**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**








**FORM
        10-KSB/A**
 Amendment
            No. 3


x ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2005


COMMISSION
      FILE NO. **000-50830**


**OR**


o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF
      1934




For
      the
      transition period from ______to______


**Calibre
      Energy, Inc.**


(Name
      of
      small business issuer on its charter)








**Nevada**
              (State
                or Other Jurisdiction of Incorporation or
                Organization)
            1311
              (Primary
                Standard Industrial
              Classification
                Code Number)
            88-0343804
              (I.R.S.
                Employer
              Identification
                Number)





**1667
      K Street, NW, Suite 1230**


**Washington,
      D.C. 20006**


**(202)
      223-4401**


(Address
      and telephone number


of
      principal executive offices and principal place of business)


___________________




**Oliver
      Pennington**


**1667
      K Street, NW, Suite 1230**


**Washington,
      D.C. 20006**


**(202)
      223-4401**


(Name,
      address and telephone number


of
      agent
      for service)


**___________________**




**Copy
      to:**


**Michael
      C. Blaney**


**Vinson
      & Elkins L.L.P.**


**1001
      Fannin, Suite 2300**


**Houston,
      TX 77002**


**(713)
      758-2222**





Check
      whether the issuer (1) filed all reports required to be filed by sections 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Check
      if
      disclosure of delinquent filers pursuant to Item 405, of Regulation S-B is
      not
      contained in this form  **,**  and
      no
      disclosure will be contained, to the best of registrant's knowledge, in
      definitive proxy or information statements incorporated by reference in Part
      III
      of this Form 10-KSB or any amendment to this Form 10-KSB. o




Registrant's
      revenue for its most recent fiscal  year:
      $20,778.





On
      March
      31, 2006 the aggregate market value of the voting stock of Calibre Energy,
      Inc.
      held by non-affiliates of the registrant was $92,558,176. There is currently
      a
      limited public market for the registrant’s common stock.




As
      of
      March 31, 2006 there were 53,980,806  outstanding
      shares of common stock, par value $0.001.




Transitional
      Small Business Format: Yes o No x




Documents
      incorporated by reference: None.








1




**Cautionary
      Notice Regarding Forward Looking Statements**




“Calibre
      Energy, Inc.,” the “company,” “we,” “us” or “our” refer to Calibre Energy, Inc.,
      a Nevada corporation, and its subsidiaries, except where otherwise indicated
      or
      required by context. This
      report contains a number of forward-looking statements that reflect management’s
      current views and expectations with respect to our business, strategies, future
      results and events and financial performance. All statements made in this Annual
      Report other than statements of historical fact, including statements that
      address operating performance, events or developments that management expects
      or
      anticipates will or may occur in the future, including statements related to
      revenues, cash flow, profitability, adequacy of funds from operations,
      statements expressing general optimism about future operating results and
      non-historical information, are forward looking statements. In particular,
      the
      words “believe,” “expect,” “intend,” “ anticipate,” “estimate,” “may,”
variations of such words, and similar expressions identify forward-looking
      statements, but are not the exclusive means of identifying such statements
      and
      their absence does not mean that the statement is not forward-looking. These
      forward-looking statements are subject to certain risks and uncertainties,
      including those discussed below. Our actual results, performance or achievements
      could differ materially from historical results as well as those expressed
      in,
      anticipated or implied by these forward-looking statements. We do not undertake
      any obligation to revise these forward-looking statements to reflect any future
      events or circumstances.




Readers
      should not place undue reliance on these forward-looking statements, which
      are
      based on management’s current expectations and projections about future events,
      are not guarantees of future performance, are subject to risks, uncertainties
      and assumptions (including those described below) and apply only as of the
      date
      of this report. Our actual results, performance or achievements could differ
      materially from the results expressed in, or implied by, these forward-looking
      statements. Factors that could cause or contribute to such differences include,
      but are not limited to, those discussed below in “Risk Factors” as well as those
      discussed elsewhere in this report, and the risks discussed in our press
      releases and other communications to shareholders issued by us from time to
      time
      which attempt to advise interested parties of the risks and factors that may
      affect our business. We undertake no obligation to publicly update or revise
      any
      forward-looking statements, whether as a result of new information, future
      events or otherwise.




2


**ITEM
      1.DESCRIPTION OF BUSINESS**





We
      are an
      independent natural gas and oil exploration and production company concentrating
      on growing reserves and production through the exploration, development,
      exploitation and acquisition of natural gas and oil reserves in North America.
      We have initially concentrated on the acquisition, exploitation and development
      of producing and non-producing shale gas and oil properties in the Barnett
      Shale
      in Texas. Our oil and gas business was commenced in August 2005. We specialize
      in acquiring oil and gas interests involved in extracting hydrocarbons from
      known gas-shale source rocks. We intend to focus on: a) shales that are
      laterally extensive; b) basins where the target zones have been previously
      penetrated; and c) shales that have been successfully fraced and commercially
      produced.




**Our
      Executive Offices**




Our
      principal executive and administrative office facility is located at 1667 K
      Street, N.W., Suite 1230, Washington, D.C. 20006 and our telephone number is
      (202) 223-4401 and we have an operations office at Ashford VI, 1155 Dairy
      Ashford South, Fourth Floor, Houston, TX 77079.




**Business
      Strategy**




Our
      goal
      is to expand and develop our exploration and production business and our
      reserves by initially emphasizing the identification and development of shale
      gas opportunities in the Barnett Shale and the Fayetteville Shale. We believe
      that both the Mississippian developments of the Barnett Shale in the Ft. Worth
      Basin and the Fayetteville Shale development in the Arkoma Basin provides the
      greatest near term economic value to us.




Because
      the experience of our current management team and project partners, we have
      the
      potential to execute quickly in identifying opportunities and capturing a land
      position. Some exploration and production companies take up to one year to
      obtain rights to the land and an additional year to evaluate the land for the
      first well. We believe we can shorten the total time for obtaining rights and
      evaluation to one year and then commence development in the second
      year.




**Our
      Projects**




Currently
      our growth depends heavily on the performance of our operating partners, to
      execute drilling and completion programs in an environment where shortages
      of
      equipment and talent are resulting in the escalation of costs. We have no
      current capability to act as an operator at this time as additional legal,
      land,
      drilling, and completion personnel will also be required for us to expand our
      operations and to act as an operator. Our senior management team will have
      to
      hire additional expertise in operations and finance to make a successful
      transition into a full operating company. However, in the future we will seek
      to
      operate wells in which we own an interest as we believe that by controlling
      operations, we will be able to more effectively manage the cost and timing
      of
      exploration and development of our properties, including the drilling and
      fracture stimulation methods used.




*Projects
      with Kerogen Resources*




We
      are
      currently participating in three projects with Kerogen Resources, Inc., a small,
      privately held, recently formed exploration and production company, located
      in
      Houston, Texas. These are as follows:


3


*Reichmann
      Petroleum Corporation Project*




The
      first
      project is a joint venture with Kerogen Resources, Crosby Minerals and Reichmann
      Petroleum Corporation to explore, acquire and develop properties located in
      the
      Barnett Shale in the Ft. Worth Basin of North Texas. In October 2005 we
      acquired, through Kerogen Resources, a 12.5% working interest in 6,190 net
      acres
      of leasehold interests in Parker, Tarrant, Denton, and Johnson Counties, Texas. Subsequent
      to the initial acquisition, we purchased a 25% working interest in 443 net
      acres
      of leasehold interests from Reichmann Petroleum in Johnson County, Texas.
      Kerogen Resources provides the technical guidance for the project and in
      exchange will receive 12.5% of our working interest in each well drilled. As
      of June
      15,
      2006, we have paid Kerogen a total $6,708,758, of which $3,529,098 was for the 12.5% working interest in the initial 6,190
      acres, prepayment of drilling costs on 12 wells and
      for the 25% working interest in the leasehold interest in Johnson County and
      $1,655,401 was for operating costs (ie, drilling and completion costs) of the
      JV
      since the original payment. Kerogen
      then paid such amounts to Reichmann Petroleum Corporation as reimbursement
      of
      leasehold costs, drilling and operating expenses .
      Currently, our net acreage position subject to the Reichmann agreement is 773.94
      net acres. As of June 15, 2006, we owed $1,910,667 as our chare of the
      development and operation costs for the wells in this joint
      venture.




As
      of June
      15, 2006, Calibre has participated in 22 gross wells. Four wells are currently
      producing, nine wells have been drilled, completed and fraced and are waiting
      to
      be hooked up to a pipeline, four wells have been drilled, completed and are
      cleaning up after being frac prior to being hooked up to a gas gathering line,
      three wells have been drilled to total depth, completed and are waiting to
      be
      fraced, and two wells are currently drilling. “Frac” or Fracture stimulation is
      a method of stimulating production by opening new flow channels in the rock
      surrounding a production well by pumping proppant, a granular substance that
      is
      carried into the formation by the fracturing fluid and helps keep the cracks
      open after a fracture treatment, and fluid into the well at high pressure and
      volume.




*South
      Ft. Worth Basin Project*




In
      October
      2005, we entered into a Participation Agreement for the exploration and
      development of wells in a portion of the South Ft. Worth Basin with Kerogen
      Resources, Wynn Crosby Energy, Inc. (“Crosby”), and Triangle USA (“Triangle”).
      The agreement covers a five county area of approximately 1.5 million acres
      and
      consists of all lands in these counties outside areas of mutual interest covered
      by the Reichmann project. Kerogen Resources is expected to generate shale gas
      prospects in the area subject to the agreement. Calibre is obligated to pay
      Kerogen Resources $597,600 for its generation of shale gas prospects within
      the
      five county area. As of June 15, 2006 Calibre has paid $500,000 of this amount
      and the balance is due upon the delivery of Kerogen Resources’ technical report.




The
      Participation Agreement is for a two year term. Kerogen Resources, as the
      technical partner in charge of generating the prospect areas, pays 10% of the
      costs in exchange for a 16% working interest. Each of Triangle and us will
      pay
      30% of costs for a 27% working interest and Crosby, as operator, will pay 30%
      of
      costs for a 30% working interest. Crosby intends to have three drilling rigs
      dedicated to this project. The agreement would bind all parties to the same
      area
      of mutual interest. Each party is permitted to obtain oil and gas leases in
      the
      territory, but must offer to assign to the other parties the percentage interest
      in the leases described above. Prospects are defined by agreement of the
      parties. The operator of a lease may require the other parties to advance
      payments for their respective percentages of the costs for leases or drilling
      of
      the lease.




Crosby
      has
      engaged 12 independent land brokers to identify leases for purchase. As of
      June
      15, 2006, Crosby has leased approximately 11,710.87 net leasehold acres. Our
      net
      leasehold position pursuant to this agreement is 3,161.93 acres. We have
      advanced $1,184,154 to Kerogen for participation in these leases in the Ft,
      Worth Basin of Texas. We anticipate Calibre will acquire an additional 5,000
      to
      7,500 net leasehold acres under the Participation Agreement in the next six
      months. Additionally, Kerogen has acquired a 12 square mile 3D seismic program
      over part of our joint leasehold position and we have elected to participate
      for
      our share of the costs of the seismic program. We anticipate that we will
      acquire additional 3D seismic over our other leasehold interests in
      2006.


4


*Williston
      Basin Project*




On
      September 20, 2005 we entered into a Participation Agreement with Kerogen
      Resources covering all of the Williston Basin. Under this agreement, we are
      obligated to pay Kerogen Resources the sum of $638,600 for generation of shale
      gas prospects in the Williston Basin. As of June 15, 2006 Calibre has paid
      $550,000 to Kerogen Resources and the balance is due upon the delivery of
      Kerogen Resources’ technical report. As of June 15, 2006 no acreage has been
      leased pursuant to this agreement. Kerogen Resources, as the technical partner
      in charge of generating the prospect areas, will pay 70% of the costs for a
      73%
      working interest in the leasehold interests acquired subject to the agreement,
      and we pay 30% of the costs for a 27% working interest. Each party will control
      their own leases with obligations to offer any leases acquired to the rest
      of
      the group pro-rata. Prospects are defined based on land and range from 25,000
      to
      45,000 acres each. The operator on a lease may required participating parties
      to
      advance funds for leases or drilling.




*Additional
      Acreage*




In
      addition to the three joint venture projects with Kerogen Resources, as of
      June
      15, 2006, we have acquired 5,318 gross leasehold acres and 3,417 net acres
      in
      the Barnett Shale outside of the areas covered by the Reichmann Petroleum JV,
      the South Ft. Worth Basin project and the Williston Basin project. We anticipate
      that we will commence development activities on these leases in the third
      quarter of 2006. Additionally, as of June 15, 2006, we have acquired 2,636
      gross
      leasehold acres and 1,771 net leasehold acres in the Fayetteville Shale
      development in the Arkoma Basin in Arkansas.




“Gross
      leasehold acres” means the total number of acres in which we have a working
      interest. “Net leasehold acres” means the sum of the fractional working
      interests we have in the gross leasehold interests.




**Employees**




As
      of
      March 31, 2006 we employed five people, none of which are subject to a
      collective bargaining agreement. We consider our relations with our employees
      to
      be good.




**Oil
      and Gas Properties**




*Reserves* .
      We have
      4 producing wells in which we have an interest and have recently commenced
      production. Our working interests in each of these wells are
      10.9375%.




The
      following table presents summary data with respect to our estimated net proved
      oil and natural gas reserves as of the dates indicated. Our reserve estimates
      as
      of December 31, 2005 are based primarily on reserve reports prepared by Ryder
      Scott Company, L.P., our independent reserve engineers In preparing its reports,
      Ryder Scott Company, L.P. evaluated properties representing approximately 100%
      of our PV-10 as of December 31, 2005. All calculations of estimated net proved
      reserves have been made in accordance with the rules and regulations of the
      Securities and Exchange Commission, or the SEC.


5




**Gas**
              **(Mcf)**
            
            **Oil**
              **(MBbls)**Total
                Proved Reserves:Balance,
                August 17, 2005
            
            
            —
            
            
            —Extensions,
                discoveries and improved production
            
            
            69,000Production
            
            
            (3,000
            )
            
            —Balance,
                December 31, 2005
            
            
            66,000
            
            
            —




*Well
      Status Summary* .
      The well
      status of our drilling operations is as follows:




**Number
                of Gross Wells**Producing
            
            
            4Fraced
                & Waiting on Gas Line Hookup
            
            
            9Drilled,
                Completed, Fraced and Cleaning Up
            
            
            4Waiting
                on Fracture Treatment
            
            
            3Drilling
            
            
            2**Total**
            
            
            22





In
      addition, we have interest in four wells that are currently producing, nine
      wells that have been drilled, completed and fraced and are waiting to be hooked
      up to a pipeline, four wells that have been drilled, completed and are cleaning
      up after being frac prior to being hooked up to a gas gathering line, three
      wells that have been drilled to total depth, completed and are waiting to be
      fraced, and two wells that are currently drilling. Our gross and net gas well
      ownership position is as follows:




**Gross
                Wells**
            
            **Net
                Wells**Reichmann
                Petroleum Corporation Project
            
            
            22
            
            
            2.54







During
      the
      period ending December 31, 2005, the average sales price per unit of gas
      produced was $6.63 and the average lifting costs was $4.30. Our production
      has
      only recently commenced.




*Developed
      and Undeveloped Leasehold.* We have
      the following developed and undeveloped leasehold interests:




Developed
      Acreage




**Gross
                Leasehold**
            
            **Net
                Leasehold**Reichmann
                Petroleum Corporation Project
            
            
            303
            
            
            33Total
            
            
            303
            
            
            33




6


Undeveloped
      Acreage




**Gross
                Leasehold**
            
            **Net
                Leasehold**Reichmann
                Petroleum Corporation Project
            
            
            6,330
            
            
            741So.
                Ft. Worth Basin Project
            
            
            11,711
            
            
            3,162Other
                Ft. Worth Basin
            
            
            5,316
            
            
            3,417Williston
                Basin Project
            
            
            0
            
            
            0Arkoma
                Basin
            
            
            2,636
            
            
            1,771Total
            
            
            26,296
            
            
            9,124







Our
      oil
      and gas properties consist primarily of working interests in oil and gas wells
      and our ownership of interests in leasehold acreage, both developed and
      undeveloped. The table above summarizes our gross and net developed and
      undeveloped oil and natural gas acreage under lease or option as of June 1,
      2006. A developed acre is considered to be an acre spaced or assignable to
      productive wells. A gross acre is an acre in which a working interest is owned.
      A net acre is the result that is obtained when our fractional ownership working
      interest is multiplied by gross acres. The number of net acres is the sum of
      the
      factional working interests owned in gross acres expressed as whole numbers
      and
      fractions thereof. Undeveloped acreage is considered to be those lease acres
      on
      which wells have not been drilled or completed to a point that would permit
      the
      production of commercial quantities of oil or natural gas, regardless of whether
      that acreage contains proved reserves, but does not include undrilled acreage
      held by production under the terms of a lease. As is customary in the oil and
      gas industry, we can generally retain our interest in undeveloped acreage by
      drilling activity that establishes commercial production sufficient to maintain
      the leases or by paying delay rentals during the remaining primary term of
      leases. The oil and natural gas leases in which we have an interest are for
      varying primary terms, and if production under a lease continues from our
      developed lease acreage beyond the primary term, we are entitled to hold the
      lease for as long as oil or natural gas is produced.




**Government
      Regulation**




*Regulation
      of transportation of oil*




Sales
      of
      crude oil, condensate and natural gas liquids are not currently regulated and
      are made at negotiated prices. Nevertheless, Congress could reenact price
      controls in the future.




Our
      sales
      of crude oil are affected by the availability, terms and cost of transportation.
      The transportation of oil in common carrier pipelines is also subject to rate
      regulation. The Federal Energy Regulatory Commission, or the FERC, regulates
      interstate oil pipeline transportation rates under the Interstate Commerce
      Act.
      In general, interstate oil pipeline rates must be cost-based, although
      settlement rates agreed to by all shippers are permitted and market-based rates
      may be permitted in certain circumstances. Effective January 1, 1995, the FERC
      implemented regulations establishing an indexing system (based on inflation)
      for
      transportation rates for oil that allowed for an increase or decrease in the
      cost of transporting oil to the purchaser. A review of these regulations by
      the
      FERC in 2000 was successfully challenged on appeal by an association of oil
      pipelines. On remand, the FERC in February 2003 increased the index slightly,
      effective July 2001. Intrastate oil pipeline transportation rates are subject
      to
      regulation by state regulatory commissions. The basis for intrastate oil
      pipeline regulation, and the degree of regulatory oversight and scrutiny given
      to intrastate oil pipeline rates, varies from state to state. Insofar as
      effective interstate and intrastate rates are equally applicable to all
      comparable shippers, we believe that the regulation of oil transportation rates
      will not affect our operations in any way that is of material difference from
      those of our competitors.






