---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended August
31, 2007

OR

[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACTFor the transition period from _____________to
_____________

Commission file number 000-52721

FOX PETROLEUM INC.(Exact
name of small business issuer 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 SW1X 7JF,
England(Address of principal executive offices)

44-207-590-9630(Issuers telephone number)

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

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

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

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: 71,967,271 shares
of common stock issued and outstanding as of October 18, 2007.

Transitional Small Business Disclosure Format (Check one): Yes [
] No [X]

---

- 2 -

PART I  FINANCIAL INFORMATION

|Item 1. | Financial Statements
|------- | --------------------

It is the opinion of management that the interim consolidated
financial statements for the quarter ended August 31, 2007 include all
adjustments necessary in order to ensure that the interim consolidated financial
statements are not misleading.

Our consolidated financial statements are stated in United
States dollars and are prepared in accordance with United States generally
accepted accounting principles.

---

|FOX PETROLEUM INC.                       
|-----------------------------------------
|                                         
|(A Pre-exploration Stage Company)        
|                                         
|INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|                                         
|August 31, 2007                          
|                                         
|(Stated in US Dollars)                   
|                                         
|(Unaudited)                              

---

|FOX PETROLEUM INC.                   
|-------------------------------------
|(A Pre-exploration Stage Company)    
|INTERIM CONSOLIDATED BALANCE SHEETS  
|August 31, 2007 and February 28, 2007
|(Stated in US Dollars)               
|(Unaudited)                          

|                                                            |   | August 31, |   |   | February 28, |  
|----------------------------------------------------------- | - | ---------- | - | - | ------------ | -
|                                                            |   | 2007       |   |   | 2007         |  
|**ASSETS**                                                 
|Current                                                     |   |            |   |   |              |  
|Cash                                                        | $ | 568,978    |   | $ | 119,051      |  
|Cash - restricted                                           |   | 20,000     |   |   | -            |  
|Prepaid expenses                                            |   | 299,239    |   |   | -            |  
|                                                            |   |            |   |   |              |  
|                                                            |   | 888,217    |   |   | 119,051      |  
|Oil and Gas Interests  Notes 4 and 9                       |   | 1,001,702  |   |   | -            |  
|                                                            |   |            |   |   |              |  
|                                                            | $ | 1,889,919  |   | $ | 119,051      |  
|                                                            |   |            |   |   |              |  
|LIABILITIES                                                
|                                                            |   |            |   |   |              |  
|Current                                                     |   |            |   |   |              |  
|Accounts payable and accrued liabilities
       Note 5     | $ | 533,736    |   | $ | 40,467       |  
|Due to related party 
      Note 5                         |   | 29,975     |   |   | 29,975       |  
|                                                            |   |            |   |   |              |  
|                                                            |   | 563,711    |   |   | 70,442       |  
|                                                            |   |            |   |   |              |  
|STOCKHOLDERS EQUITY                                       
|                                                            |   |            |   |   |              |  
|Capital stock  Notes 4 and 6                               |   |            |   |   |              |  
|Authorized:                                                 |   |            |   |   |              |  
|450,000,000
      common shares, par value $0.001 per share |   |            |   |   |              |  
|Issued and outstanding:                                     |   |            |   |   |              |  
|71,342,072 common shares (February 28, 2007: 49,300,000     |   |            |   |   |              |  
|common shares)                                              |   | 71,342     |   |   | 49,300       |  
|Additional paid-in capital                                  |   | 3,348,260  |   |   | 118,600      |  
|Share subscriptions  Note 6                                |   | 950,000    |   |   | -            |  
|Deficit accumulated during the pre-exploration
      stage  |   | (3,043,394 | ) |   | (119,291     | )
|                                                            |   |            |   |   |              |  
|                                                            |   | 1,326,208  |   |   | 48,609       |  
|                                                            |   |            |   |   |              |  
|                                                            | $ | 1,889,919  |   | $ | 119,051      |  

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                          
|----------------------------------------------------------------------------
|(A Pre-exploration Stage Company)                                           
|INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS                               
|for the three and six months ended August 31, 2007 and 2006
      and       
|for the period November 4, 2004 (Date of Inception) to August
      31, 2007
|(Stated in US Dollars)                                                      
|(Unaudited)                                                                 

|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   | November 4,   |  
|--------------------------------- | - | ------------------ | - | - | ---------------- | - | - | ------------- | - | - | ---------- | - | - | ------------- | -
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   | 2004 (Date of |  
|                                  |   | Three months ended |   |   | Six months ended |   |   | Inception) to |  
|                                  |   | August31,          |   |   | August 31        |   |   | August 31,    |  
|                                  |   | 2007               |   |   | 2006             |   |   | 2007          |   |   | 2006       |   |   | 2007          |  
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Revenue                           |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Interest income                   | $ | 6,974              |   | $ | -                |   | $ | 7,188         |   | $ | -          |   | $ | 7,188         |  
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Expenses:                         |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Accounting and audit fees         |   | 29,536             |   |   | 4,293            |   |   | 35,112        |   |   | 6,770      |   |   | 68,625        |  
|Advertising and public relations  |   | 755,463            |   |   | -                |   |   | 763,775       |   |   | -          |   |   | 763,775       |  
|Bank charges                      |   | 2,363              |   |   | 47               |   |   | 3,045         |   |   | 67         |   |   | 3,683         |  
|Consulting fees  Note 5          |   | 24,000             |   |   | -                |   |   | 39,000        |   |   | -          |   |   | 39,000        |  
|Filing and transfer agent         |   | 1,318              |   |   | 643              |   |   | 2,018         |   |   | 1,205      |   |   | 8,126         |  
|Legal fees                        |   | 42,307             |   |   | -                |   |   | 53,758        |   |   | -          |   |   | 81,882        |  
|Management fees 
      Note 5    |   | 36,000             |   |   | 1,500            |   |   | 72,000        |   |   | 3,000      |   |   | 96,000        |  
|Mineral property acquisition and  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|exploration costs                 |   | 1,862,618          |   |   | 5,000            |   |   | 1,864,953     |   |   | 5,000      |   |   | 1,881,953     |  
|Office and miscellaneous  Note 5 |   | 27,415             |   |   | 750              |   |   | 49,957        |   |   | 2,695      |   |   | 59,865        |  
|Travel and entertainment          |   | 38,177             |   |   | -                |   |   | 47,673        |   |   | -          |   |   | 47,673        |  
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|                                  |   | 2,819,197          |   |   | 12,223           |   |   | 2,931,291     |   |   | 18,737     |   |   | 3,050,582     |  
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Net loss for the period           | $ | (2,812,223         | ) | $ | (12,223          | ) | $ | (2,924,103    | ) | $ | (18,737    | ) | $ | (3,043,394    | )
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Basic and diluted loss per share  | $ | (0.05              | ) | $ | (0.00            | ) | $ | (0.06         | ) | $ | (0.00      | ) |   |               |  
|                                  |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Weighted average number of shares |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|outstanding                       |   | 54,499,984         |   |   | 49,200,000       |   |   | 51,899,992    |   |   | 49,200,000 |   |   |               |  

