coglon(1)(50)   | Chief Executive Officer                              |                  
|                        |                                                      |                  
|Peter Noonan(1)(69)     | Director (Chairman)                                  | March 30, 2010   
|                        |                                                      |                  
|                        | Director,                                            | November 19, 2009
|                        | Executive Vice President, Business
      Development |                  
|James Chui(1)(47)       | and Chief Operating Officer                          | June 15, 2010    
|                        |                                                      |                  
|Carlos Contreras(1)(62) | Director                                             | March 30, 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 energy, mining, technology and real estate
sector. 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 CBM 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.

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 US 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 USNAA and the Disable American Veterans. He
continued his education at the University of Houston, University of Texas of
Austin and Nichols State University. Mr. Noonan has achieve 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 ongoing development of various industry inventions with
particular focus on the Hydrogen Inducement (HIP) Process, which was originally
referred to as the NooPar Process.

Mr. Noonan has been successful in developing technologies, such
as a systems 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 off- shore drilling units which includes
the drilling of numerous wells and there operations thereof.

31

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Mr. Noonan holds the US Methods Patent to the HIP Processes and
in addition to his vast oilfield experience, Mr. Noonan has been a presenter and
speaker before the US Department of Energy Technology Centre, and the US
Congress on hearings relating to various issues in the Oil and Gas sector as
well a lecturer to 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).

Carlos Contreras

Mr. Contreras graduated from the University of Tulsa in 1970
with a Bachelor of Science Degree in Chemical Engineering. Mr. Contreras also
holds an associate degree in Engineering (Honors) from Middle George College.
Mr. Contreras has done graduate work in Macromolecular Science at Case Western
Reserve University. Mr. Contreras specialized field of study was the Masters
Program in Polymer Science. He has completed the Executive Program in Management
at the University of California. In addition, Mr. Contreras has successfully
completed numerous formal courses including Performance Management, Executive
Decision-Making, Professional Presentations and he is certified for Offshore
Survival.

Mr. Contreras has been in the oil and gas industry for over 35
years. Since June 2009, Mr. Contreras has been our chief operating officer. Mr.
Contreras has acted as the director and chief operating officer of World GTL
Trinidad Limited from February 2007 to August 2008 and he served as a Minister
of Energy and Hydrocarbons in La Paz (Bolivia) from 1999-2001. During the mid
1970s until 1999, Mr. Contreras was employed with Occidental Petroleum in which
he served in many executive roles such as president, vice-president and general
manager at Occidentals companies in various locations such as the Philippines,
Columbia and California.

Relationships

There are no family relationships between 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.

32

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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,
2010:

|Chairman  Peter J. Noonan                 | $ | 58,331  | 
|------------------------------------------ | - | ------- | 
|CEO  Richard Coglon                       |   | 58,331  | 
|VP
      Business Development  James Chui |   | 52,500  | 
|Total  Management fees                    | $ | 169,644 | 
|Consultant  EHS Administrative Services   | $ | 8,240   | 

In addition to the cash paid to the directors during the year
ended November 30, 2010, 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, 2010, we have no
options outstanding. We do not have a formal stock option plan or any informal
plan to pay compensation to directors, officers or employees by way of options.
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, 2010, 2009 and 2008,
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.

33

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E. Share Ownership

As of April 26, 2011, 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 | Percentage(1)
|---------------------------------- | ----------------------- | -------------
|                                   | Beneficially Owned      |              
|                                   |                         |              
|Richard Coglon                     | 5,142,788               | 8.4%         
|President, Chief Executive Officer |                         |              
|                                   |                         |              
|Peter Noonan                       | 50,000,000(2)           | 82.3%(2)     
|Director (Chairman)                |                         |              
|                                   |                         |              
|James Chui                         | 50,000,000(2)           | 82.3%(2)     
|Executive Vice-President Business  |                         |              
|Development and Director           |                         |              
|                                   |                         |              
|Carlos Contreras                   | 40,000                  | *            
|Director                           |                         |              

Notes

|*   | Less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on 60,727,660 shares of common stock issued and
      outstanding as of April 26, 2011. 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 26, 2011, 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 26, 2011:

|                               | Number of Common Shares |              
|------------------------------ | ----------------------- | -------------
|Name                           | Beneficially Owned      | Percentage(1)
|Richard Coglon                 | 5,142,788               | 8.4%         
|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 26, 2011. 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

34

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|(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 shareholder do not differ from
the voting rights of holders of our companys shares who are not major
shareholders.