7




Further,
      interstate and intrastate common carrier oil pipelines must provide service
      on a
      non-discriminatory basis. Under this open access standard, common carriers
      must
      offer service to all similarly situated shippers requesting service on the
      same
      terms and under the same rates. When oil pipelines operate at full capacity,
      access is governed by prorationing provisions set forth in the pipelines’
published tariffs. Accordingly, we believe that access to oil pipeline
      transportation services generally will be available to us to the same extent
      as
      to our competitors.




*Regulation
      of transportation and sale of natural gas*




Historically,
      the transportation and sale for resale of natural gas in interstate commerce
      have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas
      Policy Act of 1978 and regulations issued under those Acts by the FERC. In
      the
      past, the federal government has regulated the prices at which natural gas
      could
      be sold. While sales by producers of natural gas can currently be made at
      uncontrolled market prices, Congress could reenact price controls in the future.
      Deregulation of wellhead natural gas sales began with the enactment of the
      Natural Gas Policy Act. In 1989, Congress enacted the Natural Gas Wellhead
      Decontrol Act. The Decontrol Act removed all Natural Gas Act and Natural Gas
      Policy Act price and non-price controls affecting wellhead sales of natural
      gas
      effective January 1, 1993.




FERC
      regulates interstate natural gas transportation rates and service conditions,
      which affects the marketing of natural gas that we produce, as well as the
      revenues we receive for sales of our natural gas. Since 1985, the FERC has
      endeavored to make natural gas transportation more accessible to natural gas
      buyers and sellers on an open and non-discriminatory basis. The FERC has stated
      that open access policies are necessary to improve the competitive structure
      of
      the interstate natural gas pipeline industry and to create a regulatory
      framework that will put natural gas sellers into more direct contractual
      relations with natural gas buyers by, among other things, unbundling the sale
      of
      natural gas from the sale of transportation and storage services. Beginning
      in
      1992, the FERC issued Order No. 636 and a series of related orders to implement
      its open access policies. As a result of the Order No. 636 program, the
      marketing and pricing of natural gas have been significantly altered. The
      interstate pipelines’ traditional role as wholesalers of natural gas has been
      eliminated and replaced by a structure under which pipelines provide
      transportation and storage service on an open access basis to others who buy
      and
      sell natural gas. Although the FERC’ s orders do not directly regulate natural
      gas producers, they are intended to foster increased competition within all
      phases of the natural gas industry.




In
      2000,
      the FERC issued Order No. 637 and subsequent orders, which imposed a number
      of
      additional reforms designed to enhance competition in natural gas markets.
      Among
      other things, Order No. 637 effected changes in FERC regulations relating to
      scheduling procedures, capacity segmentation, penalties, rights of first refusal
      and information reporting. Most pipelines’ tariff filings to implement the
      requirements of Order No. 637 have been accepted by the FERC and placed into
      effect.




Gathering
      service, which occurs upstream of jurisdictional transmission services, is
      regulated by the states on shore and in state waters. Although its policy is
      still in flux, FERC has reclassified certain jurisdictional transmission
      facilities as non-jurisdictional gathering facilities, which may increase our
      costs of getting gas to point of sale locations.




Intrastate
      natural gas transportation is also subject to regulation by state regulatory
      agencies. The basis for intrastate regulation of natural gas transportation
      and
      the degree of regulatory oversight and scrutiny given to intrastate natural
      gas
      pipeline rates and services varies from state to state. Insofar as such
      regulation within a particular state will generally affect all intrastate
      natural gas shippers within the state on a comparable basis, we believe that
      the
      regulation of similarly situated intrastate natural gas transportation in any
      states in which we operate and ship natural gas on an intrastate basis will
      not
      affect our operations in any way that is of material difference from those
      of
      our competitors. Like the regulation of interstate transportation rates, the
      regulation of intrastate transportation rates affects the marketing of natural
      gas that we produce, as well as the revenues we receive for sales of our natural
      gas.




8


*Regulation
      of production*




The
      production of oil and natural gas is subject to regulation under a wide range
      of
      local, state and federal statutes, rules, orders and regulations. Federal,
      state
      and local statutes and regulations require permits for drilling operations,
      drilling bonds and reports concerning operations. Such regulations govern
      conservation matters, including provisions for the unitization or pooling of
      oil
      and natural gas properties, the establishment of maximum allowable rates of
      production from oil and natural gas wells, the regulation of well spacing,
      and
      plugging and abandonment of wells. The effect of these regulations is to limit
      the amount of oil and natural gas that we can produce from our wells and to
      limit the number of wells or the locations at which we can drill, although
      we
      can apply for exceptions to such regulations or to have reductions in well
      spacing. Moreover, each state generally imposes a production or severance tax
      with respect to the production and sale of oil, natural gas and natural gas
      liquids within its jurisdiction.




The
      failure to comply with these rules and regulations can result in substantial
      penalties. Our competitors in the oil and natural gas industry are subject
      to
      the same regulatory requirements and restrictions that affect our operations.




*Environmental,
      health and safety regulation*




*General* .
      Our
      operations are subject to stringent and complex federal, state, local and
      provincial laws and regulations governing environmental protection, health
      and
      safety, including the discharge of materials into the environment. These laws
      and regulations may, among other things:




·
            require
                the acquisition of various permits before drilling
                commences;




·
            restrict
                the types, quantities and concentration of various substances that
                can be
                released into the environment in connection with oil and natural
                gas
                drilling, production and transportation
                activities;




·
            limit
                or prohibit drilling activities on certain lands lying within wilderness,
                wetlands and other protected areas;
                and




·
            require
                remedial measures to mitigate pollution from former and ongoing
                operations, such as requirements to close pits and plug abandoned
                wells.




These
      laws
      and regulations may also restrict the rate of oil and natural gas production
      below the rate that would otherwise be possible. The regulatory burden on the
      oil and gas industry increases the cost of doing business in the industry and
      consequently affects profitability. Additionally, Congress and federal and
      state
      agencies frequently revise environmental, health and safety laws and
      regulations, and any changes that result in more stringent and costly waste
      handling, disposal and cleanup requirements for the oil and gas industry could
      have a significant impact on our operating costs.




The
        following is a summary of the material existing environmental, health and
        safety
        laws and regulations to which our business operations are subject.


*Waste
      handling* .
      The
      Resource Conservation and Recovery Act, or RCRA, and comparable state statutes,
      regulate the generation, transportation, treatment, storage, disposal and
      cleanup of hazardous and non-hazardous wastes. Under the auspices of the federal
      Environmental Protection Agency, or EPA, the individual states administer some
      or all of the provisions of RCRA, sometimes in conjunction with their own,
      more
      stringent requirements. Drilling fluids, produced waters and most of the other
      wastes associated with the exploration, development and production of crude
      oil
      or natural gas are currently regulated under RCRA’s non-hazardous waste
      provisions. However, it is possible that certain oil and natural gas exploration
      and production wastes now classified as non-hazardous could be classified as
      hazardous wastes in the future. Any such change could result in an increase
      in
      our costs to manage and dispose of wastes, which could have a material adverse
      effect on our results of operations and financial position.




9


*Comprehensive
      Environmental Response, Compensation and Liability Act* .
      The
      Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
      also known as the Superfund law, imposes joint and several liability, without
      regard to fault or legality of conduct, in connection with the release of a
      hazardous substance into the environment. Persons potentially liable under
      CERCLA include the current or former owner or operator of the site where the
      release occurred and anyone who disposed or arranged for the disposal of a
      hazardous substance to the site where the release occurred. Under CERCLA, such
      persons may be subject to joint and several liability for the costs of cleaning
      up the hazardous substances that have been released into the environment,
      damages to natural resources and the costs of certain health studies. In
      addition, it is not uncommon for neighboring landowners and other third parties
      to file claims for personal injury and property damage allegedly caused by
      the
      hazardous substances released into the environment.




We
      own and
      lease, and may in the future operate, numerous properties that have been used
      for oil and natural gas exploitation and production for many years. Hazardous
      substances may have been released on, at or under the properties owned, leased
      or operated by us, or on, at or under other locations, including off-site
      locations, where such substances have been taken for disposal. In addition,
      some
      of our properties have been or are operated by third parties or by previous
      owners or operators whose handling, treatment and disposal of hazardous
      substances were not under our control. These properties and the substances
      disposed or released on, at or under them may be subject to CERCLA, RCRA and
      analogous state laws. In certain circumstances, we could be responsible for
      the
      removal of previously disposed substances and wastes, remediate contaminated
      property or perform remedial plugging or pit closure operations to prevent
      future contamination. In addition, federal and state trustees can also seek
      substantial compensation for damages to natural resources resulting from spills
      or releases.




*Water
      discharges* .
      The
      Federal Water Pollution Control Act, or the Clean Water Act, and analogous
      state
      laws, impose restrictions and strict controls with respect to the discharge
      of
      pollutants, including oil and other substances generated by our operations,
      into
      waters of the United States or state waters. Under these laws, the discharge
      of
      pollutants into regulated waters is prohibited except in accordance with the
      terms of a permit issued by EPA or an analogous state agency. Federal and state
      regulatory agencies can impose administrative, civil and criminal penalties
      for
      non-compliance with discharge permits or other requirements of the Clean Water
      Act and analogous state laws and regulations.




The
      Safe
      Drinking Water Act, or SDWA, and analogous state laws impose requirements
      relating to underground injection activities. Under these laws, the EPA and
      state environmental agencies have adopted regulations relating to permitting,
      testing, monitoring, record keeping and reporting of injection well activities,
      as well as prohibitions against the migration of injected fluids into
      underground sources of drinking water.




*Air
      emissions* .
      The
      Federal Clean Air Act and comparable state laws regulate emissions of various
      air pollutants through air emissions permitting programs and the imposition
      of
      other requirements. In addition, EPA and certain states have developed and
      continue to develop stringent regulations governing emissions of toxic air
      pollutants at specified sources. Federal and state regulatory agencies can
      impose administrative, civil and criminal penalties for non-compliance with
      air
      permits or other requirements of the Federal Clean Air Act and analogous state
      laws and regulations.




10


The
      Kyoto
      Protocol to the United Nations Framework Convention on Climate Change became
      effective in February 2005. Under the Protocol, participating nations are
      required to implement programs to reduce emissions of certain gases, generally
      referred to as greenhouse gases, that are suspected of contributing to global
      warming. The United States is not currently a participant in the Protocol,
      and
      Congress has not acted upon recent proposed legislation directed at reducing
      greenhouse gas emissions. However, there has been support in various regions
      of
      the country for legislation that requires reductions in greenhouse gas
      emissions, and some states have already adopted legislation addressing
      greenhouse gas emissions from various sources, primarily power plants. The
      oil
      and natural gas industry is a direct source of certain greenhouse gas emissions,
      namely carbon dioxide and methane, and future restrictions on such emissions
      could impact our future operations.




*National
      Environmental Policy Act* .
      Oil and
      natural gas exploration and production activities on federal lands are subject
      to the National Environmental Policy Act, or NEPA. NEPA requires federal
      agencies, including the Department of Interior, to evaluate major agency actions
      that have the potential to significantly impact the environment. In the course
      of such evaluations, an agency will prepare an Environmental Assessment that
      assesses the potential direct, indirect and cumulative impacts of a proposed
      project and, if necessary, will prepare a more detailed Environmental Impact
      Statement that may be made available for public review and comment. All
      exploration and production activities on federal lands require governmental
      permits that are subject to the requirements of NEPA. This process has the
      potential to delay the development of oil and natural gas projects on federal
      lands.




*Health,
      safety and disclosure regulation* .
      We are
      subject to the requirements of the federal Occupational Safety and Health Act
      (OSHA) and comparable state statutes. The OSHA hazard communication standard,
      the Emergency Planning and Community Right to Know Act and similar state
      statutes require that we organize and/or disclose information about hazardous
      materials stored, used or produced in our operations.




We
      expect
      to incur capital and other expenditures related to environmental compliance.
      Although we believe that our compliance with existing requirements will not
      have
      a material adverse impact on our financial condition and results of operations,
      we cannot assure you that the passage of more stringent laws or regulations
      in
      the future will not have an negative impact on our financial position or results
      of operation.


11


**RISK
      FACTORS**




The
      following factors affect our business and the industry in which it operates.
      The
      risks and uncertainties described below are not the only ones we face.
      Additional risks and uncertainties not presently known or that we currently
      consider immaterial may also have an adverse effect on our business. If any
      of
      the matters discussed in the following risk factors were to occur, our business,
      financial condition, results of operations, cash flows, or prospects could
      be
      materially adversely affected.




**Risks
      Related to Our Business**




*We
      have a limited operating history and limited revenues* *.*




Our
      oil
      and gas business commenced in August of 2005 and, accordingly, is subject to
      substantial risks inherent in the commencement of a new business enterprise.
      Consequently we have limited assets and operations. To date, we have generated
      limited revenue from our operations. Additionally, we have no business history
      or operating history to successfully identify, develop and operate oil and
      gas
      leases, generate revenues, or operate profitably that investors can analyze
      to
      aid them in making an informed judgment as to the merits of an investment in
      us.
      Any investment in us should be considered a high risk investment because the
      investor will be placing funds at risk in a company with unforeseen costs,
      expenses, competition, and other problems to which new ventures are often
      subject. Investors should not purchase our stock unless they can afford to
      lose
      their entire investment.




*We
      will need additional capital to execute our business plan, and our ability
      to
      obtain the necessary funding is uncertain.*




We
      expect
      that we will require additional capital to implement our business plan
      successfully. The timing and degree of any future capital requirements will
      depend on many factors, including:




·
            the
                accuracy of the assumptions underlying our estimates for our capital
                needs
                in 2006;




·
            the
                number of prospects we identify;




·
            the
                terms on which we can obtain rights to those prospects;




·
            the
                cost of exploring and developing the prospects;
                and




·
            our
                success rate in developing economically successful prospects.




We
      have no
      immediate internal sources of funds, and we do not have any committed sources
      of
      capital. Additional financing through partnering, public or private equity
      financings, lease transactions or other financing sources may not be available
      on acceptable terms, or at all. Additional equity financings could result in
      significant dilution to our stockholders. If sufficient capital is not
      available, we may be required to delay or reduce the scope of our exploration,
      development and/or production activities which could have a material adverse
      effect on our business and financial results.




*Several
        of our officers are also employed as officers and directors for another company
        which may lead to conflicts of interest for these officers.*
  Several
        of
        our officers, including our President and CFO, are also employed as officers
        and/or directors of Standard Drilling, Inc., a company engaged in the business
        of drilling services. There exists a substantial possibility of a conflict
        of
        interest for those officers employed by Standard Drilling. arising from their
        employment by both us and Standard Drilling. As officers, these individuals
        will
        have a duty of loyalty to both companies, and a conflict will arise if we
        enter
        into any arrangements with Standard Drilling or if we and Standard Drilling
        engage, or attempt to engage, in the same businesses. In such cases, the
        officers may not be able to make decisions or take action that satisfies
        their
        obligations to both companies.


12
 
 *Employment
        of some of our officers by another company may limit the time they have
        available to devote to managing our business.*
  As
                noted
                above, several of our officers, including our President and CFO,
                are also
                employed as officers and/or directors of Standard Drilling, Inc.
                Our employment
                agreements with these officers require them to devote such time to
                managing our
                business as is reasonably necessary to perform their duties under
                the employment
                agreement but do not specify a specific number of hours or percentage
                of time.
                Further, the officers have significant discretion on a day to day
                basis as to
                whether to devote time to the management of our business or management
                of
                Standard Drilling's business. Because of the time required of these
                officers to
                manage Standard Drilling's business, they may not devote sufficient
                time to
                managing our business, and as a result our business and financial
                results could
                be adversely affected. These
                officers also serve on our Board of Directors, and they also directly
                or
                indirectly control the voting of approximately 38% of our outstanding
                common
                stock .


*There
      is a high demand for leases and drilling rigs in the areas of our operation
      and
      we may not be able to obtain leases or access to rigs at rates that permit
      us to
      be profitable or at all.*




Increases
          in oil and natural gas prices have resulted in a significant increase in
          demand
          for both oil and gas leases and drilling rigs. As a result, the cost of
          both
          leases and rigs has increased substantially. In particular the demand for
          rigs
          has made it difficult in some instances to obtain such service without
          significant advance schedulings. If we cannot obtain leases to oil and
          gas
          properties and rigs when needed and at reasonable rates, or at all, we
          may not
          be able to complete exploration and development and commence production
          in a
          timely manner. As a result, our associated costs could be substantially
          higher,
          we may lose our rights to some leases and our business and financial results
          may
          be adversely affected.




*We
      will face intense competition in our industry, and we may not have the capacity
      to compete with larger oil and gas companies also investing in oil and gas
      prospects.*




Identifying
      and realizing attractive investments in the energy sector are highly
      competitive, involve a high degree of uncertainty and often require significant
      capital. There are many companies with more resources in the oil and gas
      industry, competing to identify and acquire the most desirable oil and gas
      prospects. If we cannot acquire oil and gas prospects, at a cost which allows
      us
      to earn a profit, due to such competition, our business and financial results
      will be adversely affected.




*The
      selection of prospects, ownership and operation of oil and gas wells, and the
      ownership of non-operating oil and gas properties are highly speculative
      investments.*




Prospects
      may not produce oil or natural gas, or drilling or development on a prospect
      may
      not take place at all. Operations on the interests we acquire may be
      unprofitable, not only because a well may be non-productive “dry hole,” but also
      because the producing life and productivity of wells are unpredictable. Wells
      may not produce oil and/or gas in sufficient quantities or quality to recoup
      the
      investment, let alone return a profit. Further, weather-related and other delays
      may affect the ability to drill for hydrocarbons, produce hydrocarbons, or
      to
      transport hydrocarbons. Development and transportation may be made impracticable
      or impossible by weather, ground conditions, inability to obtain appropriate
      easements, ground water, or other conditions or delays. If any of our prospects
      or wells fails to produce at anticipated levels or if their completion or
      operation is delayed or limited, our business and financial results may be
      adversely affected.