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                          
|----------------------------------------------------------------------------
|(A Pre-exploration Stage Company)                                           
|INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS                               
|for the six months ended August 31, 2007 and 2006 and                       
|for the period November 4, 2004 (Date of Inception) to August
      31, 2007
|(Stated in US Dollars)                                                      
|(Unaudited)                                                                 

|                                                       |   |                  |   |   |               |   |   | November 4,   |  
|------------------------------------------------------ | - | ---------------- | - | - | ------------- | - | - | ------------- | -
|                                                       |   |                  |   |   |               |   |   | 2004 (Date of |  
|                                                       |   | Six months ended |   |   | Inception) to |  
|                                                       |   | August 31,       |   |   | August 31,    |  
|                                                       |   | 2007             |   |   | 2006          |   |   | 2007          |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Operating Activities                                   |   |                  |   |   |               |   |   |               |  
|Net loss for the period                                | $ | (2,924,103       | ) | $ | (18,737       | ) | $ | (3,043,394    | )
|Donated services
      and rent                        |   | -                |   |   | 4,500         |   |   | 21,000        |  
|Change in non-cash working capital
      balances      |   |                  |   |   |               |   |   |               |  
|related to
      operations:                           |   |                  |   |   |               |   |   |               |  
|Prepaid expenses                                       |   | (299,239         | ) |   | -             |   |   | (299,239      | )
|Accounts payable and accrued liabilities               |   | 493,269          |   |   | 4,851         |   |   | 533,736       |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Net cash used in operating activities                  |   | (2,730,073       | ) |   | (9,386        | ) |   | (2,787,897    | )
|                                                       |   |                  |   |   |               |   |   |               |  
|Financing Activities                                   |   |                  |   |   |               |   |   |               |  
|Issuance of common shares                              |   | 2,250,000        |   |   | -             |   |   | 2,396,900     |  
|Share subscriptions                                    |   | 950,000          |   |   | -             |   |   | 950,000       |  
|Advance from related parties                           |   | -                |   |   | -             |   |   | 29,975        |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Net cash provided by financing activities              |   | 3,200,000        |   |   | -             |   |   | 3,376,875     |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Increase (decrease) in cash and restricted cash during |   | 469,927          |   |   | (9,386        | ) |   | 588,978       |  
|the period                                             |   |                  |   |   |               |   |   |               |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Cash, beginning of period                              |   | 119,051          |   |   | 17,714        |   |   | -             |  
|                                                       |   |                  |   |   |               |   |   |               |  
|Cash and restricted cash, end of period                | $ | 588,978          |   | $ | 8,328         |   | $ | 588,978       |  

Non-cash transaction  Note 8

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                                          
|----------------------------------------------------------------------------
|(A Pre-exploration Stage Company)                                           
|INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
      (DEFICIENCY)  
|for the period November 4, 2004 (Date of Inception) to August
      31, 2007
|(Stated in US Dollars)                                                      
|(Unaudited)                                                                 

|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   | Deficit     |   |   |            |  
|---------------------------------------------- |  | -------------- |  | - | --------- |  | - | ---------- | - | - | --------------- |  | - | ----------- | - | - | ---------- | -
|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   | Accumulated |   |   |            |  
|                                               |  |                |  |   |           |  |   | Additional |   |   |                 |  |   | During the  |   |   |            |  
|                                               |  | *Common Shares |  |   | Paid-in   |  |   | Share      |   |   | Pre-exploration |  |   |             |  
|                                               |  | Number         |  |   | Par Value |  |   | Capital    |   |   | Subscriptions   |  |   | Stage       |   |   | Total      |  
|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   |             |   |   |            |  
|Capital stock issued for cash  at $0.0001667  |  | 29,400,000     |  | $ | 29,400    |  | $ | (24,500    | ) | $ | -               |  | $ | -           |   | $ | 4,900      |  
| at $0.0016667                                |  | 19,200,000     |  |   | 19,200    |  |   | 12,800     |   |   | -               |  |   | -           |   |   | 32,000     |  
| at $0.0166667                                |  | 600,000        |  |   | 600       |  |   | 9,400      |   |   | -               |  |   | -           |   |   | 10,000     |  
|Donated services and rent                      |  | -              |  |   | -         |  |   | 3,000      |   |   | -               |  |   | -           |   |   | 3,000      |  
|Net loss for the period                        |  | -              |  |   | -         |  |   | -          |   |   | -               |  |   | (18,821     | ) |   | (18,821    | )
|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   |             |   |   |            |  
|Balance, February 28, 2005                     |  | 49,200,000     |  |   | 49,200    |  |   | 700        |   |   | -               |  |   | (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                     |  | 49,200,000     |  |   | 49,200    |  |   | 9,700      |   |   | -               |  |   | (64,736     | ) |   | (5,836     | )
|Capital stock issued for cash  at $1.00       |  | 100,000        |  |   | 100       |  |   | 99,900     |   |   | -               |  |   | -           |   |   | 100,000    |  
|Donated services and rent                      |  | -              |  |   | -         |  |   | 9,000      |   |   | -               |  |   | -           |   |   | 9,000      |  
|Net loss for the period                        |  | -              |  |   | -         |  |   | -          |   |   | -               |  |   | (54,555     | ) |   | (54,555    | )
|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   |             |   |   |            |  
|Balance, February 28, 2007                     |  | 49,300,000     |  |   | 49,300    |  |   | 118,600    |   |   | -               |  |   | (119,291    | ) |   | 48,609     |  
|Capital stock issued for cash  at $1.06       |  | 1,886,792      |  |   | 1,887     |  |   | 1,998,113  |   |   | -               |  |   | -           |   |   | 2,000,000  |  
| at $1.61                                     |  | 155,280        |  |   | 155       |  |   | 249,845    |   |   | -               |  |   | -           |   |   | 250,000    |  
|Capital stock issued for oil and gas interests |  | 20,000,000     |  |   | 20,000    |  |   | 981,702    |   |   | -               |  |   | -           |   |   | 1,001,702  |  
|Share subscriptions                            |  | -              |  |   | -         |  |   | -          |   |   | 950,000         |  |   | -           |   |   | 950,000    |  
|Net loss for the period                        |  | -              |  |   | -         |  |   | -          |   |   | -               |  |   | (2,924,103  | ) |   | (2,924,103 | )
|                                               |  |                |  |   |           |  |   |            |   |   |                 |  |   |             |   |   |            |  
|Balance, August 31, 2007                       |  | 71,342,072     |  | $ | 71,342    |  | $ | 3,348,260  |   | $ | 950,000         |  | $ | (3,043,394  | ) | $ | 1,326,208  |  

