---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 2008

or

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

For the transition period from ______________ to ______________

Commission File Number: 000-52721

FOX PETROLEUM INC.(Exact
name of registrant as specified in its charter)

|Nevada                                                               | N/A                                 
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|64 Knightsbridge, London, England, UK                                | SW1X 7JF                            
|(Address of principal executive offices)                             | (Zip Code)                          

44-207-590-9630(Registrants telephone number,
including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer | [ ] |                                               | Accelerated filer         | [ ]
|----------------------- | --- | --------------------------------------------- | ------------------------- | ---
|Non-accelerated filer   | [ ] | (Do not check if a smaller reporting company) | Smaller reporting company | [X]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date:
84,668,245 shares of common stock issued and outstanding as of January 20,
2009

---

2

PART I

Item 1. Financial Statements.



FOX PETROLEUM INC.

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(Stated in US Dollars)

(Unaudited)

---

FOX PETROLEUM INC.
  (A Development Stage
  Company)
  INTERIM CONSOLIDATED BALANCE SHEETS
  November 30, 2008 and
  February 29, 2008
  (Stated in US Dollars)
  (Unaudited)

|ASSETS                                                                   |   | November 30, |   |   | February 29, |  
|------------------------------------------------------------------------ | - | ------------ | - | - | ------------ | -
|                                                                         |   | 2008         |   |   | 2008         |  
|                                                                         |   |              |   |   |              |  
|Current                                                                  |   |              |   |   |              |  
|Cash  general                                                           | $ | 9,477        |   | $ | 271,601      |  
| restricted                                                             |   | 20,114       |   |   | 30,000       |  
|VAT refund and
      other receivables                                   |   | 117,667      |   |   | -            |  
|Prepaid expenses                                                         |   | 35,648       |   |   | 63,084       |  
|                                                                         |   |              |   |   |              |  
|                                                                         |   | 182,906      |   |   | 364,685      |  
|Oil and gas interests  Note 4                                           |   | 9,169,202    |   |   | 5,800,917    |  
|                                                                         |   |              |   |   |              |  
|                                                                         | $ | 9,352,108    |   | $ | 6,165,602    |  
|                                                                         |   |              |   |   |              |  
|LIABILITIES                                                              |   |              |   |   |              |  
|                                                                         |   |              |   |   |              |  
|Current                                                                  |   |              |   |   |              |  
|Accounts payable and accrued
      liabilities  Notes 5 and 6           | $ | 4,547,658    |   | $ | 664,519      |  
|Due to related
      parties  Note 6                                    |   | 50,000       |   |   | 29,975       |  
|Current portion of notes payable
       Note 5                          |   | 1,487,980    |   |   | -            |  
|                                                                         |   |              |   |   |              |  
|                                                                         |   | 6,085,638    |   |   | 694,494      |  
|Notes payable  Note 5                                                   |   | 1,430,223    |   |   | -            |  
|Fees payable in stock and warrants  Notes 5(e), 8(c), (e)
      and (f) |   | 82,909       |   |   | 35,000       |  
|                                                                         |   |              |   |   |              |  
|                                                                         |   | 7,598,770    |   |   | 729,494      |  
|                                                                         |   |              |   |   |              |  
|STOCKHOLDERS EQUITY                                                     |   |              |   |   |              |  
|                                                                         |   |              |   |   |              |  
|Capital stock  Notes 4, 5, 6, 7, 8 and 10                               |   |              |   |   |              |  
|Authorized:                                                              |   |              |   |   |              |  
|90,000,000 common shares, par value $0.001 per share                     |   |              |   |   |              |  
|Issued and
      outstanding:                                            |   |              |   |   |              |  
|67,818,245 common shares (February 29, 2008: 14,968,245)                 |   | 67,818       |   |   | 14,968       |  
|Additional paid-in capital                                               |   | 38,630,284   |   |   | 8,168,634    |  
|Stock subscriptions receivable  Note 7(a)ii                             |   | (25,000,000  | ) |   | -            |  
|Deficit accumulated during the development
      stage                   |   | (11,944,764  | ) |   | (2,747,494   | )
|                                                                         |   |              |   |   |              |  
|                                                                         |   | 1,753,338    |   |   | 5,436,108    |  
|                                                                         |   |              |   |   |              |  
|                                                                         | $ | 9,352,108    |   | $ | 6,165,602    |  

SEE ACCOMPANYING NOTES

---

FOX PETROLEUM INC.
  (A Development Stage
  Company)
  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
  for the three and
  nine months ended November 30, 2008 and 2007 and
  for the period November 4,
  2004 (Date of Inception) to November 30, 2008
  (Stated in US
  Dollars)
  (Unaudited)

|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   | November 4,   |  
|---------------------------------------- | - | ------------------ | - | - | ----------------- | - | - | ------------- | - | - | ---------- | - | - | ------------- | -
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   | 2004 (Date of |  
|                                         |   | Three months ended |   |   | Nine months ended |   |   | Inception) to |  
|                                         |   | November 30,       |   |   | November 30,      |   |   | November 30,  |  
|                                         |   | 2008               |   |   | 2007              |   |   | 2008          |   |   | 2007       |   |   | 2008          |  
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   | (Cumulative)  |  
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Expenses                                 |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Accounting and audit fees                | $ | 31,409             |   | $ | 14,309            |   | $ | 135,718       |   | $ | 49,421     |   | $ | 232,648       |  
|Accretion of
      convertible note      |   | 204,750            |   |   | -                 |   |   | 302,849       |   |   | -          |   |   | 302,849       |  
|Advertising and public relations         |   | 44,428             |   |   | 783,648           |   |   | 250,669       |   |   | 1,547,423  |   |   | 1,951,044     |  
|Bank charges                             |   | 2,192              |   |   | 3,344             |   |   | 9,194         |   |   | 6,389      |   |   | 19,516        |  
|Consulting fees  Note 6                 |   | (155,629           | ) |   | 82,170            |   |   | 470,109       |   |   | 121,170    |   |   | 678,907       |  
|Filing and transfer
      agent          |   | 6,841              |   |   | 4,608             |   |   | 24,478        |   |   | 6,626      |   |   | 41,163        |  
|Finance fees  Notes 5 and 8(c)          |   | 2,919,413          |   |   | -                 |   |   | 3,648,653     |   |   | -          |   |   | 3,648,653     |  
|Insurance                                |   | -                  |   |   | 10,586            |   |   | 45,117        |   |   | 10,586     |   |   | 64,752        |  
|Interest on notes payable                |   | 96,085             |   |   | -                 |   |   | 199,613       |   |   | -          |   |   | 199,613       |  
|Legal fees                               |   | 102,349            |   |   | 42,569            |   |   | 211,986       |   |   | 96,327     |   |   | 375,844       |  
|Management fees  Note 6                 |   | 215,906            |   |   | 49,073            |   |   | 444,159       |   |   | 121,073    |   |   | 653,599       |  
|Mineral property
      acquisition and   |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|exploration costs                        |   | -                  |   |   | -                 |   |   | -             |   |   | -          |   |   | 17,000        |  
|Office and
      miscellaneous  Note 6  |   | 4,032              |   |   | 50,770            |   |   | 169,101       |   |   | 100,727    |   |   | 346,345       |  
|Travel and entertainment                 |   | 26,394             |   |   | 64,901            |   |   | 74,708        |   |   | 112,574    |   |   | 211,271       |  
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Loss for the period before other item    |   | (3,498,170         | ) |   | (1,105,978        | ) |   | (5,986,354    | ) |   | (2,172,316 | ) |   | (8,743,204    | )
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Other items:                             |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Impairment of oil &
      gas assets -   |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Note
      4(b)                          |   | (2,512,468         | ) |   | -                 |   |   | (2,512,468    | ) |   | -          |   |   | (2,512,468    | )
|Loss on extinguishment
      of debt    |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Note5                                    |   | (775,574           | ) |   | -                 |   |   | (775,574      | ) |   | -          |   |   | (775,574      | )
|Gain on recovery of VAT
      receivable |   | 76,502             |   |   | -                 |   |   | 76,502        |   |   | -          |   |   | 76,502        |  
|Interest and other income                |   | 130                |   |   | 942               |   |   | 624           |   |   | 8,130      |   |   | 9,980         |  
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Net loss for the period                  | $ | (6,709,580         | ) | $ | (1,105,036        | ) | $ | (9,197,270    | ) | $ | (2,164,186 | ) | $ | (11,944,764   | )
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Basic and diluted loss per share         | $ | (0.38              | ) | $ | (0.08             | ) | $ | (0.52         | ) | $ | (0.18      | ) |   |               |  
|                                         |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Weighted average number of shares        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|outstanding                              |   | 17,570,992         |   |   | 14,310,890        |   |   | 17,530,609    |   |   | 11,716,231 |   |   |               |  

SEE ACCOMPANYING NOTES

---

FOX PETROLEUM INC.
  (A Development Stage
  Company)
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  for the nine months
  ended November 30, 2008 and 2007 and
  for the period November 4, 2004 (Date of
  Inception) to November 30, 2008
  (Stated in US
  Dollars)
  (Unaudited)

|                                                      |   |                   |   |   |               |   |   | November 4,   |  
|----------------------------------------------------- | - | ----------------- | - | - | ------------- | - | - | ------------- | -
|                                                      |   |                   |   |   |               |   |   | 2004 (Date of |  
|                                                      |   | Nine months ended |   |   | Inception) to |  
|                                                      |   | November 30,      |   |   | November 30,  |  
|                                                      |   | 2008              |   |   | 2007          |   |   | 2008          |  
|                                                      |   |                   |   |   |               |   |   | (Cumulative)  |  
|Operating Activities                                  |   |                   |   |   |               |   |   |               |  
|Net loss for the
      period                         | $ | (9,197,270        | ) | $ | (2,164,186    | ) | $ | (11,944,764   | )
|Donated services and rent                             |   | -                 |   |   | -             |   |   | 21,000        |  
|Amortization of
      deferred financing costs        |   | 560,657           |   |   | -             |   |   | 560,657       |  
|Accretion of convertible debt
      discount          |   | 302,849           |   |   | -             |   |   | 302,849       |  
|Fees payable in
      stock and warrants              |   | 17,150            |   |   | -             |   |   | 52,150        |  
|Finance fee                                           |   | 2,940,382         |   |   | -             |   |   | 2,940,382     |  
|Impairment of
      oil & gas assets                  |   | 2,512,468         |   |   | -             |   |   | 2,512,468     |  
|Loss on extinguishment of debt                        |   | 775,574           |   |   | -             |   |   | 775,574       |  
|Gain on recovery
      of VAT receivable written-off  |   | (76,502           | ) |   | -             |   |   | (76,502       | )
|Change in non-cash working
      capital balances     |   |                   |   |   |               |   |   |               |  
|related
      to operations:                          |   |                   |   |   |               |   |   |               |  
|VAT refund and other receivables                      |   | (41,165           | ) |   | -             |   |   | (41,165       | )
|Prepaid expenses                                      |   | 27,436            |   |   | (49,691       | ) |   | (35,648       | )
|Accounts
      payable and accrued liabilities        |   | 137,562           |   |   | 784,707       |   |   | 372,108       |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Net cash used in operating activities                 |   | (2,040,859        | ) |   | (1,429,170    | ) |   | (4,560,891    | )
|                                                      |   |                   |   |   |               |   |   |               |  
|Investing Activities                                  |   |                   |   |   |               |   |   |               |  
|Increase in oil
      and gas interests               |   | (2,135,176        | ) |   | (3,407,291    | ) |   | (5,540,418    | )
|Decrease (increase) in
      restricted cash          |   | 9,886             |   |   | -             |   |   | (20,114       | )
|                                                      |   |                   |   |   |               |   |   |               |  
|Net cash used in investing activities                 |   | (2,125,290        | ) |   | (3,407,291    | ) |   | (5,560,532    | )
|                                                      |   |                   |   |   |               |   |   |               |  
|Financing Activities                                  |   |                   |   |   |               |   |   |               |  
|Issuance of
      common shares                       |   | -                 |   |   | 4,700,000     |   |   | 6,196,900     |  
|Share subscriptions                                   |   | -                 |   |   | 500,000       |   |   | -             |  
|Advances from
      related parties                   |   | 20,025            |   |   | -             |   |   | 50,000        |  
|Deferred financing costs                              |   | (516,000          | ) |   | -             |   |   | (516,000      | )
|Proceeds from
      notes payable                     |   | 4,400,000         |   |   | -             |   |   | 4,400,000     |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Net cash provided by financing activities             |   | 3,904,025         |   |   | 5,200,000     |   |   | 10,130,900    |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Increase (decrease) in cash and restricted
      cash |   |                   |   |   |               |   |   |               |  
|during the period                                     |   | (262,124          | ) |   | 363,539       |   |   | 9,477         |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Cash, beginning of period                             |   | 271,601           |   |   | 119,051       |   |   | -             |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Cash, end of period                                   | $ | 9,477             |   | $ | 482,590       |   | $ | 9,477         |  
|                                                      |   |                   |   |   |               |   |   |               |  
|Non-cash transactions  Note 9                        |   |                   |   |   |               |   |   |               |  

SEE ACCOMPANYING NOTES

---

FOX PETROLEUM INC.
  (A Development Stage
  Company)
  INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
  for the
  period November 4, 2004 (Date of Inception) to November 30, 2008
  (Stated in
  US Dollars)
  (Unaudited)

|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   | Deficit     |   |   |         |  
|----------------------------- | --------------- |  | -------------- |  | - | --------- |  | - | ------------- | - | - | ----------- |  | - | ----------- | - | - | ------- | -
|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   | Accumulated |   |   |         |  
|                              |                 |  |                |  |   |           |  |   | Additional    |   |   | Stock       |  |   | During the  |   |   |         |  
|                              |                 |  | *Common Shares |  |   | Paid-in   |  |   | Subscriptions |   |   | Development |  |   |             |  
|                              |                 |  | Number         |  |   | Par Value |  |   | Capital       |   |   | Receivable  |  |   | Stage       |   |   | Total   |  
|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   |             |   |   |         |  
|Capital stock issued for cash |  at $0.0008333 |  | 5,880,000      |  | $ | 5,880     |  | $ | (980          | ) | $ | -           |  | $ | -           |   | $ | 4,900   |  
|                              |  at $0.0083333 |  | 3,840,000      |  |   | 3,840     |  |   | 28,160        |   |   | -           |  |   | -           |   |   | 32,000  |  
|                              |  at $0.0833333 |  | 120,000        |  |   | 120       |  |   | 9,880         |   |   | -           |  |   | -           |   |   | 10,000  |  
|Donated services and rent     |                 |  | -              |  |   | -         |  |   | 3,000         |   |   | -           |  |   | -           |   |   | 3,000   |  
|Net loss for the period       |                 |  | -              |  |   | -         |  |   | -             |   |   | -           |  |   | (18,821     | ) |   | (18,821 | )
|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   |             |   |   |         |  
|Balance, February 28, 2005    |                 |  | 9,840,000      |  |   | 9,840     |  |   | 40,060        |   |   | -           |  |   | (18,821     | ) |   | 31,079  |  
|Donated services and rent     |                 |  | -              |  |   | -         |  |   | 9,000         |   |   | -           |  |   | -           |   |   | 9,000   |  
|Net loss for the year         |                 |  | -              |  |   | -         |  |   | -             |   |   | -           |  |   | (45,915     | ) |   | (45,915 | )
|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   |             |   |   |         |  
|Balance, February 28, 2006    |                 |  | 9,840,000      |  |   | 9,840     |  |   | 49,060        |   |   | -           |  |   | (64,736     | ) |   | (5,836  | )
|Capital stock issued for cash |  at $5.00      |  | 20,000         |  |   | 20        |  |   | 99,980        |   |   | -           |  |   | -           |   |   | 100,000 |  
|Donated services and rent     |                 |  | -              |  |   | -         |  |   | 9,000         |   |   | -           |  |   | -           |   |   | 9,000   |  
|Net loss for the year         |                 |  | -              |  |   | -         |  |   | -             |   |   | -           |  |   | (54,555     | ) |   | (54,555 | )
|                              |                 |  |                |  |   |           |  |   |               |   |   |             |  |   |             |   |   |         |  
|Balance, February 28, 2007    |                 |  | 9,860,000      |  |   | 9,860     |  |   | 158,040       |   |   | -           |  |   | (119,291    | ) |   | 48,609  |  

/contd

SEE ACCOMPANYING NOTES

---

Continued

FOX PETROLEUM INC.
  (A Development Stage
  Company)
  INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
  for the
  period November 4, 2004 (Date of Inception) to November 30, 2008
  (Stated in
  US Dollars)
  (Unaudited)

|                                                    |             |           |                |  |       |           |  |         |               |  |   |             |   |   | Deficit     |   |           |            |  
|--------------------------------------------------- | ----------- | --------- | -------------- |  | ----- | --------- |  | ------- | ------------- |  | - | ----------- | - | - | ----------- | - | --------- | ---------- | -
|                                                    |             |           |                |  |       |           |  |         |               |  |   |             |   |   | Accumulated |   |           |            |  
|                                                    |             |           |                |  |       |           |  |         | Additional    |  |   | Stock       |   |   | During the  |   |           |            |  
|                                                    |             |           | *Common Shares |  |       | Paid-in   |  |         | Subscriptions |  |   | Development |   |   |             |  
|                                                    |             |           | Number         |  |       | Par Value |  |         | Capital       |  |   | Receivable  |   |   | Stage       |   |           | Total      |  
|                                                    |             |           |                |  |       |           |  |         |               |  |   |             |   |   |             |   |           |            |  
|Balance, February 28, 2007                          |             |           | 9,860,000      |  |       | 9,860     |  |         | 158,040       |  |   | -           |   |   | (119,291    | ) |           | 48,609     |  
|Capital stock issued for oil and gas interests      |             | 4,000,000 |                |  | 4,000 |           |  | 997,702 |               |  | - |             |   | - |             |   | 1,001,702 |           
|Capital stock issued for cash                       |             |           | 1,028,245      |  |       | 1,028     |  |         | 6,048,972     |  |   | -           |   |   | -           |   |           | 6,050,000  |  
|Capital stock issued for oil and gas                |             |           |                |  |       |           |  |         |               |  |   |             |   |   |             |   |           |            |  
|interests                                           |  at $12.05 |           | 80,000         |  |       | 80        |  |         | 963,920       |  |   | -           |   |   | -           |   |           | 964,000    |  
|Net loss for the year                               |             |           | -              |  |       | -         |  |         | -             |  |   | -           |   |   | (2,628,203  | ) |           | (2,628,203 | )
|                                                    |             |           |                |  |       |           |  |         |               |  |   |             |   |   |             |   |           |            |  
|Balance, February 29, 2008                          |             |           | 14,968,245     |  |       | 14,968    |  |         | 8,168,634     |  |   | -           |   |   | (2,747,494  | ) |           | 5,436,108  |  
|Capital stock issued for finance fee                |  at $3.43  |           | 150,000        |  |       | 150       |  |         | 514,350       |  |   | -           |   |   | -           |   |           | 514,500    |  
|Capital stock issued pursuant to convertible        |             |           |                |  |       |           |  |         |               |  |   |             |   |   |             |   |           |           
|debenture                                           |  at $1.96  |           | 200,000        |  |       | 200       |  |         | 392,304       |  |   | -           |   |   | -           |   |           | 392,504    |  
|                                                    |  at $0.39  |           | 2,500,000      |  |       | 2,500     |  |         | 813,168       |  |   | -           |   |   | -           |   |           | 815,668    |  
|Discount of convertible debt
      payable - Note 5 |             | -         |                |  | -     |           |  | 574,276 |               |  | - |             |   | - |             |   | 574,276   |           
|Discount of convertible debt payable -Note 5        |             | -         |                |  | -     |           |  | 651,842 |               |  | - |             |   | - |             |   | 651,842   |           
|Beneficial conversion feature                       |             |           | -              |  |       | -         |  |         | 1,533,220     |  |   | -           |   |   | -           |   |           | 1,533,220  |  
|Beneficial conversion feature                       |             |           | -              |  |       | -         |  |         | 1,032,490     |  |   | -           |   |   | -           |   |           | 1,032,490  |  
|Capital stock issued                                |  at $0.50  |           | 50,000,000     |  |       | 50,000    |  |         | 24,950,000    |  |   | (25,000,000 | ) |   | -           |   |           | -          |  
|Net loss for the period                             |             |           | -              |  |       | -         |  |         | -             |  |   | -           |   |   | (9,197,270  | ) |           | (9,197,270 | )
|                                                    |             |           |                |  |       |           |  |         |               |  |   |             |   |   |             |   |           |            |  
|Balance, November 30, 2008                          |             |           | 67,818,245     |  | $     | 67,818    |  | $       | 38,630,284    |  | $ | (25,000,000 | ) | $ | (11,944,764 | ) | $         | 1,753,338  |  