*The
      experts on whom we rely to analyze potential acquisitions may not make accurate
      conclusions about prospects.*


13


We
      will
      rely on our management and personnel, experts, our partners and other third
      parties to analyze potential prospects in which we invest. If the analysis
      is
      inaccurate, the prospects may not result in productive wells and our business
      and financial results will be adversely affected.




*Third
      parties may operate some of the prospects in which we invest* *and
      thus we may be unable to control their operations in a manner as we believe
      will
      yield the best results.*




Third
      parties may act as the operator of some of our prospects, and in most cases,
      we
      will acquire less than a 100% ownership position in our oil and gas properties.
      Accordingly, third parties may manage and control the drilling, completion
      and
      production operations on the properties. As a result, a prospect may not be
      drilled or operated in the manner we desire. Additionally, we could be held
      liable for the joint activities of other working interest owners of our
      investment properties, including nonpayment of costs and liabilities arising
      from the other working interest owners’ actions. Moreover, if other working
      interest owners do not, or cannot, pay their share of drilling and completion
      costs for a prospect, that prospect might not be fully developed.




*Leasehold
      interests in which we invest may revert before the interest is profitable.*




Many
      leases and mineral interests contain provisions that allow ownership to revert
      back to the original owners after a certain period of time and under certain
      circumstances. Because we may not have control of the majority of the interest
      in a particular lease block or because of a lack of funds or availability of
      equipment, we will have little or no control over the development or drilling
      that takes place, and leases may therefore expire before any commercialization
      of the lease takes place.




*Drilling
      wells is speculative, unpredictable, and* *we
      will lose our entire investment in wells that do not produce in commercial
      quantities.*




We
      will be
      required to pay our pro rata share of drilling expenses on a prospect where
      we
      own a working interest. Drilling involves high risk, and the probability is
      high
      that no oil and gas will be discovered in commercial quantities. In most
      instances for any given prospect, a dry hole will result in a total loss of
      any
      amounts invested in the drilling of the prospect, including the amount invested
      in the mineral lease.




*Production
      and marketing conditions may cause production delays.*




Some
      of
      the prospects we acquire may be remote from transportation facilities. Drilling
      wells in areas remote from transportation facilities may delay production from
      those wells until sufficient reserves are established to justify construction
      of
      necessary pipelines and production facilities. The inability to complete wells
      in a timely fashion on a prospect may also result in production delays. In
      addition, marketing demands (which have historically been seasonal) may reduce
      or delay production from wells. The wells on the prospects in which we invest
      may have access to only one potential market. Local conditions, including
      closing businesses, conservation, shifting population, pipeline maximum
      operating pressure constraints, local supply levels and delivery problems could
      halt or reduce sales from the wells in which we invest. The occurrence of any
      of
      these adverse conditions may adversely affect our ability to produce and/or
      market oil and gas from the affected wells.




*Oil
      and gas markets have historically been unstable* *and
      their fluctuation may adversely affect the value and marketability of our
      investments.*




Global
      economic conditions, political conditions and other factors create an unstable
      market for the price of oil and natural gas. Oil and gas prices may fluctuate
      significantly in response to supply, demand, political, economic, weather and
      other factors. Such price fluctuation may affect the value of cash flow from
      producing properties and the value and marketability of our
      investments.




14


*We
      may
      not be able to be both cost-efficient and geographically diversified.*




While
      we
      will diversify our investments among different properties, prospects, and,
      possibly, geographic regions, the cost to acquire interests in and develop
      oil
      and gas prospects varies greatly in different geographic locations.
      Consequently, if we make investments in a limited geographic area, it may lower
      our cost per investment but would limit the diversity of our portfolio.
      Conversely, if we make investments in a number of different areas, our diversity
      would increase but at a greater cost to us.




*The
      profitability of any investment will be subject to the risk of loss due to
      damage to people or property arising from the hazards of drilling and operating
      prospects and wells.*




We
      intend
      to invest in leaseholds, titles, mineral interests, working interests, royalty
      interests and other energy exploration related assets. Numerous potential
      hazards accompany the development of these interests, including unexpected
      or
      unusual ground formations, pressures, blowouts, and pollution. Any of these
      hazards could injure or kill people or damage property, including causing
      surface damages, equipment damage, reservoir damage and reserve loss. If any
      of
      these potential hazards occur, the associated damages could exceed the value
      of
      our assets and any insurance coverage.




*Our
      activities will be subject to substantial environmental laws and regulations
      and
      the cost of complying with those laws and regulations* *may
      be significant.*




We
      will be
      subject to federal, state and local environmental laws, regulations and
      ordinances that may impose liability for the costs of cleaning up, and damages
      resulting from, past spills, disposals and other releases of hazardous
      substances. In particular, under applicable environmental laws, we may be
      responsible for certain costs associated with investigating and remediating
      environmental conditions and may be subject to associated liability, including
      lawsuits brought by private litigants, relating to prospects in which we own
      working interests. These obligations could arise regardless of whether the
      environmental conditions were created by us, a partner or by a prior owner
      or
      tenant. If we incur any such costs, our business and financial results may
      be
      adversely affected.




**Risks
      Related to Our Stock**




*There
      is currently a limited market for our common stock, and any trading market
      that
      develops in the common stock may be highly illiquid and may not reflect the
      underlying value* *of
      our
      net assets or business prospects.*




There
      is
      currently a limited market for our common stock. Accordingly, purchasers of
      the
      shares offered hereby will be required to bear the economic consequences of
      holding such securities for an indefinite period of time. An active trading
      market for our common stock may not ever develop. Any trading market that does
      develop may be volatile, and significant competition to sell our common stock
      in
      any such trading market may exist, which could negatively affect the price
      of
      our common stock. As a result, the value of our common stock may decrease.
      Additionally, if a trading market does develop, such market may be highly
      illiquid, and our common stock may trade at a price that does not accurately
      reflect the underlying value of our net assets or business prospects. Investors
      are cautioned not to rely on the possibility that an active trading market
      may
      develop or on the prices at which our stock may trade in any market that does
      develop in making an investment decision.


15


*If
      our
      share price is volatile, we may be the target of securities litigation, which
      is
      costly and time-consuming to defend.*




In
      the
      past, following periods of market volatility in the price of a company’s
      securities, security holders have often instituted class action litigation.
      If
      the market value of our common stock experiences adverse fluctuations and we
      become involved in this type of litigation, regardless of the outcome, we could
      incur substantial legal costs and our management’s attention could be diverted
      from the operation of our business, causing our business to suffer.




*Our* *“blank
      check” preferred stock could be issued to prevent a business combination not
      desired by management or our current majority shareholders.*




Our
      articles of incorporation authorize the issuance of “blank check” preferred
      stock with such designations, rights and preferences as may be determined by
      our
      board of directors without shareholder approval. Our preferred stock could
      be
      utilized as a method of discouraging, delaying, or preventing a change in our
      control and as a method of preventing shareholders from receiving a premium
      for
      their shares in connection with a change of control.




*Future
      sales of our common stock in the public market could lower our stock
      price.*




We
      may
      sell additional shares of common stock in subsequent public or private
      offerings. We may also issue additional shares of common stock to finance future
      acquisitions. Such sales or issuances may be at prices less than the public
      trading price. We cannot predict the size of future issuances of our common
      stock or the effect, if any, that future issuances and sales of shares of our
      common stock will have on the market price of our common stock. Sales of
      substantial amounts of our common stock (including shares issued in connection
      with an acquisition), or the perception that such sales could occur, may
      adversely affect prevailing market prices for our common stock.




*We
      presently do not intend to pay cash dividends on our common
      stock.*




We
      currently anticipate that no cash dividends will be paid on the common stock
      in
      the foreseeable future. While our dividend policy will be based on the operating
      results and capital needs of the business, it is anticipated that all earnings,
      if any, will be retained to finance the future expansion of the our business.
      Therefore, prospective investors who anticipate the need for immediate income
      by
      way of cash dividends from their investment should not purchase our shares
      of
      common stock.






**ITEM
      2. DESCRIPTION OF PROPERTY.**




Calibre
      Energy, Inc. leases 2,360 square feet of office space in Washington, D.C. that
      serves as its corporate office. The lease is at market rates and expires in
      October 2008. We also have an
      operations office of 4000sq feet at Ashford VI, 1155 Dairy Ashford South, Fourth
      Floor, Houston, TX 77079.




**ITEM
      3** **:
      LEGAL PROCEEDINGS.**




We
      are not
      currently a party to any legal proceedings.




**ITEM
      4.** **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**




No
      meetings were held in 2005. In December of 2005, a majority of our stockholders
      executed a written consent approving the Agreement and Plan of Reorganization
      pursuant to which we acquired Calibre Energy, Inc., a Delaware corporation
      and
      approving a stock option plan and the change of our name to Calibre Energy,
      Inc.


16


**PART
      II**




**ITEM
      5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES.**







Shares
      of
      our common stock are traded on the National Association of Securities Dealers
      Inc. Over the Counter Bulletin Board under the symbol “CBRE.OB.” Our common
      stock trades on a limited, sporadic and volatile basis. As of March 31, 2006,
      the last reported sales price of our common stock on the OTC Bulletin Board
      was
      $2.77. As of March 31, 2006, there were 53,980,806 shares of our common stock
      outstanding that were held of record by 182 persons.




The
      following table sets forth, for the periods indicated, the range of high and
      low
      bid information for our common stock. These quotations reflect inter-dealer
      prices, without retail mark-up, mark-down or commission, and may not represent
      actual transactions.




**Price
                Ranges****High**
            
            **Low****Fiscal
                Year Ended December 31, 2003**First
                Quarter
            
            
            0
            
            
            0Second
                Quarter
            
            
            0
            
            
            0Third
                Quarter
            
            
            0
            
            
            0Fourth
                Quarter
            
            
            0
            
            
            0**Fiscal
                Year Ended December 31, 2004**First
                Quarter
            
            
            0
            
            
            0Second
                Quarter
            
            
            0
            
            
            0Third
                Quarter
            
            
            0
            
            
            0Fourth
                Quarter
            
            
            0
            
            
            0**Fiscal
                Year Ended December 31, 2005**First
                Quarter
            
            
            0
            
            
            0Second
                Quarter
            
            
            0
            
            
            0Third
                Quarter
            
            
            0
            
            
            0Fourth
                Quarter
            
            
            2.00
            
            
            1.42**Fiscal
                Year Ended December 31, 2006**First
                Quarter
            
            
            3.00
            
            
            1.55





17


**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF
      OPERATIONS**




**Overview**




We
      are
      engaged in oil and natural gas exploration and exploitation activities in the
      Barnett Shale development in Ft. Worth Basin located northern Texas, the Bakkan
      Shale development in the Williston Basin located in Montana and North Dakota,
      and the Fayetteville Shale development in the Arkoma Basin located in Arkansas.
      We have a limited operating history as our predecessor company for financial
      reporting purposes was formed on August 17, 2005. We are engaged in the
      acquisition, exploitation and development of producing and non-producing oil
      and
      gas-shale (source rock) properties in selected producing basins in North
      America. Our oil and gas business was commenced in August 2005. Our current
      activities are focused on the exploration and production of natural gas in
      the
      Barnett Shale development in Northern Texas and the Fayetteville Shale
      development in Arkansas.




Our
      goal
      is to expand and develop our exploration and production business and our
      reserves by initially emphasizing the identification and development of shale
      gas opportunities in the Barnett Shale and the Fayetteville Shale. We believe
      both the Mississippian development of the Barnett Shale in the Ft. Worth Basin
      and the Fayetteville Shale development in the Arkoma Basin provides the greatest
      near term economic value to us.




*Acquisition,
      exploration and development.*




We
      follow
      the full cost method of accounting for oil and gas properties. Accordingly,
      all
      costs associated with acquisition, exploration, and development of oil and
      gas
      reserves, including directly related overhead costs and related asset retirement
      costs, are capitalized.




*General
      and administrative.*




General
      and administrative expenses consist primarily of salaries and benefits, office
      expense, professional services fees, and other corporate overhead costs. We
      anticipate increases in general and administrative expenses as we continue
      to
      increase our staff to expand our operations.




**Results
      of Operations**




We
      commenced our oil and gas operations in August 2005. Prior to that time we
      did
      not have any significant activities or assets. Consequently, we are not able
      to
      compare results of operations for the period ended December 31, 2005 to any
      earlier period.




*Oil
      and Gas Revenues.*




For
      the
      period from inception (August 17, 2005) to December 31, 2005 our oil and gas
      net
      sales were $20,778, Oil and gas revenues are derived from our proportionate
      share of working interests in oil and gas properties.




18


*General
      and Administrative Expenses.*




For the
      period
      from inception (August 17, 2005) to December 31, 2005 general and administrative
      expenses were $1,893,602. A total of $273,585 was for actual costs associated
      with our general and administrative expense ,
      $115,517
      was for salary and wages for employees, and
      $1,504,500 since inception was a non-cash compensation expense associated with
      stock and options granted to our founders and management who we believe are
      key
      to the development of our business.




*Net
      loss.*




For
      the
      period from inception (August 17, 2005) to December 31, 2005, we had a net
      loss
      for the year ended December 31, 2005, of $1,901,651 or ($0.05) per share (basic
      and diluted).




**Liquidity
      and Capital Resources**




Since
      our
      inception, our primary sources of liquidity have been generated by the sale
      of
      equity securities (including the issuance of securities in exchange for goods
      and services to third parties and to pay costs of employees).




On
      October
      31, 2005, we raised an aggregate of $8,000,000 ($7,243,056 net of offering
      costs) through the sale of 20,000,000 shares of common stock and warrants to
      purchase 10,000,000 shares of common stock at an exercise price of $0.75. The
      terms of the warrants are described in this report under “Description of
      Securities.” As of March 31, 2006, 400,000 warrants to purchase our common stock
      have been exercised. As of December 31, 2005, we had cash of $2,105,749. In
      March and April 2006, we raised an aggregate of $11,560,000 ($10,708,000 net
      of
      offering costs) through the sale of 5,780,000 shares of common stock and
      warrants to purchase 5,780,000 shares of common stock at an exercise price
      of
      $2.75. The terms of the Warrants are described in this report under “Description
      of Securities.”




For
      the
      period from August 17, 2005 to December 31, 2005, cash provided by operating
      activities was 566,352 which consists of our net loss of $1,901,651, the
      adjustment to for the non-cash expense of stock options granted for services
      and
      an increase in accounts payable of $1,045,482.




**CASH
      FLOW FROM INVESTING ACTIVITIES**




For
      the
      period from August 17, 2005 to December 31, 2005, net cash used in investing
      activities was ($5,730,659), driven primarily by our investment in oil and
      gas
      properties in the Ft. Worth Basin.




**CASH
      FLOW FROM FINANCING ACTIVITIES**




For
      the
      period from August 17, 2005 to December 31, 2005, net cash provided by financing
      activities was $7,270,056, which was attributed to our sale of common stock
      and
      purchase warrants. On October 31, 2005, we raised an aggregate of $8,000,000
      ($7,243,056 net of offering costs) through the sale of 20,000,000 shares of
      common stock and warrants to purchase 10,000,000 shares of common stock at
      an
      exercise price of $0.75.




**Future
      capital expenditures and commitments**




Expenditures
      for exploration and development of oil and natural gas properties and lands
      costs related to the acquisition of non-producing leasehold are the primary
      use
      of our capital resources. Our budgeted capital and exploration and development
      expenditures are expected to be approximately $19.5 million in 2006 as follows
      (in millions):




**Amount**General
                & Administrative and Capital Costs
            
            $
            3.0Exploration
                & development drilling
            
            
            9.5Land
                costs
            
            
            6.5Seismic
            
            
            .5**Total**
            
            $
            19.5





19


As
      of June
      15, 2006, we believe that our remaining cash balance and revenues from existing
      projects will be sufficient to cover our current liabilities, obligations and
      contractual commitments for 2006 but will not be sufficient to fund all budgeted
      development and drilling of our existing projects, or to fund the acquisition
      of
      all budgeted land costs, as discussed above in our 2006 capital budget. We
      will
      need to raise additional capital through the sale of equity and/or debt
      securities to fully meet our 2006 capital budget. Failure to raise necessary
      capital or generate sufficient cash flow from operations in 2006 will cause
      us
      to curtail or eliminate certain development and drilling of existing and planned
      projects as well as a curtail the acquisition of land costs as highlighted
      in
      our 2006 capital budget.





As
      a
      result, the actual amount and timing of our capital expenditures may differ
      materially from our estimates. Some of the other factors which may keep us
      from
      fulfilling our 2006 capital budget are among other things, actual drilling
      results, cost overruns, the availability of drilling rigs and other services
      and
      equipment, regulatory, technological and competitive developments, and all
      such
      other assumptions referenced in the in this report.




**Hedging**




We
      did not
      hedge any of our oil or natural gas production during 2005 and have not entered
      into any such hedges from January 1, 2006 through the date of this
      filing.




**Contractual
      Commitments**




**Total**
            
            **Payments
                Due By Period****Less
                Than 1 Year**
            
            **1-3
                Years**
            
            **3-5
                Years**
            
            **More
                than 5 Years****Contractual
                Obligations****Operating
                Lease****Obligations**
            
            
            634,202
            
            
            143,097
            
            
            79,033
            
            
            -**Drilling
                Well in Progress**
            
            
            1,910,667
            
            
            1,910.667**Total**
            
            $
            2,544,869
            
            $
            2,053,764
            
            $
            79,033
            
            
            -







All
      of our
      drilling well obligations are associated with the Reichmann Petroleum
      Project.




As
      of
      December 31, 2005, we had no long-term debt obligations, capital lease
      obligations, purchase obligations or other long-term liabilities reflected
      on
      the balance sheet.




**Off-Balance
      Sheet Arrangements**




As
      of
      December 31, 2005, we had no off-balance sheet arrangements.




**Related
      Party Transactions**




For
      information on these transactions, please read “Certain Relationships and
      Related Party Transactions” in this report.




20


**Critical
      Accounting Policies**




Our
      discussion and analysis of our financial condition and results of operations
      is
      based on our financial statements, which have been prepared in accordance with
      accounting principles generally accepted in the United States of America. The
      preparation of these financial statements requires us to make estimates and
      judgments that affect the reported amounts of assets, liabilities and expenses.
      We base our estimates on historical experience and on various other assumptions
      that we believe to be reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying values of assets and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or conditions. We
      believe the following critical accounting policies affect our most significant
      judgments and estimates used in preparation of our consolidated financial
      statements.