|* | The common stock issued has been retroactively restated
        to reflect a forward split of 6 new shares for 1 old share, effective
        on January 11, 2007. The par value of common stock and additional paid-in
        capital has been retroactively restated to reflect this change.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES

---

|FOX PETROLEUM INC.                                    
|------------------------------------------------------
|(A Pre-exploration Stage Company)                     
|NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|August 31, 2007                                       
|(Stated in US Dollars)                                
|(Unaudited)                                           

|Note 1 | Interim Financial Statements
|------ | ----------------------------

While the information presented in the
  accompanying six months to August 31, 2007 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 28, 2007 financial statements.

Operating results for the six months
  ended August 31, 2007 are not necessarily indicative of the results that can
  be expected for the year ending February 28, 2008.

|Note 2 | Nature and Continuance of Operations
|------ | ------------------------------------

The Company was incorporated in the
  State of Nevada on November 4, 2004 and is in the pre-exploration stage. The
  Company has acquired a mineral property located in the Northwest Territories,
  Canada and has not yet determined whether this property contains reserves that
  are economically recoverable. The recoverability of amounts from the property
  will be dependent upon the discovery of economically recoverable reserves, confirmation
  of the Companys interest in the underlying property, the ability of the
  Company to obtain necessary financing to satisfy the expenditure requirements
  under the property agreement and to complete the development of the property
  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 August 31, 2007, the Company
  had not yet achieved profitable operations, has accumulated losses of $3,043,394
  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 Pre-exploration Stage Company)                     
|Notes to the Interim Consolidated Financial Statements
|August 31, 2007                                       
|(Stated in US Dollars)                                
|(Unaudited)  Page 2                                  

|Note 3 | Additional Significant Accounting Policy
|------ | ----------------------------------------

Principles of Consolidation

These consolidated financial statements
  include the accounts of Fox Energy Exploration Limited, a wholly owned inactive
  subsidiary incorporated in England and Wales on May 17, 2007 and Fox Petroleum
  (Alaska) Inc., a wholly owned inactive subsidiary incorporated in Alaska, U.S.A.
  on April 18, 2007. All significant inter-company transactions and balances have
  been eliminated.

|Note 4 | Oil and Gas Interests Note 9
|------ | -----------------------------

On May 29, 2007, the Company entered
  into a Lease Purchase and Sale Agreement with a company to acquire a combined
  100% working interest in 12 state-issued oil and gas leases in the north slope
  of Alaska subject to a royalty of 16.66667% to the State of Alaska and a private
  royalty equal to 5%. In consideration for the oil and gas leases, the Company
  issued 20,000,000 restricted common shares of the Company valued at $1,001,762,
  the transferors historical cost. The valuation is based the SEC Staff Accounting
  Bulletin, Topic 5, G.

Pursuant to a farm-in agreement dated
  June 8, 2007, the Company agreed to acquire a 33.33% interest in two UK petroleum
  production licenses (Licenses). The Licenses are located in the
  UK North Sea. As consideration for the Licenses, the Company agreed to fund
  100% of the seismic costs and its 33.33% share of the License budget costs as
  agreed by the parties. The Company also has the option to acquire an additional
  26.67% interest in the Licenses. The option is effective from completion of
  the transfer of the assigned interest to the Company and shall continue to be
  valid and exercisable until 28 days after receipt by the Company of the processed
  seismic data. To acquire the option, the Company shall pay an additional 46.67%
  of the dry-hole costs of an exploration well.

|Note 5 | Related Party Transactions
|------ | --------------------------

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

| |                          |   |                    |  |   |                  |  |   |               |  |   |       |  |   | November 4,   | 
| | ------------------------ | - | ------------------ |  | - | ---------------- |  | - | ------------- |  | - | ----- |  | - | ------------- | 
| |                          |   |                    |  |   |                  |  |   |               |  |   |       |  |   | 2004 (Date of | 
| |                          |   | Three months ended |  |   | Six months ended |  |   | Inception) to | 
| |                          |   | August 31,         |  |   | August 31,       |  |   | August 31,    | 
| |                          |   | 2007               |  |   | 2006             |  |   | 2007          |  |   | 2006  |  |   | 2007          | 
| |                          |   |                    |  |   |                  |  |   |               |  |   |       |  |   |               | 
| | Consulting fees          | $ | 24,000             |  | $ | -                |  | $ | 39,000        |  | $ | -     |  | $ | 39,000        | 
| | Management fees          |   | 36,000             |  |   | 1,500            |  |   | 72,000        |  |   | 3,000 |  |   | 96,000        | 
| | Office and miscellaneous |   | -                  |  |   | 750              |  |   | -             |  |   | 1,500 |  |   | 7,000         | 
| |                          |   |                    |  |   |                  |  |   |               |  |   |       |  |   |               | 
| |                          | $ | 60,000             |  | $ | 2,250            |  | $ | 111,000       |  | $ | 4,500 |  | $ | 142,000       | 

Included in these amounts is the fair
  value of services and office premises provided by an officer during the six
  month period ended August 31, 2006.