As of April 26, 2011, Computershare Trust Company, our
registrar and transfer agent, reported that our companys 60,727,660 common
shares are held as follows:

|                       |                  |                      | Number of Registered  
|---------------------- | ---------------- | -------------------- | ----------------------
|Location               | Number of Shares | Percentage of Shares | Shareholders of Record
|Canada                 | 7,437,651        | 12.25%               | 25                    
|United States          | 21,029,951       | 34.63%               | 24                    
|British Virgin Islands | 30,000,000       | 49.40%               | 1                     
|Other                  | 2,260,058        | 3.72%                | 8                     
|Total                  | 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, 2008 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, 2010, we incurred
      $169,644 (2009  $1,736; 2008  $1,919) for management fees to directors,
      officers and private companies controlled by them.                                                                                                                      
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                    
| | 2. | During the year ended November 30, 2010, we incurred
      $1,000 (2009  $Nil) in consulting fees to an officer.                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                    
| | 3. | As at November 30, 2010, we owe $49,010 (CDN$50,000)
      (2009  $47,125 (CDN$50,000)) to Tony Knott, 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 December 31,
      2010.

35

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| | 4. | As at November 30, 2010, we owe $25,762 (2009  $Nil) to
      our directors for accrued management fees, which are unsecured,
      non-interest bearing and payable on demand. As at April 30, 2011, we owe
      $152,597 to our directors.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | As at November 30, 2010, we owe $14,704 (CDN$15,000)
      (2009  $14,080 (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.

Financial Statements filed as part of this Annual
Report

| | 1. | Independent Auditors Report of BDO Canada LLP March 30,
      2011 on the Financial Statements as at November 30, 2010, together with
      Comments by Auditor for US Readers in Canada  US Reporting
    Conflict;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                       
| | 2. | Balance Sheets at November 30, 2010 and 2009;                                                                                                                                                                         
| |    |                                                                                                                                                                                                                       
| | 3. | Statements of Operations and Comprehensive Loss for the
      years ended November 30, 2010, 2009 and 2008 and for the period June 22,
      1983 (Date of Inception) to November 30, 2010;                           
| |    |                                                                                                                                                                                                                       
| | 4. | Statements of Cash Flows for the years ended November 30,
      2010, 2009 and 2008 and for the period June 22, 1983 (Date of Inception)
      to November 30, 2010;                                                  
| |    |                                                                                                                                                                                                                       
| | 5. | Statement of Shareholders Equity (Deficiency) from June
      22, 1983 (Date of Inception) to November 30, 2010; and                                                                                                 
| |    |                                                                                                                                                                                                                       
| | 6. | Notes to the Financial
Statements.                                                                                                                                                                                    

The audited financial statements for the years ended November
30, 2010, 2009 and 2008 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.

36

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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.

The annual high and low market prices for our common shares for
the five most recent full fiscal years were as follows:

|                   | OTC Bulletin Board
|------------------ | ------------------
|                   |                   
|Year Ended         | High              
|                   |                   
|November 30, 2006  | US $0.75          
|November 30, 2007  | US $2.50          
|November 30, 2008  | US $0.075         
|November 30, 2009* | US $0.05          
|November 30, 2010  | US $1.01          

* 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 Board
|----------------- | ------------------
|                  |                   
|Quarter Ended     | High              
|                  |                   
|February 28, 2009 | US $0.0025        
|May 31, 2009      | No trades         
|August 31, 2009   | US $0.0005        
|November 30, 2009 | US $0.0102        
|February 29, 2010 | US $1.01          
|May 31, 2010      | US $1.01          
|August 31, 2010   | US $0.02          
|November 30, 2010 | US $0.20          

The high and low market prices of our common shares for each of
the most recent six months, from October, 2010 through March, 2011, on the
Over-the-Counter Bulletin Board were as follows:

37

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|               | OTC Bulletin Board
|-------------- | ------------------
|Month          | High              
|November, 2010 | US $0.20          
|December, 2010 | US $0.11          
|January, 2011  | No trades         
|February, 2011 | No trades         
|March, 2011    | No trades         
|April, 2011    | 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.

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 Actcame
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.

38

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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.

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.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

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| | 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.

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.

40

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Dividends

Dividends paid on our common shares to a non-resident holder
will be subject under the Income 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.

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.

41

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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.

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.

42

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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. (HIP Texas) 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. (HIP Nevada) 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.