*Reverse
      Acquisition* .
      We
      treated the merger of Calibre Energy, Inc.,a Delaware corporation, into a
      subsidiary of Hardwood Doors and Milling Specialties, Inc. as a reverse
      acquisition. Pursuant to the guidance in Appendix B of SEC Accounting Disclosure
      Rules and Practices Official Text, the “merger of a private operating company
      into a non-operating public shell corporation with nominal net assets typically
      results in the owners and management of the private company having actual or
      effective operating control of the combined company after the transaction,
      with
      the shareholders of the former public shell continuing only as passive
      investors. These transactions are considered by the staff to be capital
      transactions in substance, rather than business combinations. That is, the
      transaction is equivalent to the issuance of stock by the private company for
      the net monetary assets of the shell corporation, accompanied by a
      recapitalization.” Accordingly, the reverse acquisition has been accounted for
      as a recapitalization. For accounting purposes, the original Calibre Energy,
      Inc. is considered the acquirer in the reverse acquisition. The historical
      financial statements are those of the original Calibre Energy, Inc. Earnings
      per
      share for periods prior to the merger are restated to reflect the number of
      equivalent shares received by the acquiring company.




*Revenue
      recognition* .
      We
      derive substantially all of our revenues from the sale of oil and natural gas.
      Oil and gas revenues are recorded in the month the product is delivered to
      the
      purchaser and title transfers. We generally receive payment from one to three
      months after the sale has occurred. Each month we estimate the volumes sold
      and
      the price at which they were sold to record revenue. Variances between estimated
      revenue and actual amounts are recorded in the month payment is
      received.




*Oil
      and Gas Properties* .
      We
      follow the full cost method of accounting for oil and gas properties.
      Accordingly, all costs associated with acquisition, exploration, and development
      of oil and gas reserves, including directly related overhead costs and related
      asset retirement costs, are capitalized.




All
        capitalized costs of oil and gas properties, including the estimated future
        costs to develop proved reserves, are amortized on the unit-of-production
        method
        using estimates of proved reserves. Investments in unproved properties and
        major
        development projects in progress are not amortized until proved reserves
        associated with the projects can be determined and are periodically assessed
        for
        impairment. If the results of an assessment indicate that the properties
        are
        impaired, such impairment is added to the costs being amortized and is subject
        to the ceiling test.


21


In
      addition, the capitalized costs are subject to a “ceiling test,” which basically
      limits such costs to the aggregate of the “estimated present value,” discounted
      at a 10-percent interest rate of future net revenues from proved reserves,
      based
      on current economic and operating conditions, plus the lower of cost or fair
      market value of unproved properties.




Sales
      of
      proved and unproved properties are accounted for as adjustments of capitalized
      costs with no gain or loss recognized, unless such adjustments would
      significantly alter the relationship between capitalized costs and proved
      reserves of oil and gas, in which case the gain or loss is recognized in
      income.




Abandonments
      of properties are accounted for as adjustments of capitalized costs with no
      loss
      recognized.




*Oil
      and Gas Properties Not Subject to Amortization* .
      We are
      currently participating in oil and gas exploration and development activities.
      As of December 31, 2005, substantially all of our activities are in a
      preliminary exploration and drilling stage. Upon completion of development
      of
      each property, we make an estimate of proved producing reserves associated
      with
      such property. Until such time, property, development and exploratory costs
      are
      excluded in computing amortization.




Calibre
      is
      currently participating in oil and gas exploration and development activities.
      At December 31, 2005, a determination could not be made about the extent of
      oil
      reserves that should be classified as proved reserves. Consequently, all the
      property, development and exploratory costs have been excluded in computing
      amortization. Calibre will begin to amortize these costs when these projects
      are
      evaluated, which is currently estimated to be at the end of 2006




Depreciation,
      depletion and amortization, or DD&A, of capitalized drilling and development
      costs of oil and natural gas properties are generally computed using the unit
      of
      production method on an individual property or unit basis based on total
      estimated proved developed oil and natural gas reserves. Amortization of
      producing leasehold is based on the unit-of-production method using total
      estimated proved reserves. In arriving at rates under the unit-of-production
      method, the quantities of recoverable oil and natural gas are established based
      on estimates made by our geologists and engineers and independent engineers.
      Service properties, equipment and other assets are depreciated using the
      straight-line method over estimated useful lives of 5 to 40 years. Upon sale
      or
      retirement of depreciable or depletable property, the cost and related
      accumulated DD&A are eliminated from the accounts and the resulting gain or
      loss is recognized.




Non-producing
      properties consist of undeveloped leasehold costs and costs associated with
      the
      purchase of certain proved undeveloped reserves. Undeveloped leasehold cost
      is
      expensed over the life of the lease or transferred to the associated producing
      properties. Individually significant non-producing properties are periodically
      assessed for impairment of value and a loss is recognized.




*Oil
      and natural gas reserves and standardized measure of future cash
      flows* .
      Our
      independent engineers and technical staff prepare the estimates of our oil
      and
      natural gas reserves and associated future net cash flows. Current accounting
      guidance allows only proved oil and natural gas reserves to be included in
      our
      financial statement disclosures. The SEC has defined proved reserves as the
      estimated quantities of crude oil and natural gas which geological and
      engineering data demonstrate with reasonable certainty to be recoverable in
      future years from known reservoirs under existing economic and operating
      conditions. Even though our independent engineers and technical staff are
      knowledgeable and follow authoritative guidelines for estimating reserves,
      they
      must make a number of subjective assumptions based on professional judgments
      in
      developing the reserve estimates. Reserve estimates are updated at least
      annually and consider recent production levels and other technical information
      about each field. Periodic revisions to the estimated reserves and future cash
      flows may be necessary as a result of a number of factors, including reservoir
      performance, new drilling, oil and natural gas prices and cost changes,
      technological advances, new geological or geophysical data, or other economic
      factors. We cannot predict the amounts or timing of future reserve revisions.
      If
      such revisions are significant, they could significantly alter future DD&A
      and result in impairment of assets that may be material.


22


*Impairment
      of Long-Lived Assets* .
      We
      review long-lived assets and certain identifiable assets for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be recoverable. If the sum of the expected future undiscounted cash
      flows is less than the carrying amount of the asset, further impairment analysis
      is performed. An impairment loss is measured as the amount by which the carrying
      amount exceeds the fair value of assets.




*Employee
      Stock Plan* .
      In
      December 2004, the FASB issued SFAS No.123R, “Accounting for Stock-Based
      Compensation” (“SFAS No. 123R”). SFAS No.123R establishes standards for the
      accounting for transactions in which an entity exchanges its equity instruments
      for goods or services. This Statement focuses primarily on accounting for
      transactions in which an entity obtains employee services in share-based payment
      transactions. SFAS No.123R requires that the fair value of such equity
      instruments be recognized as expense in the historical financial statements
      as
      services are performed. Prior to SFAS No.123R, only certain pro forma
      disclosures of fair value were required. SFAS No.123R shall be effective for
      small business issuers as of the beginning of the first interim or annual
      reporting period that begins after December 15, 2005. Calibre will adopt SFAS
      No. 123R as of January 1, 2006.




We
      have a
      stock-based compensation plan, which is described more fully in Note 6. As
      permitted under generally accepted accounting principles, we account for the
      plan under the recognition and measurement principles of APB Opinion No. 25,
      Accounting for Stock Issued to Employees, and related interpretations.
      Accordingly, stock-based employee compensation cost has been recognized, as
      all
      options granted under the plan had an exercise price less than the market value
      of the underlying common stock on the date of grant, see note 5 for more
      information. There would be minimal effect on the net loss had compensation
      cost
      for the stock-based compensation plan been determined based on the grant date
      fair values of awards (the method described in FASB Statement No. 123,
      Accounting for Stock-Based Compensation).




*Consolidation
      of Variable Interest Entities* .
      In
      January 2003, the FASB issued Interpretation No. 46(R) (“FIN 46”), Consolidation
      of Variable Interest Entities. FIN 46 addresses consolidation by business
      enterprises of variable interest entities (formerly special purpose entities).
      In general, a variable interest entity is a corporation, partnership, trust
      or
      any other legal structure used for business purposes that either (a) does not
      have equity investors with voting rights nor (b) has equity investors that
      do
      not provide sufficient financial resources for the entity to support its
      activities. The objective of FIN 46 is not to restrict the use of variable
      interest entities, but to improve financial reporting by companies involved
      with
      variable interest entities. FIN 46 requires a variable interest entity to be
      consolidated by a company if that company is subject to a majority of the risk
      of loss from the variable interest entity’s activities or entitled to receive a
      majority of the entity’s residual returns or both. The consolidation
      requirements are effective for the first period that ends after March 15, 2004;
      we elected to adopt the requirements effective for the reporting period ending
      December 31, 2005. The adoption of FIN 46 had no effect on our consolidated
      financial statements.




23


**ITEM
      7. FINANCIAL STATEMENTS**




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors


Calibre
      Energy, Inc.


Washington,
      DC 20006




We
      have
      audited the accompanying consolidated balance sheet of Calibre Energy, Inc.
      as
      of December 31, 2005 and the related consolidated statements of operations,
      stockholders’ equity, and cash flows for the period August 17, 2005 (inception)
      to December 31, 2005. These consolidated financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit also includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the
      financial statements, assessing the accounting principles used and significant
      estimates made by management, as well as evaluating the overall financial
      statement presentation. We believe that our audit provides a reasonable basis
      for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Calibre Energy, Inc. as of December
      31, 2005 and the results of operations and cash flows for the period from August
      17, 2005 (inception) to December 31, 2005, in conformity with accounting
      principles generally accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that Calibre
      Energy, Inc. will continue as a going concern. As discussed in Note 3 to the
      financial statements, Calibre Energy, Inc. was formed on August 17, 2005 and
      has
      generated operating losses since inception, which raise substantial doubt about
      its ability to continue as a going concern. Management’s plans in regard to
      these matters are described in Note 3. The financial statements do not include
      any adjustments that might result from the outcome of this uncertainty.




Malone
      & Bailey, P.C.




Houston,
      Texas




May
      2,
      2006


24




**Calibre
                  Energy, Inc.****Balance
                  Sheet****December
                  31, 2005****Assets****Current
                  Assets**Cash
              
              $
              2,105,749Accounts
                  receivable
              
              
              33,960Note
                  receivable - related party
              
              
              300,000Other
                  current assets
              
              
              104,100Total
                  current assets
              
              
              2,543,809**Noncurrent
                  Assets**Oil
                  and gas properties, using full cost methodProperties
                  subject to amortization
              
              
              830,646Properties
                  not subject to amortization
              
              
              4,478,235Furniture
                  and office equipment
              
              
              121,778Less:
                  Accumulated depreciation, depletion, amortization and
                  impairment
              
              
              (35,599
              )Net
                  property, furniture and office equipment
              
              
              5,395,060**Total
                  assets**
              
              **$**
              **7,938,869****Liabilities
                  and Shareholders’ Equity****Current
                  Liabilities**Accounts
                  payable - trade
              
              
              946,852Accounts
                  payable - employees
              
              
              98,630Accrued
                  expenses
              
              
              20,482Total
                  liabilities
              
              
              1,065,964**Shareholders’
                  Equity**Preferred
                  stock; $.001 par value; 10,000,000 authorized; none issued
              
              
              -Common
                  stock; $.001 par value; 70,000,000 authorized; 47,000,000 issued
                  and
                  outstanding
              
              
              47,000Additional
                  paid-in capital
              
              
              8,727,556Accumulated
                  deficit
              
              
              (1,901,651
              )Total
                  shareholders’ equity
              
              
              6,872,905**Total
                  liabilities and shareholders’ equity**
              
              **$**
              **7,938,869**See
                  accompanying notes to financial statements.





25





**Calibre
                Energy, Inc.****Statement
                of Operations****For
                the Period from Inception (August 17, 2005) to December 31,
                2005**Oil
                and Gas Revenue
            
            $
            20,778Operating
                expensesLease
                operating expense
            
            
            14,684Depletion
                expense
            
            
            35,599Compensation
                expense(including salaries, benefits and a non-cash option
                expense)
            
            
            1,620,017General
                and administrative (excluding compensation expense)
            
            
            273,585,Total
                operating expense
            
            
            1,943,885Loss
                from operations
            
            
            1,923,107Interest
                income
            
            
            21,502Interest
                expense
            
            
            (46
            )21,456Net
                loss
            
            $
            1,901,651Earnings
                per share:Basic
                and diluted
            
            $
            (0.05
            )See
                accompanying notes to financial statements.




26




**Calibre
                Energy, Inc.****Statement
                of Shareholders’ Equity****For
                the Period from Inception (August 17, 2005) to December 31,
                2005****Common
                Stock**
            
            **Additional
                Paid-in**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Total**Balance,
                August 17, 2005 (inception)
            
            
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Initial
                capital from founding shareholdersInit
            
            
            27,000,000
            
            
            27,000
            
            
            
            
            
            
            
            
            27,000Issuance
                of common stock and warrants
            
            
            20,000,000
            
            
            20,000
            
            
            7,223,056
            
            
            
            
            
            7,243,056Stock
                options granted to employees for services
            
            
            
            
            
            
            
            
            1,504,500
            
            
            
            
            
            1,504,500Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            (1,901,651
            )
            
            (1,901,651
            )Balance,
                December 31, 2005
            
            
            47,000,000
            
            $
            47,000
            
            $
            8,727,556
            
            $
            (1,901,651
            )
            $
            6,872,905See
                accompanying notes to financial statements.





27




**Calibre
                Energy, Inc.****Statement
                of Cash Flows****For
                the Period from Inception (August 17, 2005) to December 31,
                2005**Cash
                Flows from Operating Activities:Net
                loss
            
            $
            (1,901,651
            )Adjustments
                to reconcile net loss to net cash provided by operating
                activities:Stock
                options granted for services
            
            
            1,504,500Depletion
                expense
            
            
            35,599Changes
                in working capital components:(Increase)
                in accounts receivable
            
            
            (33,960
            )(Increase)
                in other current assets
            
            
            (104,100
            )Increase
                in accounts payable
            
            
            1,045,482Increase
                in accrued expense
            
            
            20,482Net
                cash provided by operating activities
            
            
            566,352Cash
                Flows from Investing Activities:Additions
                to oil and gas properties
            
            
            (5,308,881
            )Additions
                to furniture, office equipment and leasehold improvements
            
            
            (121,778
            )Disbursements
                on note receivable
            
            
            (300,000
            )Net
                cash (used in) investing activities
            
            
            (5,730,659
            )Cash
                Flows from Financing Activities:Proceeds
                from sale of common stock
            
            
            7,270,056Net
                cash provided by financing activities
            
            
            7,270,056Net
                increase in cash
            
            $
            2,105,749Cash:Beginning
                of period
            
            
            —End
                of period
            
            $
            2,105,749Supplemental
                information:Income
                taxes paid
            
            
            —Interest
                paid
            
            
            46See
                accompanying notes to financial statements.





28


**CALIBRE
      ENERGY, INC.**




**Notes
      to Financial Statements**




**Note
      1.**  **Organization
      and Business Operations**




Calibre
      Energy, Inc. (the “Company” or “Calibre”) is an exploration and production
      company focused on the acquisition, exploitation and development of high
      quality, long-lived producing and non-producing fractured gas and oil shale
      properties in selected producing basins in North America. Headquartered in
      Washington, DC and Houston, Texas, Calibre is a Delaware corporation that was
      formed on August 17, 2005.




Calibre
      completed a reverse merger into a public company, Hardwood Doors and Milling
      Specialties, Inc. (“Hardwood”), on January 27, 2006, in which Calibre obtained a
      controlling interest. See Note 11 for details.




Calibre’s
      goal is to expand and develop our exploration and production business and its
      reserves by initially emphasizing the identification and development of shale
      gas opportunities in the Barnett Shale and the Fayetteville Shale. Calibre
      has
      identified that both the Mississippian developments of the Barnett Shale in
      the
      Ft. Worth Basin and the Fayetteville Shale development in the Arkoma Basin
      provide the greatest near term economic value to it. Calibre is currently
      participating in three projects with Kerogen Resources, Inc., a small, privately
      held, exploration and production company, located in Houston, Texas, the
      Reichmann Petroleum project, South Ft. Worth Basin project and Williston Basin
      project. As of June 15, 2006, Calibre held 774 net acres in the Reichmann
      Petroleum project and 3,161.93 net acres in the South Ft. Worth JV and has
      participated in 22 gross wells. Four wells are currently producing, nine wells
      have been drilled, completed and fraced and are waiting to be hooked up to
      a
      pipeline, four wells have been drilled, completed and are cleaning up after
      being frac prior to being hooked up to a gas gathering line, three wells have
      been drilled to total depth, completed and are waiting to be fraced, and two
      wells are currently drilling. Calibre has acquired 5,318 gross leasehold acres
      and 3,417 net acres in the Barnett Shale outside of the areas covered by the
      Reichmann Petroleum project, South Ft. Worth Basin project and Williston Basin
      project. Calibre anticipates that it will commence development activities on
      these leases in the third quarter of 2006. Additionally, as of June 15, 2006,
      we
      have acquired 2,636 gross leasehold acres and 1,771 net leasehold acres in
      the
      Fayetteville Shale development in the Arkoma Basin in Arkansas.







Calibre
      anticipates applying a business model to achieve substantial annual growth
      in
      production and reserves with a relatively low risk approach. These plans include
      deploying known techniques for use in identifying, predicting, and optimizing
      future production volumes and rates. Using multi-discipline teams with core
      competencies of petrophysics, reservoir and production engineering, geology
      and
      geophysics, the Calibre’s emphasis will be on the practical integrated
      application of these technologies to identify previously “hidden” potential.
      This model mitigates conventional exploration risk because Calibre will focus
      on: a) shales that are laterally extensive (pervasive); b) basins where the
      target zones have been previously penetrated and found to be productive; c)
      shales that have been successfully fraced (contained); d) cuttings utilized
      to
      validate source rock potential, porosity, and permeability; and e) projects
      that
      will be financially leveraged.




29


**Note
      2.**  **Summary
      of Significant Accounting Policies**




**Use
      of Estimates**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




Calibre’s
      financials are based on a number of significant estimates, including oil and
      gas
      reserve quantities which are the bases for the calculation of depreciation,
      depletion and impairment of oil and gas properties, and timing and costs
      associated with its retirement obligations.