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Pre-exploration Stage Company)                     
|Notes to the Interim Consolidated Financial Statements
|August 31, 2007                                       
|(Stated in US Dollars)                                
|(Unaudited)  Page 3                                  

|Note 5 | Related Party Transactions - (contd)
|------ | -------------------------------------

Included in accounts payable and accrued
  liabilities at August 31, 2007, is $5,000 (February 28, 2007: $10,000) owed
  to a director of the Company for unpaid management fees and $1,392 (February
  28, 2007: $Nil) paid by the directors for travel and telephone expenses.

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

|Note 6 | Capital Stock Note 4
|------ | ---------------------

Commitments:

| | a) | Share Issuance Agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | On May 17, 2007, the Company entered into
        a share issuance agreement with a subscriber that will allow the subscriber
        to advance up to $8,000,000 to the Company in exchange for units of the
        Company. The units will be issued at a price equal to 80% of the volume
        weighted average of the closing price of common share for the 10 banking
        days immediately preceding the date of the notice. Each unit will consist
        of one common share of the Company and one common share purchase warrant.
        Each common share purchase warrant will entitle the subscriber the right
        to purchase one additional common share at 125% of the price of the units
        for a period of three years.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Pre-exploration Stage Company)                     
|Notes to the Interim Consolidated Financial Statements
|August 31, 2007                                       
|(Stated in US Dollars)                                
|(Unaudited)  Page 4                                  

|Note 6 | Capital Stock Note 4  (contd)
|------ | --------------------------------

Commitments:  (contd)

| | a) | Share Issuance Agreement  (contd)                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                      
| |    | v)                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                      
| |    | vi)                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                      
| | b) | Share Purchase Warrants:                                                                                                                                                                             
| |    |                                                                                                                                                                                                      
| |    | As at August 31, 2007, there are 2,142,072
        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       | 
| |           |  |  |          |  |  |                   | 
| | 100,000   |  |  | $1.25    |  |  | February 23, 2010 | 
| | 1,886,792 |  |  | $1.33    |  |  | May 17, 2010      | 
| | 155,280   |  |  | $2.01    |  |  | August 1, 2010    | 
| |           |  |  |          |  |  |                   | 
| | 2,142,072 |  |  |          |  |  |                   | 

The summary of the changes in the Companys
  share purchase warrants for the periods ended August 31, 2007 and February 28,
  2007 is presented below:

| |                           |  | August 31, 2007 |  |   | February 28, 2007 | 
| | ------------------------- |  | --------------- |  | - | ----------------- | 
| |                           |  |                 |  |   | Weighted          | 
| |                           |  |                 |  |   | Average           | 
| |                           |  | Number of       |  |   | Exercise          | 
| |                           |  | Warrants        |  |   | Price             | 
| |                           |  |                 |  |   |                   | 
| | Balance, beginning of the |  |                 |  |   |                   | 
| | period                    |  | 100,000         |  | $ | 1.25              | 
| | Issued                    |  | 2,042,072       |  | $ | 1.38              | 
| |                           |  |                 |  |   |                   | 
| | Balance, end of period    |  | 2,142,072       |  | $ | 1.38              | 

---

|Fox Petroleum Inc.                                    
|------------------------------------------------------
|(A Pre-exploration Stage Company)                     
|Notes to the Interim Consolidated Financial Statements
|August 31, 2007                                       
|(Stated in US Dollars)                                
|(Unaudited)  Page 5                                  

|Note 7 | Commitments Notes 4 and 6
|------ | --------------------------

| | 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 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 per month and from $5,000 per
        month to £7,000. All other terms remained the same.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | c) | By Board of Advisors (BOA) Agreements dated
        in August 2007, the Company agreed to grant a total of 250,000 common
        shares to the members of the BOA at the end of each year served. These
        agreements are subject to approval by the Advisors.                                                                                                                                                                                                                                                               

|Note 8 | Non-cash Transaction Note 4
|------ | ----------------------------

Investing and financing activities that
  do not have a direct impact on current cash flows are excluded from the statement
  of cash flows. During the six months ended August 31, 2007, the Company issued
  20,000,000 restricted common shares valued at $1,001,762, the transferors historical
  cost. This transaction was excluded from the statement of cash flows.

|Note 9 | Subsequent Events Notes 6 and 7
|------ | --------------------------------

Pursuant to a subscription agreement
  dated October 9, 2007, the Company has agreed to acquire 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. As consideration for the 22.5% joint venture interest in
  the well, the Company has agreed to pay US$500,000.

---

- 4 -

|Item 2. | Managements Discussion and Analysis or Plan
      of Operation.
|------- | ----------------------------------------------------------------

FORWARD LOOKING STATEMENTS

This quarterly report contains forward-looking statements as
that term is defined in section 27A of the United States Securities Act of 1933,
as amended, and section 21E of the United States Securities Exchange Act of
1934, as amended. 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. In particular,
this quarterly report contains forward-looking statements pertaining to the
following:

- the quantity of potential natural gas and petroleum reserves;
- potential natural gas and crude oil production levels;
- capital expenditure programs;
- projections of market prices and costs;
- supply and demand for natural gas and crude oil;
- expectations regarding our ability to raise capital and to continually add
  to reserves through acquisitions and development; and
- treatment under governmental regulatory regimes and tax laws.

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 the section entitled Risks and
  Uncertainties commencing on page 14 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.

---

- 5 -

In this quarterly report, unless otherwise specified, all
references to common shares refer to the common shares in our capital stock
and the terms we, us and our refer to Fox Petroleum Inc. and/or our wholly
owned subsidiaries, Fox Petroleum (Alaska) Inc. and Fox Energy Exploration
Limited, as the case may be.

Our consolidated financial statements are stated in United
States dollars and are prepared in accordance with United States generally
accepted accounting principles. The following discussion should be read in
conjunction with our consolidated financial statements and the related notes
that appear elsewhere in this quarterly report.