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

Not applicable.

43

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ITEM 15T. 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, 2010. 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,
2010 (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.

Based on such evaluation, they have 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 them 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 their 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.
| |       |                                                                                                                                                                                                                                         
| | (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.

44

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During the review period ending November 30, 2010, we were
designated as a shell company having had no defined business during the same
period 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 2010, we took steps to address weaknesses in its
internal controls over financial reporting including greatly expanding its board
of directors, and increasing its internal financial oversight review and
approval process, including establishing an audit committee and the requirement
of two signatories on all transactions in excess of $5000. In addition all
internally prepared general ledgers are reviewed by the companies VP finance
before submission to its 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 Carlos Contreras and
Peter Noonan qualify as independent members 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.

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;                                                                                                                                                   

45

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|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; and
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                  
|5. | 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 years
ended November 30, 2009 and November 30, 2010. The aggregate of fees billed by
BDO Canada LLP, Chartered Accountants, for professional services rendered for
the audit of our annual financial statements included in this annual report for
the fiscal years ended 2009 and 2010 were $16,900 and $30,000, respectively.

Audit Related Fees

For the fiscal years ended November 30, 2009 and November 30,
2010, the aggregate fees billed for assurance and related services by BDO Canada
LLP, Chartered 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, 2009 and November 30,
2010, the aggregate fees billed for tax compliance, tax advice and tax planning
by BDO Canada LLP, Chartered Accountants, was $Nil for both years.

All Other Fees

For the fiscal years ended November 30, 2009 and November 30,
2010, the aggregate fees billed by BDO Canada LLP, Chartered Accountants, for
other non-audit professional services, other than those services listed above,
totalled $Nil and $Nil, respectively.

46

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Pre-Approval Policies and Procedures

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before BDO Canada LLP, Chartered Accountants, is
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 BDO Canada LLP, Chartered Accountants, and believes that the
provision of the services for activities unrelated to the audit is compatible
with maintaining the independence of BDO Canada LLP, Chartered 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 Account

None.

ITEM 16G Corporate Governance

Not Applicable.

47

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PART III

ITEM 17 Financial Statements

Financial Statements Filed as Part of this Annual
Report:

- Independent Auditors Report of BDO Canada LLP March 30, 2011 on the
  Financial Statements as at November 30, 2010 and 2009; together with Comments
  by Auditor for US Readers on Canada  US Reporting Conflict;
- Balance Sheets at November 30, 2010 and 2009;
- Statements of Operations and Comprehensive Loss for the years ended
  November 30, 2010, 2009 and 2008 and for the period June 22, 1983 (Date of
  Inception) to November 30, 2010;
- Statements of Cash Flows for the years ended November 30, 2010, 2009 and
  2008 and for the period June 22, 1983 (Date of Inception) to November 30,
  2010;
- Statement of Shareholders Equity (Deficiency) from June 22, 1983 (Date of
  Inception) to November 30, 2010; and
- Notes to Financial Statements.

48

---

HIP ENERGY CORPORATION (A Development Stage Company)
Consolidated Financial Statements(Expressed in US dollars)
November 30, 2010, 2009, 2008

---

|                  | Tel: 604 688 5421           | BDO Canada LLP
|----------------- | --------------------------- | --------------
|Fax: 604 688 5132 | 600 Cathedral Place        
|www.bdo.ca        | 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 2009 and the consolidated statements of
operations and comprehensive loss, cash flows and stockholders equity
(deficiency) for the years ended November 30, 2010, 2009 and 2008. 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 2009 and the results of its operations and its cash flows for the years
ended November 30, 2010, 2009 and 2008 in accordance with Canadian generally
accepted accounting principles.

(signed) BDO CANADA LLPChartered Accountants
Vancouver, Canada March 30, 2011

COMMENTS BY AUDITOR FOR US READERS ON CANADA - US REPORTING
CONFLICT

In the United States of America, reporting standards for
auditors require the addition of an explanatory paragraph (following the opinion
paragraph) when there is substantial doubt about a companys ability to continue
as a going concern. The accompanying financial statements have been prepared on
the basis of accounting principles applicable to a going concern which assumes
the realization of assets and discharge of liabilities in the normal course of
business. As discussed in Note 1 to the accompanying financial statements, the
Company is in the development stage, has accumulated losses since incorporation
and has a working capital deficiency, which raises substantial doubt about the
Companys ability to continue as a going concern. The accompanying financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

Our report to the shareholders dated March 30, 2011 is
expressed in accordance with Canadian reporting standards which do not permit a
reference to such uncertainty in the auditors report when the uncertainty is
adequately disclosed in the financial statements.