| | * | The common stock issued has been retroactively restated
      to reflect a reverse split of 1 new share for 5 old shares, effective
      April 21, 2008. The par value of common stock and additional paid-in
      capital has been retroactively restated to reflect these
      changes.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)                                           

|Note 1 | Interim Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | While the information presented in the accompanying nine
      months to November 30, 2008 interim financial statements is unaudited, it
      includes all adjustments which are, in the opinion of management,
      necessary to present fairly the financial position, results of operations
      and cash flows for the interim period presented in accordance with the
      accounting principles generally accepted in the United States of America.
      In the opinion of management, all adjustments considered necessary for a
      fair presentation of the results of operations and financial position have
      been included and all such adjustments are of a normal recurring nature.
      It is suggested that these financial statements be read in conjunction
      with the Companys February 29, 2008 financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | Operating results for the nine months ended November 30,
      2008 are not necessarily indicative of the results that can be expected
      for the year ending February 28, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Note 2 | Nature of Operations and Ability to Continue as a
      Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The Company was incorporated in the State of Nevada on
      November 4, 2004 and is in the development stage. The Company has oil and
      gas interests in Alaska, North Sea and Texas and has not yet determined
      whether these properties contain reserves that are economically
      recoverable. The recoverability of amounts from the properties will be
      dependent upon the discovery of economically recoverable reserves,
      confirmation of the Companys interest in the underlying properties, the
      ability of the Company to obtain necessary financing to satisfy the
      expenditure requirements under the property agreements and to complete the
      development of the properties and upon future profitable production or
      proceeds for the sale thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | These financial statements have been prepared in
      accordance with generally accepted accounting principles applicable to a
      going concern, which assumes that the Company will be able to meet its
      obligations and continue its operations for its next twelve months.
      Realization values may be substantially different from carrying values as
      shown and these financial statements do not give effect to adjustments
      that would be necessary to the carrying values and classification of
      assets and liabilities should the Company be unable to continue as a going
      concern. At November 30, 2008, the Company has a working capital
      deficiency of $5,902,732, has not yet achieved profitable operations, has
      accumulated losses of $11,944,764 since its inception and expects to incur
      further losses in the development of its business, all of which casts
      substantial doubt about the Companys ability to continue as a going
      concern. The Companys ability to continue as a going concern is dependent
      upon its ability to generate future profitable operations and/or to obtain
      the necessary financing to meet its obligations and repay its liabilities
      arising from normal business operations when they come due. Management has
      no formal plan in place to address this concern but considers that the
      Company will be able to obtain additional funds by equity financing and/or
      related party advances, however there is no assurance of additional
      funding being available or on acceptable terms, if at all.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 2                                  

|Note 3 | New Accounting Standards
|------ | ------------------------

In December 2008, the FASB issued FSP
  FAS140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about
  Transfers of Financial Assets and Interests in Variable Interest Entities. This
  disclosure-only FSP improves the transparency of transfers of financial assets
  and an enterprises involvement with variable interest entities, including
  qualifying special-purpose entities. This FSP is effective for the first
  reporting period (interim or annual) ending after December 15, 2008, with
  earlier application encouraged. The Company does not expect the adoption of the
  FSP will have any impact on its results of operations.

In June 2008, the FASB ratified EITF
  Issue No. 07-5, Determining Whether an Instrument (or an Embedded Feature) is
    Indexed to an Entitys Own Stock(EITF07-5). EITF07-5 provides that an
  entity should use a two step approach to evaluate whether an equity-linked
  financial instrument (or embedded feature) is indexed to its own stock,
  including evaluating the instruments contingent exercise and settlement
  provisions. It also clarifies on the impact of foreign currency denominated
  strike prices and market-based employee stock option valuation instruments on
  the evaluation. EITF07-5 is effective for fiscal years beginning after December
  15, 2008. The Company is currently assessing the impact, if any, on its
  consolidated financial position and results of operations.

In March 2008, the FASB issued
  Statement of Financial Accounting Standards (SFAS) No. 161, Disclosures about
  Derivative Instruments and Hedging Activities, an amendment of FASB Statement
  No. 133, which requires additional disclosures about the objectives of the
  derivative instruments and hedging activities, the method of accounting for such
  instruments under SFAS No. 133 and its related interpretations, and a tabular
  disclosure of the effects of such instruments and related hedged items on our
  financial position, financial performance, and cash flows. SFAS No. 161 is
  effective for fiscal years and interim periods beginning after November 15,
  2008. The adoption of SFAS 161 should have no effect on the financial position
  and results of operations of the Company.

In January 2008, Staff Accounting
  Bulletin (SAB) 110, Share-Based Payment was issued. Registrants may
  continue, under certain circumstances, to use the simplified method in
  developing estimates of the expected term of share options as initially allowed
  by SAB 107, Share-Based Payment. The adoption of SAB 110 should have no effect
  on the financial position and results of operations of the Company.

In December 2007, the FASB issued SFAS
  No. 141 (Revised) Business Combinations. SFAS 141 (Revised) establishes
  principles and requirements for how the acquirer of a business recognizes and
  measures in its financial statements the identifiable assets acquired, the
  liabilities assumed, and any noncontrolling interest in the acquired. The
  statement also provides guidance for recognizing and measuring the goodwill
  acquired in the business combination and determines what information to disclose
  to enable users of the financial statements to evaluate the nature and financial
  effects of the business combination. The guidance will become effective for the
  first fiscal year beginning after December 15, 2008. Management is in the
  process of evaluating the impact SFAS 141 (Revised) will have on the Companys
  financial statements upon adoption.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 3                                  

|Note 3 | New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | In December 2007, the FASB issued SFAS No. 160
      Noncontrolling Interests in Consolidated Financial Statements-an
      amendment of ARB No. 51. SFAS 160 establishes accounting and reporting
      standards for the noncontrolling interest in a subsidiary and for the
      deconsolidation of a subsidiary. The guidance will become effective for
      the first fiscal year beginning after December 15, 2008. Management is in
      the process of evaluating the impact SFAS 160 will have on the Companys
      financial statements upon adoption.                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | In September 2006, the FASB issued SFAS No. 157, Fair
      Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value,
      establishes a framework for measuring fair value in accordance with
      generally accepted accounting principles, and expands disclosures about
      fair value measurements. The provisions of SFAS 157 are effective for
      fiscal years beginning after November 15, 2007. There was no impact on the
      Companys quarterly financial statements resulting from adoption of this
      new standard.                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | In February 2007, FASB issued FASB Statement No. 159,
      "The Fair Value Option for Financial Assets and Financial Liabilities".
      FASB 159 is effective for fiscal years beginning after November 15, 2007.
      FASB 159 allows entities to choose, at specified election dates, to
      measure eligible financial assets and liabilities at fair value that are
      not otherwise required to be measured at fair value. If a company elects
      the fair value option for an eligible item, changes in that item's fair
      value in subsequent reporting periods must be recognized in current
      earnings. There is no impact on the Companys quarterly financial
      statements resulting from adoption of this new standard.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Note 4 | Oil and Gas Interests Note 10 b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                                      |   | November 30, 2008 |  
| | ------------------------------------ | - | ----------------- | -
| |                                      |   | United            |  
| |                                      |   | States            |  
| |                                      |   |                   |  
| | Unproved properties                  |   |                   |  
| | - acquisition costs                  | $ | 3,617,182         |  
| | - exploration costs                  |   | 2,338,797         |  
| |                                      |   |                   |  
| |                                      |   | 5,955,979         |  
| | Less: Write-down of oil & gas assets |   | -                 |  
| | Less: Incidental revenue             |   | (52,164           | )
| |                                      |   |                   |  
| |                                      | $ | 5,903,815         |  

| |                     |   | February 29, 2008 | 
| | ------------------- | - | ----------------- | 
| |                     |   | United            | 
| |                     |   | States            | 
| |                     |   |                   | 
| | Unproved properties |   |                   | 
| | - acquisition costs | $ | 3,533,282         | 
| | - exploration costs |   | 67,168            | 
| |                     |   |                   | 
| |                     | $ | 3,600,450         | 

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 4                                  

|Note 4 | Oil and Gas Interests Note
      10 b)  (contd)
|------ | --------------------------------------------------
|       |                                                   
|       | a)                                                
|       |                                                   
|       |                                                   
|       |                                                   
|       | b)                                                
|       |                                                   
|       |                                                   
|       |                                                   
|       | c)                                                
|       |                                                   
|       | d)                                                

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 5                                  

|Note 4 | Oil and Gas Interests Note
      10 b)  (contd)
|------ | --------------------------------------------------
|       |                                                   
|       | e)                                                
|       |                                                   
|       | f)                                                
|       |                                                   
|       | g)                                                
|       |                                                   
|       |                                                   
|       |                                                   
|       | h)                                                

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 6                                  

|Note 5 | Notes Payable
|------ | -------------

| |                                            |   |            |   |   | November 30, |   |   | February 29, | 
| | ------------------------------------------ | - | ---------- | - | - | ------------ | - | - | ------------ | 
| |                                            |   |            |   |   | 2008         |   |   | 2008         | 
| |                                            |   |            |   |   |              |   |   |              | 
| | Promissory notes (a), (b), (c)             |   |            |   | $ | 450,000      |   | $ | -            | 
| | Loan agreement (d)                         |   |            |   |   | 450,000      |   |   | -            | 
| | Convertible notes payable (e)              | $ | 3,500,000  |   |   |              |   |   |              | 
| | Less: discount on convertible notes        |   | (1,467,510 | ) |   |              |   |   |              | 
| | Add: accretion of
      discount           |   | 111,643    |   |   |              |   |   |              | 
| | Less: financing costs                      |   | (134,087   | ) |   |              |   |   |              | 
| | Add: amortization of
      financing costs |   | 8,157      |   |   | 2,018,203    |   |   | -            | 
| |                                            |   |            |   |   |              |   |   |              | 
| |                                            |   |            |   |   | 2,918,203    |   |   | -            | 
| | Less: current portion                      |   |            |   |   | (1,487,980   | ) |   | -            | 
| |                                            |   |            |   |   |              |   |   |              | 
| |                                            |   |            |   | $ | 1,430,223    |   | $ | -            | 

| | a) | On April 2, 2008 the Company was loaned $250,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the Company, or (ii) April 1, 2009.
      For the period from the date of advance of the loan up to and including
      the date that the loan is repaid, interest will accrue on the balance of
      principal outstanding at the rate of 10% per annum, compounded monthly.
      Interest will be payable in a balloon payment on the date the loan is
      repaid. The note is unsecured.         
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | On May 6, 2008 the Company was loaned $150,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the company, or (ii) May 1, 2009. For
      the period from the date of advance of the loan up to and including the
      date that the loan is repaid, interest will accrue on the loan on the
      balance of principal outstanding at the rate of 10% per annum, compounded
      monthly. Interest will be payable in a balloon payment on the date the
      loan is repaid. The note is unsecured. 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | On May 23, 2008 the Company was loaned $50,000 by the
      issuance of a promissory note, to be paid on the earlier of (i) the date
      that the Company obtains equity financing from a third party in the
      minimum amount of $1,000,000 net to the company, or (ii) May 23, 2009. For
      the period from the date of advance of the loan up to and including the
      date that the loan is repaid, interest will accrue on the loan on the
      balance of principal outstanding at the rate of 10% per annum, compounded
      monthly. Interest will be payable in a balloon payment on the date the
      loan is repaid. The note is unsecured.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 7                                  

|Note 5 | Notes Payable (contd)
|------ | -----------------------
|       |                        
|       | c)                     
|       |                        
|       |                        
|       |                        
|       | e)                     
|       |                        
|       |                        
|       |                        
|       |                        
|       |                        
|       |                        

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 8                                  

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e)  (contd)                                 
| | ----------------------------------------------
| | (i) Amended Debentures - $2,500,000  (contd)

Due to the cancellation of the
  Original Debenture and share purchase warrants, for accounting purposes, the new
  convertible debenture was accounted for as an extinguishment of the original
  debt with the issuance of new convertible debt in accordance with EITF 96-19
  "Debtor's Accounting for a Modification or Exchange of Debt Instruments: ("EITF
  96-19") and EITF Issue No. 06-6 "Debtor's Accounting for a Modification (or
  Exchange) of Convertible Debt Instruments ("EITF 06-6"). As a result, the
  difference between the fair value of the new convertible debenture and the
  carrying value of the original debt was recorded as a loss on extinguishment of
  convertible debt of $775,574 in the Consolidated Statement of Operations and a
  corresponding entry to the debt discount. In consideration for the holder's
  agreement to extend the maturity date of the original convertible debt from
  October 24, 2008 to April 30, 2009, the Company cancelled the original 500,000
  warrants issued in connection with the Original Debenture and replaced them with
  2,000,000 warrants with a term of 5 years and a decreased exercise price of
  $0.001. The exercise price is subject to an adjustment if, during the term of
  the warrants, the Company issues shares, options or convertible securities for
  consideration less than the exercise price, then the exercise price will be
  adjusted to 85% of such consideration. Additional warrants will be issued if the
  Company becomes in default under the transaction agreements.

The Company determined the allocation
  of the proceeds of the Original convertible debenture based on the relative fair
  value of the convertible debenture, the 500,000 share purchase warrants and the
  200,000 common shares. The fair value of the warrants of $574,276 and the common
  shares of $392,504 were determined using the Black-Scholes valuation model and
  the market value of the shares on the date of issuance, respectively. The
  resulting discount of $966,780 was being accreted over the term of the
  debenture. The assumptions used in the Black-Scholes calculation are as follows:
  expected life  5 years; volatility  78.26%; Dividend rate  0%; and risk free
  interest rate is 3.52% .

The Company determined the allocation
  of the proceeds of the Amended Debentures based on the relative fair value of
  the convertible debenture, the share purchase warrants and the common shares.
  The fair value of the warrants of $651,842 and the common shares of $815,668
  were determined using the Black-Scholes valuation model and the market value of
  the shares on the date of issuance, respectively. The resulting discount of
  $1,457,510 being accreted over the term of the debenture. The assumptions used
  in the Black-Scholes calculation are as follows: expected life  5 years;
  volatility  78.26%; Dividend rate  0%; and risk free interest rate is 3.52%
  .

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 9                                  

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e)  (contd)                                 
| | ----------------------------------------------
| |                                               
| | (i) Amended Debentures - $2,500,000  (contd)

|                                      |   | Face       |   |   |            |   |   | Deferred        |   |   | Carrying   |  
|------------------------------------- | - | ---------- | - | - | ---------- | - | - | --------------- | - | - | ---------- | -
|                                      |   | Amount     |   |   | Discount   |   |   | Financing Costs |   |   | Value      |  
|Balance, March 1, 2008                | $ | -          |   | $ | -          |   | $ | -               |   | $ | -          |  
|Issuance of Original Debenture        |   | 2,500,000  |   |   | (966,780   | ) |   | -               |   |   | 1,533,220  |  
|Accretion of debt discount            |   | -          |   |   | 191,206    |   |   | -               |   |   | 191,206    |  
|Closing costs                         |   | -          |   |   | -          |   |   | (252,500        | ) |   | (252,500   | )
|Commissions paid  cash               |   | -          |   |   | -          |   |   | (150,000        | ) |   | (150,000   | )
|Finders fees  warrants               |   | -          |   |   | -          |   |   | (5,109          | ) |   | (5,109     | )
|Extinguishment of Original            |   | (2,500,000 | ) |   | 775,574    |   |   | 407,609         |   |   | (1,316,817 | )
|Debenture                             |   |            |   |   |            |   |   |                 |   |   |            |  
|Issuance of Amended Debentures        |   | 2,500,000  |   |   | (1,467,510 | ) |   |                 |   | $ | 1,032,491  |  
|Accretion of debt
      discount      |   | -          |   |   | 111,643    |   |   |                 |   |   | 111,642    |  
|Closing costs                         |   | -          |   |   | -          |   |   | (53,500         | ) |   | (53,500    | )
|Commissions paid 
      cash         |   | -          |   |   | -          |   |   | (60,000         | ) |   | (60,000    | )
|Finders fee  warrants                |   | -          |   |   | -          |   |   | (20,587         | ) |   | (20,587    | )
|Amortization of
      financing costs |   | -          |   |   | -          |   |   | 8,157           |   |   | 8,157      |  
|Balance, November 30, 2008            | $ | 2,500,000  |   | $ | (1,355,867 | ) | $ | (125,930        | ) | $ | 1,018,203  |  

The Company recorded a beneficial
  conversion feature of $1,533,220 with respect to the Original Debentures
  pursuant to EITF 98-5 Accounting for Convertible Securities with Beneficial
    Conversion Features or Contingently Adjustable Conversion Ratios. This
  amount has been included in financing fees for the nine months ended November
  30, 2008. The Company recorded a beneficial conversion feature of $1,032,490
  with respect to the Amended Debentures pursuant to EITF 98-5 Accounting for
    Convertible Securities with Beneficial Conversion Features or Contingently
    Adjustable Conversion Ratios. This amount has also been included in
  financing fees for the nine months ended November 30, 2008.

The Company was required to pay to the
  investor at closing of the Original Agreements: $17,500 in legal costs, a
  $10,000 due diligence fee, a 7% commitment fee and a 2% facility fee, 500,000
  share purchase warrants and 200,000 shares of common stock. Finders fees of
  $150,000 and 52,265 share purchase warrants were paid to Partners Consulting in
  connection with the Original Agreements pursuant to a finder agreement dated
  February 15, 2008. This amount is included in fees payable in stock and warrants
  at November 30, 2008. The warrants will expire in a minimum period of three
  years from the date of issuance.

At the closing of the Amended
  Debentures the Company incurred: $7,500 in legal costs, a $45,000 commitment
  fee, a $1,000 due diligence fee, and 2,500,000 shares of common stock.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 10                                 

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e)  (contd)                                 
| | ----------------------------------------------
| |                                               
| | (i) Amended Debentures - $2,500,000  (contd)

Pursuant EITF 96-19 Debtors
  Accounting for a Modification or Exchange of Debt Instruments and EITF 06-6 Debtors Accounting for a Modification (or Exchange) of Convertible Debt
    Instruments, the Company determined that the modifications to the Original
  Debenture under the Amendment Agreements were substantial, therefore the
  Original Debenture was considered extinguished and the remaining unamortized
  commissions and fees due on closing were recognized in income as financing
  fees.

In no event shall the Holder be
  entitled to convert this Debenture for a number of shares of Common Stock in
  excess of that number of shares of Common Stock which, upon giving effect to
  such conversion, would cause the aggregate number of shares of Common Stock
  beneficially owned by the Holder and its affiliates to exceed 9.99% of the
  outstanding shares of the Common Stock following such conversion without the
  approval of the Company.

Upon the occurrence of an Event of
  Default by the Company, the Holder has the option to elect that the interest due
  and payable be paid in cash or in stock at the rate of 85% of the lower of: (i)
  the VWAP on the date the interest payment is due; or (ii) if the interest
  payment is not made when due, the VWAP on the date the interest payment is made.

The Debentures are secured by all of
  the assets and property of the Company and its subsidiaries pursuant to a
  Security Agreement. The debentures are further secured by a Pledge and Escrow
  Agreement pursuant to which 15,000,000 common shares of the Company are being
  held in escrow on behalf of the investor and have been recorded at $nil
  consideration.

Further, the debenture is subject to a
  currency adjustment clause whereby the exchange rate between the US Dollar and
  the Euro will be fixed at the date of closing and if the exchange rate moves
  unfavorably for the holder of the debenture, the Company will be required to
  adjust conversion and redemption rates to compensate the holder for any such
  loss.

The debenture also contains certain
  restrictions on the Company for new share or debt issuances as long as any
  principal or interest amount remains outstanding on the debenture.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 11                                 

|Note 5 | Notes Payable (contd)
|------ | -----------------------

| | e)  (contd)                  
| | -------------------------------
| |                                
| | (ii) New Debenture - $1,000,000

The New Debenture and has a principal
  amount of $1,000,000 and matures on October 31, 2010 (the New Debenture). The
  New Debenture bears interest at a rate of 10% per annum compounded monthly. The
  principal and any unpaid accrued interest owing on the debentures are
  convertible into common stock of the Company in the event of a default or at the
  option of the holder at the rate of the lesser of i) 125% of the volume weighted
  average stock price and ii) at 85% of the lowest daily closing VWAP as quoted by
  Bloomberg L.P. during the 5 trading days immediately preceding the conversion
  date.