COMPANY OVERVIEW

We are an exploration stage company engaged in the acquisition,
exploration, and, if warranted, development of prospective oil and gas
properties. We were previously engaged in mineral resource exploration. Because
we have not discovered any economically viable mineral deposit on our mineral
property, we decided to change the direction of our exploration activities to
oil and gas sectors.

On July, 31, 2007, through our wholly owned UK subsidiary, Fox
Energy Exploration Limited, we completed the acquisition of the total of 33.33%
interests in a UK Petroleum Production License under the Farm-In Agreement dated
June 8, 2007 with Granby Enterprises Limited and Atlantic Petroleum UK Limited.
The license P1211 covers two recently merged blocks located in the UK North Sea.
Furthermore, on August 14, 2007, we completed the acquisition of the 11 oil and
gas leases in North Slope, Alaska from Fox Petroleum LLC under the Lease
Purchase and Sale Agreement we entered into with Fox Petroleum LLC on May 29,
2007.

RECENT CORPORATE DEVELOPMENTS

We experienced the following significant corporate developments
since the completion of our quarter ended May 31, 2007:

|1. | On June 8, 2007 we appointed Richard Bullock as our
      Chairman of the Board of Directors and a director, and Richard Moore as
      our President and Chief Executive Officer and a director. On the same day,
      Alexander Craven was appointed as our Vice President, Finance and resigned
      as our President and Chief Executive Officer, and Chairman of the Board of
      Directors. Our Board of Directors currently consists of Richard Bullock,
      Richard Moore, and Alexander Craven.                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | On June 8, 2007, we entered into an employment agreement
      with Richard Moore, pursuant to which Mr. Moore serves as our President
      and Chief Executive Officer. Pursuant to the employment agreement, we paid
      Mr. Moore $12,000 per month and agreed to reimburse him for all reasonable
      traveling and other expenses incurred by him in connection with his
      services to us. Mr. Moore was required to work at a minimum of 3 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On October 19, 2007, we amended the employment agreement
      to increase the salary of Mr. Moore to £9,000 per month, payable £4,500
      bi-monthly installments, in arrears, commencing November 1, 2007. Mr.
      Moore agreed to work at a minimum of 5 days per week for us.                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3. | On June 8, 2007, we entered into a consulting agreement
      with Alexander Craven, pursuant to which we agreed to pay Mr. Craven
      $5,000 per month and all reasonable traveling and other expenses incurred
      by him in connection with his duties to us. The term of the agreement is
      for an                                                                                                                                                                                                                                                                                                                                                               

---

- 6 -

|   | indefinite period and the agreement may be terminated
      with or without cause.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On October 19, 2007, we amended the consulting agreement
      to increase the fee to £7,000 monthly, commencing October 1,
  2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4. | On June 8, 2007, we entered into a consulting agreement
      with Richard Bullock, pursuant to which we pay Mr. Bullock $3,000 per
      month and all reasonable traveling and other expenses actually and
      properly incurred by him in connection with his duties. The term of the
      agreement is for an indefinite period and the agreement may be terminated
      with or without cause.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5. | On July 31, 2007, through our wholly owned UK subsidiary,
      Fox Energy Exploration Limited, we completed the acquisition of the
      farm-in interests under the Farm-In Agreement dated June 8, 2007 with
      Granby Enterprises Limited and Atlantic Petroleum UK Limited. Pursuant to
      the terms of the Farm-In Agreement, we acquired from Granby Enterprises
      Limited and Atlantic Petroleum UK Limited a total of 33.33% interests in a
      UK Petroleum Production License P1211 covering two blocks located in the
      UK North Sea. In consideration for the farm-in interests, we agreed to
      fund 100% of the high resolution 2D seismic survey and pseudo 3D
      processing over the UK North Sea license and our 33.33% share of the
      license budget costs from June 1, 2007. So far we have paid approximately
      $2,000,000 to cover the cost of the seismic survey and reprocessing, which
      is already very close to our total estimated cost of the seismic project.
      We have completed the acquisition of seismic data on the areas of interest
      in the license and these data are currently being processed.                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In addition to the acquisition of the 33.33% interests in
      the license, we were granted an exclusive, non-transferable option to
      acquire an additional 26.67% interest in the license. The option will
      continue to be valid and exercisable by us until 28 days after our
      receiving the processed seismic data from the high resolution 2D seismic
      survey and processing. To acquire the additional 26.67% interest in the
      license, we will have to pay 46.67% of the cost of an exploration well in
      addition to our existing obligation to fund 33.33% of the cost of the
      exploration well under the Farm-In Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As a result of the closing of the Farm-In Agreement, our
      company ceased to be a shell company as defined in Rule 12b-2 of the
      United States Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. | On August 14, 2007, we completed the acquisition of 11
      oil and gas leases from Fox Petroleum LLC under the Lease Purchase and
      Sale Agreement we entered into with Fox Petroleum LLC on May 29, 2007.
      Pursuant to the terms of the Lease Purchase and Sale Agreement, Fox
      Petroleum LLC caused the registered owners of the oil and gas leases to
      transfer the legal ownership of the leases to us. The assignments of these
      leases to our wholly owned subsidiary, Fox Petroleum (Alaska) Inc., were
      completed on August 9, 2007, and were effective August 1, 2007. As a
      result, we acquired a combined 100% working interests in 11 state-issued
      oil and gas leases subject to a royalty to the State of Alaska of
      16.66667% and a private royalty equal to 5% in Alaskas North Slope
      hydrocarbon province. The agreement was for 12 oil and gas leases, but the
      12th lease is currently unissued and the title still remains with Alaska
      Department of Natural Resources. We expect to obtain the 12th lease once
      it is issued by Alaska Department of Natural Resources, as the original
      assignees have notice of high bidder.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In consideration for the oil and gas leases, we issued
      20,000,000 restricted common shares of our company to Richard Bullock.
      Richard Bullock, the 100% owner of Fox Petroleum LLC, became our Chairman
      of the Board of Directors and a director on June 8, 2007. The amount of
      consideration for the oil and gas leases was determined as a result of
      arms length bargaining                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