(signed) BDO CANADA LLPChartered Accountants
Vancouver, Canada March 30, 2011



BDO Canada LLP, a Canadian limited liability partnership, is a
member of BDO International Limited, a UK company limited by guarantee, and
forms part of the international BDO network of independent member firms.

---

|HIP Energy Corporation       
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|November 30, 2010 and 2009   
|(Expressed in US dollars)    

|                                                                                                                                                                                                                                                             |  | November 30, |   |  | November 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | - |  | ------------ | -
|                                                                                                                                                                                                                                                             |  | 2010         |   |  | 2009         |  
|                                                                                                                                                                                                                                                             |  | $            |   |  | $            |  
|ASSETS                                                                                                                                                                                                                                                       |  |              |   |  |              |  
|Current Assets                                                                                                                                                                                                                                               |  |              |   |  |              |  
|Cash                                                                                                                                                                                                                                                         |  | 35,290       |   |  | 11,515       |  
|HST recoverable                                                                                                                                                                                                                                              |  | 8,074        |   |  | 1,280        |  
|Prepaid expenses                                                                                                                                                                                                                                             |  | 547          |   |  |             |  
|Total Current Assets                                                                                                                                                                                                                                         |  | 43,911       |   |  | 12,795       |  
|Equipment (Note 3)                                                                                                                                                                                                                                           |  | 36,243       |   |  |             |  
|Exploration Advances (Note 4)                                                                                                                                                                                                                                |  | 210,000      |   |  |             |  
|Oil and Gas Properties (Note 4)                                                                                                                                                                                                                              |  | 127,500      |   |  |             |  
|Total Assets                                                                                                                                                                                                                                                 |  | 417,654      |   |  | 12,795       |  
|                                                                                                                                                                                                                                                             |  |              |   |  |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)                                                                                                                                                                                                            |  |              |   |  |              |  
|Current Liabilities                                                                                                                                                                                                                                          |  |              |   |  |              |  
|Accounts payable and accrued liabilities                                                                                                                                                                                                                     |  | 44,764       |   |  | 43,979       |  
|Due to related parties (Note
      8)                                                                                                                                                                                                                        |  | 25,762       |   |  |             |  
|Advances payable (Note 8)                                                                                                                                                                                                                                    |  | 63,714       |   |  | 61,205       |  
|Total Liabilities                                                                                                                                                                                                                                            |  | 134,240      |   |  | 105,184      |  
|Stockholders Equity (Deficiency)                                                                                                                                                                                                                            |  |              |   |  |              |  
|Capital 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 (2009 
      6,211,660) |  | 4,409,168    |   |  | 3,275,168    |  
|Contributed Surplus                                                                                                                                                                                                                                          |  | 10,346       |   |  | 9,231        |  
|Accumulated other comprehensive loss                                                                                                                                                                                                                         |  | (111,935     | ) |  | (111,935     | )
|Deficit
      accumulated during the development stage                                                                                                                                                                                                       |  | (4,024,165   | ) |  | (3,264,853   | )
|Total Stockholders Equity (Deficiency)                                                                                                                                                                                                                      |  | 283,414      |   |  | (92,389      | )
|Total Liabilities
      and Stockholders Equity (Deficiency)                                                                                                                                                                                                |  | 417,654      |   |  | 12,795       |  

Nature 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    

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

---

|HIP Energy Corporation                                            
|------------------------------------------------------------------
|(A Development Stage Company)                                     
|Consolidated Statements of Operations and Comprehensive
      Loss
|For the years ended November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                                         

|                                         | Years ended November 30,
|---------------------------------------- | ------------------------
|                                         |                         
|                                         |                         
|                                         |                         
|EXPENSES                                 |                         
|Amortization                             |                         
|Bank charges and
      interest          |                         
|Consulting and secretarial (Note 8)      |                         
|Finders fees                            |                         
|Foreign exchange                         |                         
|Management fees (Note
      8)           |                         
|Office and miscellaneous                 |                         
|Professional fees                        |                         
|Shareholder information                  |                         
|Transfer agent and
      regulatory fees |                         
|Travel and promotion                     |                         
|Well bore technology expenses            |                         
|Net loss for the year                    |                         
|                                         |                         
|Other comprehensive income (loss)        |                         
|                                         |                         
|Foreign currency translation adjustment  |                         
|                                         |                         
|Comprehensive loss
      for the year    |                         
|                                         |                         
|Basic and diluted
      loss per share   |                         
|                                         |                         
|Weighted average shares outstanding      |                         
|                                         |                         