The Company may redeem any or all of
  the New Debenture at any time, provided that the Common Stock is trading below
  the Fixed Price at the time the Company gives the Holder the redemption notice,
  by paying the unpaid principal and interest accrued and a prepayment premium of
  15% redemption premium on the amount redeemed. In any case, the Company must
  redeem the $1,000,000 debenture maturing October 31, 2010 in equal monthly
  installments commencing January 31, 2009 until maturity at a 15% redemption
  premium.

Pursuant to the securities purchase
  agreement, the Company entered into a freestanding investor registration rights
  agreement dated June 24, 2008 and amended October 31, 2008. Under the terms of
  this agreement, the Company must have registered at least three (3) times the
  number of shares which are anticipated to be issued upon conversion of the
  Debentures issued and shares of common stock issuable to the purchaser upon
  exercise of the warrants. The Company has the obligation to use their best
  efforts to keep the registration of these securities effective by the SEC until
  all of the securities had been sold by the purchaser. Failure to meet this
  obligation would result in the Company incurring liquidated damages in the
  amount of 2% of the liquidated value of the debentures for each 30 day period
  registration of the securities is not effective.

Under the provisions of FSP EITF
  00-19-2 Accounting for Registration Payment Arrangements (EITF 00-19-2), the
  Company is required to separately recognize and measure a contingent obligation
  in respect of the liquidating damages in accordance with FASB No.5 Accounting
  for Contingencies and FSB Interpretation No.14 Reasonable Estimation of the
  Amount of a Loss. At November 30, 2008, no amount for this contingency has been
  recognized as the Company has determined that any loss is not probable.

Included in accounts payable and
  accrued liabilities at November 30, 2008 is $74,613 (February 29, 2008: $Nil)
  for accrued interest on these notes payable.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 12                                 

|Note 6 | Related Party Transactions Note 8
|------ | ----------------------------------

The officers of the Company provide
  consulting and management services to the Company as follows:

| |                 |   |                    |  |   |                   |  |   |               |  |   |         |  |   | November 4,   | 
| | --------------- | - | ------------------ |  | - | ----------------- |  | - | ------------- |  | - | ------- |  | - | ------------- | 
| |                 |   |                    |  |   |                   |  |   |               |  |   |         |  |   | 2004 (Date of | 
| |                 |   | Three months ended |  |   | Nine months ended |  |   | Inception) to | 
| |                 |   | November 30,       |  |   | November 30,      |  |   | November 30,  | 
| |                 |   | 2008               |  |   | 2007              |  |   | 2008          |  |   | 2007    |  |   | 2008          | 
| |                 |   |                    |  |   |                   |  |   |               |  |   |         |  |   |               | 
| | Consulting fees | $ | 76,141             |  | $ | 64,865            |  | $ | 265,523       |  | $ | 103,865 |  | $ | 320,939       | 
| | Management fees |   | 215,906            |  |   | 43,073            |  |   | 305,976       |  |   | 109,073 |  |   | 614,728       | 
| | Office and      |   |                    |  |   |                   |  |   |               |  |   |         |  |   |               | 
| | miscellaneous   |   | -                  |  |   | -                 |  |   | -             |  |   | -       |  |   | 7,000         | 
| |                 |   |                    |  |   |                   |  |   |               |  |   |         |  |   |               | 
| |                 | $ | 292,047            |  | $ | 107,938           |  | $ | 571,499       |  | $ | 212,938 |  | $ | 942,667       | 

Included in accounts payable and
  accrued liabilities at November 30, 2008 is $312,790 (February 29, 2008:
  $22,438) owed to directors of the Company for expenses incurred on behalf of the
  Company and for unpaid management and consulting fees.

The amounts due to related parties are
  unsecured, non-interest bearing and have no specific terms for repayment. These
  amounts were due to the director of the Company and a company controlled by a
  director of the Company.

Effective May 6, 2008, the Company
  adopted a compensation policy for its directors pursuant to which the Company
  will compensate each director, as follows:

| | i)   | a fee of $1,000 per month;                                                 
| | ---- | ---------------------------------------------------------------------------
| | ii)  | 1,000 restricted shares of the common stock of the
      Company per month;
| | iii) | a fee of $1,000 per each quarterly board meeting
      attended.           

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Effective January 11, 2007 the Company completed a
      forward stock split of the authorized, issued and outstanding shares of
      common stock on a six new for one old basis. Authorized capital increased
      from 75,000,000 common shares to 450,000,000 common shares. Effective
      April 21, 2008 the Company completed a reverse stock split of authorized,
      issued and outstanding shares of common stock on a one new for five old
      basis. Authorized capital decreased from 450,000,000 to 90,000,000. These
      financial statements have been retroactively restated to reflect these
      changes.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 13                                 

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
|------ | --------------------------------------

| | a) | Share Issuance Agreements:
| | -- | --------------------------
| |    |                           
| |    | i)                        
| |    |                           
| |    |                           

| |                    |  | Number of |  | Issue  |  |   | Total     | 
| | ------------------ |  | --------- |  | ------ |  | - | --------- | 
| | Issue Date         |  | Units     |  | Price  |  |   | Proceeds  | 
| |                    |  |           |  |        |  |   |           | 
| | May 17, 2007       |  | 377,358   |  | $5.30  |  | $ | 2,000,000 | 
| | August 1, 2007     |  | 31,056    |  | $8.05  |  |   | 250,000   | 
| | September 18, 2007 |  | 44,199    |  | $9.05  |  |   | 400,000   | 
| | September 18, 2007 |  | 52,133    |  | $10.55 |  |   | 550,000   | 
| | September 27, 2007 |  | 28,708    |  | $10.45 |  |   | 300,000   | 
| | October 26, 2007   |  | 16,381    |  | $12.21 |  |   | 200,000   | 
| | October 26, 2007   |  | 21,097    |  | $11.85 |  |   | 250,000   | 
| | October 26, 2007   |  | 35,897    |  | $9.75  |  |   | 350,000   | 
| | November 28, 2007  |  | 47,337    |  | $8.45  |  |   | 400,000   | 
| | January 16, 2008   |  | 43,478    |  | $3.45  |  |   | 150,000   | 
| | January 24, 2008   |  | 96,154    |  | $5.20  |  |   | 500,000   | 
| | January 30, 2008   |  | 48,387    |  | $3.10  |  |   | 150,000   | 
| | February 11, 2008  |  | 89,286    |  | $2.80  |  |   | 250,000   | 
| | February 26, 2008  |  | 96,774    |  | $3.10  |  |   | 300,000   | 
| |                    |  |           |  |        |  |   |           | 
| |                    |  | 1,028,245 |  |        |  | $ | 6,050,000 | 

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 14                                 

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
|------ | --------------------------------------

| | a) | Share Issuance Agreement:  (contd)
        i)  contd
| | -- | --------------------------------------------------------

As at November 30, 2008, there are
  3,048,245 share purchase warrants outstanding entitling the holders thereof the
  right to purchase one common share for each warrant held as follows:

| | Number of |  |  |  | Exercise |  |  |                          | 
| | --------- |  |  |  | -------- |  |  | ------------------------ | 
| | Warrants  |  |  |  | Price    |  |  | Expiry Date              | 
| |           |  |  |  |          |  |  |                          | 
| | 20,000    |  |  |  | $6.25    |  |  | February 23,
      2010  | 
| | 377,358   |  |  |  | $6.65    |  |  | May 17, 2010             | 
| | 31,056    |  |  |  | $10.05   |  |  | August 1, 2010           | 
| | 44,199    |  |  |  | $11.30   |  |  | September 10, 2010       | 
| | 52,133    |  |  |  | $13.20   |  |  | September 10,
      2010 | 
| | 28,708    |  |  |  | $13.05   |  |  | October 1, 2010          | 
| | 16,381    |  |  |  | $15.25   |  |  | October 26, 2010         | 
| | 21,097    |  |  |  | $14.80   |  |  | October 26, 2010         | 
| | 35,897    |  |  |  | $12.20   |  |  | October 26, 2010         | 
| | 47,337    |  |  |  | $10.55   |  |  | November 28, 2010        | 
| | 43,478    |  |  |  | $4.30    |  |  | January 16, 2011         | 
| | 96,154    |  |  |  | $6.50    |  |  | January 24, 2011         | 
| | 48,387    |  |  |  | $3.90    |  |  | January 30, 2011         | 
| | 89,286    |  |  |  | $3.50    |  |  | February 11, 2011        | 
| | 96,774    |  |  |  | $3.90    |  |  | February 26,
      2011  | 
| | 2,000,000 |  |  |  | $0.001   |  |  | October 31, 2013         | 
| |           |  |  |  |          |  |  |                          | 
| | 3,048,245 |  |  |  |          |  |  |                          | 

| | ii) | On November 5, 2008, the Company entered into a
      subscription agreement with Carbon Energy Investments Limited (Carbon
      Energy) for the sale of 80,000,000 shares of common stock at a price of
      $0.50 per share for the aggregate price of $40,000,000. Carbon Energy
      agreed to pay for the shares as follows:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                       

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 15                                 

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | a) | Share Issuance Agreement:  (contd)
| | -- | ------------------------------------

| | ii)  contd
| | ------------

On November 26, 2008, the Company
  issued 50,000,000 shares of common stock to Carbon Energy in consideration for
  $25,000,000 to be received pursuant to the above-mentioned subscription
  agreement.

On November 5, 2008, the Company
  entered into an agreement to purchase shares in Alaska Oil & Gas Resources
  Limited (Alaska Oil & Gas) with Carbon Energy. Carbon Energy is the sole
  owner of Alaska Oil & Gas. Pursuant to the agreement, the Company agreed to
  acquire 100% of the issued shares of Alaska Oil & Gas from Carbon Energy in
  consideration for $57,500,000, $250,000 of which was to be paid in cash and the
  remainder by the issuance of 57,250,000 shares of common stock. On the same day,
  two of the Companys directors were appointed as directors of Alaska Oil &
  Gas.

On November 28, 2008, the Company
  entered into an amendment agreement with Carbon Energy relating to purchase of
  Alaska Oil & Gas whereby it was agreed that the consideration to be paid
  pursuant to the agreement was varied such that the consideration would amount to
  $57,500,000, payable by the issuance of 2,000,000 shares of common stock within
  three business days of November 2008 (issued subsequently) and 55,500,000 shares
  on completion of the transaction.

On December 3, 2008, the Company
  entered into a letter agreement with Carbon Energy whereby Carbon Energy agreed
  to return 2,000,000 shares of common stock to the company upon demand unless
  certain conditions are fulfilled or waived. The conditions are, among others,
  that Carbon Energy must complete in full the subscription agreement dated
  November 5, 2008 except that the first $20,000,000 must be paid to the company
  on or before December 7, 2008 and that Carbon Energy must sell to the Company
  Alaska Oil & Gas which must own certain oil and gas leases pursuant to the
  agreement relating to the purchase of Alaska Oil & Gas.

The Company has not yet received the
  $25,000,000 under the above mentioned subscription agreement and it is the
  Companys intention to extend and amend these agreements.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 16                                 

|Note 7 | Capital Stock Notes 4, 5, 6, 8 and 10
       (contd)
|------ | -------------------------------------------------------

| | b) | Share Purchase Warrants
| | -- | -----------------------

The summary of the changes in the
  Companys share purchase warrants for the periods ended November 30, 2008 and
  February 29, 2008 is presented below:

| |                           |  | November 30, 2008 |  |          | February 29, 2008 | 
| | ------------------------- |  | ----------------- |  | -------- | ----------------- | 
| |                           |  |                   |  | Weighted |                   | 
| |                           |  |                   |  | Average  |                   | 
| |                           |  | Number of         |  | Exercise |                   | 
| |                           |  | Warrants          |  | Price    |                   | 
| |                           |  |                   |  |          |                   | 
| | Balance, beginning of the |  |                   |  |          |                   | 
| | period                    |  | 1,048,246         |  | $7.34    |                   | 
| | Issued                    |  | 2,000,000         |  | $0.001   |                   | 
| |                           |  |                   |  |          |                   | 
| | Balance, end of period    |  | 3,048,246         |  | $2.53    |                   | 

The remaining average life of the
  warrants at November 30, 2008 is 3.85 years (February 29, 2008: 2.57 years).

A finder's fee of $60,000 and 52,265
  share purchase warrants exercisable at $2.87 for a period of three years from
  the date of issuance (6% of proceeds) were paid to Partners Consulting in
  connection with the Original Debenture (Note 5(e)) pursuant to a finder
  agreement dated February 15, 2008. The fair value of the warrants was determined
  using the Black-Scholes valuation model. The assumptions used in the
  Black-Scholes calculation are as follows: expected life  3 years; volatility 
  78.26%; Dividend rate 0%; and risk free interest rate is 1.27% . At November
  30, 2008 these warrants had not yet been issued and are included in fees payable
  in stock and warrants.

A finder's fee of $60,000 and 76,923
  share purchase warrants exercisable at $0.78 for a period of three years from
  the date of issuance (6% of additional proceeds) were paid to Partners
  Consulting in connection with the Amended Debentures (Note 5(e) pursuant to a
  finder agreement dated February 15, 2008. The fair value of the warrants was
  determined using the Black-Scholes valuation model. The assumptions used in the
  Black-Scholes calculation are as follows: expected life  3 years; volatility 
  78.26%; Dividend rate 0%; and risk free interest rate is 1.27% . At November
  30, 2008 these warrants had not yet been issued and are included in fees payable
  in stock and warrants.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 17                                 

|Note 8 | Commitments Notes 4, 5, 7 and 10
|------ | ---------------------------------

| | a) | By an agreement dated May 22, 2007, the Company engaged
      an independent analyst to provide continuing research coverage regarding
      the Company beginning May 22, 2007 until May 31, 2009. The Company is
      required to pay $5,000 (paid) before commencement of work and twenty-four
      installments of $1,750.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | By agreements dated June 8, 2007, the Company agreed to
      pay three directors of the Company a total amount of $20,000 per month for
      an indefinite period for consulting and management services to the
      Company. The agreements may be terminated at any time with cause and with
      three months notice without cause. On October 19, 2007 two of these
      agreements where amended from $12,000 to £9,000 ($17,900) per month and
      from $5,000 per month to £7,000 ($13,900). All other terms remained the
      same.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | On May 8, 2008 the Company entered into a consulting
      agreement with Partners Consulting Inc. (PCI), a Florida Corporation, to
      introduce the Company to potential new investors. The consideration
      payable to PCI is warrants to purchase 50,000 shares of common stock due
      upon signing the agreement. In addition, PCI will receive 6% of the gross
      proceeds from any potential financing, payable in cash and share purchase
      warrants equal to 6% of the gross proceeds. In the event a financing is
      facilitated through an investment banker introduced by PCI, PCI will
      instead receive 3% of the gross proceeds, payable in cash and share
      purchase warrants equal to 3% of the gross proceeds. All warrants will
      have a cashless exercise and will be priced at market value as of the date
      of the financing and with a minimum expiry period of three years. The
      consulting agreement is for a period of one year.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | At November 30, 2008, the Company had not yet issued the
      warrants for 50,000 common shares due upon signing of the agreement but
      the fair value of these warrants was determined to be $5,063, which was
      included in fees payable in stock and warrants at November 30, 2008. The
      fair value of these warrants was determined to be $138,500 at August 31,
      2008 and, consequently an amount of $133,437 has been shown as a recovery
      of for the three months ended November 30, 2008. These warrants are
      exercisable at $2.77 and will expire three years from the date of
      issuance. The fair value of these warrants was determined using the Black
      Scholes valuation model. The assumptions used in the Black-Scholes
      calculation are as follows: expected life  3 years; volatility  78.26%;
      Dividend rate  0%; and risk free interest rate is 1.27%.                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | d) | On May 21, 2008, the Company signed a letter of
      commitment whereby the Company agreed to commit to the use of a drilling
      rig commencing no earlier than October 1, 2008 for a total cost of
      $8,910,000. The Company also committed to enter into a well project
      management and integrated services contract for the management of a well
      program on the rig. The Company is also obligated to pay a fee of 1.75% of
      the operating rig rate in acknowledgement of the value provided with the
      rig opportunity, if the Company uses the rig, but not the integrated
      project management services.                                                                                                                                                                                                                                                                                                                                                     

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Development Stage Company)                         
|Notes to the Interim Consolidated Financial Statements
|November 30, 2008                                     
|(Stated in US Dollars)                                
|(Unaudited)  Page 18                                 

|Note 8  | Commitments Notes 4, 5, 7 and 10  (contd)                                                                                                                                                                                                                                                                                                                         
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                      
|        | e)                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                      
|        | f)                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                      
|        | g)                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                      
|Note 9  | Non-cash Transactions Note 5                                                                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                      
|        | Investing and financing activities that do not have a
      direct impact on current cash flows are excluded from the statements of
      cash flows. For the nine months ended November 30, 2008, accounts payable
      includes $3,745,577 of expenditures related to oil and gas projects. This
      transaction was excluded from the statements of cash flows.
|        |                                                                                                                                                                                                                                                                                                                                                                      
|Note 10 | Subsequent Events                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                      
|        | Subsequent to November 30, 2008, the Company obtained
      shareholder approval to amend its authorized share capital from 90,000,000
      common shares, par value $0.001 to 500,000,000 common shares, par value
      $0.001.                                                                                                                                   

---

3

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

Forward Looking Statements

This quarterly report contains forward looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward looking statements by terminology such as
may, should, intend, expect, plan, anticipate, believe,
estimate, project, predict, potential, or continue or the negative of
these terms or other comparable terminology. These statements speak only as of
the date of this quarterly report. Examples of forward looking statements made
in this quarterly report include statements about:

- our future exploration programs and results;
- our future capital expenditures;
- our future financing; and
- our future investments in and acquisitions of oil and gas properties.

These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks, such as

- our ability to establish or find reserves;
- volatility in market prices for natural gas and crude oil;
- liabilities inherent in natural gas and crude oil operations;
- uncertainties associated with estimating natural gas reserves and crude
  oil;
- competition for, among other things, capital, acquisitions of reserves,
  undeveloped lands and skilled personnel;
- political instability or changes of laws in the countries in which we
  operate and risks of terrorist attacks;
- incorrect assessments of the value of acquisitions;
- geological, technical, drilling and processing problems;
- the uncertainty inherent in the litigation process, including the
  possibility of newly discovered evidence or the acceptance of novel legal
  theories, and the difficulties in predicting the decisions of judges and
  juries; and
- other factors discussed under Item 1A. Risk Factors commencing on
  page 20 of this quarterly report.

These risks may cause our or our industrys actual results,
levels of activity or performance to be materially different from any future
results, levels of activity or performance expressed or implied by these forward
looking statements.

Although we believe that the expectations reflected in the
forward looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward looking statements to conform these statements to actual
results.

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In this report, the terms we, us and our refer to Fox
Petroleum Inc. and/or our wholly owned subsidiaries, Fox Petroleum (Alaska)
Inc., Fox Petroleum, Inc. (a Kansas corporation) and Fox Energy Exploration
Limited, as the case may be.

Corporate Overview

We are a development stage company engaged in the
identification, acquisition, exploration, and, if warranted, development of
prospective oil and gas properties. We have oil and gas leases in Alaska,
farm-in interests and awarded interests in the licenses covering blocks in the
UK North Sea, interests in the UK onshore and offshore licenses, and joint
venture interests in a gas well in Texas, and oil and gas leases in Kansas.

Transactions with Carbon Energy Investments Limited

Subscription Agreement

On November 5, 2008, we entered into a subscription agreement
with Carbon Energy Investments Limited for the sale of 80,000,000 shares of our
common stock at a price of $0.50 per share for the aggregate price of
$40,000,000. Carbon Energy agreed to pay for the shares as follows:

$15,000,000 on or before November 30,
2008 (later amended to December 12, 2008);

$15,000,000 on or before January 31,
2009; and

$10,000,000 on or before March 31,
2009.

On November 26, 2008, we issued 50,000,000 shares of our common
stock to Carbon Energy in consideration for $25,000,000 to be received pursuant
to the above-mentioned subscription agreement.