- 7 -

|   | between Fox Petroleum LLC and our company before Richard
      Bullock became our Chairman of the Board of Directors and a director on
      June 8, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|7. | On July 25, 2007, a group of 5 oil and gas professionals
      verbally agreed to join our Board of Advisors. Effective August 17, 2007,
      we formally appointed a group of 5 oil and gas professionals to our Board
      of Advisors. The Board of Advisors has been created to assist and advise
      our management on strategic, financial and technical issues. The Board of
      Advisors is a consultative body whose members are experts in oil and gas
      and corporate governance, and will provide guidance and support in
      developing our oil and gas properties and our future oil and gas
      endeavors. As compensation, we verbally agreed to issue 50,000 restricted
      shares of our common stock to each member of the Board of Advisors at the
      end of each year served. The written agreements are now with the members
      of the Board of Advisors for their own review and signing.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | Since June 1, 2007, we received total advances in the
      amount of $1,950,000 from EuroEnergy Growth Capital S.A. pursuant to the
      share issuance agreement between EuroEnergy Growth Capital S.A. and our
      company. In consideration for the advances, we issued units of our common
      stock pursuant to the share issuance agreement. Under the share issuance
      agreement, the remaining amount that can be advanced from EuroEnergy
      Growth Capital S.A. is $4,050,000.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | For more information regarding unit issuances to
      EuroEnergy Growth Capital S.A. since June 1, 2007, please see the
      information under the heading Unregistered Sales of Equity Securities and
      Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|9. | On October 9, 2007, we entered into a subscription
      agreement with Trius Energy, LLC, a Texas company, pursuant to which we
      subscribed for 22.5 joint venture units of a joint venture called Spears
      Gas Unit 2 Well #1 Project, JV, representing a 22.5% interest in the
      joint venture, in consideration for $500,000. The joint venture consists
      of Trius Energy, LLCs 72.75% working interest in Spears Gas Unit 2, Well
      #1, located in the Gomez Field, Pecos County, Texas. Trius Energy, LLC has
      set a target spud date in late October 2007 for the
well.                                                                                                                                                                                                                                                                                                                          

PLAN OF OPERATIONS AND CASH REQUIREMENTS

We intend to conduct an aggressive exploration and appraisal
program on the 12 oil and gas leases acquired or to be acquired under the Lease
Purchase and Sale Agreement with Fox Petroleum LLC, over the next two years. Our
starting point will be to collect and analyze the existing information 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.

Our primary aim is to model the geological structure
surrounding and including the leases based on the direct and offset data
available to us. This will involve a detailed analysis and re-interpretation of
several key 2D seismic lines crossing over the leases. Currently we have
identified 8 to 10 lines of seismic available in the public domain. Further
seismic data, readily available at market cost of around $1,500 per km, will be
acquired through specialist seismic brokers. We are already in discussion with
several licensed data brokers in the region.

In addition to this, it is likely to prove advantageous to
re-process the available seismic data. Seismic data can be altered in many ways
during the processing phase and techniques have improved beyond recognition over
the course of the last decade. Since most of the data in this area is relatively
old, a simple and cost-effective way of enhancing our understanding of the area
is to reprocess the seismic data.

---

- 8 -

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.

Pursuant to the Farm-In Agreement dated June 8, 2007, we paid
almost all of the estimated $2,000,000 cost for the hi-density 2D seismic survey
over the license located in the UK North Sea. We have completed the acquisition
of seismic data on the areas of interest in the license and these data are being
processed. Pending final analysis of all relevant data, we expect to be able to
define a drilling location in the fourth quarter of 2007, and hopefully commence
drilling in the second half of 2008. We may have to spend approximately
$4,000,000 for our share of drilling an exploration well under the agreement.

On October 9, 2007, we entered into a subscription agreement
with Trius Energy, LLC, a Texas company, pursuant to which we subscribed for
22.5 joint venture units of a joint venture called Spears Gas Unit 2 Well #1
Project, JV, representing a 22.5% interest in the joint venture, in
consideration for $500,000. The joint venture consists of Trius Energy, LLCs
72.75% working interest in Spears Gas Unit 2, Well #1, located in the Gomez
Field, Pecos County, Texas. Trius Energy, LLC has confirmed that the drilling
rig to be used on the re-entry program for the Spears Gas Unit 2 Well #1 has
been obtained ahead of original schedule, and is expected to be on site on
October 29, 2007. Spudding of the well is expected to occur on the same day. The
work-over program is projected to take between 3 and 4 weeks.

In addition to the cost of the seismic and the well re-entry,
we estimate our minimum operating expenses and working capital requirements for
the next twelve month period to be as follows:

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

Exploration Costs

We estimate that our exploration costs on our leases in North
Slope, Alaska will be approximately $600,000 during the next twelve 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 Eletromagnetic and Gravity Survey
process.

We have paid approximately $2,000,000 for the seismic survey on
the UK North Sea license so far and this represents almost all of the projects
estimated cost. Depending on the result of the seismic survey, we may then drill
the prospect at a cost to us of $4,000,000.

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
twelve month period will

---

- 9 -

be approximately $100,000. We estimate that our employee
compensation expenses for the next twelve month period will be approximately
$390,000.

Professional Fees

We expect to incur on-going 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 twelve month period to be approximately $100,000.

General and Administrative Expenses

We anticipate spending $75,000 on general and administrative
costs in the next twelve month period. These costs primarily consist of expenses
such as lease payments, office supplies and office equipment.

LIQUIDITY AND CAPITAL RESOURCES

Our company's principal cash requirements are for exploration
expenses which we anticipate will rise as we proceed to determine the
feasibility of developing our current or future property interests.

Capital Resources

As of August 31, 2007, we had cash of $568,978 and working
capital of $324,506, compared to cash of $119,051 and working capital of $48,609
as of February 28, 2007. We have suffered recurring losses from inception. Our
ability to meet our financial liabilities and commitments is primarily dependent
upon the continued financial support of our directors and shareholders, the
continued issuance of equity to new or existing shareholders, and our ability to
achieve and maintain profitable operations.