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

---

|HIP Energy Corporation                              
|----------------------------------------------------
|(A Development Stage Company)                       
|Consolidated Statements of Cash Flows               
|For the years ended November 30, 2010, 2009 and 2008
|(Expressed in US dollars)                           

|                                                                        | Years ended November 30,
|----------------------------------------------------------------------- | ------------------------
|                                                                        |                         
|                                                                        |                         
|NET INFLOW (OUTFLOW) OF CASH RELATED TO THE
      FOLLOWING ACTIVITIES: |                         
|                                                                        |                         
|OPERATING                                                               |                         
|Net loss for the period                                                 |                         
|Adjustments to reconcile net
      loss to net cash used in             |                         
|operating activities:                                                   |                         
|Amortization                                                            |                         
|Donated services                                                        |                         
|Foreign exchange                                                        |                         
|                                                                        |                         
|Changes in non-cash working
      capital items                         |                         
|HST recoverable                                                         |                         
|Due to related
      parties                                            |                         
|Prepaid expenses                                                        |                         
|Accounts payable and accrued
      liabilities                          |                         
|                                                                        |                         
|Net cash used in operating activities                                   |                         
|                                                                        |                         
|INVESTING                                                               |                         
|Mineral Property refund                                                 |                         
|Acquisition of equipment                                                |                         
|Exploration advances                                                    |                         
|Acquisition of oil and gas properties                                   |                         
|                                                                        |                         
|Net cash flows provided by (used in) investing activities               |                         
|                                                                        |                         
|FINANCING                                                               |                         
|Advance payable                                                         |                         
|Capital stock issued for cash                                           |                         
|                                                                        |                         
|Net cash flows provided by financing activities                         |                         
|                                                                        |                         
|NET CASH INFLOWS                                                        |                         
|                                                                        |                         
|CASH, BEGINNING OF YEAR                                                 |                         
|CASH, END OF YEAR                                                       |                         
|Cash paid for income taxes during the year                              | $                       
|Cash paid for
      interest during the year                            | $                       

Non-cash transactions  Note 10

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

---

|HIP Energy Corporation                                     
|-----------------------------------------------------------
|(A Development Stage Company)                              
|Consolidated Statement of Stockholders Equity (Deficiency)
|For the years ended November 30, 2010, 2009 and 2008.      
|(Expressed in US dollars)                                  

|                                                                           |  |            |  |  |           |  |  |             |  |  |               |   |  | Deficit     |   |  |          |  
|-------------------------------------------------------------------------- |  | ---------- |  |  | --------- |  |  | ----------- |  |  | ------------- | - |  | ----------- | - |  | -------- | -
|                                                                           |  |            |  |  |           |  |  |             |  |  | Accumulated   |   |  | Accumulated |   |  |          |  
|                                                                           |  |            |  |  |           |  |  |             |  |  | Other         |   |  | During the  |   |  |          |  
|                                                                           |  |            |  |  |           |  |  | Contributed |  |  | Comprehensive |   |  | Development |   |  |          |  
|                                                                           |  | Shares     |  |  | Amount    |  |  | Surplus     |  |  | Income (loss) |   |  | Stage       |   |  | Total    |  
|                                                                           |  | #          |  |  | $         |  |  | $           |  |  | $             |   |  | $           |   |  | $        |  
|                                                                           |  |            |  |  |           |  |  |             |  |  |               |   |  |             |   |  |          |  
|Balance  November 30, 2007                                                |  | 1,211,660  |  |  | 3,225,168 |  |  |            |  |  | (116,615      | ) |  | (3,161,845  | ) |  | (53,292  | )
|Donated services                                                           |  |           |  |  |          |  |  | 4,798       |  |  |              |   |  |            |   |  | 4,798    |  
|Foreign currency translation adjustment                                    |  |           |  |  |          |  |  |            |  |  | 17,268        |   |  |            |   |  | 17,268   |  
|Net loss for the
      year                                                |  |           |  |  |          |  |  |            |  |  |              |   |  | (45,589     | ) |  | (45,589  | )
|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    |  |  |            |  |  |              |   |  |            |   |  | 50,000   |  
|Donated services                                                           |  |           |  |  |          |  |  | 4,433       |  |  |              |   |  |            |   |  | 4,433    |  
|Foreign 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     |  |  |            |  |  |              |   |  |            |   |  | 5,000    |  
|Shares 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   |  |  |            |  |  |              |   |  |            |   |  | 604,000  |  
|Shares issued for cash at $0.25 per share                                  |  | 2,100,000  |  |  | 525,000   |  |  |            |  |  |              |   |  |            |   |  | 525,000  |  
|Donated Services                                                           |  |           |  |  |          |  |  | 1,115       |  |  |              |   |  |            |   |  | 1,115    |  
|Net 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  | ) |  | 283,414  |  