Purchase Agreement for Alaska Oil & Gas Resources
Limited

On November 5, 2008, we entered into an agreement to purchase
shares in Alaska Oil & Gas Resources Limited with Carbon Energy. Carbon
Energy is the sole owner of Alaska Oil & Gas. Pursuant to the agreement, we
agreed to acquire 100% of the issued shares of Alaska Oil & Gas from Carbon
Energy in consideration for $57,500,000, $250,000 of which was to be paid in
cash and the remainder by the issuance of 57,250,000 shares of our common stock
at a deemed price of $1.00 per share. In addition, Carbon Energy agreed to
procure the directors of Alaska Oil & Gas to appoint Richard Moore (our
chairman, president, chief executive officer and director) as director and
another party as director and as secretary of Alaska Oil & Gas. On the same
day, Mr. Moore and William MacNee (our chief operating officer and director)
were appointed as directors of Alaska Oil & Gas.

On November 28, 2008, we entered into an amendment agreement
with Carbon Energy relating to purchase of Alaska Oil & Gas whereby it was
agreed that the consideration to be paid pursuant to the agreement was varied
such that the consideration would amount to $57,500,000, payable by the issuance
of 2,000,000 shares of our common stock within three business days of November
2008 and 55,500,000 shares on completion of the transaction, as described in the
agreement for the purchase of Alaska Oil & Gas, with all shares having a
deemed price of $1.00 per share.

On December 3, 2008, we also entered into a letter agreement
with Carbon Energy whereby Carbon Energy agreed to return 2,000,000 shares of
our common stock to our company upon demand unless certain conditions are
fulfilled or waived. The conditions were, among others, that Carbon Energy must
complete in full the subscription agreement dated November 5, 2008 except that
the first $20,000,000 must be paid to our company on or before December 7, 2008
and that Carbon Energy must sell our company Alaska Oil & Gas which must own
North Alexander, Kitchen and East Kitchen oil and gas leases pursuant to the
agreement relating to the purchase of Alaska Oil & Gas.

It is our intention to extend and amend these agreements to
give Carbon Energy additional time, given current market conditions, to complete
the above transactions.

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Increase in the Authorized Capital

We are currently authorized to issue 90,000,000 shares of our
common stock. As of January 20, 2009, we had 84,668,245 shares of our common
stock issued and outstanding. In order to issue all the shares under the
subscription agreement and the purchase agreement for Alaska Oil & Gas, we
plan to increase our authorized capital from 90,000,000 shares of common stock
with a par value of $0.001 to 500,000,000 shares of common stock with a par
value of $0.001.

On November 26, 2008, our board of directors unanimously approved the amendment to our articles of incorporation to increase the authorized number of shares of our common stock from 90,000,000 to 500,000,000. The approval of the amendment to our articles of incorporation requires the consent of the holders of at least a majority of the outstanding shares of our common stock. Subsequent to the approval of our board of directors of the amendment to our articles of incorporation, Carbon Energy Investments Limited and Trafalgar Capital Specialized Investment Fund, the holders of the majority of the outstanding shares of our common stock, gave us their written consent to the amendment to our articles of incorporation effective December 6, 2008. The increase in our authorized share capital will not become effective until not less than 20 days after the information statement regarding the increase in the authorized capital is first mailed to stockholders of our common stock and until the appropriate filing is made with the Nevada Secretary of State.

Blackhawk Investments Limited

On November 19, 2008, Blackhawk Investments Limited sent a
letter to our company agreeing to underwrite our commitment to Senergy Limited
in respect of all costs related to the drilling of our 211/17 Bourbon prospect
in the sum not to exceed $30,000,000 and that Blackhawk will be repaid as a
priority distribution from income generated by the Bourbon prospect, together
with a return of $6,000,000 or equivalent. The letter stated that the
undertaking is irrevocable undertaking on behalf of Blackhawk and is issued on
the understanding that we will secure Blackhawks funds in the total sums
advanced by granting Blackhawk a security interest over our interest in the
well. Blackhawk Investments Limited agreed to work on the basis that, upon
request by our company, that it will transfer the sum of $15,000,000 to our
operating account as the initial payment no later than November 30, 2008 and
thereafter in tranches of $5,000,000 each, up to the maximum limited of
$30,000,000.

It is our intention to extend and amend this agreement to give
Blackhawk additional time, given current market conditions, to complete the
above transactions.

There is no guarantee that the transactions contemplated by the
agreements or arrangements between our company and Carbon Energy or its related
parties will be completed or, if they are completed, that they will be completed
on the terms set forth above.

Offer to Minmet Plc.

On December 4, 2008, we sent a letter to the directors of
Minmet plc, an Irish company, with an offer for the entire issued and to be
issued share capital of Minmet. We proposed to offer a price of 0.12 pence per
share to all shareholders of Minmet. The proposed offer is an all share offer
whereby shareholders of Minmet are to receive shares of our common stock in
exchange for shares in Minmet. The offer is subject to our completing, to our
satisfaction, both technical and legal due diligence (which remains ongoing) on
the proposed transaction and Minmet. It is intended that the proposed offer will
be funded through an issue and allotment of new shares of our common stock based
on the average mid market price 10 days prior to any circular going to the
shareholders of Minmet. We intend to apply for admission and trading of our
shares post completion on the London Plus Market in order to afford all
shareholders the opportunity to trade their shares in the UK, but we cannot
provide assurance that shares of our common stock will ever be admitted to or
traded on the London Plus Market.

This offer is subject to satisfaction of certain
pre-conditions: (i) the proposed offer being unanimously recommended by the
board of Minmet and such recommendation not being subsequently modified or
withdrawn; and (ii) final approval of our board of directors. This acquisition
is also conditioned on a final due diligence review of Tucumcari Oil and Gas
field, as well as a signed acquisition agreement between our company and
Tucumcari Investments Limted for the acquisition of a 75% ownership interest in
Tucumcari to close simultaneously with the acquisition of Minmet.

There is no guarantee that the proposed offer to Minmet will be
accepted or, if it is accepted, that the transactions contemplated by our
proposed offer will be completed or, if they are completed, that they will be
completed on the terms set forth above.

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Our Oil and Gas Projects

Kansas

On February 27, 2008, we entered into an agreement of intention
to purchase the Geneseo-Edwards Program with Hodgden & Associates. Pursuant
to the agreement, we had a net revenue interest in the program.The
program consists of 100% working interest in 3 leases comprising 320 acres and
located in Ellsworth County, Kansas. The expiration dates of these 3 leases are
November 19, 2008, August 19, 2009, and August 31, 2009.

On June 26, 2008, we purchased these 3 leases and pursuant to
an agreement with Hodgden & Associates, a mutual area of interest is
established to cover the entire leases in addition to some of the surrounding
areas.. Mr. Hodgden and Dr. Knight received the sum of $80,000 from us and
Hodgden & Associates sold and assigned to us an 80% net revenue interest
(100% working interest) in these 3 leases. The landowner royalty on each of
these leases is 12.5% and Hodgden & Associates retains an overriding royalty
interest of 7.5% in each lease. We are expected to drill a minimum of 10 wells
on these leases and we will have to drill and establish production on each lease
before the expiration date of each lease. If we fail to drill and establish
production on each lease before the expiration date, we will have to pay
$150,000 per lease lost to Hodgden & Associates.

We commenced a 10-well drilling program for the development of
the Geneseo-Edwards Field located in Ellsworth County in September 2008. We have
drilled 4 wells to date. All four have been commercial successes. Wells 1and 2
have produced and we expect that wells 3 and 4 will be producing once water
disposal facilities are in place. The lease which would have expired on November
19, 2008 is now held by production. Once further financing is in place we intend
to drill further wells, possibly further 6 wells, commencing February 2009.

On October 14, 2008, through our wholly owned subsidiary, Fox
Petroleum, Inc., a Kansas corporation, we entered into two oil and gas lease
agreements with Bryant T. Wires and Rosalie Wires. Pursuant to the agreements,
we acquired two oil and gas leases for the lands located in the county of
Ellsworth in Kansas in consideration of $10 per acre for total consideration of
$3,200. Each of these two leases contains about 160 acres. The leases will
remain in force for a term of two years and, after the first two years, as long
as oil or gas are or can be produced, if any. On October 21, 2008, we registered
the above two leases with the Register of Deeds of Ellsworth County of State of
Kansas.

We are required to deliver Mr. and Mrs. Wires, as a royalty,
1/8th of part of all oil produced and saved from the leased premises, if any, or
at our option may pay them for such 1/8th royalty the market price at the
wellhead for oil of like grade and gravity prevailing on the day such oil is run
into the pipeline or into storage tanks. We are also required to pay Mr. and
Mrs. Wires, as a royalty, 1/8th of the proceeds received by us from the sale of
gas produced from the lands leased, if any. The leases are paid-up leases and
may be maintained during the first two years without further payments or
drilling operations.

We expect to receive revenue of $52,164, on oil sales from
Kansas October and November, 2008 pilot production of 976 barrels, in January
2009.

Further funding will be required to both maintain and expand
operations.

Spears Gas Unit 2, Well #1

On October 9, 2007, we entered into a subscription agreement
with Trius Energy, LLC, pursuant to which we acquired a 22.5% joint venture
interest in a gas well called the Spears Gas Unit 2, Well #1 in the Gomez Field,
Pecos County, Texas in consideration for $500,000. The joint venture consists of
Trius Energys 72.75% working interest in the Spears Gas Unit 2, Well #1 and was
formed to reopen the gas well.

Drilling activities commenced in November 2007 for the
reworking of the gas well and initial test production from the gas well took
place in early January 2008. The well has been dormant since then but we intend
to re-enter the well in the first quarter of 2009 with a view to perforating the
alternative zones, and recommencing production of natural gas.

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We are currently considering other similar oil and gas well
re-entry opportunities in this area. Given the nature of the projects, it is not
possible to define exact locations of our targets.

Cook Inlet, Alaska

Leases Acquired from Daniel Donkel and Samuel Cade

On October 10, 2007, through Fox Petroleum (Alaska) Inc., we
entered into a lease purchase agreement with Daniel Donkel and Samuel Cade to
acquire 6 oil and gas leases located in the Cook Inlet, Alaska in consideration
for $750,000. These leases are subject to a total of 5% overriding royalty
interests to Daniel Donkel and Samuel Cade and a royalty of 16.67% to the State
of Alaska. Acquisitions of 3 oil and gas leases that had been issued were
completed effective March 1, 2008. The other 3 oil and gas leases have been
issued, and are now assigned to us.

Our primary focus in Alaska is the Catchers Mitt prospect
located in the Cook Inlet, Alaska. We have put into place a four-stage
development program on the Catchers Mitt prospect in order to begin drilling.

Stage one was the purchase of a magnetic airborne survey over
the area. Fugro Airborne Surveys Corp. carried out the survey, which covered
approximately 1,869 line miles. We analyzed this data in order to optimize our
understanding of where potential reserves were best defined thus enhancing our
choice of drilling locations.

Stage two was our acquisition of a detailed gravity survey from
Photo Gravity Corporation in order to acquire in depth data regarding the
structures and formations on the leases.

Stage three involved the re-interpretation of original and
offset well logs. Our geologists worked with data originally collected from test
wells that were initiated in the early stages of the prospects exploration. We
reprocessed and reinterpreted this information using the latest available
technology to improve our ability to decide upon exact zones and targets for
drilling and producing hydrocarbons.

Stage four was the purchase of the available seismic data on
the leases, which was completed in July 2008 for approximately $200,000. We also
plan to drill 2 wells during the 2009-2010 drilling season. Hodgden &
Associates is currently finishing the geology and geophysical studies. These
studies have enabled us to optimize well location selection, and we are underway
permitting the wells.

North Slope, Alaska

Leases Acquired from Fox Petroleum LLC

On August 14, 2007, we acquired 11 oil and gas leases in North
Slope, Alaska under the lease purchase and sale agreement that we entered into
with Fox Petroleum LLC on May 29, 2007. Effective March 1, 2008, we acquired
12th oil and gas lease under the agreement. These leases have been assigned to
our wholly owned subsidiary, Fox Petroleum (Alaska) Inc. We have combined 100%
working interests in these 12 state-issued oil and gas leases subject to a
royalty of 16.67% to the State of Alaska and a private royalty of 5%. We intend
to conduct an exploration and appraisal program on these 12 oil and gas
leases.

We have already met with industry specialists in Alaska to
discuss the co-ordination of our exploration program with them. We are also
discussing existing seismic data acquisition with several licensed data brokers
in the region. The gathering of data on the leases is ongoing and our
consultants are carrying out quality assurance tests on the data available.

We aim to analyze as much quality information as is available
to us from the many geophysical surveys, well drilling and testing activities
that have already taken place in or around the leases since serious exploration
and appraisal commenced in the region.

Thereafter, we intend to model the geological structure
surrounding and including the leases based on the direct and offset data
available to us.

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8

We are also discussing with Petroleum Geo-Services, a major
seismic acquisition company, regarding a new seismic survey across our leases
and beyond. Although negotiations are ongoing Petroleum Geo-Services is
monitoring interest across a wide range of Alaskan North Slope exploration
companies with regard to participating in the survey. This would spread the
costs as well as giving the participants new data on their own acreage and fresh
data on the acreage in the region which is yet to be awarded. Given the early
stage of negotiations, there is no assurance that we will reach an agreement
with Petroleum Geo-Services regarding a new seismic survey.

We are also considering the use of electromagnetic and gravity
survey processes to further assist us in defining the most likely whereabouts of
hydrocarbons on the leases. The idea is to use electromagnetic and gravity
survey processes over prospects identified by seismic surveys as containing the
right kind of rock structures for the accumulation of hydrocarbons.
Electromagnetic and gravity survey processes provide an independent measurement
of the potential for hydrocarbons and could be used to select the prospects with
greatest chance of success.

We are currently in advanced discussions with other Alaskan
explorers and international geophysical service companies on areas of mutual
cooperation, including seismic acquisition and data sharing.

Leases Acquired from Daniel Donkel and Samuel
Cade

On October 10, 2007, our wholly owned subsidiary, Fox Petroleum
(Alaska) Inc., entered into a purchase agreement with Daniel Donkel and Samuel
Cade to acquire a 100% working interest on 8 oil and gas leases located in the
North Slope, Alaska in consideration for $250,000 and 80,000 shares of our
common stock. On November 2, 2007, the purchase agreement was amended to add Fox
Petroleum Inc. as a party to the purchase agreement. These leases are subject to
a total of 5% overriding royalty interests to Daniel Donkel and Samuel Cade and
a royalty of 16.67% to the State of Alaska. Acquisitions of these 8 oil and gas
leases were completed effective March 1, 2008.

We are currently seeking to acquire all available data on these
leases, such as seismic, gravity, and magnetic data, which we plan to tie in
with the existing well logs and other offset and analog data.

UK North Sea

The Anglesey Prospect

On July, 31, 2007, through our wholly owned UK subsidiary, Fox
Energy Exploration Limited, we acquired a total of 33.33% interests in a UK
petroleum production license under a farm-in agreement dated June 8, 2007 with
Granby Enterprises Limited and Atlantic Petroleum UK Limited. The license P1211
covers blocks 14/9a and 14/14b located in the UK North Sea. In consideration for
the farm-in interest, we agreed to fund 100% of the high resolution 2D seismic
survey and pseudo 3D processing over the license and our 33.33% share of the
license budget costs from June 1, 2007. In addition to the acquisition of the
33.33% interest in the license, we obtained an exclusive, non-transferable
option to acquire an additional 26.67% interest in the license. We have declined
to take up this option but continue with our 33.33% interest in the license.

Pursuant to this farm-in agreement, we paid more than
$2,000,000 cost for the hi-density 2D seismic survey over the Anglesey prospect
located in the license. We acquired the seismic data on the Anglesey prospect
and further to analysis of all relevant data by the parties to the agreement, it
was decided that economic viability of the project could not be proven and steps
are being taken to relinquish the license.

The Bourbon Prospect

On November 8, 2007, through our wholly owned UK subsidiary,
Fox Energy Exploration Limited, we entered into a farm-in agreement with Valiant
North Sea Limited and Petrofac Energy Developments Limited. Pursuant to the
farm-in agreement, Valiant North Sea Limited and Petrofac Energy Developments
Limited agreed to assign a total of 46% interest in the southern part of block
211/17 located in the UK North Sea. In consideration for the 46% interest, we
agreed to pay for 89% of the cost of drilling an exploration well on the
southern part of the block and perform certain related works to the drilling an
exploration well. When we acquire the 46% interest, Valiant North Sea Limited
will have a 30% interest and Petrofac Energy Developments Limited will have a
24% interest.

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9

We were required to spud the exploration well before December
31, 2008 unless the parties agreed to a later date. Our primary target for the
exploration well is the Bourbon prospect located in the southern part of block
211/17.

While no formal amendment has been made to the agreements with
Senergy, Petrofac or Valiant, dialogue has taken place with a view to extending
the farm in agreement and the drilling contract to allow us additional time to
put financial in place to the satisfaction of all parties, which we expect would
lead to the well being drilled during 2009.

Under a separate agreement with Aimwell Energy Ltd., we agreed
to transfer a 4.6% interest out of above 46% interest to Aimwell when we acquire
the 46% interest from Valiant and Petrofac. Following the transfer of the 4.6%
interest to Aimwell, we will pay Aimwells share of all costs, expenses,
liabilities, and obligations arising in respect of the operations on the
southern part of block 211/17 until a field development plan is formally
approved by the UK Secretary of State responsible for such matters, for the
development of a discovery of petroleum in the block. Thereafter, our company
and Aimwell will each be responsible for its respective share of costs. Michael
Rose and Robert Frost, who became directors of our company effective May 5,
2008, are the beneficial owners and directors of Aimwell.

On April 15, 2008, we signed a letter of commitment with
Senergy Limited, an international integrated oil services company, to utilize
the Byford Dolphin semi-submersible drilling rig to drill a well on our Bourbon
prospect. Senergy countersigned the letter of commitment on May 5, 2008. On May
20, 2008, we signed a new letter of commitment with Senergy, which was
countersigned by Senergy on May 21, 2008. We agreed to commit to the use of a
drilling rig commencing no earlier than October 1, 2008 for a total rig cost of
$8,910,000. We also committed to enter into a well project management and
integrated services contract for the management of a well program on the rig. We
are also obligated to pay a fee of $1.75% of the operating rig rate, for the
duration of the use of the rig, if we use the rig, but not the integrated
project management services of Senergy. We also committed to enter into a side
letter agreement with Senergy and its other clients who will be using the rig to
share any mobilization and demobilization or other costs that can be reasonably
and equitably be shared on a pro-rata basis (based on days the rig is used).

Technically the Bourbon prospect is drill-ready having
completed the site survey in Autumn 2008. Pending partner consent to an
extension to the farm in agreement we plan to drill the well in the first half
of 2009.

UK Onshore License

On June 3, 2008, we acquired four 10 km x 10 km UK onshore
license blocks in the south of England. The UK government made available this
Petroleum Exploration and Development License and awarded the blocks totaling
400 km2 to our company and Aimwell Energy Ltd. in the latest round of
onshore licensing. In return for the license, we will have to shoot 60 km of 2D
seismic within the 6-year term of the license. Interpretation and analysis of
the seismic data acquired will help further define the prospect, after which we
will have an option to drill a well, or simply relinquish the license. While the
tendering process for the aforementioned seismic acquisition obligation has been
put on hold we expect it to resume in the second quarter of 2009.

On September 5, 2008 our subsidiary, Fox Energy Exploration
Limited, entered into a letter agreement with Aimwell Energy Ltd. (two of our
directors, Michael Rose and Robert Frost, are the beneficial owners and
directors of Aimwell.), relating to the participation in four UK onshore license
blocks in the south of England, which have been awarded to both companies by the
UK government in May 2008. Pursuant to the letter agreement, we have a 90%
interest in the four blocks and Aimwell has a 10% interest. We will pay
Aimwells 10% share of all costs, expenses, liabilities and obligations arising
in respect of operations jointly conducted by us and Aimwell in respect of each
license block until a filed development plan is formally approved by the UK
Secretary of State responsible for such matters, for the development of a
discovery of petroleum in the blocks. Thereafter, our company and Aimwell will
each be responsible for its respective share of costs, with us being responsible
for 90% of the costs and Aimwell responsible for its 10% share of the costs. We
agreed to be named as operator of all blocks (subject to the approval by the UK
government) and to negotiate and execute a joint operating agreement in respects
of the licenses no later than 6 months following the award of the licenses. We
agreed to pay a consideration of £10,000 per block awarded (a total of £40,000
for all 4 blocks) to Aimwell on receipt of an appropriate invoice from Aimwell
to cover past technical costs and an initial 3 months technical management of
the blocks by Aimwell.