**Cash
      and Cash Equivalents**




Cash
      and
      cash equivalents include cash in banks and certificates of deposit which mature
      within three months of the date of purchase.




**Concentration
      of Credit Risk**




Financial
      instruments that potentially subject Calibre to concentration of credit risk
      consist of cash. At December 31, 2005, Calibre had $1,905,749 in cash in excess
      of federally insured limits. Calibre maintains cash accounts only at large
      high
      quality financial institutions and Calibre believes the credit risk associated
      with cash is remote.




**Oil
      and Gas Properties**




Calibre
      follows the full cost method of accounting for oil and gas properties.
      Accordingly, all costs associated with acquisition, exploration, and development
      of oil and gas reserves, including directly related overhead costs and related
      asset retirement costs, are capitalized.


All
        capitalized costs of oil and gas properties, including the estimated future
        costs to develop proved reserves, are amortized on the unit-of-production
        method
        using estimates of proved reserves. Investments in unproved properties and
        major
        development projects in progress are not amortized until proved reserves
        associated with the projects can be determined and are periodically assessed
        for
        impairment. If the results of an assessment indicate that the properties
        are
        impaired, such impairment is added to the costs being amortized and is subject
        to the ceiling test.


Capitalized
      costs are subject to a “ceiling test,” which limits such costs to the aggregate
      of the “estimated present value,” discounted at a 10-percent interest rate of
      future net revenues from proved reserves, based on current economic and
      operating conditions, plus the cost of properties not being amortized, plus
      the
      lower of cost or fair market value of unproved properties included in costs
      being amortized, less the income tax effects related to book and tax basis
      differences of the properties.




Sales
      of
      proved and unproved properties are accounted for as adjustments of capitalized
      costs with no gain or loss recognized, unless such adjustments would
      significantly alter the relationship between capitalized costs and proved
      reserves of oil and gas, in which case the gain or loss is recognized in
      income.




30


Abandonments
      of properties are accounted for as adjustments of capitalized costs with no
      loss
      recognized.




**Oil
      and Gas Properties Not Subject to Amortization**




Calibre
      is
      currently participating in oil and gas exploration and development activities.
      At December 31, 2005, a determination cannot be made about the extent of oil
      reserves that should be classified as proved reserves. Consequently, all the
      property, development and exploratory costs have been excluded in computing
      amortization. Calibre will begin to amortize these costs when these projects
      are
      evaluated, which is currently estimated to be 2006.




**Furniture
      and Office Equipment**




Furniture
      and office equipment is stated at cost. Depreciation is computed on a
      straight-line basis over the estimated useful lives of 5 years. During the
      period ended December 31, 2005, there was no depreciation expense as the assets
      were not in place and utilized until after the period end.




**Employee
      Stock Plan**




In
      December 2004, the FASB issued SFAS No.123R, “Accounting for Stock-Based
      Compensation” (“SFAS No. 123R”). SFAS No.123R establishes standards for the
      accounting for transactions in which an entity exchanges its equity instruments
      for goods or services. This Statement focuses primarily on accounting for
      transactions in which an entity obtains employee services in share-based payment
      transactions. SFAS No.123R requires that the fair value of such equity
      instruments be recognized as expense in the historical financial statements
      as
      services are performed. Prior to SFAS No.123R, only certain pro forma
      disclosures of fair value were required. SFAS No.123R shall be effective for
      small business issuers as of the beginning of the first interim or annual
      reporting period that begins after December 15, 2005. Calibre will adopt SFAS
      No. 123R as of January 1, 2006.




Calibre
      has a stock-based compensation plan, which is described more fully in Note
      6. As
      permitted under generally accepted accounting principles, Calibre accounts
      for
      the plan under the recognition and measurement principles of APB Opinion No.
      25,
      Accounting for Stock Issued to Employees, and related interpretations.
      Accordingly, stock-based employee compensation cost has been recognized, as
      all
      options granted under the plan had an exercise price less than the market value
      of the underlying common stock on the date of grant, see note 6 for more
      information. There would be minimal effect on the net loss had compensation
      cost
      for the stock-based compensation plan been determined based on the grant date
      fair values of awards (the method described in FASB Statement No. 123,
      Accounting for Stock-Based Compensation).




**Income
      Taxes**




Provisions
      for income taxes are based on taxes payable or refundable for the current year
      and deferred taxes on temporary differences between the amount of taxable income
      and pretax financial income and between the tax bases of assets and liabilities
      and their reported amounts in the financial statements. Deferred tax assets
      and
      liabilities are included in the financial statements at currently enacted income
      tax rates applicable to the period in which the deferred tax assets and
      liabilities are expected to be realized or settled as prescribed in SFAS
      Statement No. 109, Accounting for Income Taxes. As changes in tax laws or rates
      are enacted, deferred tax assets and liabilities are adjusted through the
      provision for income taxes. A valuation allowance is established when necessary
      to reduce the deferred tax asset to the amount expected to be
      realized.


31


**Revenue
      and Cost Recognition**




Calibre
      uses the sales method of accounting for natural gas and oil revenues. Under
      this
      method, revenues are recognized based on the actual volumes of gas and oil
      sold
      to purchasers. The volume sold may differ from the volumes to which Calibre
      is
      entitled based on our interest in the properties. Costs associated with
      production are expensed in the period incurred.




**Note
      3.**  **Going
      Concern**




As
      shown
      in the accompanying financial statements, Calibre has incurred operating losses
      since inception and expects to continue to incur losses through 2006. As of
      December 31, 2005, Calibre has limited financial resources until such time
      that
      Calibre is able to generate positive cash flow from operations. These factors
      raise substantial doubt about our ability to continue as a going concern.
      Calibre’s ability to achieve and maintain profitability and positive cash flow
      is dependent upon Calibre’s ability to locate profitable properties, generate
      revenue from their planned business operations, and control exploration cost.
      Management plans to fund its future operation by obtaining additional financing
      and commencing commercial production. However, there is no assurance that we
      will be able to obtain additional financing from investors or private lenders
      and, if available, such financing may not be on commercial terms acceptable
      to
      Calibre or its shareholders.




**Note
      4.**  **Income
      Taxes**




Net
      deferred tax assets consist of the following components as of December 31,
      2005:




Net
                  operating loss
              
              
              665,578Less
                  valuation allowance
              
              
              (665,578
              )Total
              
              $
              -





The
      components giving rise to the net deferred tax assets described above have
      been
      included in the accompanying balance sheet as noncurrent assets. The deferred
      tax assets are net of a full valuation allowance of $665,578 based on the amount
      that management believes will ultimately be realized. Realization of deferred
      tax asset is dependent upon sufficient future taxable income during the period
      that deductible temporary differences and carryforwards are expected to be
      available to reduce taxable income. Loss carryforwards for tax purposes will
      begin to expire in 2025.




The
      income
      tax provision differs from the amount of income determined by applying the
      U.S.
      Federal income tax rate to pretax income for the year ended December 31, 2005
      primarily due to the valuation allowance.




**Note** **5.**  **Oil
      and Gas Properties Not Subject to Amortization**




Calibre
      is
      currently participating in oil and gas exploration and development activities
      on
      onshore properties in the Fort Worth Basin, Williston Basin and Arkhoma Basin.
      At December 31, 2005, these activities are in the early stages of development
      and a determination cannot be made about the extent of oil and gas reserves
      that
      should be classified as proved reserves. Accordingly, the capital costs have
      been excluded from the computation of amortization of the full cost pool.
      Calibre will begin to amortize these costs as the projects are completed and
      reserve estimates are available. We estimate that many of the projects we are
      currently participating in will be evaluated and subject to amortization by
      the
      2006 year end.





32


Costs
      excluded from amortization consist of the following at December 31,
      2005:





Year
                Incurred
            Acquisition
                Costs
            Exploration
                Costs
            DevelopmentCosts
            CapitalizedInterest
            Total2005
            $1,042,418
            $1,083,130
            $2,352,687
            -
            4,478,235




**Note** **6.**  **Shareholders’
      Equity**




**Preferred
      Stock**




Calibre
      is
      authorized to issue up to 10 million shares of $.001 par value preferred stock,
      the rights and preferences of which are to be determined by the Board of
      Directors at or prior to the time of issuance. As of December 31, 2005 none
      of
      the preferred stock is outstanding.




**Common
      Stock**




As
      of
      December 31, 2005, Calibre is authorized to issue 70,000,000 shares of common
      stock, par value of $.001 per share. The founding shareholders were granted
      and
      issued 27,000,000 shares of common stock at inception. In October 2005, Calibre
      completed a private offering of 20,000,000 shares of common stock at a price
      of
      $.40 per share realizing net proceeds after offering costs of $7.2 million.
      In
      conjunction with the common shares issued, Calibre issued warrants to purchase
      10,000,000 shares of common stock at an exercise price of $.75 per share. The
      warrants expire in October 2007. These warrants are valued at $0.15 per share
      or
      $1,500,000. Calibre paid fees and expenses related to this offering of $756,944.
      Calibre also granted 2,000,000 warrants with an exercise price of $0.40 per
      share. The Warrants expire in October 2007. These warrants were also valued
      at
      $0.15 or $300,000.




**Note** **7.
      Stock Option Plan**




**2005
      Stock Incentive Plan** .
      Calibre
      adopted the 2005 Stock Incentive Plan (the “Plan”) in October 2005. Under the
      Plan options may be granted to key employees and other persons who contribute
      to
      the success of Calibre. Calibre has reserved 9,000,000 shares of common stock
      for the plan. During the period ended December 31, 2005, we granted options
      pursuant to the plan, to purchase 5,150,000 shares of common stock at an
      exercise price of $.05 per share, 50,000 options to purchase shares of common
      stock at an exercise price of $.12 per share, and 1,250,000 options to purchase
      shares of common stock at an exercise price of $.24 per share. 5,800,000 options
      are fully vested and 650,000 options vest equally over a four year period.
      All
      of our outstanding options expire 10 years after the date of grant. The plan
      is
      designed to qualify under the Internal Revenue Code as an incentive stock option
      plan. Compensation expense recorded through December 31, 2005 for the options
      granted is $1,504,500.




33


**December
                31, 2005**Net
                loss, as reported
            
            
            ($1,901,651
            )Add:
                Stock based intrinsic value included in report loss
            
            
            ($1,504,500
            )Less:
                Total stock-based employee compensation expense determined under
                the fair
                value based method for all awards
            
            
            ($1,877,465
            )Pro-forma
                net loss
            
            
            ($2,274,616
            )Basic
                and diluted loss per share:As
                reported
            
            
            ($0.05
            )Pro
                forma
            
            
            ($0.06
            )




The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: dividend yield $0, expected volatility of 57.99%, risk-free
      interest rate of 5.0%, and expected lives of 10 years.




**Note** **8.
      Related Party Transactions.**




Prentis
      B.
      Tomlinson, Jr., served as a Director and Chairman of the Board of Directors
      from
      its formation in July 2005 until April 21, 2006. He owns a 17.9% interest in
      Kerogen Resources, Inc. (“KRI”.) Calibre has entered into four agreements with
      Kerogen Resources, Inc.




First,
      Calibre is a party to a letter agreement with Kerogen Resources pursuant to
      which Calibre is participating in the Reichmann Petroleum project. The
      project is a joint venture with Kerogen Resources, Crosby Minerals and Reichmann
      Petroleum Corporation to explore, acquire and develop properties located in
      the
      Barnett Shale in the Ft. Worth Basin of north Texas. Reichmann is the operator
      of the properties. In October 2005 Calibre acquired, through Kerogen Resources,
      a 12.5% working interest in 6,190 net acres of leasehold interests in Parker,
      Tarrant, Denton, and Johnson Counties, Texas. Subsequent to the initial
      acquisition, Calibre purchased a 25% working interest in 443 net acres of
      leasehold interests from Reichmann Petroleum in Johnson County, Texas. Kerogen
      Resources provides the technical guidance for the project and in exchange will
      receive 12.5% of our working interest in each well drilled. As of March
      31,
      2005, Calibre has paid Kerogen a total $4,835,061, of which $3,179,660 was for the 12.5% working interest in the initial 6,190
      acres, prepayment of drilling costs on 12 wells and
      for
      the purchase of the 25% working interest in the leasehold interest in Johnson
      County and $1,655,401 was for operating costs (ie, drilling and completion
      costs) of the joint venture since the original payment. Kerogen
      then paid such amounts to Reichmann Petroleum Corporation as reimbursement
      of
      leasehold costs, drilling and operating expenses .
      Currently, our net acreage position subject to the Reichmann agreement is 773.94
      net acres. As
      of
      April 30, 2006, Calibre has participated in 20 gross wells. Four wells are
      currently producing, nine wells have been drilled, completed and fraced and
      are
      waiting to be hooked up to a pipeline, four wells have been drilled, completed
      and are cleaning up after being frac prior to being hooked up to a gas gathering
      line, three wells have been drilled to total depth, completed and are waiting
      to
      be fraced, and two wells are currently drilling.




Second,
      Calibre has entered into a Participation Agreement with Kerogen Resources for
      the exploration and development of prospects in the South Fort Worth Basin.
      Pursuant to this agreement Calibre is obligated to pay Kerogen Resources
      $597,000 for its identification of prospects; Calibre has paid Kerogen Resources
      $500,000 of such amount. As of April 30, 2006 Calibre
      has leased approximately 2,399 net leasehold acres under 8,885 gross leasehold
      acres pursuant to this agreement.  Calibre
      has paid $666,637 to Kerogen for participation in these leases in the Ft. Worth
      Basin of Texas. All the leasehold acreage is currently undeveloped. Management
      believes the price paid for leases represented market prices for similar acreage
      in the area.




34


Third,
      Calibre has entered into a Participation Agreement with Kerogen Resources for
      the exploration and development of prospects in the Williston Basin. Pursuant
      to
      this agreement Calibre is obligated to pay Kerogen Resources $638,600 for its
      identification of prospects; Calibre has paid Kerogen Resources $550,000 of
      such
      amount. As of March 31, 2006, Calibre has not leased or developed any properties
      pursuant to this agreement.




Fourth,
      Calibre held a promissory note issued by Kerogen Resources. The principal owed
      pursuant to the note was $300,000 bearing interest at the rate of 6.25% per
      annum. The principal of this note and accrued interest thereon was due and
      payable in a single installment on the maturity date. The maturity date was
      the
      earlier of September 30, 2006 or the date on which Kerogen Resources received
      gross proceeds of at least $6,000,000 from a sale of equity, in one or more
      transactions. Calibre acquired the note from Mr. Tomlinson in October 2005
      in
      exchange for a payment of $300,000. This note was entered into by Mr. Tomlinson,
      a founder of Calibre Energy, in anticipation of the formation of Calibre Energy.
      After the incorporation of Calibre Energy, the company entered into agreements
      with Kerogen for the purpose of identification, exploration
      and development of prospects in the Fort Worth Basin and
      Williston Basin. The Reichmann Petroleum Project and South Fort Worth Basin
      project are projects identified by these agreements. On March 24, 2006, Kerogen
      Resources repaid $314,623.29, the full amount of the promissory note and all
      interest due.




On
      March
      24, 2006, we loaned $350,000 to Standard Drilling, Inc.  pursuant to a loan
      bearing interest at 4% per annum.  On April 7, 2006 Standard Drilling, Inc.
      repaid us $350,544.54, the full amount of the loan with all interest due. 
Mr. Tomlinson, our President, controls a limited liability company that, at
      the
      time of the loan, owned 53% of Standard Drilling, Inc.


Several
        of
        our officers, including our President and CFO, are also employed as officers
        and/or directors of Standard Drilling, Inc., a company engaged in the business
        of drilling services.


35






**Note** **9.**  **Commitments
      and Contingencies**




Calibre
      has entered into a three year operating lease agreement for office space in
      Washington, DC. The lease commenced on November 1, 2005 and will expire on
      October 31, 2008.




At
      December 31, 2005, future minimum lease payments under the operating lease
      are
      as follows:




2006
            
            $
            100,9272007
            
            
            103,4502008
            
            
            79,0332009
            
            
            -2010
            
            
            -Thereafter
            
            
            -Total
            
            $
            283,410







Total
      rent
      expense was $32,557 for the period ended December 31, 2005. There were $17,700
      of leasehold incentives which will be amortized over the life of the lease.
      As
      of December 31, 2005, we have drilling commitments of $3,183,898 in 2006 for
      drilling and completion of wells in progress.




**NOTE** **10.
      - Asset Retirement Obligations**




In
      accordance with SFAS 143, “Accounting for Asset Retirement Obligations” Calibre
      records the fair value of a liability for asset retirement obligations (“ARO”)
      in the period in which it is incurred and a corresponding increase in the
      carrying amount of the related long-lived asset. The present value of the
      estimated asset retirement cost is capitalized as part of the carrying amount
      of
      the long-lived asset and is depreciated over the useful life of the asset.
      Calibre accrues an abandonment liability associated with its oil and gas wells
      when those assets are placed in service. The ARO is recorded at its estimated
      fair value and accretion is recognized over time as the discounted liability
      is
      accreted to its expected settlement value. Fair value is determined by using
      the
      expected future cash outflows discounted at Calibre’s risk-free interest rate.
      No market risk premium has been included in Calibre’s calculation of the ARO
      balance. Calibre’s net ARO liability at December 31, 2005 is expected to
      approximate the salvage value of the properties.