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

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|1. | NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A
      GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 US 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, 2010, the Company
      has negative working capital, accumulated operating losses of $4,024,165
      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 the 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 (US) 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 Translationand concluded that its functional
      currency is now predominately the US 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 year 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.

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|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
      US 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 US 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, 2010 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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. There was no asset retirement obligation accrued at November
      30, 2010 and 2009.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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, 2010, 2009 and 2008,
      there were no potentially dilutive common shares relating to stock options
      and warrants outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|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 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 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 interim 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 interim 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 interim 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.

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|3. | EQUIPMENT
|-- | ---------

| |   |        |  |   | Accumulated  |  |   | November 30, |  |   | November 30, | 
| | - | ------ |  | - | ------------ |  | - | ------------ |  | - | ------------ | 
| |   | Cost   |  |   | Amortization |  |   | 2010         |  |   | 2009         | 
| | $ | 39,000 |  | $ | 2,757        |  | $ | 36,243       |  | $ | -            | 

|4. | OIL AND GAS PROPERTIES
|-- | ----------------------

| |             | Texas Well Bores |        |  |  
| | ----------- | ---------------- | ------ |  | -
| |             |                  | Opal   |  |  
| | Acquisition |                  |        |  |  
| | Cash        | $                | 62,500 |  | $
| | Shares      |                  | -      |  |  
| |             | $                | 62,500 |  | $

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.

Peak Well Bores

On January 1, 2010, the Company entered
into a joint operating agreement with a company to operate and develop to
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 at 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.

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|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 4, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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,
      2010 and 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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,
      2010 and 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|7.     | 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
      credit worthiness. At November 30, 2010, the Company had cash of $35,290
      (2009  $11,515).                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | 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.                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|**9.** | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|10. | NON-CASH TRANSACTIONS
|--- | ---------------------

| |                                                                        | Years Ended November 30,
| | ---------------------------------------------------------------------- | ------------------------
| |                                                                        |                         
| |                                                                        |                         
| | Shares issued for acquisition of intangible
      assets (Note 5)      |                         
| | Shares issued for acquisition of oil and gas properties
      (Note 4) |                         
| | Donated services                                                       |                         

|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

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 counter party 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 HST recoverable. The
      Companys maximum credit exposure for cash and amounts receivable is the
      carrying value of $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, 2010, the Companys working capital
      deficiency is $90,329 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.                                                                                         

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|11. | RISK MANAGEMENT (Continued)
|--- | ---------------------------
|    |                            
|    | c)                         
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            
|    |                            

| |                                          |   | 2010    |   |   | 2009    |  
| | ---------------------------------------- | - | ------- | - | - | ------- | -
| |                                          |   |         |   |   |         |  
| | Cash                                     | $ | 69      |   | $ | 11,526  |  
| | HST recoverable                          |   | 8,074   |   |   | 1,281   |  
| | Accounts payable and accrued liabilities |   | (43,530 | ) |   | (44,021 | )
| |                                          |   |         |   |   |         |  
| |                                          | $ | (35,387 | ) | $ | (31,214 | )

| |      | The Company has determined that an effect of a 10%
      increase or decrease in the Canadian dollar against the US dollar on
      financial assets and liabilities, as at November 30, 2010, including cash,
      HST recoverable, and accounts payable and accrued liabilities denominated
      in Canadian dollar, would result in an insignificant change to the net
      loss and comprehensive loss for the year ended November 30, 2010. At
      November 30, 2010, the Company had no hedging agreements in place with
      respect to foreign exchange rates.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 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.                                                                                                                                                           