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10

Also, on September 5, 2008 our subsidiary, Fox Energy
Exploration Limited, entered into another letter agreement with Aimwell Energy
Ltd., relating to the participation in an application made for blocks 13/17
& 210/20e. Pursuant to the letter agreement, we have a 90% interest in the
blocks and Aimwell has a 10% interest. We will pay Aimwells 10% share of all
costs, expenses, liabilities and obligations arising in respect of operations
jointly conducted by us and Aimwell in respect of each license block until a
field development plan is formally approved by the UK Secretary of State
responsible for such matters, for the development of a discovery of petroleum in
the blocks. Thereafter, our company and Aimwell will each be responsible for its
respective share of costs, with us being responsible for 90% of the costs and
Aimwell responsible for its 10% share of the costs. We agreed to be named as
operator of all blocks (subject to the approval by the UK government) and to
negotiate and execute a joint operating agreement in respects of the licenses no
later than 6 months following the award of the licenses. We agreed to pay a
consideration of £32,000 to Aimwell for preparation of the application
documentation for the blocks. We also agreed to pay a further consideration of
£50,000 to Aimwell per each block awarded to both companies by the UK government
to cover an initial 3 months technical management of each block by Aimwell.

UK Offshore License

On November 12, 2008 we were formally notified by the UK
Department of Energy and Climate Change (DECC) of our success in the 25th
Seaward Licensing Round Awards, the rights to explore and develop the block
13/17 concession in the North Sea by the UK government. License obligations are
to obtain 3D seismic over the block and to carry out geological and seismic
modelling before firming up a drilling location. We have 4 years in which to
drill or drop the license. Due to the current problems in the credit markets,
DECC are reviewing every single award in regards to the recipients abilities to
finance their agreed work program. We hope to satisfy them accordingly.

Other Commitments

By an agreement dated May 22, 2007, we engaged an analyst to
provide continuing research coverage regarding our company beginning May 22,
2007 until May 31, 2009. As of August 31, 2008, we are required to pay monthly
installments of $1,750 until May 31, 2009.

On June 8, 2007, we entered into an employment agreement with
Richard Moore, which was amended on October 19, 2007, pursuant to which Mr.
Moore serves as our President and Chief Executive Officer. Pursuant to the
employment agreement, we paid Mr. Moore £9,000 per month, payable in £4,500
bi-monthly installments, in arrears and reimburse him for all reasonable
travelling and other expenses incurred by him in connection with his services to
us. Mr. Moore is required to work a minimum of 5 days per week for us and is
entitled to a minimum annual vacation of four weeks. The term of the agreement
is for an indefinite period and the agreement may be terminated with or without
cause. Effective May 1, 2008, Mr. Moores salary was increased to £15,000 per
month.

On June 8, 2007, we entered into a consulting agreement with
Alexander Craven, which was amended on October 19, 2007, pursuant to which we
paid Mr. Craven £7,000 monthly and all reasonable travelling and other expenses
incurred by him in connection with his duties to us. The term of the agreement
is for an indefinite period and the agreement may be terminated with or without
cause. Effective May 1, 2008, Mr. Cravens salary was increased to £12,500 per
month.

Effective August 17, 2007, we appointed William MacNee, Robert
Frost, Michael Rose, John Spence, and Jonathan Wood to our board of advisors. We
also entered into board of advisors agreements with Aimwell Energy Ltd. (a
company controlled by Robert Frost and Michael Rose), Black Gold Consulting Inc.
(a company controlled by William MacNee), John Spence, and Jonathan Wood,
whereby we agreed to grant 20,000, 10,000, 10,000, and 10,000 shares of our
common stock, respectively, for each completed year of the services. Effective
May 5, 2008, all five of them became our directors and the board of advisors was
dissolved. Also effective June 10, 2008, we entered into board of advisors
termination agreements, whereby we terminated the board of advisors agreements
and agreed to issue 20,000, 10,000, 10,000, 10,000 shares of our common stock to
Aimwell Energy Ltd., Black Gold Consulting Inc., John Spence, and Jonathan Wood,
respectively, for the services performed by them.

Effective May 6, 2008, we adopted a compensation policy for our
independent directors pursuant to which we compensate each independent director
(i) a fee of $1,000 per month, (ii) 1,000 restricted shares of our common stock
per month, and (iii) a fee of $1,000 per each quarterly board meeting attended.
On May 6, 2008, our board of

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11

directors determined that Robert Frost, Michael Rose, John
Spence, and Jonathan Wood are independent directors. On July 11, 2008, our board
of directors determined that Jonathan Wood no longer qualified as an independent
director of our company because of his appointment as our Chief Financial
Officer.

On May 1, 2008 and June 1, 2008 William MacNee and Jonathan
Wood respectively commenced employment with us on a full time basis. Mr. MacNee
assumed the position of Chief Operating Officer and Mr. Wood that of Chief
Financial Officer. Both are executive directors of our company. They both
receive a salary of £10,000 per month.

On May 8, 2008 we entered into a consulting agreement with
Partners Consulting, Inc., a Florida corporation, with a view to introducing our
company to potential new investors. We engaged Partners Consulting, Inc. on a 90
day exclusive basis commencing on May 8, 2008. The consideration payable is 6%
of the gross proceeds from any financing whose funding source is introduced by
Partners Consulting, Inc., payable in cash and by issuance of share purchase
warrants equal to 6% of the gross proceeds. The warrants will have a cashless
exercise and will be priced at market value as of the date of the financing and
with a minimum expiry period of three years. In addition, if the financing is
facilitated through an investment banker introduced by Partners Consulting,
Inc., the consideration payable is reduced to 3% of the gross proceeds for cash
and 3% of the gross proceeds for share purchase warrants. We also agreed to pay
Partners Consulting, Inc. share purchase warrants equal to 50,000 shares of our
common stock for the services of Partners Consulting, Inc. relating to the
assembling, formatting, and compiling certain presentation documentation. These
warrants will have a cashless exercise and will be priced at the market value as
of May 8, 2008, exercisable in 90 days, and have a minimum expiry period of
three years. In the event that Partners Consulting, Inc. introduces our company
to potential new investors for successful financing, Partners Consulting, Inc.
has the right to represent us as a finder in all subsequent equity or debt
financing undertaken by us, for two years from May 8, 2008, on an exclusive
basis for a 180 day period from formal engagement of Partners Consulting, Inc.
in respect of each such subsequent financing round. The consulting agreement is
for a period of one year. On June 27, 2008, we paid $150,000 to Partners
Consulting, Inc. for financing from Trafalgar Capital Specialized Investment
Fund, Luxembourg. In addition, we are required to issue warrants for financing
from Trafalgar Capital Specialized Investment Fund, Luxembourg, pursuant to the
consulting agreement with Partners Consulting, Inc.

On September 26, 2008, Fox Petroleum Inc. and its wholly owned
subsidiary, Fox Energy Exploration Limited, entered into a transaction proposal
and exclusive agreement with Ballyliffin Capital Corp. relating to the proposed
business combination. Ballyliffin is a capital pool company listed on the TSX
Venture Exchange in Canada. A capital pool company is a company with no assets
other than cash and no commercial operations. The capital pool company uses its
funds to seek out an investment opportunity. Under the proposed transaction,
Ballyliffin would acquire 100% of the issued and outstanding shares of Fox
Energy Exploration Limited whereby the holder of the issued and outstanding
shares of Fox Energy Exploration Limited would receive common shares of
Ballyliffin in exchange for its shares of Fox Energy Exploration Limited. The
agreement has now lapsed and, although extensions were considered by both
parties, on January 16, 2009 Ballyliffin informed us, through their legal
counsel, that it considers the proposed transaction terminated. On September 25,
2008, our wholly owned subsidiary, Fox Energy Exploration Limited, entered into
a letter agreement with Pollard Financial Ltd. pursuant to which Pollard
Financial Ltd. agreed to provide general corporate finance services with respect
to Fox Energy Exploration Limiteds financing needs and listing on the TSX
Venture Exchange via entering into definitive and binding agreement with a
capital pool company in Canada. The term of the letter agreement was for a
period of twelve months, and thereafter, renewable monthly at the option of Fox
Energy Exploration Limited. In consideration for the services of Pollard
Financial Ltd., Fox Energy Exploration Limited agreed to: (i) pay an engagement
fee of 25,000 shares of common stock of Fox Petroleum Inc., payable upon signing
of the letter agreement; (ii) pay 7% in cash of the gross proceeds of the
financing, to be deducted from the gross proceeds, and paid upon the closing of
each and any portion of the financing; (iii) issue common stock warrants equal
to 7% of the gross proceeds, with the warrants having a cashless exercise and
being priced as mutually agreed upon by Fox Energy Exploration Limited and
Pollard Financing Ltd. at the time of each closing and having a term of two
years; and (iv) pay a corporate finance fee of 100,000 shares of common stock of
Fox Petroleum Inc., payable upon completion of the qualifying transaction with
the capital pool company. Any amounts due and payable under the letter agreement
and outstanding for in excess of 45 calendar days will accrue interest at the
rate of 1.5% per month, compounding on a monthly basis. Fox Energy Exploration
Limited also agreed to reimburse all reasonable out of pocket costs, charges and
expenses, including travel, incurred by Pollard Financial Ltd. in the
performance of its obligations under the letter agreement.

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12

By a bonus agreement dated May 22, 2008, we agreed to issue
5,000 shares of our common stock and paid £5,000 during the year ended February
29, 2008 to Richard Moore as a performance bonus. We have not yet issued the
shares due.

Anticipated Cash Requirements

We estimate our minimum operating expenses and working capital
requirements for the next 12 month period to be as follows:

|Estimated Operating Expenses For the Next 12 Month Period |  
|--------------------------------------------------------- | -
|Exploration (and Appraisal) Costs                         | $
|Employee and Consultant Compensation                      |  
|Professional Fees                                         |  
|General and Administrative Expenses                       |  
|                                                          |  
|Total                                                     | $

Exploration Costs

We estimate that our exploration costs on our leases in Cook
Inlet, Alaska will be approximately $15,000,000 during the next 12 months, which
will include the costs of completing the four-stage development on the Catchers
Mitt prospect and the drilling of 2 wells.

We estimate that our exploration costs on our leases in North
Slope, Alaska (mainly to obtain seismic data) will be approximately $2,000,000
during the next 12 months, which will include modeling the geological structure
surrounding and including the leases based on the direct and offset data
available to us and re-processing the available seismic data and the use of
electromagnetic and gravity survey process.

We estimate that our exploration costs on our interests in the
UK will be approximately $32,000,000 during the next 12 months, which will
include drilling and testing of 1 exploration well on the Bourbon prospect.
These costs may be substantially reduced depending on our ability to farm out a
reasonable percentage of our interests in the Bourbon prospect. We are currently
negotiating with other oil and gas companies which have shown interest in
participating in the exploration and appraisal of the prospect. Given the
perceived potential of the prospect by the interested parties, we could farm out
part of our percentage interest on a promote basis whereby the incoming
farminees would acquire such interest by carrying us for a substantial portion
of the cost of drilling the well, although this has become less likely given the
current market conditions .

Employee and Consultant Compensation

Given the early stage of our development and exploration
properties, we intend to continue to outsource our professional and personnel
requirements by retaining consultants on an as needed basis. We estimate that
our consultant and related professional compensation expenses for the next 12
month period will be approximately $500,000. We estimate that our employee
compensation expenses for the next 12 month period will be approximately
$1,500,000.

Professional Fees

We expect to incur ongoing legal expenses to comply with our
reporting responsibilities as public company under the United States Securities
Exchange Act of 1934, as amended. We estimate our legal and accounting expenses
for the next 12 month period to be approximately $4,000,000.

General and Administrative Expenses

We anticipate spending $1,000,000 on general and administrative
costs in the next 12 month period. These costs primarily consist of expenses
such as lease payments, office supplies and office equipment.

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13

Results of Operation

Revenues

We had no operating revenues during the nine months ended
November 30, 2008. We expect to receive revenue of $52,164, on oil sales from
Kansas October and November, 2008 pilot production of 976 barrels, in January
2009.

Expenses

The major components of our expenses for the three and nine
months ended November 30, 2008 are outlined in the table below:

|                                                         | Three Months Ended |   | Nine Months Ended | 
|-------------------------------------------------------- | ------------------ | - | ----------------- | 
|                                                         | November 30        |   | November 30       | 
|                                                         |                    |   |                   | 
|Expenses:                                                | 2008               |   | 2007              | 
|Accounting and audit fees                                | 31,409             |   | 14,309            | 
|Advertising and public relations                         | 44,428             |   | 783,648           | 
|Accretion of convertible note                            | 204,750            |   | -                 | 
|Bank charges                                             | 2,192              |   | 3,344             | 
|Consulting fees                                          | (155,629           | ) | 82,170            | 
|Filing and transfer agent                                | 6,841              |   | 4,608             | 
|Finance charge                                           | 2,919,413          |   | -                 | 
|Interest on notes payable                                | 96,085             |   | -                 | 
|Legal fees                                               | 102,349            |   | 42,569            | 
|Management fees                                          | 215,906            |   | 49,073            | 
|Mineral property acquisition and
      exploration costs | -                  |   | -                 | 
|Office and miscellaneous                                 | 4,032              |   | 27,415            | 
|Insurance                                                | -                  |   | 10,586            | 
|Travel and entertainment                                 | 26,394             |   | 64,901            | 

Accounting and audit fees

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in accounting and audit fees was primarily due to
increased volume of work resulting from the start up of our operational
activity.

Advertising and public relations expenses

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The decrease in advertising and public relations expenses was
primarily due to less printing and distribution of our brochures and
newsletter.

Accretion of Covertible Note

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in accretion of convertible note was due to
inclusion of this item.

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14

Bank Charges

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007

The decrease in bank charges was primarily due to a reduction
in the number of banking transactions in the period.

Nine Months Ended November 30, 2008 Compared to Nine Months
Ended November 30, 2007

The increase in bank charges was primarily due to an overall
increase in the number of banking transactions.

Consulting Fees

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007

The decrease in consulting fees was primarily due to
revaluation of shares issuable to the advisory board.

Nine Months Ended November 30, 2008 Compared to Nine Months
Ended November 30, 2007

The increase in consulting fees was primarily due to start up
of technical work program.

Filing and Transfer Agent Fees

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in filing and transfer agent fees was primarily
due to increased number of filings and associated fees.

Finance Charges

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in finance charges was primarily due to the amortization of finance cost associated with convertible debenture.

Interest on Notes Payable

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in interest on notes payable was due to inclusion
of accrued interest on notes payable.

Legal Fees

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in legal fees was primarily due to increased legal
advice requirements as a result of the start up of our operational activity.

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15

Management Fees

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

The increase in management fees was primarily due to greater
staffing levels.

Mineral Property Acquisition and Exploration
Costs

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007

There was no movement in the period in mineral property
acquisition and exploration costs

Nine Months Ended November 30, 2008 Compared to Nine Months
Ended November 30, 2007

The decrease in mineral property acquisition and exploration
costs was primarily due to no costs incurred in the period

Office and Miscellaneous Expenses

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007

The decrease in office and miscellaneous expenses was primarily
due to reduced short term office space required.

Nine Months Ended November 30, 2008 Compared to Nine Months
Ended November 30, 2007

The increase in office and miscellaneous expenses was primarily
due to increase in staff numbers and thus office space required.

Insurance Expenses

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007

The decrease in insurance expenses was primarily due to
implementation of directors and officers insurance coverage paid in prior
period.

Nine Months Ended November 30, 2008 Compared to Nine Months
Ended November 30, 2007

The increase in insurance expenses was primarily due to
implementation of directors and officers insurance coverage.

Travel and Entertainment Expenses

Three Months Ended November 30, 2008 Compared to Three
Months Ended November 30, 2007 and Nine Months Ended November 30, 2008 Compared
to Nine Months Ended November 30, 2007

This decrease in travel and entertainment expenses was
primarily due to a reduction in the management travel requirement.

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16

Liquidity and Capital Resources

|Working Capital     |   | November 30, |   |   | February 29, |  
|------------------- | - | ------------ | - | - | ------------ | -
|                    |   | 2008         |   |   | 2008         |  
|Current Assets      | $ | 182,906      |   | $ | 364,685      |  
|Current Liabilities | $ | 6,085,638    |   | $ | 694,494      |  
|Working Capital     | $ | (5,902,732   | ) | $ | (329,809     | )

As of November 30, 2008, we held a cash balance of $9,477 and a
working capital deficit of $5,902,732, compared to a cash balance of $271,601
and a working capital deficit of $329,809 as of February 29, 2008. We have
suffered recurring losses from inception.

Financing from EuroEnergy Growth Capital S.A.

On May 17, 2007, we entered into a share issuance agreement
with EuroEnergy Growth Capital S.A. whereby EuroEnergy agreed to advance up to
$8,000,000 to our company under our drawdown requests, in exchange for units of
our common stock. Pursuant to the agreement, the price of a unit is equal to 80%
of the volume weighted average of the closing price of common stock as quoted on
Yahoo! Finance for the 10 banking days immediately preceding the date of our
drawdown request. Each unit consists of one common share and one warrant. One
warrant will entitle EuroEnergy to purchase one additional common share at an
exercise price equal to 125% of the unit price. The warrants will be exercisable
for three years from the date of issue. For the fiscal year ended February 29,
2008, we received the funds from EuroEnergy in the aggregate amount of
$6,050,000 after giving EuroEnergy a total of 14 drawdown requests.

Subsequent to the fiscal year ended February 29, 2008,
EuroEnergy requested its financing to us to be debt financing instead of equity
financing because of changes in market conditions. As a result, we obtained
funds from EuroEnergy by issuing promissory notes and entering into a loan
agreement.

We issued a total of three promissory notes dated April 1,
2008, May 1, 2008, and May 23, 2008 to EuroEnergy for the loans in the principal
amounts of $250,000, $150,000, and $50,000, respectively. The principal amounts
of the loans were to be paid on the earlier of (i) the date that we obtain
equity financing from a third party in the minimum amount of $1,000,000 net to
our company, or (ii) one year anniversary of the date of the promissory notes.
For the period from the date of advance of the loan up to and including the date
that we repay the loan, interest will accrue on the loan on the balance of
principal outstanding at the rate of 10% per annum, calculated and compounded
monthly not in advance, until paid. Interest will be payable in a balloon
payment on the date that we repay the loan.

On June 12, 2008, we entered into a loan agreement with
EuroEnergy for the $450,000 loan that EuroEnergy provided us on May 30, 2008.
Pursuant to the loan agreement, we agreed to pay the principal and interest to
EuroEnergy in full by August 31, 2008. However, if we have cash available from
our operations or raise funds from any third party in a private placement of
equity or debt of at least $1,000,000, we agreed to use the net proceeds from
such events to repay the principal and interest then outstanding. The loan bears
interest at 12% per annum, calculated annually. The loan is secured by all of
our assets. On June 23, 2008, pursuant to the loan agreement, we issued to
EuroEnergy Growth Capital S.A. 150,000 restricted shares of our common stock as
additional compensation for the loan.

Under the share issuance agreement with EuroEnergy, we may not
obtain financing from anyone other than EuroEnergy for 24 months from the date
of the share issuance agreement with EuroEnergy, without the prior written
consent of EuroEnergy. EuroEnergy also retains first right of refusal, relating
to any future financing of our company. On April 22, 2008, EuroEnergy gave us a
written consent to seek alternative financing and on June 18, 2008, EuroEnergy
accepted the terms of the debenture issued to Trafalgar Capital Specialized
Investment Fund, Luxembourg, discussed below.

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17

EuroEnergy has agreed, in light of the current market climate,
to extend the term of the agreement until we are able to raise further
financing. Other terms of loans remain.

Financing from Trafalgar Capital Specialized Investment
Fund, Luxembourg

On June 24, 2008, we entered into a securities purchase
agreement with Trafalgar Capital Specialized Investment Fund, Luxembourg
pursuant to which we sold to Trafalgar $2,500,000 of a senior secured
convertible redeemable debenture. Pursuant to the terms of the securities
purchase agreement, we agreed to pay to Trafalgar a legal and documentation
review fee of $17,500, a due diligence fee of $10,000, a warrant to purchase
500,000 shares of our common stock for five years at an exercise price of
$2.9851 (issued), a commitment fee equal to 7% of the principal amount of the
debenture, a facility fee equal to 2% of the principal amount of the debenture,
and 200,000 restricted shares of our common stock (issued). In connection with
the securities purchase agreement, we executed a nonbinding term sheet to enter
into a committed equity facility with Trafalgar, which would be entered into
upon the debenture being repaid in full by us.