On May 17, 2007, we entered into a share issuance agreement
with EuroEnergy Growth Capital S.A. or EuroEnergy whereby EuroEnergy will
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.

On June 1, 2007, we issued 1,886,792 units of our common stock
to EuroEnergy at a deemed price of $1.06 per unit pursuant to the agreement. We
gave EuroEnergy our drawdown request on May 17, 2007 in the amount of
$2,000,000. Each warrant contained in the units entitles the holder to purchase
one common share at an exercise price of $1.33 per common share until May 17,
2010.

On August 1, 2007, we issued 155,280 units of our common stock
to EuroEnergy at a deemed price of $1.61 per unit pursuant to the agreement. We
gave EuroEnergy our drawdown request on July 18, 2007 in the amount of $250,000.
Each warrant contained in the units entitles the holder to purchase one common
share at an exercise price of $2.01 per common share until August 1, 2010.

On September 18, 2007, we issued 220,994 units of our common
  stock to EuroEnergy at a deemed price of $1.81 per unit pursuant to the agreement.
  We gave EuroEnergy our drawdown request on August 7, 2007 in the amount of $400,000.
  Each warrant contained in the units entitles the holder to purchase one common
  share at an exercise price of $2.26 per common share until September 10, 2010.

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On September 18, 2007, we also issued 260,664 units of our common
  stock to EuroEnergy at a deemed price of $2.11 per unit pursuant to the agreement.
  We gave EuroEnergy our drawdown request on August 21, 2007 in the amount of
  $550,000. Each warrant contained in the units entitles the holder to purchase
  one common share at an exercise price of $2.64 per common share until September
  10, 2010.

On September 27, 2007, we issued 143,541 units of our common
  stock to EuroEnergy at a deemed price of $2.09 per unit pursuant to the agreement.
  We gave EuroEnergy our drawdown request on September 9, 2007 in the amount of
  $300,000. Each warrant contained in the units entitles the holder to purchase
  one common share at an exercise price of $2.61 per common share until October
  1, 2010.

On October 1, 2007, we gave EuroEnergy our drawdown request in
the amount of $200,000 and on October 10, 2007, we gave EuroEnergy our drawdown
request in the amount of $250,000. We have not issued units to EuroEnergy for
these two advances yet.

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 believe that we will require additional funds from EuroEnergy to
continue to engage in the acquisition, exploration, and, if warranted,
development of prospective oil and gas properties. The remaining amount that can
be advanced from EuroEnergy under the share issuance agreement is $4,050,000.
Obtaining additional funds from EuroEnergy may result in substantial dilution of
the equity ownership of our common shares.

Capital Expenditure Requirements

Except as disclosed otherwise, as of October 19, 2007, we do
not have any material commitments for capital expenditures and our management
does not anticipate that we will spend additional material amounts on capital
expenditures in the near future.

Under the Lease Purchase and Sale Agreement with Fox Petroleum
LLC, we acquired a combined 100% working interests in 11 state-issued oil and
gas leases in Alaskas North Slope hydrocarbon province subject to a royalty of
16.66667% to the State of Alaska and a private royalty equal to 5%. We will
acquire one remaining lease after it is issued by Alaska Department of Natural
Resources. In consideration for the oil and gas leases, we issued 20,000,000
restricted common shares of our company to Richard Bullock. We have the leases
for 5 years and there are no work commitments. We are required to pay $1 per
acre in the first year then increasing by $0.50 per annum up to $3 in the fifth
year in order to maintain the leases. The leases comprise approximately 32,490
acres and the effective date for 8 of these leases is February 1, 2007, while
the effective date for 3 of these leases is March 1, 2007.

Under the Farm-In Agreement with Granby Enterprises Limited and
Atlantic Petroleum UK Limited, we may have to spend approximately $4,000,000 for
our share of drilling an exploration well if it is decided to drill an
exploration well on the areas covered by our license in the UK North Sea.

By an agreement dated May 22, 2007, we engaged an independent
analyst to provide continuing research coverage regarding our company beginning
May 22, 2007 until May 31, 2009. We agreed to pay the independent analyst $5,000
before the commencement of the work and twenty-four installments of $1,750.

Subject to the signing of the Board of Advisors agreements, we
may issue a total of 250,000 common shares to the members of the Board of
Advisors at the end of each year served by them.

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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.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates, which have been made using careful judgment.
Actual results may vary from these estimates. The financial statements have, in
our managements opinion, been properly prepared within the framework of the
significant accounting policies summarized below:

Pre-exploration Stage Company

We comply with Financial Accounting Standard Board Statement
No. 7 and the Securities and Exchange Commission Exchange Act Guide 7 for its
characterization of our company as pre-exploration stage.

Mineral Property

Costs of lease, acquisition, exploration, carrying and
retaining unproven mineral lease properties are expensed as incurred.

Development Stage Company

We comply with Financial Accounting Standard Board Statement
No. 7 for our characterization of our company as a development stage company. We
are devoting substantially all of our present efforts to establish a new
business and none of our planned principal operations have commenced.

Oil and Gas Properties

We follow the full cost method of accounting for oil and gas
operations whereby all costs of exploring for and developing oil and gas
reserves are initially capitalized on a country-by-country (cost centre) basis.
Such costs include land acquisition costs, geological and geophysical expenses,
carrying charges on non-producing properties, costs of drilling and overhead
charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production
equipment, are depleted and amortized on the unit-of-production method based on
the estimated gross proved reserves. Petroleum products and reserves are
converted to a common unit of measure, using 6 MCF of natural gas to one barrel
of oil.

Costs of acquiring and evaluating unproved properties are
initially excluded from depletion calculations. These unevaluated properties are
assessed periodically to ascertain whether impairment has occurred. When proved
reserves are assigned or the property is considered to be impaired, the cost of
the property or the amount of the impairment is added to costs subject to
depletion calculations.

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If capitalized costs, less related accumulated amortization and
deferred income taxes, exceed the full cost ceiling the excess is expensed in
the period such excess occurs. The full cost ceiling is determined based on
the present value of estimated future net revenues attributed to proved
reserves, using current prices less estimated future expenditures plus the lower
of cost and fair value of unproven properties within the cost centre.