36
 
 **NOTE
        1** **1
        -** **Subsequent
        Events**
  *Reverse
        Merger*
  On
        January
        27, 2006, pursuant to an Amended and Restated Agreement and Plan of
        Reorganization dated as of January 17, 2006 by and among Hardwood Doors and
        Milling Specialties, Inc., a Nevada corporation ( ” Hardwood”),
        Calibre Acquisition Co., a Delaware corporation (“ Merger
        Sub ”),
        and
        Calibre Energy, Inc., a Delaware corporation (“ Calibre
        Energy Delaware ”),
        ( the
“Merger Agreement”), Merger Sub was merged with and into Calibre Energy
        Delaware, and Calibre Energy Delaware became a wholly-owned subsidiary of
        Hardwood (the “ Merger ”).
        As a
        result of the Merger, Hardwood, which previously had no material operations,
        acquired the business of Calibre Energy Delaware. For accounting purposes,
        this
        reorganization was treated as a reverse merger, with Calibre Energy, Inc.
        being
        the accounting acquirer and the go-forward financial statements reflect
        Calibre’s history from its inception on August 17, 2005.
  Each
        outstanding share of common stock of Calibre Energy Delaware was converted
        into
        one share of common stock of Hardwood. All outstanding options and warrants
        to
        purchase common stock of Calibre Energy Delaware were assumed by Calibre
        and
        converted into options and warrants to purchase an equal number of shares
        of
        common stock of Hardwood. The Merger resulted in a change of control of
        Hardwood, with the former security holders of Calibre Energy Delaware owning
        approximately 93.0% of Hardwood’s outstanding common stock, or approximately
        93.7% assuming the exercise of all outstanding options and warrants, following
        the closing of the Merger.
  In
        the
        Merger, Hardwood issued 47,000,000 shares of its common stock in exchange
        for
        47,000,000 shares of common stock of Calibre Energy Delaware and reserved
        for
        issuance (1) 10,000,000 shares of common stock pursuant to outstanding warrants
        to purchase common stock of Calibre Energy Delaware that were assumed by
        Hardwood, and (2) 6,425,000 shares of common stock pursuant to outstanding
        options to purchase common stock of Calibre Energy Delaware pursuant to the
        Calibre Energy, Inc. 2005 Stock Incentive Plan that were assumed by Hardwood.
        In
        connection with the Merger, Calibre paid Hardwood $100,000 as a deposit pursuant
        to the Merger Agreement. A condition to the Merger was an agreement by the
        then
        principal stockholder of Hardwood to cancel, immediately prior to the Merger,
        19,575,000 outstanding shares of common stock of Hardwood that had been issued
        to the principal shareholder. In consideration of such cancellation, Hardwood
        paid the principal shareholder $100,000, and Calibre recognized
        recapitalization expense of $100,000. The then principal shareholder of Hardwood
        also assumed the net liabilities of Hardwood. As a result of the Merger,
        Hardwood has 50,525,000 shares of common stock issued and outstanding and
        an
        additional 18,425,000 shares of common stock reserved for issuance as described
        above.
  In
        connection with the consummation of the merger, we changed our name to Calibre
        Energy, Inc.


37


*Private
      Placement*




On
      April
      18, 2006 Calibre completed a private placement to institutional and other
      accredited investors in which it sold 5 ,780,000
      units. Each unit, composed of one share of common stock and a warrant to
      purchase a share of common stock, was sold at a price of $2.00. Aggregate
      gross proceeds to Calibre were $11,560,000.
      Offering costs were $ 892,000 and will be reflected as a reduction in the
      proceeds.




Each
      warrant issued entitles the holder to acquire one additional share of Calibre
      common stock at an exercise price of U.S. $2.75 per share at any time on or
      before two years following the date of issuance. Provided that if the closing
      price of our common stock on any exchange on which the common stock is traded
      or
      quoted equals or exceeds U.S.$4.00 for 20 consecutive trading days and if
      either: (i) a registration statement registering the re-sale of the shares
      issuable upon exercise of the warrants has been declared effective, or (ii)
      Calibre has completed a “Canadian Going Public Transaction” as referred to in
      the Warrant under the caption “Canadian Reporting Issuer Status,” then the
      warrant term shall be automatically reduced to 30 days from the date of initial
      issuance of a news release by Calibre announcing the change to the warrant
      term.




In
      connection with sales outside the United States, Calibre Energy paid finders
      fees totaling $ 892,000 and issued to the finders warrants to acquire a total
      of
      577,500 shares on the same terms as those warrants issued to the investors
      except that the exercise price for the finders warrants is $2.00 per
      share.


38


SUPPLEMENTAL
      INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES




(UNAUDITED)




The
      standardized measure of discounted future net cash flows is computed by applying
      year-end prices of oil and gas to the estimated future production of proved
      oil
      and gas reserves, less estimated future expenditures (based on year-end costs)
      to be incurred in developing and producing the proved reserves, less estimated
      future income tax expenses (based on year-end statutory tax rates) to be
      incurred on pre-tax net cash flows less tax basis of the properties and
      available credits, and assuming continuation of existing economic conditions.
      The estimated future net cash flows are then discounted using a rate of 10
      percent per year to reflect the estimated timing of the future cash
      flows.




Proved
      Developed and Undeveloped Oil and Gas Reserves, at year end (net):




From
                Inception (August 17, 2005)to December 31, 2005(MMcf)Balance,
                August 17, 2005
            
            
            -Extensions,
                discoveries and improved production
            
            
            69.000Production
            
            
            (3.000
            )Balance,
                December 31, 2005
            
            
            66.000





Proved
                developed reservesAt
                August 17, 2005
            
            
            -At
                December 31, 2005
            
            
            66.000





Standardized
      Measure of Discounted Future Net Cash Flows:




December
                31, 2005Future
                cash inflows
            
            $
            462,794Future
                production costs
            
            
            ($154,904
            )Future
                development costs and abandonment
            
            
            (10,938
            )Future
                net cash flows before income taxes
            
            
            296,952Future
                income taxes
            
            
            (103,933
            )Future
                net cash flows
            
            
            193,01910%
                annual discount for estimated
              timing
                of cash flows
            
            
            (60,500
            )Standardized
                Measure of Discounted Future Net Cash Flows
            
            $
            132,519




Changes
      in
      Standardized Measure of Discounted Future Net Cash Flows:


From
                Inception(August 7, 2005) to December 31, 2005Beginning
                of the year
            
            
            -Extensions,
                discoveries and improved production
            
            $
            138,613Sales
                of oil and gas produced, net of production costs
            
            
            (6,094
            )End
                of the Year
            
            $
            132,519





39


**ITEM
      8** **.
      C** **HANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**




**Change
      of Accountants**




Effective
      April 7, 2006, our Board of Directors, determined to change our independent
      accountants and dismissed Jones Simkins, PC as our independent registered public
      accounting firm. The Audit Committee of the Board of Directors and the Board
      of
      Directors approved the decision to change independent auditors. Jones Simkins,
      PC had served as our Independent Registered Public Accountant since June 1,
      2001
      and audited our financial statements for the period June 1, 2001 through
      December 31, 2005.




During
      our
      two most recent fiscal years, ending December 31, 2004 and 2005, (i) there
      were
      no disagreements between us and Jones Simkins on any matter of accounting
      principles or practices, financial statement disclosure or auditing scope or
      procedure which, if not resolved to the satisfaction of Jones Simkins would
      have
      caused Jones Simkins to make reference to the matter in its reports on our
      financial statements, and (ii) Jones Simkins’ report on our financial statements
      did not contain any adverse opinion or disclaimer of opinion, and was not
      qualified or modified as to uncertainty, audit scope, or accounting principles
      with the exception of the following “going concern” qualification:




“As
      of
      December 31, 2005, the Company’s revenue generating activities are not in place,
      and the Company has incurred losses since inception. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      Management intends to seek additional funding through business ventures. There
      can be no assurance that such funds will be available to the Company or
      available on terms acceptable to the Company. The financial statements do not
      include any adjustments that might result from the outcome of these
      uncertainties.”




On
      April
      4, 2006, our Audit Committee recommended the engagement of Malone & Bailey,
      CP as our independent registered public accounting firm. Our Board of Directors
      appointed Malone & Bailey as our Independent Registered Public Accountant
      effective April 7, 2006.




**ITEM
        8A.Controls
        and Procedures.**
  Our
          management, with the participation of our chief executive officer and chief
          financial officer, has evaluated the effectiveness of our disclosure controls
          and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
          Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2005. Based on
          this evaluation, our chief executive officer and chief financial officer
          have
          concluded that, as of December 31, 2005, our disclosure controls and procedures
          were not effective. Our conclusion was based on (1) our lack of systematic
          accounting and disclosure procedures, (2) the initial stages of the development
          of our IT systems, (3) the hiring and development of new personnel and
          (4) the
          number of adjustments identified by our independent auditors during the
          course
          of their review. Changes in our internal controls over financial reporting
          occurred in the fourth quarter 2005 that materially affected our internal
          control over financial reporting. We currently lack the personnel resources
          to
          ensure that our disclosure controls and procedures are adequate. We
          are
          addressing the procedural and control issues by adding more formalized
          accounting procedures and IT systems and by developing and adding to our
          personnel in the reporting and control area.
 
 Calibre
        has substantially increased its business activities since the merger on January
        27, 2006. Accordingly, Calibre has been required to improve its system of
        internal control over financial reporting during the fiscal quarter covered
        by
        this report by (1) initiating a plan to formalize accounting and disclosure
        procedures; (2) further development of our internal IT systems; (3) hiring
        additional financial personnel (4) engaging a third party provider of
        accounting, bookkeeping and IT services that specializes in oil and gas
        accounting; (5) performing additional reviews of our internal accounting
        information prior to review by our independent auditors to ensure that no
        items
        that would have a material affect or are reasonably likely to have a material
        affect on internal control over financial reporting will be identified prior
        to
        issuance of our reports.


40


**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      SECTION 16(A) OF THE EXCHANGE ACT.**







The
      following table sets forth certain information regarding our current directors
      and executive officers.




Our
      executive officers are elected by the board of directors and serve at the
      discretion of the board. All of the current directors serve until the next
      annual stockholders’ meeting or until their successors have been duly elected
      and qualified.




**Name**
            **Age**
            **Position**Prentis
                B. Tomlinson, Jr.
            63
            President,
                CEO and Chairman of the BoardEdward
                L. Moses, Jr.
            67
            Vice
                Chairman, DirectorO.
                Oliver Pennington
            35
            Vice
                President and Chief Financial OfficerPeter
                F. Frey
            62
            ControllerW.
                Richard Anderson
            50
            Director





The
      following biographies describe the business experience of our executive officers
      and directors. Each of our officers and directors were appointed to their
      positions on January 27, 2006 in connection with the merger of our subsidiary,
      Calibre Acquisition Co., with the predecessor of our business. Each of our
      officers devotes such
      of his business
      time, attention and energies to the business of the Company as are reasonably
      necessary to perform his duties under their
      respective employment Agreements.




**Prentis
      B. Tomlinson, Jr** .,
      President, Chairman and CEO. Mr. Tomlinson has over 30 years of experience
      in
      the energy industry, and is a second-generation oil and gas man who traces
      his
      roots back to Tomlinson Geophysical Service, founded in 1937 by P. B. Tomlinson,
      Sr. Mr. Tomlinson has founded a number of companies in the energy sector,
      including exploration and production companies, a crude trading company and
      an
      oilfield service company, TGS Geophysical, Inc., which merged with Nopec in
      1997
      to form TGS Nopec (OSE: TGS). Since 2001 Mr. Tomlinson has been a private
      investor. In 2004 Mr. Tomlinson helped to found, and remains a significant
      shareholder in, a drilling technology company based in Houston, Texas, Particle
      Drilling Technologies, Inc. (www.particledrilling.com) (Nasdaq: PDRT). Since
      February 2006, Mr. Tomlinson has also served as Chairman and CEO of Standard
      Drilling, Inc., a privately held land drilling company based in Houston, Texas.
      See “ITEM 12” Certain Relationships and Related Party Transactions.




**Edward
      L. Moses, Jr** .,
      Vice
      President of Operations and Director. Mr. Moses has over 40 years experience
      in
      the oil and gas industry beginning as a roustabout and roughneck for drilling
      contractors while studying for his B.S. in Petroleum Engineering at Texas
      A&M University. He is currently a Director of Horizon Offshore (Nasdaq:
      HOFF). After receiving his engineering degree in 1958, Mr. Moses joined The
      Superior Oil Company where he was Manager of Domestic and International Drilling
      Operations. He left Superior Oil in 1976 to work as an independent consultant
      where he and his partners provided consulting and turnkey drilling services
      throughout the Gulf Coast, South Texas, and North Sea areas as well as India
      and
      Central America. Mr. Moses joined Deep Tech companies in 1989 as Vice President,
      Engineering. Before leaving Deep Tech in 1998, he served as Senior Vice
      President of North Atlantic Pipeline Partners, L.P.; Senior Vice President
      of
      Tatham Offshore Canada, Limited; Managing Director of Deepwater Production
      Systems, Inc.; and Executive Vice President of RIGCO North American, L.L.C.
      From
      1998 until 2000, Mr. Moses was the Chairman and Chief Executive Officer of
      Prime
      Natural Resources, Inc. a Houston based exploration and production company.
      Since 2000 Mr. Moses has been a private investor. He is a Professional Engineer
      in Texas and Louisiana, member of Society of Petroleum Engineers, Texas Society
      of Professional Engineers, and a Director of Spindletop. Since February 2006,
      Mr. Moses has also served as Vice Chairman of Standard Drilling,
      Inc.




41


**O.
      Oliver Pennington** ,
      Vice
      President and Chief Financial Officer. Mr. Pennington has over 11 years of
      experience in the financial industry and can trace his roots in the oil and
      gas
      business through his grandfather, Arthur Buzzini, back to the mid-1930s. From
      July 2005 until December of 2005 Mr. Pennington was a private investor. From
      January 2003 until June 2005, Mr. Pennington was employed as a partner and
      senior member of the investment team of Sthenos Capital Limited, a hedge fund
      based in London. From September 2002 until January 2005, Mr. Pennington was
      a
      private investor. From August 1996 until September of 2002 as the Head of
      International Trading, analyst and member of the international investment team
      at Kingdon Capital Management Corp., a hedge fund based in New York. Mr.
      Pennington started his career as a trader for AIM Management, an asset
      management company based in Houston. Since February 2006, Mr. Pennington has
      also served as CFO of Standard Drilling, Inc.




**Peter
      F. Frey** ,
      Controller. Mr. Frey has over 39 years of experience in accounting, banking
      and
      finance. After serving in the U.S. Air Force, Mr. Frey, began his financial
      career at Buffalo Savings Bank, later known as Goldome FSB where he was
      Assistant Vice President for Budgeting and Planning for the $16 billion bank.
      Since retiring from Goldome FSB, Mr. Frey has worked for various financial
      and
      banking institutions including FDIC - Resolution Trust Corporation, which
      assisted with the Savings and Loan Association crisis of the early 90’s. From
      there he joined ESL Federal Credit Union as Controller, which was successfully
      separated from the Eastman Kodak Company and was launched as an independently
      managed financial institution. From March 1997 until December 2001 Mr. Frey
      was
      employed as the Director of Accounting Operations by Superior Bank FSB, managing
      the accounting operations for the bank and a coast-to-coast lending operation.
      From December 2001 to August 2003 Mr. Frey was the Director of Accounting
      Operations at the Nasdaq Stock Market where he developed and implemented the
      accounting operations and payroll functions for the impending separation from
      the parent company, NASD. From August 2003 until January 2004 Mr. Frey worked
      as
      a private consultant. From January 2004 to December 2005 Mr. Frey was employed
      by Rose Financial Services, LLC as project manager. Mr. Frey joined Calibre
      Energy in December 2005. Since February 2006, Mr. Frey has also served as
      Controller of Standard Drilling, Inc.




**W.
      Richard Anderson** ,
      Director
      for Calibre Energy, Inc. Since 2002, Mr. Anderson has served as President and
      Chief Executive Officer of Prime Natural Resources, Inc. and was formerly its
      Chief Financial Officer (1998-2002). Prime Natural Resources www.primenri.com
      is
      a closely held exploration and production company. Prior to his employment
      at
      Prime, he was employed by Hein & Associates, LLP, a certified public
      accounting firm, where he served as a partner from 1989 to January 1995 and
      as a
      managing partner from January 1995 until October 1998. Since 1999, Mr. Anderson
      has served as a Director of Boots & Coots International Well Control
      www.bootsandcoots.com (AMEX: WEL), Chairman the Audit Committee, and member
      of
      the Compensation Committee. Mr. Anderson also formerly served as a Director
      and
      Chairman of the Audit Committees of Grant Geophysical, Inc www.grantgeo.com.,
      and its subsidiary Solid State Geophysical, Inc.(TSE), Professional Geophysics,
      Inc., and Seis Pros, Inc. www.seispros.com.




42


**Committees
      of the Board of Directors**




We
      currently have an audit committee, a compensation committee, and a nominating
      and corporate governance committee.




*Audit
      Committee* .
      The
      audit committee selects, on behalf of our board of directors, an independent
      public accounting firm to be engaged to audit our financial statements, discuss
      with the independent auditors their independence, review and discuss the audited
      financial statements with the independent auditors and management and recommend
      to our board of directors whether the audited financials should be included
      in
      our Annual Reports to be filed with the Securities and Exchange Commission.
      The
      Audit Committee operates pursuant to a written charter, which was adopted
      February 3, 2005. The current member of the audit committee is Mr. Anderson.




All
      of the
      current members of the Audit Committee are non-employee directors who: (1)
      meet
      the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”); (2) have not participated
      in the preparation of our financial statements or the financial statements
      Hardwood Doors and Milling Specialties, Inc.; and (3) are able to read and
      understand fundamental financial statements, including a balance sheet, income
      statement and cash flow statement. The board has determined that Mr. Anderson
      qualifies as an “Audit Committee Financial Expert” as defined by item 401(e) of
      Regulation S-B of the Exchange Act.




*Compensation
      Committee* .
      The
      compensation committee reviews and either approves, on behalf of our board
      of
      directors, or recommends to the board of directors for approval (1) the annual
      salaries and other compensation of our executive officers and (2) individual
      stock and stock option grants. The compensation committee also provides
      assistance and recommendations with respect to our compensation policies and
      practices and assists with the administration of our compensation plans. The
      members of our Compensation Committee are independent directors as defined
      in
      the applicable rules and regulations promulgated by the SEC, and are neither
      an
      officer nor employee of us or our subsidiary. The Compensation Committee
      operates pursuant to a written charter, which was adopted August 11, 2004.
      The
      current member of the compensation committee is Mr. Anderson.




*Nominating
      and Corporate Governance Committee* .
      The
      nominating and corporate governance committee assists our board of directors
      in
      fulfilling its responsibilities by: identifying and approving individuals
      qualified to serve as members of our board of directors, selecting director
      nominees for our annual meetings of shareholders, evaluating the performance
      of
      our board of directors, and developing and recommending to our board of
      directors corporate governance guidelines and oversight with respect to
      corporate governance and ethical conduct. Mr. Anderson is the current member
      of
      the Nominating and Corporate Governance Committee, who has been found by the
      Board of Directors to be an “independent director” pursuant to the applicable
      rules and regulations promulgated by the SEC. Mr. Tomlinson is also a member
      of
      the committee. This committee operates pursuant to a written charter adopted
      on
      April 4, 2006.