Effective October 31, 2008 we amended the securities purchase
agreement and related transaction documents dated June 24, 2008 (collectively,
the Original Transaction Documents) between us and Trafalgar. The amendment
and certain related transaction documents (collectively, the Amended
Transaction Documents) are dated October 31, 2008 and were executed and
delivered to us by Trafalgar on November 11, 2008.

Under the Amended Transaction Documents, we sold to Trafalgar
$3,500,000 of secured convertible redeemable debentures consisting of (i) the
original debenture sold to Trafalgar under the Original Transaction Documents in
the principal amount of $2,500,000, which was amended and extended such that the
debenture was separated into two debentures, each of which are for a total
principal amount of $1,250,000 (the Amended Debentures); and (ii) a new
debenture in the total principal amount of $1,000,000 (the New Debenture and
together with the Amended Debentures, the Debentures).

The Amended Debentures mature as to $1,250,000 on April 30,
2009, $1,250,000 on April 30, 2010 and $1,000,000 on October 31, 2010 and bear
an annual interest rate of 10% compounded monthly until the unpaid principal is
paid. Trafalgar is entitled, at its option, to convert and sell the principal
amount of the Amended Debenture plus accrued interest into shares of our common
stock at the price per share equal to the lesser of (i) 100% of the volume
weighted average price as quoted by Bloomberg L.P. on October 31, 2008, or (ii)
80% of the lowest daily closing volume weighted average price as quoted by
Bloomberg L.P. during the 5 trading days immediately preceding the date of
conversion. In no event will Trafalgar be entitled to convert the Amended
Debentures for a number of shares of our common stock in excess of that number
of shares of our common stock, upon giving effect to such conversion, would
cause the aggregate number of shares of our common stock beneficially owned by
Trafalgar and its affiliates to exceed 9.99% of the outstanding shares of our
common stock following such conversion without our approval. We may redeem the
Amended Debentures provided that our common stock is trading below 100% of the
volume weighted average price as quoted by Bloomberg L.P. on October 31, 2008 at
the time we give Trafalgar the redemption notice, by paying the unpaid principal
and interest accrued to such date and a prepayment premium of 15% redemption
premium on the amount redeemed. We must redeem the entire principal amount
outstanding on only one of the Amended Debentures on April 30, 2009 at a 15%
redemption premium; there is no mandatory redemption requirement for the other
Amended Debenture.

The New Debenture matures on October 31, 2010 and bears an
annual interest rate of 10% compounded monthly until the unpaid principal is
paid. An event of default occurs if (i) we fail to pay amounts due under the New
Debenture, (ii) our transfer agent fails to issue freely tradeable common stock
to Trafalgar within 3 days of our receiving a notice of conversion or exercise
after our registration statement is declared effective, (iii) we fail to comply
with any of our other agreements in the New Debenture for 5 business days after
receiving notice to comply, (iv) we enter into bankruptcy or become insolvent,
or (v) we breach any of covenants under the securities purchase agreement and do
not cure within 5 business days of receiving a written notice of the breach.
Upon an event of default, Trafalgar may accelerate full repayment of the New
Debenture outstanding and accrued interest thereon. Also, Trafalgar is entitled,
at its option, to convert and sell the principal amount of the New Debenture
plus accrued interest into shares of our common stock at the price per share
equal to the lesser of (i) 100% of the volume weighted average price as quoted
by Bloomberg L.P. on October 31, 2008, or (ii) 80% of the lowest daily closing
volume weighted average price as quoted by Bloomberg L.P. during the 5 trading
days immediately preceding the

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18

date of conversion. However, if we issue or sell shares of our
common stock without consideration or for a consideration per share less than
the bid price of our common stock determined immediately prior to its issuance,
the conversion price will be reset to 85% of such sales price if the reset price
is lower than the conversion price. In no event will Trafalgar be entitled to
convert the New Debenture for a number of shares of our common stock in excess
of that number of shares of our common stock, upon giving effect to such
conversion, would cause the aggregate number of shares of our common stock
beneficially owned by Trafalgar and its affiliates to exceed 9.99% of the
outstanding shares of our common stock following such conversion without our
approval. We may redeem the debentures provided that our common stock is trading
below 100% of the volume weighted average price as quoted by Bloomberg L.P. on
October 31, 2008 at the time we give Trafalgar the redemption notice, by paying
the unpaid principal and interest accrued to such date and a prepayment premium
of 15% redemption premium on the amount redeemed. We must begin redeeming the
New Debenture monthly beginning on January 31, 2009 by making equal payments of
principal over the term of the New Debenture plus any outstanding interest
payments and at a 15% redemption premium on the principal redeemed each month.
So long as any of the principal of or interest on the New Debenture remains
unpaid, we may not, without the prior consent of Trafalgar, (i) issue or sell
shares of our common stock without consideration or for a consideration per
share less than the bid price of our common stock determined immediately prior
to its issuance, (ii) issue or sell any warrant, option, right, contract, call,
or other security instrument granting the holder thereof, the right to acquire
our common stock without consideration or for a consideration less than our
common stocks bid price value determined immediately prior to its issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of our or our subsidiarys assets, (iv) permit any of our subsidiaries to
enter into any security instrument granting the holder a security interest in
any assets of such subsidiary, (v) file any registration statement on Form S-8,
or (vi) incur any additional debt or permit any of our subsidiaries to incur any
additional debt without Trafalgars prior written consent.

Our use of the $1,000,000 received pursuant to the New
Debenture will require the prior written approval of Trafalgar. Upon the
disbursement of the $1,000,000 relating to the purchase of the New Debenture, we
paid to Trafalgar one interest payment due on each of the three Debentures,
which was paid directly from the proceeds of the closing for the Amended
Transaction Documents.

We agreed to enter into a lock box agreement covering revenue
generated by us which shall be executed prior to November 21, 2008. Failure by
our company to execute such lock box agreement is deemed an event of default
under Amended Transaction Documents including the Debentures and the Pledge and
Escrow Agreement. We have negotiated the terms of this agreement with Trafalgar
and we expect that the lock box agreement will be in place to receive first
revenue.

The original warrant issued by us to Trafalgar was amended and
replaced such that it is exercisable for a total of 2,000,000 shares of common
stock at an exercise price of $0.001 per share. Also, we agreed to register the
shares of common stock into which the warrant is exercisable within thirty days
of October 31, 2008, subject to compliance with Rule 415 as promulgated under
the Securities Act of 1933, as amended, or any Rule 415 comments or restrictions
placed by the Securities and Exchange Commission on the registration statement
for the shares underlying the warrant.

We agreed to issue to Trafalgar 2,500,000 shares of common
stock (issued). Also, we agreed to register such shares of common stock within
thirty days of October 31, 2008, subject to compliance with Rule 415 as
promulgated under the Securities Act of 1933, as amended, or any Rule 415
comments or restrictions placed by the Securities and Exchange Commission on the
registration statement for such shares.

We entered into a Pledge and Escrow Agreement with Trafalgar
and James G. Dodrill II, P.A. as escrow agent, whereby we agreed to issue to
Trafalgar an additional 15,000,000 shares of common stock (the Pledged
Shares), which shall serve as additional pledged property under the Security
Agreement, as amended, between us and Trafalgar. The Pledged Shares will be held
by the escrow agent until the full payment of all amounts due to Trafalgar under
the Debentures or the termination or expiration of the Pledge and Escrow
Agreement. Upon the occurrence of an event of default under the Debentures, the
Securities Purchase Agreement, the Pledge and Escrow Agreement, the Security
Agreement and all other contracts between our company and Trafalgar, Trafalgar
will be entitled to receive physical delivery of the Pledged Shares, vote the
Pledged Shares, to receive dividends and other distributions thereon, to sell
the Pledged Shares, and to enjoy all other rights and privileges incident to the

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19

ownership of the Pledged Shares. Upon full payment of all
amounts due to Trafalgar under the Debentures, the Pledge Agreement and
Trafalgars security interest and rights in and to the Pledged Shares will
terminate.

Also in connection with the Amended Transaction Documents: (i)
we gave Trafalgar the first right of refusal to provide additional funding to
us; (ii) we agreed to enter into an exclusive investment banking agreement with
Trafalgar Capital Advisors, an affiliate of Trafalgar, within ten business days
of October 31, 2008, and as of the date of this quarterly report, we are
currently negotiating the terms of this agreement with Trafalgar Capital
Advisors; (iii) we agreed to pay a legal and documentation review fee to James
G. Dodrill II, P.A. of $7,500, which was paid directly from the proceeds of the
closing for the Amended Transaction Documents; (iv) we entered into a side
letter agreement whereby we agreed to redeem all of the Debentures if we
successfully complete an equity financing for gross amounts of a minimum of $5
million; and (v) we entered into irrevocable transfer agent instructions with
our transfer agent.

Future Financing

Based on our current plan of operations, we do not currently
have sufficient amount of cash to satisfy our cash requirements for the next 12
months. We are pursuing various financing alternatives to meet our immediate and
long-term financial requirements, as described elsewhere in this quarterly
report on Form 10-Q.

There are no assurances that we will be able to obtain funds
required for our continued operations. There can be no assurance that additional
financing will be available to us when needed or, if available, that it can be
obtained on commercially reasonable terms. If we are not able to obtain
additional financing on a timely basis, we will be unable to conduct our
operations as planned, and we will not be able to meet our other obligations as
they become due. In such event, we will be forced to scale down or perhaps even
cease our operations.

Going Concern

Because we are in the development stage, have not yet achieved
profitable operations and are dependent on our ability to raise capital from
stockholders or other sources to meet our obligations and repay our liabilities
arising from normal business operations when they become due, in their report on
our audited financial statements for the years ended February 29, 2008 and
February 28, 2007, our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosure describing the
circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

Item 3. Quantitative and Qualitative Disclosures About
Market Risk.

Not Applicable.

Item 4T. Controls and Procedures.

As required by Rule 13a-15 under the Securities Exchange Act of
1934, we have carried out an evaluation of the effectiveness of the design and
operation of our companys disclosure controls and procedures as of the end of
the period covered by this quarterly report, being November 30, 2008. This
evaluation was carried out under the supervision and with the participation of
our management, including our President and Chief Executive Officer and our
Chief Financial Officer.

Our management does not expect that our disclosure controls or
our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system

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20

reflects limitations on resources, and the benefits of a
control system must be considered relative to its costs. These limitations also
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people or by management override of a control. A design of a control
system is also based upon certain assumptions about potential future conditions;
over time, controls may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be
detected.

Based upon that evaluation, our President and Chief Executive
Officer and our Chief Financial Officer concluded that our disclosure controls
and procedures are ineffective as at the end of the period covered by this report.
There have been no changes in our internal controls over financial reporting
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect our internal controls
over financial reporting.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commissions rules and forms. Disclosure controls
and procedures include controls and procedures designed to ensure that
information required to be disclosed in our companys reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management,
including our President and Chief Executive Officer and our Chief Financial
Officer as appropriate, to allow timely decisions regarding required
disclosure.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, active or pending legal proceedings
against us, nor are we involved as a plaintiff in any material proceedings or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial stockholders is an
adverse party or has a material interest adverse to us.

Item 1A. Risk Factors

In addition to other information in this quarterly report, the
following risk factors should be carefully considered in evaluating our business
because such factors may have a significant impact on our business, operating
results, liquidity and financial condition. As a result of the risk factors set
forth below, actual results could differ materially from those projected in any
forward looking statements. Additional risks and uncertainties not presently
known to us, or that we currently consider to be immaterial, may also impact our
business, operating results, liquidity and financial condition. If any such
risks occur, our business, operating results, liquidity and financial condition
could be materially affected in an adverse manner. Under such circumstances, the
trading price of our securities could decline, and you may lose all or part of
your investment.

Risks Relating To Our Business and the Oil and Gas
Industry

We have had a history of losses and no revenue to date,
which trend may continue and may negatively impact our ability to achieve our
business objectives.

We have experienced net losses since inception, and expect to
continue to incur substantial losses for the foreseeable future. To date, we
have not generated any revenues from our operations. We will not be able to
generate significant revenues in the immediate future and our management expects
operating expenses to increase substantially over the next 12 months because of
our increased oil and gas exploration activities. As a result, our management
expects the business to continue to experience negative cash flow for the
foreseeable future and cannot predict when, if ever, our business might become
profitable. We need to raise additional funds, and such funds may not be
available on commercially acceptable terms, if at all. If we are unable to raise
funds on acceptable terms, we may not be able to execute our business plan, take
advantage of future opportunities, or respond to competitive pressures or
unanticipated requirements. This may seriously harm our business, financial
condition and results of operations.

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Because we are in the development stage, have not yet achieved
profitable operations and are dependent on our ability to raise capital from
stockholders or other sources to meet our obligations and repay our liabilities
arising from normal business operations when they become due, in their report on
our audited financial statements for the years ended February 29, 2008 and
February 28, 2007, our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosure describing the
circumstances that led to this disclosure by our independent auditors.

We are a development stage company with a limited
operating history, which may hinder our ability to successfully meet our
objectives.

We are a development stage company with only a limited
operating history upon which to base an evaluation of our current business and
future prospects. We have only begun engaging in the oil and gas exploration and
development business since February 2007 and our company does not have an
established history of locating and developing properties that have oil and gas
reserves. As a result, the revenue and income potential of our business is
unproven. In addition, because of our limited operating history, we have limited
insight into trends that may emerge and affect our business. Errors may be made
in predicting and reacting to relevant business trends and we will be subject to
the risks, uncertainties and difficulties frequently encountered by early-stage
companies in evolving markets. We may not be able to successfully address any or
all of these risks and uncertainties. Failure to adequately do so could cause
our business, results of operations and financial condition to suffer.

Market conditions or operation impediments may hinder our
access to oil and gas markets or delay our potential production.

The marketability of potential production from our properties
depends in part upon the availability, proximity and capacity of pipelines,
natural gas gathering systems and processing facilities. This dependence is
heightened where this infrastructure is less developed. Therefore, even if
drilling results are positive in certain areas of our oil and gas properties, a
new gathering system may need to be built to handle the potential volume of oil
and gas produced. We might be required to shut in wells, at least temporarily,
for lack of a market or because of the inadequacy or unavailability of
transportation facilities. If that were to occur, we would be unable to realize
revenue from those wells until arrangements were made to deliver production to
market.

Even if we are able to establish any oil or gas reserves on our
properties, our ability to produce and market oil and gas is affected and also
may be harmed by:

- inadequate pipeline transmission facilities or carrying capacity;
- government regulation of natural gas and oil production;
- government transportation, tax and energy policies;
- changes in supply and demand; and
- general economic conditions.

Our future performance is dependent upon our ability to
identify, acquire and develop oil and gas properties, the failure of which could
result in under use of capital and losses.

Our future performance depends upon our ability to identify,
acquire and develop oil and gas reserves that are economically recoverable. Our
success will depend upon our ability to acquire working and revenue interests in
properties upon which oil and gas reserves are ultimately discovered in
commercial quantities, and our ability to develop prospects that contain proven
oil and gas reserves to the point of production. Without successful acquisition
and exploration activities, we will not be able to develop oil and gas reserves
or generate revenues. We cannot provide you with any assurance that we will be
able to identify and acquire oil and gas reserves on acceptable terms, or that
oil and gas deposits will be discovered in sufficient quantities to enable us to
recover our exploration and development costs or sustain our business.

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The successful acquisition and development of oil and gas
properties requires an assessment of recoverable reserves, future oil and gas
prices and operating costs, potential environmental and other liabilities, and
other factors. Such assessments are necessarily inexact and their accuracy
inherently uncertain. In addition, no assurance can be given that our
exploration and development activities will result in the discovery of any
reserves.

We have a very small management team and the loss of any
member of our team may prevent us from implementing our business plan in a
timely manner.

We currently have four executive officers and a limited number
of full time employees and consultants upon whom our success largely depends. We
do not maintain key person life insurance policies on our executive officers or
consultants, the loss of which could seriously harm our business, financial
condition and results of operations. In such an event, we may not be able to
recruit personnel to replace our executive officers or consultants in a timely
manner, or at all, on acceptable terms.

If we are unable to successfully recruit qualified
managerial and field personnel having experience in oil and gas exploration, we
may not be able to continue our operations.

In order to successfully implement and manage our business
plan, we will depend upon, among other things, successfully recruiting qualified
managerial and field personnel having experience in the oil and gas exploration
business. Competition for qualified individuals is intense. We may not be able
to find, attract and retain qualified personnel on acceptable terms. If we are
unable to find, attract and retain qualified personnel with technical expertise,
our business operations could suffer.

Future growth could strain our personnel and
infrastructure resources, and if we are unable to implement appropriate controls
and procedures to manage our growth, we may not be able to successfully
implement our business plan.

We expect to experience rapid growth in our operations, which
will place a significant strain on our management, administrative, operational
and financial infrastructure. Our future success will depend in part upon the
ability of our executive officers to manage growth effectively. This may require
us to hire and train additional personnel to manage our expanding operations. In
addition, we must continue to improve our operational, financial and management
controls and our reporting systems and procedures. If we fail to successfully
manage our growth, we may be unable to execute upon our business plan.

We will have substantial capital requirements that, if
not met, may hinder our growth and operations.

Our future growth depends on our ability to make large capital
expenditures for the exploration and development of our natural gas and oil
properties. Future cash flows and the availability of financing will be subject
to a number of variables, such as:

- the success of our planned projects on North Slope and Cook Inlet in
  Alaska, in Texas and Kansas, in the UK;
- success in locating and producing reserves; and
- prices of natural gas and oil.

Financing might not be available in the future, or we might not
be able to obtain necessary financing on acceptable terms, if at all. If
sufficient capital resources are not available, we might be forced to curtail
our drilling and other activities or be forced to sell some assets on an
untimely or unfavorable basis, which would have an adverse affect on our
business, financial condition and results of operations.

If we obtain additional financing, our existing
stockholders may suffer substantial dilution or we may not have sufficient funds
to pay the interest on our current or future debt.

Additional financing sources will be required in the future to
fund developmental and exploratory drilling. Issuing equity securities to
satisfy our financing requirements could cause substantial dilution to our
existing stockholders.

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Additional debt financing could lead to:

- a substantial portion of operating cash flow being dedicated to the payment
  of principal and interest;
- being more vulnerable to competitive pressures and economic downturns; and
- restrictions on our operations.

If we incur indebtedness, our ability to meet our debt
obligations and reduce our level of indebtedness depends on future performance.
General economic conditions, oil and gas prices and financial, business and
other factors affect our operations and future performance. Many of these
factors are beyond our control. We cannot assure you that we will be able to
generate sufficient cash flow to pay the interest on our current or future debt
or that future working capital, borrowings or equity financing will be available
to pay or refinance such debt. Factors that will affect our ability to raise
cash through an offering of our capital stock or a refinancing of our debt
include financial market conditions, the value of our assets and performance at
the time we need capital. We cannot assure you that we will have sufficient
funds to make such payments. If we do not have sufficient funds and are
otherwise unable to negotiate renewals of our borrowings or arrange additional
financing, we might have to sell significant assets. Any such sale could have a
material adverse effect on our business and financial results.

We may not be able to determine reserve potential or
identify liabilities associated with our properties in Alaska, Texas, Kansas,
the UK and/or other future properties. We may also not be able to obtain
protection from vendors against possible liabilities, which could cause us to
incur losses.

Although we have reviewed and evaluated our properties in
Alaska, Texas, Kansas, and the UK in a manner consistent with industry
practices, such review and evaluation might not necessarily reveal all existing
or potential problems. This is also true for any future acquisitions made by us.
Inspections may not always be performed on every well, and environmental
problems, such as groundwater contamination, are not necessarily observable even
when an inspection is undertaken. Even when problems are identified, a vendor
may be unwilling or unable to provide effective contractual protection against
all or part of those problems, and we may assume environmental and other risks
and liabilities in connection with the acquired properties.

If we or our operators fail to maintain adequate
insurance, our business could be materially and adversely affected.

Our operations are subject to risks inherent in the oil and gas
industry, such as blowouts, cratering, explosions, uncontrollable flows of oil,
gas or well fluids, fires, pollution, earthquakes and other environmental risks.
These risks could result in substantial losses due to injury and loss of life,
severe damage to and destruction of property and equipment, pollution and other
environmental damage, and suspension of operations. We could be liable for
environmental damages caused by previous property owners. As a result,
substantial liabilities to third parties or governmental entities may be
incurred, the payment of which could have a material adverse effect on our
financial condition and results of operations.

Any prospective drilling contractor or operator which we hire
will be required to maintain insurance of various types to cover our operations
with policy limits and retention liability customary in the industry. Therefore,
we do not plan to acquire our own insurance coverage for such prospects. The
occurrence of a significant adverse event on such prospects that is not fully
covered by insurance could result in the loss of all or part of our investment
in a particular prospect which could have a material adverse effect on our
financial condition and results of operations.