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|12. | INCOME TAXES                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                        
|    | A reconciliation of income tax recovery at statutory
      rates with the reported income tax recovery is as
  follows:

| |                                                                   |   | 2010     |   |   | 2009    |   |   | 2008    |  
| | ----------------------------------------------------------------- | - | -------- | - | - | ------- | - | - | ------- | -
| |                                                                   |   |          |   |   |         |   |   |         |  
| | Basic statutory and provincial income tax rate                    |   | 28.63%   |   |   | 30.04%  |   |   | 31.30%  |  
| |                                                                   |   |          |   |   |         |   |   |         |  
| | Net loss                                                          | $ | (759,312 | ) | $ | (57,419 | ) | $ | (45,589 | )
| |                                                                   |   |          |   |   |         |   |   |         |  
| | Expected income tax recovery on net loss,
      before income tax | $ | 217,000  |   | $ | 17,000  |   | $ | 14,000  |  
| | Differences due to recognition of items for tax purposes:         |   |          |   |   |         |   |   |         |  
| | Foreign income taxed at other than CAD stat
      rate            |   | 22,000   |   |   | -       |   |   | -       |  
| | Effects of reduction in statutory rate                            |   | (4,000   | ) |   | (19,000 | ) |   | (1,000  | )
| | Permanent differences                                             |   |         |   |   | (3,000  | ) |   | (1,000  | )
| | Expiry of non-capital loss carry forward                          |   |         |   |   | (37,000 | ) |   | (16,000 | )
| | Change in valuation allowance                                     |   | (235,000 | ) |   | 42,000  |   |   | 4,000   |  
| |                                                                   |   |          |   |   |         |   |   |         |  
| | Total income tax recovery                                         | $ |         |   | $ |        |   | $ |        |  

The significant components of the
Companys future income tax assets and liabilities are as follows:

| |                                    |   | 2010     |   |   | 2009     |  
| | ---------------------------------- | - | -------- | - | - | -------- | -
| |                                    |   |          |   |   |          |  
| | Future income tax assets:          |   |          |   |   |          |  
| | Non-capital losses carried forward | $ | 303,000  |   | $ | 89,000   |  
| | Exploration expenses               |   | 237,000  |   |   | 219,000  |  
| | Capital loss carry-forwards        |   | 91,000   |   |   | 88,000   |  
| |                                    |   | 631,000  |   |   | 396,000  |  
| | Valuation
      allowance          |   | (631,000 | ) |   | (396,000 | )
| | Net future income tax assets       | $ |         |   | $ |         |  

As at November 30, 2010, the Company
has accumulated Canadian and foreign exploration costs totaling $911,000 and
non-capital losses totaling $765,000. The Company also has $365,000 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, 2010, the Company has accumulated net operating losses in
United States totaling $316,000. 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
    
    71,000
    
    
    -
    
    
    71,0002026
    
    58,000
    
    
    -
    
    
    58,0002027
    
    62,000
    
    
    -
    
    
    62,0002028
    
    47,000
    
    
    -
    
    
    47,0002029
    
    66,000
    
    
    -
    
    
    66,0002030
    
    412,000
    
    
    316,000
    
    
    728,000$
    765,000
    
    $
    316,000
    
    $
    1,081,000


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.

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|13. | CONTRIBUTED SURPLUS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the year ended November 30, 2010, a Company with a
      common director provided bookkeeping services and management services at
      no cost. The fair value of the bookkeeping and management services of
      $1,115 (2009  $4,433) have been recorded in the consolidated statement of
      operations and in contributed surplus. The donated services were
      discontinued in 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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 US 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 US 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
      interim 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 ASC 740 supports the
      conclusion that the Company does not have any accruals for uncertain tax
      positions as of November 30, 2010, 2009 and 2008. 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.                                                                                                                                        

---

|HIP Energy Corporation                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|November 30, 2010, 2009 and 2008              
|(Expressed in US dollars)                     