*Compensation
      Committee Interlocks And Insider Participation* .
      During
      the year ended December 31, 2005, we did not have a Compensation Committee
      because Luke Frazier served as our sole officer and director. Following our
      acquisition of Calibre Energy, Inc. in January 2006 and the appointment of
      our
      current Board of Directors, our Board of Directors formed a Compensation
      Committee comprised of Mr. Anderson. The committee member has never been an
      employee of Calibre Energy, Inc. None of our executive officers serve as a
      member of the board of directors or compensation committee of any entity that
      has any executive officer serving as a member of our Board of Directors or
      Compensation Committee.




43


**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act of 1934 requires our directors, executive
      officers and beneficial owners of more than 10% of our Common Stock to file
      with
      the SEC reports of their holdings of, and transactions in, our Common Stock.
      Based solely upon our review of copies of such reports and written
      representations from reporting persons that were provided to us, we believe
      that
      our officers, directors and 10% stockholders complied with these reporting
      requirements with respect to 2005.




**Code
      of Ethics**




We
      have
      adopted a written code of ethics that applies to our principal executive
      officer, principal financial officer, principal accounting officer and any
      persons performing similar functions. The Company will provide a copy of its
      code of ethics to any person without charge upon written request addressed
      to
      Calibre Energy, Inc., 1667 K Street, NW, Suite 1230, Washington, D.C.
      20006.





44


**ITEM
      10. EXECUTIVE COMPENSATION**




The
      following tables set forth certain information regarding our CEO and each of
      our
      most highly-compensated officers whose total annual salary and bonus for the
      period ending December 31, 2005 exceeded $100,000.




**Summary
      Compensation Table**




**Annual
                Compensation**
            
            **Long
                Term Compensation Awards****Name
                and**
              **Principal
                Position (2)**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Securities
                Underlying**
              **Options**
              **(#)**
            
            **All
                Other**
              **Compensation**
              **($)**Prentis
                B. Tomlinson(1)
            
            
            2005
            
            $
            15,000
            
            
            -
            
            
            4,000,000
            
            
            -Chief
                Executive Officer
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            
            
            
            -O.
                Oliver Pennington, III (1)
            
            
            2005
            
            
            -
            
            
            -
            
            
            1,000,000
            
            
            -Chief
                Financial Officer
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            
            
            
            -Peter
                F. Frey (1)
            
            
            2005
            
            $
            4,166
            
            
            -
            
            
            200,000
            
            
            -Controller
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -Edward
                L. Moses (1)
            
            
            2005
            
            $
            8,333
            
            
            -
            
            
            750,000
            
            
            -Vice
                Chairman
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -




(1)  Each
      executive served for less than a full year in 2005. See “Executive Employment
      Contracts” for a discussion of their annual Salary and options.


(2)  Luke
      Frazier was the sole officer for Hardwood Doors and Milling Speciality during
      2003, 2004, and 2005, and received no compensation during those years. Mr.
      Frazier resigned as an officer and director on January, 27, 2006.


45




**Equity
      Compensation Plan Information - December 31, 2005**


Plan
                Category
            
            (a)
              Number
                of securities to
              be
                issued upon exercise
              of
                outstanding options,
              warrants
                and rights
            
            (b)
              Weighted-average
              exercise
                price of
              outstanding
                options,
              warrants
                and rights
            
            (c)
              Number
                of securities
              remaining
                available for
              future
                issuance under
              equity
                compensation
              plans
                (excluding
              securities
                reflected in
              column
                (a))Equity
                compensation plansapproved
                by security holders
            
            8,450,000-
            
            0.163
            
            2,450,000Equity
                compensation plans not approved by security holders
            
            
            
            
            
            -Total
            
            8,450,000
            
            $0.163
            
            2,450,000




(1)
            Consists
                of warrants issued to our placement agent to purchase (a) 2,000,000
                shares
                of our Common Stock at $0.40 per share.(2)
            Consists
                of 6,450,000 stock options grants to our employees, officers and
                directors.






**Option
      Grants in Fiscal Year Ending December 31, 2005**




(Individual
      Grants)




**Name**
            **Number
                of Securities Options Granted**
            **%
                of Total Options Granted to Fiscal Year**
            **Exercise/Base
                Price ($/Share)**
            **Expiration
                Date**Prentis
                B. Tomlinson
            4,000,000
            62%
            $0.05
            August
                2015Edward
                L. Moses
            750,000
            12%
            $0.05
            August
                2015O.
                Oliver Pennington
            1,000,000
            16%
            $0.24
            December
                2015W.
                Richard Anderson
            400,000
            6%
            $0.05
            August
                2015Peter
                F. Frey
            200,000
            3%
            $0.24
            December
                2015




46




**Options
      Exercises and First Quarter 2006 Quarter End Values**




**Number
                of Shares**
            
            **Value
                of Unexercised****Underlying
                Unexercised**
            
            **In-the-Money
                Options****Options
                at March 31 2006**
            
            **at
                March 31 2006 (1)****Name**
            
            **Exercisable**
            
            **Unexercisable**
            
            **Exercisable**
            
            **Unexercisable**Prentis
                B. Tomlinson (1)
            
            4,000,000
            
            
            
            0
            
            
            
            $10,800,000
            
            
            
            $0Edward
                L. Moses (1)
            
            750,000
            
            
            
            0
            
            
            
            $2,025,000
            
            
            
            $0O.
                Oliver Pennington, III (2)
            
            500,000
            
            
            
            500,000
            
            
            
            $1,255,000
            
            
            
            $1,255,000W.
                Richard Anderson (1)
            
            400,000
            
            
            
            0
            
            
            
            $1,080,000
            
            
            
            $0Peter
                F. Frey (2)
            
            100,000
            
            
            
            100,000
            
            
            
            $251,000
            
            
            
            $251,000




(1)
            The
                value of “in-the-money” stock options represents the difference between
                the $0.05 exercise price of such options and the fair market value
                of
                $2.75 per share of common stock as of March 31, 2006, the closing
                price of
                the common stock reported on the OTC Bulletin
                Board.


(2)
            The
                value of “in-the-money” stock options represents the difference between
                the $0.24 exercise price of such options and the fair market value
                of
                $2.75 per share of common stock as of March 31, 2006, the closing
                price of
                the common stock reported on the OTC Bulletin
                Board.





No
      options
      were exercised during the fiscal year ended December 31, 2005. No stock
      appreciation rights were outstanding at the end of the 2005 fiscal
      year.




**Executive
      Employment Contracts**




*Prentis
      B. Tomlinson, Jr* .
      Mr.
      Tomlinson entered into an employment agreement effective October 1, 2005. The
      agreement has a three year term and provides that Mr. Tomlinson will serve
      as
      President and CEO. Mr. Tomlinson receives an annual base salary of $180,000,
      which may be further increased at our discretion. Not withstanding the above,
      the base salary of Mr. Tomlinson shall be increased to $360,000 on the third
      anniversary date from the effective date of the agreement. Mr. Tomlinson has
      also received the following stock options pursuant to the agreement:
      non-statutory options to purchase 4,000,000 shares of our common stock at a
      price of $.05 per share, which options are fully vested and shall survive Mr.
      Tomlinson termination date. Mr. Tomlinson is entitled to participate in any
      employee benefit plans that are made available to our employees.




*Edward
      L. Moses* .
      Mr.
      Moses entered into an employment agreement effective October 1, 2005. The
      agreement has a three year term and provides that Mr. Moses will serve as Vice
      President of Operations. Mr. Moses receives an annual base salary of $120,000,
      which may be increased at our discretion. Mr. Moses has also received the
      following stock options pursuant to the agreement: non-statutory options to
      purchase 750,000 shares of our common stock at a price of $0.05 per share,
      which
      options are fully vested. Mr. Moses is entitled to participate in our employee
      benefit plans are made available to our employees.




*O.
      Oliver Pennington* .
      Mr.
      Pennington entered into an employment agreement effective December 28, 2005.
      The
      agreement has a three year term and provides that Mr. Pennington will serve
      as
      Vice President and Chief Financial Officer. Mr. Pennington receives an annual
      base salary of $200,000, which may be increased at our discretion. Mr.
      Pennington has also received the following stock options pursuant to the
      agreement: non-statutory options to purchase 500,000 shares of our common stock
      at a price of $.24 per share, which options are fully vested and has received
      incentive stock options to purchase 500,000 shares of our common stock at a
      price of $.24 pursuant to our qualified stock option plan that shall vest over
      a
      four year period. Mr. Pennington is entitled to participate in our employee
      benefit plans are made available to our employees.




47


*Peter
      F. Frey* .
      Mr. Frey
      entered into an employment agreement effective December 21, 2005. The agreement
      has a three-year term and provides that Mr. Frey will serve as Controller. Mr.
      Frey receives an annual base salary of $135,000, which may be increased at
      our
      discretion. Mr. Frey also received the following stock option pursuant to the
      agreement: non-qualified options to purchase 100,000 shares of our common stock
      at a price of $.24 per share. Such options are fully vested, and (2) incentive
      stock options to purchase 100,000 shares of our common stock at a price of
      $.24
      pursuant to our qualified stock option plan that shall vest over a four year
      period. Mr. Frey is entitled to participate in other employee benefit plans
      that
      we may adopt.




*Other
      Employment Agreement Terms* .
      Each of
      the foregoing employment agreements also include the following terms:




During
      the
      term of the agreement, we may terminate the employee’s employment at any time by
      giving three months written notice. Additionally, we may terminate the
      employee’s employment for cause upon written notice by the company. The employee
      may terminate his employment for “Good Reason” when there is a decrease in his
      base salary, or a materially adverse diminution of the overall level of his
      responsibilities, or a material breach by us of any term or provision of the
      employment agreement or after a change of control, or any personal reason that
      the Board or the Compensation Committee of the Board in its discretion
      determines shall constitute “Good Reason.”




In
      the
      event of a “Change of Control” (as defined below), if the employee is terminated
      without cause or he terminates his employment for good reason at any time during
      the three year period following the Change of Control, the employee will be
      entitled to the following: all outstanding stock options granted on or prior
      to
      the Change of Control shall become immediately exercisable and shall remain
      exercisable for a period of three years, a lump-sum payment equal to three
      times
      the employee’s then current base salary, a lump-sum payment equal to three times
      the highest annual bonus allowed under the Executive Bonus Plan during the
      three
      year period preceding the date of the Change of Control, and continued medial
      and dental coverage for three years from the termination date at no cost to
      the
      employee.




For
      purposes of the agreement, a “Change of Control” means: a tender offer for more
      than 25% of the outstanding voting securities of the company; the company is
      merged or consolidated with another corporation, and as a result of the
      transaction, less than 75% of the outstanding voting securities of the resulting
      corporations are beneficially owned by stockholders of the company immediately
      prior to the transaction; the company sells all or substantially all of its
      assets to another entity that is not a wholly-owned subsidiary; during any
      15-month period, individuals who at the beginning of such period constituted
      the
      board of directors of the company (including any new member whose election
      was
      approved by at least 2/3 of the members of the board of directors then still
      in
      office who were members at the beginning of such period) cease for any reason
      to
      constitute at least a majority of the board of directors; the Compensation
      Committee of the Board of Directors determines, in its sole discretion, that
      a
      change of control has occurred; or 80% or more of the outstanding voting
      securities of the company are acquired by any person or entity other than the
      company, its subsidiaries or its affiliates.




The
      employment agreement with each employee also contains customary nondisclosure
      and proprietary rights provisions. In addition, for the period from October
      1,
      2005 until two years after termination of the agreement, the employee is subject
      to a non-solicitation agreement with respect to, among others, our customers,
      suppliers and employees.





48




The
        employment aggreement with each of these employees requires them to devote
        such
        of his business time, attention and energies to the business of the Company
        as
        are reasonably necessary to perform his duties under this Agreement. The
        agreements also restrict the employee from engaging in any other business
        activity, whether or not pursued for gain, profit or other pecuniary advantage,
        which would impact his ability to fulfill his duties to the Company under
        this
        Agreement, without the prior written consent of the Board. As disclosed herein,
        each of these officers and employees is concurrently serving as an officer
        or
        employee of Standard Drilling, Inc. Such service has been approved by the
        Company's Board of Directors.




As
        of
        February 14, 2006, Mr. Tomlinson, Mr. Moses, Mr. Pennington and Mr. Frey
        are
        also employed by Standard Drilling, Inc. and serve as its Chairman, President,
        CFO and controller, respectively. As a result, each of these officers devote
        some of their business time to the management of Standard Drilling, Inc.
        The
        amount of time devoted to the management of our business and the management
        of
        Standard Drilling's business by each of these officers fluctuates from day
        to
        day and week to week. An officer may devote his time exclusively to the
        management of Standard Drilling for a period of time. Each of the officers
        has
        significant discretion as to whether to devote time to management of the
        Company's business or to management of Standard Drilling's
        business.




**Compensation
      of Directors**




On
      April
      4, 2006, the Compensation Committee (the “Committee”) of our Board of Directors
      recommended that the Board approve new compensation for Board members to be
      effective as of January 1, 2006. The new compensation was approved by the Board
      on April 25, 2006. Under the new compensation package, non-employee directors
      will receive an annual retainer of $20,000 and $1,500 for each formal Board
      meeting attended. In addition, each non-employee director who is also a
      committee member will receive an annual committee retainer fee of $2,500 and
      $750 for each formal committee meeting attended. Each non-employee director
      who
      is also a committee chair will receive an additional annual retainer of $2,500.
      In addition, each non-employee director will be granted 20,000 shares of
      restricted common stock and an option for 25,000 shares of common stock. In
      addition, any new non-employee directors will be granted 20,000 shares of
      restricted common stock an option to purchase 25,000 shares of the common stock
      at the market price at the time of grant as a one time award upon joining the
      Board. All option awards will be non-qualified stock options and, together
      with
      all awards of restricted stock, will be issued pursuant to equity compensation
      plans in effect at the time of the award and will be exercisable for a ten-year
      period from the date of grant of the award. The restricted stock and option
      awards will vest in 50% installments on each December 31.





49


**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**




The
      following table sets forth the number of shares of our common stock beneficially
      owned as of June 9, 2006 by:




·
            those
                persons or groups known to beneficially own more than 5% of our common
                stock;




·
            each
                of our executive officers and directors;
                and




·
            all
                of our directors and executive officers as a
                group.




For
      purposes of this table, beneficial ownership is determined in accordance with
      Rule 13d-3 promulgated under the Securities Exchange Act of 1934. Except as
      indicated below, the security holders listed possess sole voting and investment
      power with respect to the shares beneficially owned by that person.




**Name
                and Address**(1)
            
            **Common
                Stock**
            
            **Ownership
                (%)**(2)Prentis
                B. Tomlinson(3)
            
            
            20,060,000
            
            
            35.4
            %Edward
                L. Moses(4)
            
            
            1,500,000
            
            
            2.65
            %W.
                Richard Anderson(4)
            
            
            400,000
            
            
            *O.
                Oliver Pennington(4)
            
            
            500,000
            
            
            *Peter
                F. Frey(4)
            
            
            100,000
            
            
            *International
                Capital Advisory, Inc.(5)
            
            
            3,896,025
            
            
            6.88
            %The
                Tobin Family Trust(6)
            
            
            2,650,000
            
            
            4.68
            %All
                executive officers and directors as a group(5
                persons):
            
            
            22,560,000
            
            
            39.84
            %





*
            Represents
                less than 1% of the issued and outstanding shares of common
                stock.





(1)
            Except
                as otherwise noted, the street address of the named beneficial owner
                is
                1667 K Street, NW, Suite 1230, Washington, DC
                20006.


(2)
            Based
                on a total of (i) 53,980,806 shares of common stock issued and outstanding
                on March 31, 2006, plus (ii) shares that may be issued upon exercise
                of
                options that are exercisable within 60
                days.


(3)
            Includes
                (i) 540,000 shares of stock owned directly, (ii) 15,250,000 shares
                of
                stock held by Calibre Energy Partners, LLC., which Mr. Tomlinson
                controls,
                (iii) 270,000 shares of common stock to be issued upon the exercise
                of
                warrants, and (iv) 4,000,000 shares of common stock that may be issued
                upon the exercise of options exercisable in the next 60
                days.


(4)
            Represents
                shares of common stock that may be acquired upon exercise of options
                in
                the next 60 days.


(5)
            Includes
                296,025 shares that may be acquired upon exercise of warrants in
                the next
                60 days. The address for the beneficial owner is 202 Melrose Avenue,
                Toronto, Ontario, Canada.


(6)
            Includes
                250,000 shares that may be acquired upon exercise of warrants in
                the next
                60 days. The address for the beneficial owner is 40 Bassano Rd.,
                Toronto,
                Ontario, Canada M2N 2K1.




50





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**




Our
      President and Chairman, Mr. Prentis B. Tomlinson, Jr., owns a 17.9% (on a fully
      diluted basis) stake of Kerogen Resources, Inc., a privately held oil and gas
      exploration company. We have entered into four agreements with Kerogen
      Resources, Inc.




First,
      we
      are parties to a letter agreement with Kerogen Resources pursuant to which
      we
      are participating in the Reichmann Petroleum project. The
      project is a joint venture with Kerogen Resources, Crosby Minerals and Reichmann
      Petroleum Corporation to explore, acquire and develop properties located in
      the
      Barnett Shale in the Ft. Worth Basin of north Texas. Reichmann is the operator
      of the properties. In October 2005 we acquired, through Kerogen Resources,
      a
      12.5% working interest in 6,190 net acres of leasehold interests in Parker,
      Tarrant, Denton, and Johnson Counties, Texas. Subsequent to the initial
      acquisition, we purchased a 25% working interest in 443 net acres of leasehold
      interests from Reichmann Petroleum in Johnson County, Texas. Kerogen Resources
      provides the technical guidance for the project and in exchange will receive
      12.5% of our working interest in each well drilled. As of March
      31,
      2006, we have paid Kerogen a total $4,835,061, of which $3,179,660 was for the 12.5% working interest in the initial 6,190
      acres, prepayment of drilling costs on 12 and for
      the 25% working interest in the leasehold interest in Johnson County, TX and
      $1,655,401 was for operating costs (ie, drilling and completion costs) of the
      JV
      since the original payment. Kerogen
      then paid such amounts to Reichmann Petroleum Corporation as reimbursement
      of
      leasehold costs, drilling and operating expenses .
      Currently, our net acreage position subject to the Reichmann agreement is 773.94
      net acres. As
      of May
      31, 2006, Calibre has participated in 22 gross wells. Four wells are currently
      producing, nine wells have been drilled, completed and fraced and are waiting
      to
      be hooked up to a pipeline, four wells have been drilled, completed and are
      cleaning up after being frac prior to being hooked up to a gas gathering line,
      three wells have been drilled to total depth, completed and are waiting to
      be
      fraced, and two wells are currently drilling.