The oil and gas industry is highly competitive, and we
may not have sufficient resources to compete effectively.

The oil and gas industry is highly competitive. We compete with
oil and natural gas companies and other individual producers and operators, many
of which have longer operating histories and substantially greater financial and
other resources than we do, as well as companies in other industries supplying
energy, fuel and other needs to consumers. Our larger competitors, by reason of
their size and relative financial strength, can more easily access capital
markets than we can and may enjoy a competitive advantage in the recruitment of
qualified personnel. They may be able to absorb the burden of any changes in
laws and regulation in the jurisdictions in which we do business and handle
longer periods of reduced prices for oil and gas more easily than we can. Our
competitors may be able to pay more

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for oil and gas leases and properties and may be able to
define, evaluate, bid for and purchase a greater number of leases and properties
than we can. Further, these companies may enjoy technological advantages and may
be able to implement new technologies more rapidly than we can. Our ability to
acquire additional properties in the future will depend upon our ability to
conduct efficient operations, evaluate and select suitable properties, implement
advanced technologies and consummate transactions in a highly competitive
environment.

Exploration and production activities are subject to
certain environmental regulations which may prevent or delay the commencement or
continuance of our operations.

In general, our exploration and production activities are
subject to certain federal, state, local, and foreign laws and regulations
relating to environmental quality and pollution control. Such laws and
regulations increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Specifically, we are subject
to legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. In addition, legislation has been
enacted which requires well and facility sites to be abandoned and reclaimed to
the satisfaction of state authorities. However, such laws and regulations are
frequently changed and any such changes may have material adverse effects on our
activities. We are unable to predict the ultimate cost of compliance with such
laws and regulations. Generally, environmental requirements do not appear to
affect us any differently or to any greater or lesser extent than other
companies in the industry. To date we have not been required to spend any
material amount on compliance with environmental regulations. However, we may be
required to do so in future and this may affect our ability to expand or
maintain our operations.

Any change to government regulation/administrative
practices may have a negative impact on our ability to operate and our
profitability.

The business of oil and gas exploration and development is
subject to substantial regulation under federal, state, local and foreign laws
relating to the exploration for, and the development, upgrading, marketing,
pricing, taxation, and transportation of oil and gas and related products and
other matters. Amendments to current laws and regulations governing operations
and activities of oil and gas exploration and development operations could have
a material adverse impact on our business. In addition, there can be no
assurance that income tax laws, royalty regulations and government incentive
programs related to our oil and gas properties and the oil and gas industry
generally, will not be changed in a manner which may adversely affect our
progress and cause delays, inability to explore and develop or abandonment of
these interests.

Permits, leases, licenses, and approvals are required from a
variety of regulatory authorities at various stages of exploration and
development. There can be no assurance that the various government permits,
leases, licenses and approvals sought will be granted in respect of our
activities or, if granted, will not be cancelled or will be renewed upon expiry.
There is no assurance that such permits, leases, licenses, and approvals will
not contain terms and provisions which may adversely affect our exploration and
development activities.

Shortages of rigs, equipment, supplies and personnel
could delay or otherwise adversely affect our cost of operations or our ability
to operate according to our business plans.

If drilling activity increases in Alaska, Texas, Kansas, and
the UK, a shortage of drilling and completion rigs, field equipment and
qualified personnel could develop. These costs have recently increased sharply
and could continue to do so. The demand for and wage rates of qualified drilling
rig crews generally rise in response to the increasing number of active rigs in
service and could increase sharply in the event of a shortage. Shortages of
drilling and completion rigs, field equipment or qualified personnel could
delay, restrict or curtail our exploration and development operations, which
could in turn harm our operating results.

To the extent that we establish oil and gas reserves, we
will be required to replace, maintain or expand our oil and gas reserves in
order to prevent our reserves and production from declining, which would
adversely affect cash flows and income.

In general, production from oil and gas properties declines
over time as reserves are depleted, with the rate of decline depending on
reservoir characteristics. If we establish reserves, of which there is no
assurance, and we are not successful in our subsequent exploration and
development activities or in subsequently acquiring properties containing proved
reserves, our proved reserves will decline as reserves are produced. Our future
oil and gas

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production is highly dependent upon our ability to economically
find, develop or acquire reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a
decrease in prevailing prices for oil and gas or an increase in finding and
development costs, and external sources of capital become limited or
unavailable, our ability to make the necessary capital investment to maintain or
expand our asset base of oil and gas reserves would be impaired. Even with
sufficient available capital, our future exploration and development activities
may not result in additional proved reserves, and we might not be able to drill
productive wells at acceptable costs.

The geographic concentration of all of our properties in
Alaska, Texas, Kansas, and the UK subjects us to an increased risk of loss of
revenue or curtailment of production from factors affecting those
areas.

The geographic concentration of all of our leasehold interests
in Alaska and Kansas, our joint venture interests in Texas, our farm-in
interests in UK North Sea, and our UK onshore and offshore licenses means that
our properties could be affected by the same event should the regions
experience:

- severe weather;
- delays or decreases in production, the availability of equipment,
  facilities or services;
- delays or decreases in the availability of capacity to transport, gather or
  process production; or
- changes in the regulatory environment.

The oil and gas exploration and production industry is
historically a cyclical industry and market fluctuations in the prices of oil
and gas could adversely affect our business.

Prices for oil and gas tend to fluctuate significantly in
response to factors beyond our control. These factors include:

- weather conditions in the United States and wherever our property interests
  are located;
- economic conditions, including demand for petroleum-based products, in the
  United States and the rest of the world;
- actions by OPEC, the Organization of Petroleum Exporting Countries;
- political instability in the Middle East and other major oil and gas
  producing regions;
- governmental regulations, both domestic and foreign;
- domestic and foreign tax policy;
- the pace adopted by foreign governments for the exploration, development,
  and production of their national reserves;
- the price of foreign imports of oil and gas;
- the cost of exploring for, producing and delivering oil and gas;
- the discovery rate of new oil and gas reserves;
- the rate of decline of existing and new oil and gas reserves;
- available pipeline and other oil and gas transportation capacity;
- the ability of oil and gas companies to raise capital;
- the overall supply and demand for oil and gas; and

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- the availability of alternate fuel sources.

Changes in commodity prices may significantly affect our
capital resources, liquidity and expected operating results. Price changes will
directly affect revenues and can indirectly impact expected production by
changing the amount of funds available to reinvest in exploration and
development activities. Reductions in oil and gas prices not only reduce
revenues and profits, but could also reduce the quantities of reserves that are
commercially recoverable. Significant declines in prices could result in
non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect our
ability to estimate the value of producing properties for acquisition and
divestiture and often cause disruption in the market for oil and gas producing
properties, as buyers and sellers have difficulty agreeing on the value of the
properties. Price volatility also makes it difficult to budget for and project
the return on acquisitions and the development and exploitation of projects. We
expect that commodity prices will continue to fluctuate significantly in the
future.

Exploratory drilling involves many risks that are outside
our control which may result in a material adverse effect on our business,
financial condition or results of operations.

The business of exploring for and producing oil and gas
involves a substantial risk of investment loss. Drilling oil and gas wells
involves the risk that the wells may be unproductive or that, although
productive, the wells may not produce oil or gas in economic quantities. Other
hazards, such as unusual or unexpected geological formations, pressures, fires,
blowouts, power outages, sour gas leakage, loss of circulation of drilling
fluids or other conditions may substantially delay or prevent completion of any
well. Adverse weather conditions can also hinder drilling operations. A
productive well may become uneconomic if water or other deleterious substances
are encountered that impair or prevent the production of oil or gas from the
well. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. There can be no
assurance that oil and gas will be produced from the properties in which we have
interests.

We are dependent upon the efforts of various third
parties that we do not control and, as a result, we may not be able to control
the timing of development efforts, associated costs, or the rate of production
of reserves (if any).

The success of our business depends upon the efforts of various
third parties that we do not control. At present, we do act as the operator for
several of our projects, but we do contract many service providers such as rig
and drilling contractors. As a result, we may have limited ability to exercise
influence over the operations of the properties or their associated costs. Our
dependence on the operator and, where applicable, other working interest owners
for these projects and our limited ability to influence operations and
associated costs could prevent the realization of our targeted returns on
capital in drilling or acquisition activities. The success and timing of
development and exploitation activities on properties operated by others depend
upon a number of factors that will be largely outside of our control,
including:

- the timing and amount of capital expenditures;
- the operators expertise and financial resources;
- approval of other participants in drilling wells;
- selection of technology;
- the rate of production of the reserves; and
- the availability of suitable drilling rigs, drilling equipment, production
  and transportation infrastructure, and qualified operating personnel.

We will rely upon various companies to provide us with
technical assistance and services. We will also rely upon the services of
geologists, geophysicists, chemists, engineers and other scientists to explore
and analyze oil and gas prospects to determine a method in which the oil and gas
prospects may be developed in a cost-effective manner. Although our management
has relationships with a number of third-party service providers, we cannot
assure you that we will be able to continue to rely on such persons. If any of
these relationships with third-party service

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providers are terminated or are unavailable on commercially
acceptable terms, we may not be able to execute our business plan.

We may be unable to retain our leases or licenses and
working interests in our leases or licenses, which would result in significant
financial losses to our company.

In general, our properties are held under oil and gas leases or
licenses. If we fail to meet the specific requirements of each lease or license,
such lease or license may terminate or expire. We cannot assure you that any of
the obligations required to maintain each lease or license will be met. The
termination or expiration of our leases or licenses will harm our business. Our
property interests will terminate unless we fulfill certain obligations under
the terms of our leases or licenses and other agreements related to such
properties. If we are unable to satisfy these conditions on a timely basis, we
may lose our rights in these properties. The termination of our interests in
these properties will harm our business. In addition, we will need significant
funds to meet capital requirements for the exploration activities that we intend
to conduct on our properties.

Title deficiencies could render our leases worthless
which could have adverse effects on our financial condition or results of
operations.

The existence of a material title deficiency can render a lease
worthless and can result in a large expense to our business. It is our practice
in acquiring oil and gas leases or undivided interests in oil and gas leases to
forgo the expense of retaining lawyers to examine the title to the oil or gas
interest to be placed under lease or already placed under lease. Instead, we
rely upon the judgment of oil and gas landmen who perform the field work in
examining records in the appropriate governmental office before attempting to
place under lease a specific oil or gas interest. We do not anticipate that we,
or the person or company acting as operator of the wells located on the
properties that we lease or may lease in the future, will obtain counsel to
examine title to the lease until the well is about to be drilled. As a result,
we may be unaware of deficiencies in the marketability of the title to the
lease. Such deficiencies may render the lease worthless.

Risks Relating to Our Common Stock

A decline in the price of our common stock could affect
our ability to raise further working capital and adversely impact our ability to
continue operations.

A prolonged decline in the price of our common stock could
reduce liquidity of our common stock and reduce our ability to raise capital.
Because a significant portion of our operations have been and will be financed
through the sale of equity securities, a decline in the price of our common
stock could be especially detrimental to our liquidity and our operations. Such
reductions may force us to reallocate funds from other planned uses and may have
a significant negative effect on our business plan and operations, including our
ability to continue our current operations. If our stock price declines, we can
offer no assurance that we will be able to raise additional capital or generate
funds from operations sufficient to meet our obligations. If we are unable to
raise sufficient capital in the future, we may not be able to have the resources
to continue our normal operations.

The market price for our common stock may also be affected by
our ability to meet or exceed expectations of analysts or investors. Any failure
to meet these expectations, even if minor, may have a material adverse effect on
the market price of our common stock.

If we issue additional shares in the future, it will
result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to
90,000,000 shares of common stock with a par value of $0.001 per share and we
plan to increase our authorized capital from 90,000,000 shares of common stock
with a par value of $0.001 to 500,000,000 shares of common stock with a par
value of $0.001. Our board of directors may choose to issue some or all of such
shares to acquire one or more businesses or to provide additional financing in
the future. The issuance of any such shares will reduce the book value and
market price of the outstanding shares of our common stock. If we issue any such
additional shares, such issuance will reduce the proportionate ownership and
voting power of all current shareholders. Further, such issuance may result in a
change of control of our corporation.

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Trading of our stock may be restricted by the Securities
Exchange Commissions penny stock regulations, which may limit a stockholders
ability to buy and sell our common stock.

The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

In addition to the penny stock rules described above, the
Financial Industry Regulatory Authority or FINRA has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customers financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Our common stock is illiquid and the price of our common
stock may be negatively impacted by factors which are unrelated to our
operations.

Our common stock currently trades on a limited basis on the OTC
Bulletin Board. Trading of our stock through the OTC Bulletin Board is
frequently thin and highly volatile. There is no assurance that a sufficient
market will develop in our stock, in which case it could be difficult for
shareholders to sell their stock. The market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception
of our ability to achieve our planned growth, quarterly operating results of our
competitors, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.

Because of the early stage of development and the nature
of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally
because of the nature of our business and the early stage of our development. We
are engaged in the business of identifying, acquiring, exploring and, if
warranted, developing commercial reserves of oil and gas. Our properties are in
the exploration stage only and are without known reserves of oil and gas.
Accordingly, we have not generated any revenues nor have we realized a profit
from

---

29

our operations to date and there is little likelihood that we
will generate any revenues or realize any profits in the short term. Any
profitability in the future from our business will be dependent upon locating
and developing economic reserves of oil and gas, which itself is subject to
numerous risk factors as set forth herein. Since we have not generated any
revenues, we will have to raise additional monies through the sale of our equity
securities or debt in order to continue our business operations.

We do not intend to pay dividends on any investment in
the shares of stock of our company.

We have never paid any cash dividends and currently do not
intend to pay any dividends for the foreseeable future. To the extent that we
require additional funding currently not provided for in our financing plan, our
funding sources may prohibit the payment of a dividend. Because we do not intend
to declare dividends, any gain on an investment in our company will need to come
through an increase in the stocks price. This may never happen and investors
may lose all of their investment in our company.

Risks Related to the Financing from Trafalgar Capital
Specialized Investment Fund

The market price of our common stock could be reduced if
Trafalgar exercises its warrant or convert the debentures, such that we would be
required to issue additional shares of our commons stock.

If Trafalgar exercises its warrant or convert the debentures,
such that we would be required to issue additional shares of our common stock,
it would result in substantial dilution to the equity interests of our
stockholders. Furthermore, we agreed to register the shares of our common stock
to be issued pursuant to such warrant exercise and debenture conversion for
resale. Public resales of shares of our common stock following such warrant
exercise and debenture conversion could depress the prevailing market price of
our common stock. Even prior to the actual warrant exercise or debenture
conversion, the perception of a significant market overhang resulting from the
existence of our obligation to honor the warrant exercise and debenture
conversion could depress the market price of our common stock.

If we are required for any reason to repay our
outstanding secured convertible debentures, we would be required to deplete our
working capital, if available, or raise additional funds. Our failure to repay
the convertible debentures, if required, could result in legal action against
our company, which could require the sale of substantial assets.

If we are required to repay the secured convertible debentures
for any reason, we would be required to use our limited working capital and
raise additional funds. If we are unable to repay the secured convertible
debentures when required, Trafalgar could commence legal action against our
company and foreclose on all of our assets to recover the amounts due. Any such
action would require our company to curtail or possibly cease our
operations.

Risks Related to the transactions with Carbon Energy
Investments Limited

Issuance of substantial amount of the shares of our
common stock to Carbon Energy may result in substantial dilution to the equity
interests of our stockholders.

The issuance of substantial amount of the shares of our common
stock to Carbon Energy may result in substantial dilution to the equity
interests of our stockholders, and may reduce the book value and market price of
the outstanding shares of our common stock. If we issue any such additional
shares, such issuance will reduce the proportionate ownership and voting power
of all current stockholders.

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30

Carbon Energys control may prevent our other
stockholders from causing a change in the course of our operations and may
affect the price of our common stock.

As long as Carbon Energy controls more than 50% of our common
stock, it will be able to elect our entire board of directors, control all
matters that require a shareholder vote (such as mergers, acquisitions and other
business combinations, and the future issuance of our shares) and exercise a
significant amount of influence over our management and operations. Therefore,
the ability of our other stockholders to cause a change in the course of our
operation is eliminated. As such, the value attributable to the right to vote is
limited.

Risks Related to Our Company

Our by-laws contain provisions indemnifying our officers
and directors.

Our by-laws provide the indemnification of our directors and
officers to the fullest extent legally permissible under the Nevada corporate
law against all expenses, liability and loss reasonably incurred or suffered by
him in connection with any action, suit or proceeding. Furthermore, our by-laws
provide that our board of directors may cause our company to purchase and
maintain insurance for our directors and officers, and we have implemented
director and officer insurance coverage.

Our by-laws do not contain anti-takeover provisions and
thus our management and directors may change if there is a take-over of our
company.

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our by-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company. If there is a take-over of
our company, our management and directors may change.

Because most of our directors and officers are residents
of other countries other than the United States, investors may find it difficult
to enforce, within the United States, any judgments obtained against our
directors and officers.

Most of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of such persons assets are located outside the United States. As a
result, it may be difficult for investors to enforce within the United States
any judgments obtained against our officers or directors, including judgments
predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof.

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

None.

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

On November 26, 2008, our board of directors unanimously
approved the amendment to our articles of incorporation to increase the
authorized number of shares of our common stock from 90,000,000 to 500,000,000.
The approval of the amendment to our articles of incorporation requires the
consent of the holders of at least a majority of the outstanding shares of our
common stock. Subsequent to the approval of our board of directors of the
amendment to our articles of incorporation, Carbon Energy Investments Limited
and Trafalgar Capital Specialized Investment Fund, the holders of the majority
of the outstanding shares of our common stock, gave us their written consent to
the amendment to our articles of incorporation effective December 6, 2008.

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31

Item 5. Other Information.

Oil and Gas Lease Agreements

On October 14, 2008, through our wholly owned subsidiary, Fox
Petroleum, Inc., a Kansas corporation, we entered into two oil and gas lease
agreements with Bryant T. Wires and Rosalie Wires. Pursuant to the agreements,
we acquired two oil and gas leases for the lands located in the county of
Ellsworth in Kansas in consideration of $10 per acre for total consideration of
$3,200. Each of these two leases contains about 160 acres. The leases will
remain in force for a term of two years and, after the first two years, as long
as oil or gas are or can be produced, if any. On October 21, 2008, we registered
the above two leases with the Register of Deeds of Ellsworth County of State of
Kansas.

We are required to deliver Mr. and Mrs. Wires, as a royalty,
1/8th of part of all oil produced and saved from the leased premises, if any, or
at our option may pay them for such 1/8th royalty the market price at the
wellhead for oil of like grade and gravity prevailing on the day such oil is run
into the pipeline or into storage tanks. We are also required to pay Mr. and
Mrs. Wires, as a royalty, 1/8th of the proceeds received by us from the sale of
gas produced from the lands leased, if any. The leases are paid-up leases and
may be maintained during the first two years without further payments or
drilling operations.

Agreements with Aimwell Energy Limited

On September 5, 2008 our subsidiary, Fox Energy Exploration
Limited, entered into a letter agreement with Aimwell Energy Ltd. (two of our
directors, Michael Rose and Robert Frost, are the beneficial owners and
directors of Aimwell.), relating to the participation in four UK onshore license
blocks in the south of England, which have been awarded to both companies by the
UK government in May 2008. Pursuant to the letter agreement, we have a 90%
interest in the four blocks and Aimwell has a 10% interest. We will pay
Aimwells 10% share of all costs, expenses, liabilities and obligations arising
in respect of operations jointly conducted by us and Aimwell in respect of each
license block until a filed development plan is formally approved by the UK
Secretary of State responsible for such matters, for the development of a
discovery of petroleum in the blocks. Thereafter, our company and Aimwell will
each be responsible for its respective share of costs, with us being responsible
for 90% of the costs and Aimwell responsible for its 10% share of the costs. We
agreed to be named as operator of all blocks (subject to the approval by the UK
government) and to negotiate and execute a joint operating agreement in respects
of the licenses no later than 6 months following the award of the licenses. We
agreed to pay a consideration of £10,000 per block awarded (a total of £40,000
for all 4 blocks) to Aimwell on receipt of an appropriate invoice from Aimwell
to cover past technical costs and an initial 3 months technical management of
the blocks by Aimwell.