|14. | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
      (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In April 2010, the FASB issued Accounting Standards
      Update 2010-13, Compensation  Stock Compensation (Topic 718). The
      objective of this update is to address the classification of an employee
      share-based payment award with an exercise price denominated in the
      currency of a market in which the underlying equity security trades. It
      provides guidance on the classification of a share-based payment award as
      either equity or a liability. A share-based payment award that contains a
      condition that is not a market, performance, or service condition is
      required to be classified as a liability. The amendments in this update
      are effective for fiscal years, and interim periods within those fiscal
      years, beginning on or after December 15, 2010. The amendments in this
      update should be applied by recording a cumulative-effect adjustment to
      the opening balance of retained earnings. The cumulative-effect adjustment
      should be calculated for all awards outstanding as of the beginning of the
      fiscal year in which the amendments are initially applied, as if the
      amendments had been applied consistently since the inception of the award.
      The cumulative-effect adjustment should be presented separately. Earlier
      application is permitted. The Company is currently evaluating the impact
      of this update on the financial statements.                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In February 2010, the FASB issued Accounting Standards
      Update 2010-09, Subsequent Events. This Update clarifies the financial
      statement issuance dates that potentially conflict with some of the
      Securities and Exchange Commissions guidance. The amendment is effective
      for interim or annual periods ending after June 15, 2010. The adoption of
      this guidance had no material effect on the consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In January 2010, FASB issued ASU 2010-06, Fair Value
      Measurements and Disclosures (Topic 820) - Improving Disclosures about
      Fair Value Measurements. This ASU requires some new disclosures and
      clarifies some existing disclosure requirements about fair value
      measurement as set forth in Accounting Standards Codification (ASC) 820.
      ASU 2010-06 amends ASC 820 to now require: (1) a reporting entity should
      disclose separately the amounts of significant transfers in and out of
      Level 1 and Level 2 fair value measurements and describe the reasons for
      the transfers; and (2) in the reconciliation for fair value measurements
      using significant unobservable inputs, a reporting entity should present
      separately information about purchases, sales, issuances, and settlements.
      In addition, ASU 2010-06 clarifies the requirements of existing
      disclosures. ASU 2010-06 is effective for interim and annual reporting
      periods beginning after December 15, 2009, except for the disclosures
      about purchases, sales, issuances, and settlements in the roll forward of
      activity in Level 3 fair value measurements. Those disclosures are
      effective for fiscal years beginning after December 15, 2010, and for
      interim periods within those fiscal years. Early application is permitted.
      The Company will comply with the additional disclosures required by this
      guidance upon its adoption in fiscal 2012.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In January 2010, the FASB issued ASU 2010-03, Extractive
      Activities - Oil and Gas - Oil and Gas Reserve Estimation and
      Disclosures. This ASU amends the Extractive Industries - Oil and Gas
      Topic of the Codification to align the oil and gas reserve estimation and
      disclosure requirements in this Topic with the SEC's Release No.
      33-8995, Modernization of Oil and Gas Reporting Requirements (Final
      Rule), discussed below. The amendments are effective for annual reporting
      periods ending on or after December 31, 2009. The adoption of these
      provisions did not have a material impact on the consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

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 Registration
      Statement on Form 20-F/A, filed on January 22, 2001).                                                                                                                          
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|1.2   | Altered Memorandum, dated
      December 13, 1999 (incorporated by reference from our Registration
      Statement on 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 Registration
      Statement on 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
      Registration Statement on Form 20-F, filed on June 1, 2004).                                                                                                                        
|     
|1.5   | Notice of Alteration of
      Articles, effective March 31, 2004 (incorporated by reference from our
      Registration Statement on Form 20-F, filed on June 1, 2004).                                                                                                                        
|     
|1.6   | Notice of Articles, effective
      October 20, 2009 (incorporated by reference from our Registration
      Statement on 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 Registration Statement on 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 Registration Statement on 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 Registration Statement on 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 Registration Statement on Form 20-F, filed on April 5, 2010).                         
|     
|4.5*  | Form of Subscription Agreement (U.S. Subscriber).                                                                                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                
|4.6*  | Form of Subscription Agreement (Offshore Subscriber).                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                
|4.7*  | Management Agreement dated
      May 4, 2011 between HIP Energy Corporation and Richard Coglon.                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                
|4.8*  | Management Agreement dated
      May 4, 2011 between HIP Energy Corporation and James Chui.                                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                
|4.9*  | Management Agreement dated
      May 4, 2011 between HIP Energy Corporation and Peter Noonan.                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                
|4.10* | Management Agreement dated
May 4, 2011 between HIP Energy Corporation and Michael Hines.                                                                                                                                                                                                       

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2

|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.                                       
|      |                                                                                                                            
|12.2* | Section 906 Certification under
      Sarbanes-Oxley Act of 2002 for Richard Coglon.                                       

* Filed herewith.

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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.
CoglonChief Executive Officer and Chief Financial Officer (Principal
Executive Officer and Principal Financial Officer)

Date: May 4, 2011

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