Second,
      we
      have entered into a Participation Agreement with Kerogen Resources for the
      exploration and development of prospects in the South Fort Worth Basin as
      described above under “Our Business - Our Projects.” Pursuant to this agreement
      we are obligated to pay Kerogen Resources $597,000 for its identification of
      prospects; we have paid Kerogen Resources $500,000 of such amount. As of March
      31, we
      have
      leased approximately 2,399 net leasehold acres under 8,885 gross leasehold
      acres
      pursuant to this agreement.  We
      have
      paid $666,637 to Kerogen for participation in these leases in the Hill County
      area of Texas. All the leasehold acreage is currently undeveloped. The price
      paid for leases represented market prices for similar acreage in the
      area.




Third,
      we
      have entered into a Participation Agreement with Kerogen Resources for the
      exploration and development of prospects in the Williston Basin as described
      above under “Our Business - Our Projects.” Pursuant to this agreement we are
      obligated to pay Kerogen Resources $638,600 for its identification of prospects;
      we have paid Kerogen Resources $550,000 of such amount. As of March 31, 2005,
      we
      have not leased or developed of any properties pursuant to this
      agreement.




Fourth,
      Calibre held a promissory note issued by Kerogen Resources. The principal owed
      pursuant to the note was $300,000 and it did bear interest at the rate of 6.25%
      per annum. The principal of this note and accrued interest thereon was due
      and
      payable in a single installment on the maturity date. The maturity date was
      the
      earlier of September 30, 2006 or the date on which Kerogen Resources received
      gross proceeds of at least $6,000,000 from a sale of equity, in one or more
      transactions. Calibre acquired the note from Mr. Tomlinson in October 2005
      in
      exchange for a payment of $300,000. This note was entered into by Mr. Tomlinson,
      a founder of Calibre Energy, in anticipation of the formation of Calibre Energy.
      After the incorporation of Calibre Energy, the company entered into agreements
      with Kerogen for the purpose of identification, exploration
      and development of prospects in the Fort Worth Basin and
      Williston Basin. The Reichmann Petroleum Project and South Fort Worth Basin
      project are projects identified by these agreements. On March 24, 2006, Kerogen
      Resources repaid $314,623.29, the full amount of the promissory note and all
      interest due. The note in the amount of $300,000 was paid on March 24, 2006
      together with interest in the amount of $14,623.29.




51


On
      March
      24, 2006, we loaned $350,000 to Standard Drilling, Inc. pursuant to a loan
      bearing interest at 4% per annum. On April 7, 2006 Standard Drilling, Inc.
      repaid us $350,544.54, the full amount of the loan with all interest due. Mr.
      Tomlinson, our President, controls a limited liability company that, at the
      time
      of the loan, owned 53% of Standard Drilling, Inc. Further,
      Standard Drilling’s principal officers also serve as officers of Calibre.





Several
          of
          our officers, including our President and CFO, are also employed as officers
          and/or directors of Standard Drilling, Inc. a company engaged in the business
          of
          drilling services. As a result, each of these officers devotes some of
          their
          business time to the management of Standard Drilling, Inc. The amount of
          time
          devoted to the management of our business and the management of Standard
          Drilling's business by each of these officers fluctuates from day to day
          and
          week to week. An officer may devote his time exclusively to the
          management of Standard Drilling for a period of time. Each of the officers
          has significant discretion as to whether to devote time to management of
          the
          Company's business or to management of Standard Drilling's
          business.
  The
        dual
        obligations also create a risk of a conflict of interest for those officers.
        We
        intend to appoint two or more new directors who will be independent directors.
        To the extent conflicts of interest do arise, we intend to have future conflicts
        of interest reviewed and resolved by special board committee made up of
        independent directors. We are in the process of identifying individuals who
        may
        serve as independent directors.
  We
        anticipate engaging Standard Drilling to provide us with drilling services.
        The
        terms of any such engagement will be reviewed and approved or rejected by
        the
        special committee of independent directors. We expect the terms of any such
        agreement to be no less favorable to us than those terms which may have been
        obtained from unrelated third parties. When appropriate, we will obtain
        competing bids from other drilling service companies, and may engage them
        to
        provide drilling services.
  We
        share
        facilities and some overhead costs with Standard Drilling in Washington D.C.
        and are
        finalizing a service agreement pursuant to which
        Standard Drilling will
        pay us for
        office space and supplies, secretarial services and any other services we
        provide to them in sharing the Washington D.C. office space. The average
        monthly
        payment by Standard Drilling to us under the services agreement is expected
        to
        be approximately $20,000. The services agreement may be terminated by either
        party on 30 days notice.
  We
        believe
        all of the transactions with related parties have been on terms no less
        favorable to us than those terms which may have been obtained from unrelated
        third parties.
  In
        addition, Mr. O. Oliver Pennington, our Chief Financial Officer, is our
        President’s son-in-law.


52
 
 **PRO
        FORMA**
 **FINANCIAL
        INFORMATION**
 **Unaudited**
  **IMPORTANT
        NOTICE:**
  The
        following unaudited Pro Forma financial information of Calibre Energy, Inc.
        (“Calibre”) and Hardwood Doors & Milling Specialities, Inc. (“Hardwood”) set
        forth a post merger snapshot of the combined balance sheet at December 31,
        2005
        as though the merger had occurred as of the balance sheet date. Hardwood
        had no
        significant operations; therefore, no pro forma statement of operations is
        presented. The Pro Forma transactions presented are required by the merger
        agreement or by accounting principles to be completed upon the completion
        of the
        reverse acquisition.
  **Pro
        Forma Balance Sheet**
 **December
        31, 2005**
 **(unaudited)**
  **Adjustments**
              
              **ProFormaCombined****Assets**
              
              **CEI**
              
              **Hardwood**
              
              **Debit**
              
              
              **Credit****Current
                  Assets**Cash
              
              $
              2,105,749
              
              $
              100,872
              
              
              
              (5)
              
              $
              100,872
              
              $
              2,105,749Accounts
                  Receivable
              
              
              33,960
              
              
              
              
              
              
              
              
              
              
              
              
              33,960Notes
                  receivable
              
              
              300,000
              
              
              —
              
              
              
              
              
              
              
              
              
              300,000Other
                  current assets
              
              
              104,100
              
              
              —
              
              
              
              (4)
              
              
              100,000
              
              
              4,100Total
                  current assets
              
              $
              2,543,809
              
              
              100,872
              
              
              
              
              
              
              200,872
              
              
              2,443,809**Noncurrent
                  Assets**Oil
                  and gas properties, using full cost method
              
              
              5,308,881
              
              
              
              
              
              
              
              
              
              
              
              
              5,308,881Furniture
                  and office equipment
              
              
              121,778
              
              
              —
              
              
              
              
              
              
              
              
              
              121,778Less
                  accumulated depreciation, depletion, amortization and
                  impairment
              
              
              (35,599
              )
              
              —
              
              
              
              
              
              
              
              
              
              (35,599
              )Net
                  property, furniture and office equipment
              
              
              5,395,060
              
              
              —
              
              
              
              
              
              
              
              
              
              5,395,060Total
                  assets
              
              $
              7,938,869
              
              $
              100,872
              
              
              
              
              
              $
              200,872
              
              $
              7,838,869**Liabilities
                  and Shareholders’ Equity****Current
                  Liabilities**Accounts
                  payable- trade
              
              
              946,852
              
              
              
              
              
              
              
              
              
              
              
              
              946,852Accounts
                  payable- employees
              
              
              98,630
              
              
              
              
              
              
              
              
              
              
              
              
              98,630Stock
                  payable
              
              
              
              
              
              100,000
              (5)
              
              100,000
              
              
              
              
              
              
              —Accrued
                  expenses
              
              
              20,482
              
              
              12,511
              (5)
              
              12,511
              
              
              
              
              
              
              20,482Note
                  Payable - Stockholder
              
              
              -
                  -
              
              
              10,000
              (5)
              
              10,000
              
              
              
              
              
              
              —Total
                  liabilities
              
              
              1,065,964
              
              $
              122,511
              
              
              122,511
              
              
              
              
              
              
              1,065,964**Shareholders’
                  Equity**Preferred
                  stock
              
              
              —
              
              
              —
              
              
              
              
              
              
              
              
              
              —Common
                  stock
              
              
              47,000
              
              
              23,100
              (2)
              
              19,575
              (1)
              
              
              
              
              
              50,525Additional
                  paid-in capital
              
              
              8,727,556
              
              
              124,900
              (1)
              
              
              (2)
              
              
              19,575
              
              
              8,702,392(3)
              
              169,639Accumulated
                  deficit
              
              
              (1,901,651
              )
              
              (169,639)
              (4)
              
              100,000
              (3)
              
              
              169,639
              
              
              (1,980,012
              )(5)
              
              
              21,639Total
                  shareholders’ equity
              
              
              6,872,905
              
              
              (21,639
              )
              
              
              
              
              
              
              
              
              6,772,905Total
                  liabilities and shareholders’ equity
              
              $
              7,938,869
              
              $
              $100,872
              
              $
              411,725
              
              
              $
              210,853
              
              $
              7,838,869  Notes




(1)
              Merger
                  agreement provides for the cancellation of 19,575,000 shares of
                  Hardwood
                  common stock.




(2)
              As
                  a
                  result of reverse merger accounting, additional paid in capital
                  of
                  Hardwood is eliminated.




(3)
              As
                  a
                  result of the reverse merger accounting, the Hardwood’s accumulated
                  deficit is eliminated.




(4)
              Represents
                  the cost of the merger to Calibre of $100,000 reflected in
                  recapitalization expense.




(5)
              Represents
                  the net liabilities assumed by the principal shareholder of Hardwood
                  of
                  $21,639 included in Hardwood’s balance
                  sheet.




53




**ITEM
      13. EXHIBITS** **.**







**(a)**
            **Exhibits.**The
                following exhibits of Calibre are included
                herein.




ExhibitNo.
                Description2.1
                Amended
                    and Restated Agreement and Plan of Reorganization dated January
                    17, 2006
                    by and among Hardwood Doors and Milling Specialities, Inc., a
                    Nevada
                    corporation, Calibre Energy Acquisition Corp., a Delaware corporation,
                    and
                    Calibre Energy, Inc., a Delaware corporation, (Incorporated by
                    reference
                    from Exhibit 3.1 to the Current Report on Form 8-K filed by Calibre
                    Energy, Inc. on January 27, 2006)3.1
                Amended
                    and Restated Articles of Incorporation of Hardwood Doors and
                    Milling
                    Specialties, Inc. (Incorporated by reference to Exhibit 3.1 of
                    Calibre
                    Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)3.3
                Bylaws
                    of Calibre Energy, Inc. (Incorporated by reference to Exhibit
                    3.3 of
                    Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.1
                Registration
                    Rights Agreement dated October 31, 2005 by and among Calibre
                    Energy, Inc.
                    and the stockholders named therein. (Incorporated by reference
                    to Exhibit
                    10.1 of Calibre Energy, Inc.’s Current Report on Form 8-K filed January
                    27, 2006.)10.2
                Form
                    of Common Stock Warrant dated October 31, 2005 issued by Calibre
                    Energy,
                    Inc. to the purchasers. (Incorporated by reference to Exhibit
                    10.2 of
                    Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.3
                Participation
                    Agreement (Southern Fort Worth Basin) dated September 20, 2005
                    among
                    Calibre Energy, Inc., Kerogen Resources, Inc. (Incorporated by
                    reference
                    to Exhibit 10.3 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                    January 27, 2006.)10.4
                Letter
                    Agreement re: Barnett Share Acquisition dated October 12, 2005
                    between
                    Reichmann Petroleum and Calibre Energy, Inc. (Incorporated by
                    reference to
                    Exhibit 10.4 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                    January 27, 2006.)10.5
                Participation
                    Agreement (Williston Basin) dated September 20, 2005 between
                    Calibre
                    Energy, Inc. and Kerogen Energy, Inc. (Incorporated by reference
                    to
                    Exhibit 10.5 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                    January 27, 2006.)10.6
                First
                    Amendment to Participation Agreements dated October 31, 2005
                    among Calibre
                    Energy, Inc., Kerogen Resources, Inc., Triangle Petroleum USA,
                    Inc. and
                    Wynn Crosby Partners I, LP. (Incorporated by reference to Exhibit
                    10.6 of
                    Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.7
                Calibre
                    Energy, Inc. 2005 Stock Incentive Plan (Incorporated by reference
                    to
                    Exhibit 10.7 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                    January 27, 2006.)10.8
                Form
                    of Incentive Stock Option Agreement (Incorporated by reference
                    to Exhibit
                    10.8 of Calibre Energy, Inc.’s Current Report on Form 8-K filed January
                    27, 2006.)10.9
                Form
                    of Non-Statutory Stock Option Agreement (Incorporated by reference
                    to
                    Exhibit 10.9 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                    January 27, 2006.)10.10
                Employment
                    Agreement dated September 11, 2005 between Calibre Energy, Inc.
                    and
                    Prentis B. Tomlinson, Jr. (Incorporated by reference to Exhibit
                    10.10 of
                    Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.11
                Employment
                    Agreement dated September 22, 2005 between Calibre Energy, Inc.
                    and Moses.
                    (Incorporated by reference to Exhibit 10.11 of Calibre Energy,
                    Inc.’s
                    Current Report on Form 8-K filed January 27, 2006.)10.12
                Employment
                    Agreement dated December 21, 2005 between Calibre Energy, Inc.
                    and Peter
                    F. Frey (Incorporated by reference to Exhibit 10.12 of Calibre
                    Energy,
                    Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.13
                Employment
                    Agreement dated December 28, 2005 between Calibre Energy, Inc.
                    and O.
                    Oliver Pennington, III (Incorporated by reference to Exhibit
                    10.13 of
                    Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                    2006.)10.14
                Form
                    of Stock Purchase Warrant dated April 18, 2006.10.15
                Registration
                    Rights Agreement dated April 18, 2006.23.1
                Consent
                    of Malone & Bailey, P.C.23.3
                Consent
                    of Ryder Scott Company, L.P.31.1*
                Chief
                    Executive Officer Certification Pursuant to Section 13a-14 of
                    the
                    Securities Exchange Act31.2*
                Chief
                    Financial Officer Certification Pursuant to Section 13a-14 of
                    the
                    Securities Exchange Act32.1*
                Certification
                    of the CEO, pursuant to 18 U.S.C. §§ 1350 as adopted pursuant to §§ 906 of
                    the Sarbanes-Oxley Act of 200231.2*
                Certification
                    of the CFO, pursuant to 18 U.S.C. §§ 1350 as adopted pursuant to §§ 906 of
                    the Sarbanes-Oxley Act of
                    2002
 *Filed
      herewith




54


**LEGAL
      MATTERS**




The
      validity of the common stock offered by this report was passed upon for us
      by
      Vinson & Elkins L.L.P., Houston, Texas.




**EXPERTS**




The
      consolidated financial statements for the years ended December 31, 2005 included
      in this reports have been audited by Malone & Bailey, PC, independent
      registered public accounting firm, as stated in their report appearing
      herein.




**RESERVE
      ENGINEERS**




Certain
      estimates of our net oil and natural gas reserves and related information as
      of
      December 31, 2005 included in this report have been derived from engineering
      reports prepared by Ryder Scott Company, L.P. All such information has been
      so
      included on the authority of such firm as experts.






55


**Item
      14. Principal Accountant Fees and Services**





Audit
      Fee







**Item
      14. Principal Accountant Fees and Services.**




During fiscal year 2005, the aggregate fees which we paid to Malone &
Bailey, PC, our independent auditors, for professional services were as
      follows:





Fiscal
                Year Ended December 31, 2005Audit
                Fees
            
            $
            51,585Audit-Related
                Fees
            
            
            -Tax
                Fees
            
            
            -All
                Other Fees
            
            
            -




(1)
            
            Fees
                for audit services include fees associated with the annual audit,
                and with
                the preparation of our SB-2.




Audit-Related
      Fees





There
      were
      no fees for other audit related services for fiscal year ended
      2005.





Tax
      Fees





There
      were
      no fees relating to tax compliance, tax advice and tax planning.





All
      Other Fees





There
      were
      no other aggregate fees billed in either of the last two fiscal years for
      products and services provided by the principal accountant, other than the
      services reported above.




**Audit
      Committee Pre-Approval of Audit and Permissible Non-Audit Services of
      Independent Registered Public Accounting Firm.**




As required by the Audit Committee charter, the Audit Committee pre-approves
      the
      engagement of Malone & Bailey, PC for all audit and permissible non-audit
      services. The Audit Committee annually reviews the audit and permissible
      non-audit services performed by Malone & Bailey, PC, and reviews and
      approves the fees charged by Malone & Bailey, PC The Audit Committee has
      considered the role of Malone & Bailey, PC in providing tax and audit
      services and other permissible non-audit services to us and has concluded that
      the provision of such services was compatible with the maintenance of Malone
      & Bailey, PC’s independence in the conduct of its auditing
      functions.


56


SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned thereunto duly
      authorized.




Date:
                  October 3, 2006
              CALIBRE
                  ENERGY, INC.
                
                By:/s/
                  Prentis B. Tomlinson, Jr.
                Prentis
                  B. Tomlinson, Jr.
                Chief
                  Executive Officer
                
                By
                  :/s/
                  O. Oliver Pennington III
                O.
                  Oliver Pennington III
                Chief
                  Financial Officer





In
      accordance with the Exchange Act, this report has been signed by the following
      persons on behalf of the registrant and in the capacities and on the dates
      indicated.








Date:
                  October 3, 2006
              By:/s/
                  Prentis B. Tomlinson, Jr.
                Prentis
                  B. Tomlinson, Jr.
                DirectorBy:/s/
                  Edward L. Moses
                Edward
                  L. Moses
                DirectorBy:/s/
                  W. Richard Anderson
                W.
                  Richard Anderson
                Director





57