Also, on September 5, 2008 our subsidiary, Fox Energy
Exploration Limited, entered into another letter agreement with Aimwell Energy
Ltd., relating to the participation in an application made for blocks 13/17
& 210/20e. Pursuant to the letter agreement, we have a 90% interest in the
blocks and Aimwell has a 10% interest. We will pay Aimwells 10% share of all
costs, expenses, liabilities and obligations arising in respect of operations
jointly conducted by us and Aimwell in respect of each license block until a
filed development plan is formally approved by the UK Secretary of State
responsible for such matters, for the development of a discovery of petroleum in
the blocks. Thereafter, our company and Aimwell will each be responsible for its
respective share of costs, with us being responsible for 90% of the costs and
Aimwell responsible for its 10% share of the costs. We agreed to be named as
operator of all blocks (subject to the approval by the UK government) and to
negotiate and execute a joint operating agreement in respects of the licenses no
later than 6 months following the award of the licenses. We agreed to pay a
consideration of £32,000 to Aimwell for preparation of the application
documentation for the blocks. We also agreed to pay a further consideration of
£50,000 to Aimwell per each block awarded to both companies by the UK government
to cover an initial 3 months technical management of each block by Aimwell.

On November 12, 2008 we were formally notified by the UK
Department of Energy and Climate Change (DECC) of our success in the 25th
Seaward Licensing Round Awards, the rights to explore and develop the block
13/17 concession in the North Sea by the UK government. License obligations are
to obtain 3D seismic over the block and to carry out geological and seismic
modelling before firming up a drilling location. We have 4 years in which to
drill or drop the license. Due to the current problems in the credit markets,
DECC are reviewing every single award in regards to the recipients abilities to
finance their agreed work program. We hope to satisfy them accordingly.

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32

William MacNee and Jonathan Wood

On May 1, 2008 and June 1, 2008 William MacNee and Jonathan
Wood respectively commenced employment with us on a full time basis. Mr. MacNee
assumed the position of Chief Operating Officer and Mr. Wood that of Chief
Financial Officer. Both are executive directors of our company. They both
receive a salary of £10,000 per month.

Blackhawk Investments Limited

On November 19, 2008, Blackhawk Investments Limited sent a
letter to our company agreeing to underwrite our commitment to Senergy Limited
in respect of all costs related to the drilling of our 211/17 Bourbon prospect
in the sum not to exceed $30,000,000 and that Blackhawk will be repaid as a
priority distribution from income generated by the Bourbon prospect, together
with a return of $6,000,000 or equivalent. The letter stated that the
undertaking is irrevocable undertaking on behalf of Blackhawk Investment and is
issued on the understanding that we will secure Blackhawks funds in the total
sums advanced by granting Blackhawk a security interest over our interest in the
well. Blackhawk Investments Limited agreed to work on the basis that, upon
request by our company, that it will transfer the sum of $15,000,000 to our
operating account as the initial payment no later than November 30, 2008 and
thereafter in tranches of $5,000,000 each, up to the maximum limited of
$30,000,000.

It is our intention to extend and amend this agreement to give
Blackhawk additional time, given current market conditions, to complete the
above transactions.

Offer to Minmet Plc.

On December 4, 2008, we sent a letter to the directors of
Minmet plc, an Irish company, with an offer for the entire issued and to be
issued share capital of Minmet. We proposed to offer a price of 0.12 pence per
share to all shareholders of Minmet. The proposed offer is an all share offer
whereby shareholders of Minmet are to receive shares of our common stock in
exchange for shares in Minmet. The offer is subject to our completing, to our
satisfaction, both technical and legal due diligence (which remains ongoing) on
the proposed transaction and Minmet. It is intended that the proposed offer will
be funded through an issue and allotment of new shares of our common stock based
on the average mid market price 10 days prior to any circular going to the
shareholders of Minmet. We intend to apply for admission and trading of our
shares post completion on the London Plus Market in order to afford all
shareholders the opportunity to trade their shares in the UK, but we cannot
provide assurance that shares of our common stock will ever be admitted to or
traded on the London Plus Market.

This offer is subject to satisfaction of certain
pre-conditions: (i) the proposed offer being unanimously recommended by the
board of Minmet and such recommendation not being subsequently modified or
withdrawn; and (ii) final approval of our board of directors. This acquisition
is also conditioned on a final due diligence review of Tucumcari Oil and Gas
field, as well as a signed acquisition agreement between our company and
Tucumcari Investments Limted for the acquisition of a 75% ownership interest in
Tucumcari to close simultaneously with the acquisition of Minmet.

Termination of the Proposed Transactions with Ballyliffin
Capital Corp.

On September 26, 2008, Fox Petroleum Inc. and its wholly owned
subsidiary, Fox Energy Exploration Limited, entered into a transaction proposal
and exclusive agreement with Ballyliffin Capital Corp. relating to the proposed
business combination. Ballyliffin is a capital pool company listed on the TSX
Venture Exchange in Canada. A capital pool company is a company with no assets
other than cash and no commercial operations. The capital pool company uses its
funds to seek out an investment opportunity. Under the proposed transaction,
Ballyliffin would acquire 100% of the issued and outstanding shares of Fox
Energy Exploration Limited whereby the holder of the issued and outstanding
shares of Fox Energy Exploration Limited would receive common shares of
Ballyliffin in exchange for its shares of Fox Energy Exploration Limited. The
agreement has now lapsed and, although extensions were considered by both
parties, on January 16, 2009 Ballyliffin informed us, through their legal
counsel, that it considers the proposed transaction terminated.

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33

Item 6. Exhibits.

The following Exhibits are filed with this quarterly
report:

|Exhibit No. | Description                                                                                                                                                                                                                            
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)         | (i) Articles of Incorporation and (ii)
      By-laws                                                                                                                                                                                   
|3.1         | Articles of Incorporation (attached as an exhibit to our
      registration statement on Form SB-2 filed on August 19, 2005)                                                                                                           
|3.2         | Certificate of change filed with the Secretary of State
      of Nevada on January 2, 2007 and which is effective on January 11, 2007
      (attached as an exhibit to our current report on Form 8- K filed on
      January 12, 2007)
|3.3         | Article of Merger filed with the Secretary of State of
      Nevada on January 11, 2007 (attached as an exhibit to our current report
      on Form 8-K filed on February 7, 2007)                                                     
|3.4         | Certificate of Change filed with the Secretary of State
      of Nevada on April 4, 2008 (attached as an exhibit to our current report
      on Form 8-K filed on April 21, 2008)                                                      
|3.5         | Amended and Restated Bylaws (attached as an exhibit to
      our current report on Form 8- K filed on April 30, 2008)                                                                                                                  
|(10)        | Material Contracts                                                                                                                                                                                                                     
|10.1        | Private Placement Subscription Agreement dated February
      23, 2007 (attached as an exhibit to our current report on Form 8-K filed
      on June 1, 2007)                                                                          
|10.2        | Lease Purchase and Sale Agreement dated May 29, 2007
      ((attached as an exhibit to our current report on Form 8-K filed on May
      31, 2007)                                                                                     
|10.3        | Share Issuance Agreement dated May 17, 2007 (attached as
      an exhibit to our current report on Form 8-K filed on June 1, 2007)                                                                                                     
|10.4        | Farm-In Agreement dated June 8, 2007 (attached as an
      exhibit to our annual report on Form 10-KSB filed on June 13, 2007)                                                                                                         
|10.5        | Employment Agreement dated June 11, 2007 (attached as an
      exhibit to our annual report on Form 10- KSB filed on June 13, 2007)                                                                                                    
|10.6        | Escrow Agreement dated June 8, 2007 (attached as an
      exhibit to our annual report on Form 10-KSB filed on June 13, 2007)                                                                                                          
|10.7        | Consulting Agreement dated June 12, 2007 (attached as an
      exhibit to our annual report on Form 10- KSB filed on June 13, 2007)                                                                                                    
|10.8        | Consulting Agreement dated June 12, 2007 (attached as an
      exhibit to our annual report on Form 10- KSB filed on June 13, 2007)                                                                                                    
|10.9        | Subscription Agreement between Trius Energy, LLC and our
      company (attached as an exhibit to our current report on Form 8-K filed on
      October 19, 2007)                                                                      
|10.10       | Amendment to Employment Agreement dated October 19, 2007
      (attached as an exhibit to our quarterly                                                                                                                                

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34

|      | report on Form 10-QSB filed on October 22,
2007)                                                                                                                                                                                                            
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 | Amendment to Consulting Agreement dated October 19, 2007
      (attached as an exhibit to our quarterly report on Form 10-QSB filed on
      October 22, 2007)                                                                                              
|10.12 | Farm-Out Agreement dated November 8, 2007 between Valiant
      North Sea Limited, Petrofac Energy Developments Limited and Fox Energy
      Exploration Limited (attached as an exhibit to our current report on Form
      8-K filed on November 23, 2007)
|10.13 | Purchase Agreement (North Slope Leases) dated October 10,
      2007 (attached as an exhibit to our current report on Form 8-K filed on
      November 28, 2007)                                                                                            
|10.14 | Amendment Agreement No. 1 to Purchase Agreement (North
      Slope Leases) dated November 2, 2007 (attached as an exhibit to our
      current report on Form 8-K filed on November 28, 2007)                                                               
|10.15 | Purchase Agreement (Cook Inlet) dated October 10, 2007
      (attached as an exhibit to our current report on Form 8-K filed on
      November 28, 2007)                                                                                                    
|10.16 | Finder Agreement with Partners Consulting, Inc. dated
      February 15, 2008 (attached as an exhibit to our current report on Form
      8-K filed on March 21, 2008)                                                                                      
|10.17 | Promissory Note dated April 1, 2008 to EuroEnergy Growth
      Capital S.A. (attached as an exhibit to our current report on Form 8-K
      filed on May 9, 2008)                                                                                           
|10.18 | Letter of Commitment with Senergy Limited (attached as an
      exhibit to our current report on Form 8-K filed on May 9, 2008)                                                                                                                             
|10.19 | Promissory Note dated May 1, 2008 to EuroEnergy Growth
      Capital S.A. (attached as an exhibit to our current report on Form 8-K
      filed on May 21, 2008)                                                                                            
|10.20 | Bonus Agreement dated May 22, 2008 between Richard Moore
      and our company (attached as an exhibit to our current report on Form 8-K
      filed on May 28, 2008)                                                                                       
|10.21 | Agreement of Intention to Sell/Purchase the
      Geneseo-Edwards Program between Hodgden & Associates and our company
      (attached as an exhibit to our current report on Form 8-K filed on May 29,
      2008)                                         
|10.22 | Promissory Note dated May 23, 2008 to EuroEnergy Growth
      Capital S.A. (attached as an exhibit to our current report on Form 8-K
      filed on June 6, 2008)                                                                                           
|10.23 | Board of Advisors Agreement dated July 19, 2007 with
      Aimwell Energy Limited (attached as an exhibit to our annual report on
      Form 10-KSB filed on June 13, 2008)                                                                                 
|10.24 | Board of Advisors Agreement dated July 19, 2007 with
      Black Gold Consulting Inc. (attached as an exhibit to our annual report on
      Form 10-KSB filed on June 13, 2008)                                                                             
|10.25 | Board of Advisors Agreement dated August 2007 with John
      Spence (attached as an exhibit to our annual report on Form 10-KSB filed
      on June 13, 2008)                                                                                              
|10.26 | Board of Advisors Agreement dated August 2007 with
      Jonathan Wood (attached as an exhibit to our annual report on Form 10-KSB
      filed on June 13, 2008)                                                                                            
|10.27 | Board of Advisors Termination Agreement dated June 10,
      2008 with Aimwell Energy Limited (attached as an exhibit to our annual
      report on Form 10-KSB filed on June 13, 2008)                                                                     
|10.28 | Board of Advisors Termination Agreement dated June 10,
      2008 with Black Gold Consulting Inc.(attached as an exhibit to our annual
      report on Form 10-KSB filed on June 13,
2008)                                                                  

---

35

|10.29 | Board of Advisors Termination Agreement dated June 10,
      2008 with John Spence (attached as an exhibit to our annual report on Form
      10-KSB filed on June 13, 2008)                                                                                              
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.30 | Board of Advisors Termination Agreement dated June 10,
      2008 with Jonathan Wood (attached as an exhibit to our annual report on
      Form 10-KSB filed on June 13, 2008)                                                                                            
|10.31 | Agreement dated January 24, 2008 with Aimwell Energy
      limited (attached as an exhibit to our annual report on Form 10-KSB filed
      on June 13, 2008)                                                                                                              
|10.32 | Loan Agreement with EuroEnergy Growth Capital S.A.
      (attached as an exhibit to our annual report on Form 10-KSB filed on June
      13, 2008)                                                                                                                        
|10.33 | Senior Secured Convertible Redeemable Debenture dated
      June 24, 2008 issued by our company to Trafalgar Capital Specialized
      Investment Fund, Luxembourg (attached as an exhibit to our quarterly
      report on Form 10-Q filed on July 21, 2008)             
|10.34 | Warrant dated June 24, 2008 issued by our company to
      Trafalgar Capital Specialized Investment Fund, Luxembourg (attached as an
      exhibit to our quarterly report on Form 10-Q filed on July 21,
  2008)                                                         
|10.35 | Securities Purchase Agreement dated June 24, 2008 between
      Trafalgar Capital Specialized Investment Fund, Luxembourg and our company
      (attached as an exhibit to our quarterly report on Form 10-Q filed on July
      21, 2008)                                
|10.36 | Registration Rights Agreement dated June 24, 2008 between
      Trafalgar Capital Specialized Investment Fund, Luxembourg and our company
      (attached as an exhibit to our quarterly report on Form 10-Q filed on July
      21, 2008)                                
|10.37 | Escrow Agreement dated June 24, 2008 between Trafalgar
      Capital Specialized Investment Fund, Luxembourg, The Law Office of James
      G. Dodrill II, P.A. and our company (attached as an exhibit to our
      quarterly report on Form 10-Q filed on July 21, 2008)
|10.38 | Security Agreement dated June 24, 2008 between Trafalgar
      Capital Specialized Investment Fund, Luxembourg and our company (attached
      as an exhibit to our quarterly report on Form 10-Q filed on July 21,
      2008)                                           
|10.39 | Irrevocable Transfer Agent Instructions dated June 18,
      2008 between Empire Stock Transfer Inc. and our company (attached as an
      exhibit to our quarterly report on Form 10-Q filed on July 21,
  2008)                                                         
|10.40 | General Assignment of Contracts and Leases dated June 18,
      2008 between Trafalgar Capital Specialized Investment Fund, FIS and our
      company (attached as an exhibit to our quarterly report on Form 10-Q filed
      on July 21, 2008)                          
|10.41 | Consulting Agreement with Partners Consulting, Inc. dated
      May 8, 2008 (attached as an exhibit to our quarterly report on Form 10-Q
      filed on July 21, 2008)                                                                                                    
|10.42 | Letter of Commitment with Senergy Limited (attached as an
      exhibit to our quarterly report on Form 10- Q filed on July 21,
    2008)                                                                                                                                 
|10.43 | Investor Relations Consulting Service Agreement dated
      September 1, 2008 between our company and Benaterra Communications Inc.
      (attached as an exhibit to our current report on Form 8-K filed on
      September 12, 2008)                                    
|10.44 | Investor Relations Consulting Service Agreement dated
      June 1, 2007 between our company and Senergy Communications Inc. (attached
      as an exhibit to our current report on Form 8-K filed on September 12,
      2008)                                           

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36

|10.45  | Transaction Proposal and Exclusivity
        Agreement dated September 26, 2008 between Ballyliffin Capital Corp.,
        Fox Energy Exploration Limited, and Fox Petroleum Inc. (attached as an
        exhibit to our current report on Form 8-K filed on October 1, 2008)
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.46  | Letter Agreement dated September
        25, 2008 between Fox Energy Exploration Limited and Pollard Financial
        Ltd. (attached as an exhibit to our current report on Form 8-K filed on
        October 1, 2008)                                                      
|10.47  | Amendment to June 24, 2008 Financing
        Documents between Fox Petroleum Inc. and Trafalgar Capital Specialized
        Investment Fund, Luxembourg (attached as an exhibit to our current report
        on Form 8-K filed on November 21, 2008)                        
|10.48  | Amended Debenture No. 1 - $1.25
        million principal amount (attached as an exhibit to our current report
        on Form 8-K filed on November 21, 2008)                                                                                                               
|10.49  | Amended Debenture No. 2 - $1.25
        million principal amount (attached as an exhibit to our current report
        on Form 8-K filed on November 21, 2008)                                                                                                               
|10.50  | New Debenture - $1 million principal
        amount (attached as an exhibit to our current report on Form 8-K filed
        on November 21, 2008)                                                                                                                            
|10.51  | Replacement Warrant (attached
        as an exhibit to our current report on Form 8-K filed on November 21,
        2008)                                                                                                                                                    
|10.52  | Amended Security Agreement (attached
        as an exhibit to our current report on Form 8-K filed on November 21,
        2008)                                                                                                                                             
|10.53  | Pledge and Escrow Agreement (attached
        as an exhibit to our current report on Form 8-K filed on November 21,
        2008)                                                                                                                                            
|10.54  | Side Letter Agreement (attached
        as an exhibit to our current report on Form 8-K filed on November 21,
        2008)                                                                                                                                                  
|10.55  | Irrevocable Transfer Agent Instructions
        (attached as an exhibit to our current report on Form 8-K filed on November
        21, 2008)                                                                                                                                
|10.56  | Subscription Agreement with Carbon
        Energy Investments Limited dated November 5, 2008 (attached as an exhibit
        to our current report on Form 8-K filed on January 7, 2009)                                                                                     
|10.57  | Agreement for the Purchase of
        Shares in Alaska Oil & Gas Resources Limited dated November 5, 2008
        (attached as an exhibit to our current report on Form 8-K filed on January
        7, 2009)                                                                
|10.58  | Amendment Agreement for the Purchase
        of Shares of Alaska Oil & Gas Resources Limited dated November 2008
        (attached as an exhibit to our current report on Form 8-K filed on January
        7, 2009)                                                         
|10.59  | Letter Agreement with Carbon
        Energy Investments Limited dated December 10, 2008 (attached as an exhibit
        to our current report on Form 8-K filed on January 7, 2009)                                                                                          
|10.60* | Letter
        agreement between Fox Energy Exploration Limited and Aimwell Energy Limited
        dated September 5, 2008                                                                                                                                                   
|10.61* | Letter
        agreement between Fox Energy Exploration Limited and Aimwell Energy Limited
        dated September 5, 2008                                                                                                                                                   
|10.62* | Oil
        and Gas Lease Agreement dated October 14, 2008                                                                                                                                                                                                                   
|10.63* | Oil
        and Gas Lease Agreement dated October 14, 2008                                                                                                                                                                                                                   

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37

|14.1  | Code of Conduct and Ethics (attached
        as an exhibit to our current report on Form 8-K filed on May 9, 2008)            
|----- | ------------------------------------------------------------------------------------------------------------------------------
|(21)  | Subsidiaries                                                                                                                  
|21.1  | Fox Petroleum (Alaska) Inc.,
        incorporated in Alaska                                                                   
|21.2  | Fox Energy Exploration Limited,
        incorporated in England and Wales                                                     
|21.3  | Fox Petroleum, Inc., incorporated
        in Kansas                                                                           
|(31)  | Section 302 Certification                                                                                                     
|31.1* | Section
        302 Certification of Richard Moore                                                                            
|31.2* | Section
        302 Certification of Jonathan Wood                                                                            
|(32)  | Section 906 Certification                                                                                                     
|32.1* | Section
        906 Certification of Richard Moore                                                                            
|32.2* | Section
        906 Certification of Jonathan Wood                                                                            
|99.1  | Audit Committee Charter (attached
        as an exhibit to our current report on Form 8-K filed on May 9, 2008)               
|99.2  | Compensation Committee Charter
        (attached as an exhibit to our current report on Form 8-K filed on May
        9, 2008)
|99.3  | Nominating Committee Charter
        (attached as an exhibit to our current report on Form 8- K filed on May
        9, 2008) 
|99.4* | Letter
        from Blackhawk Investments Limited dated November 19, 2008                                                     
|99.5* | Letter
        to Minmet Plc regarding Proposed Offer for the Shares of Minmet Plc. dated
        December 4, 2008            

*Filed herewith

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38

SIGNATURES

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

/s/ Richard MooreBy: Richard Moore
President, Chief Executive Officer, Chairman, and Director
(Principal Executive Officer) Dated: January 20, 2009

/s/ Jonathan WoodBy: Jonathan WoodChief
Financial Officer and Director(Principal Financial Officer and Principal
Accounting Officer) Dated: January 20, 2009

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