Proceeds from a sale of petroleum and natural gas properties
are applied against capitalized costs, with no gain or loss recognized, unless
such a sale would alter the relationship between capitalized costs and proved
reserves of oil and gas attributable to a cost centre. Royalties paid net of any
tax credits received are netted with oil and gas sales.

Environmental Costs

Environmental expenditures that relate to current operations
are expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or our
commitments to plan of action based on the then known facts. There have been no
environmental expenses incurred by the Company.

Foreign Currency Translation

We use the United States of America dollar as our functional
and reporting currency for consistency with registrants of the Securities and
Exchange Commission and in accordance with the Statement of Financial Accounting
No. 52.

Assets and liabilities denominated in a foreign currency are
translated at the exchange rate in effect at the year end and capital accounts
are translated at historical rates. Income statement accounts are translated at
the average rates of exchange prevailing during the year and are included in the
Comprehensive Income Account in Stockholders Equity, if applicable.

Transactions undertaken in currencies other than the functional
currency of our company are translated using the exchange rate in effect as of
the transaction date. Any exchange gains or losses are included in other income
or expenses on the Statement of Operations, if applicable.

Financial Instruments

The carrying value of cash, accounts payable and accrued
liabilities and due to related party approximates their fair value because of
the short maturity of these instruments. Unless otherwise noted, it is our
managements opinion that we are not exposed to significant interest, currency
or credit risks arising from these financial instruments.

Income Taxes

We use the assets and liability method of accounting for income
taxes pursuant to Statement of Financial Accounting No. 109 Accounting for
Income Taxes. Under the assets and liability method of Statement of Financial
Accounting No. 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are

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measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.

Basic and Diluted Loss Per Share

We report basic loss per share in accordance with the Statement
of Financial Accounting No. 128, Earnings Per Share. Basic loss per share is
computed using the weighted average number of shares outstanding during the
period. Diluted loss per share has not been provided, as it would be
anti-dilutive.

NEW ACCOUNTING STANDARDS

In June 2006, the Financial Accounting Standards Board (FASB)
  issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
  Taxes. The interpretation clarifies the accounting for uncertainty in
  income taxes recognized in a companys financial statements in accordance
  with Statement of Financial Accounting Standards No. 109, Accounting for
  Income Taxes. Specifically, the pronouncement prescribes a recognition
  threshold and a measurement attribute for the financial statement recognition
  and measurement of a tax position taken or expected to be taken in a tax return.
  The interpretation also provides guidance on the related derecognition, classification,
  interest and penalties, accounting for interim periods, disclosure and transition
  of uncertain tax position. The interpretation is effective for fiscal years
  beginning after December 15, 2006. The adoption of FIN 48 is not expected to
  have a material impact on our consolidated financial position, results of operations
  or cash flows; however, we are still analyzing the effects of FIN 48.

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. This Statement defines fair value as used in numerous accounting
pronouncements, establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosure related to the use of fair
value measures in financial statements. The Statement is to be effective for our
financial statements issued in 2008; however, earlier application is encouraged.
We are currently evaluating the timing of adoption and the impact that adoption
might have on our financial position or results of operations.

In September 2006, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). Due to diversity
in practice among registrants, SAB 108 expressed SEC staff views regarding the
process by which misstatements in financial statements are evaluated for
purposes of determining whether financial statement restatement is necessary.
SAB 108 is effective for fiscal years ending after November 15, 2006, and early
application is encouraged. We do not believe SAB 108 will have a material impact
on our financial position or results from operations.

In December 2006, the FASB issued FASB Staff Position (FSP)
EITF 00-19-2, Accounting for Registration Payment Arrangements. This FSP
specifies that the contingent obligation to make future payments or otherwise
transfer consideration under a registration payment arrangement should be
separately recognized and measured in accordance with FASB No. 5, Accounting
for Contingencies. This FSP is effective immediately for registration payment
arrangements and the financial instruments subject to those arrangements that
are entered into or modified subsequent to December 31, 2006. For registration
payment arrangements and financial instruments subject to those arrangements
that were entered into prior to December 31, 2006, the guidance in the FSP is
effective January 1, 2006 for our company. We do not believe that this FSP will
have a material impact on our financial position or results from operations.

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On February 15, 2007, the FASB issued SFAS No. 159 The Fair
Value Option for Financial Assets and Financial Liabilities. This Statement
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. SFAS No. 159 is effective for our
financial statements issued in 2008. We are currently evaluating the impact that
the adoption of SFAS No. 159 might have on our financial position or results of
operations.

RISKS AND UNCERTAINTIES

In addition to other information in this current 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. In addition to our financing from EuroEnergy Growth Capital S.A., we
may 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.

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

We are an exploration 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.

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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.

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
exploitation 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 two executive officers and a limited number
of additional 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.

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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 Alaskas North Slope, Pecos County
  in Texas, and in the UK North Sea;
- 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.

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.

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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, and UK
North Sea 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, and UK North Sea 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

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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 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 and local 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.

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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 North Slope, Alaska, Texas,
or UK North Sea, 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 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
North Slope, Alaska, Texas, and UK North Sea 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 North Slope, Alaska, Texas, and our farm-in interests in UK North Sea 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;

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- 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
- 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 least at the present, we do not plan to
serve as the operator for our projects. 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

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- 21 -

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 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.

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.

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- 22 -

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
450,000,000 shares of common stock with a par value of $0.001 per share. 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.

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

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- 23 -

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.

Financial Industry Regulatory Authority 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 (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, the
FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The 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 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 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

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- 24 -

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 Our Company

Our by-laws contain provisions indemnifying our officers and
directors against all costs, charges and expenses incurred by them.

Our by-laws provide the indemnification of our directors
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, actually and reasonably incurred by him or her,
including an amount paid to settle an action or satisfy a judgment in active
criminal or administrative action or proceeding to which he or she is made a
party by reason of his or her being or having been one of our directors. Our
by-laws also provide that we may indemnify our officers against all costs,
charges and expenses incurred by him or them and resulting from his or her
acting as an officer of our company.

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 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.

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 3: | Controls and Procedures
|------- | -----------------------

As required by Rule 13a-15 under the Securities Exchange Act of
1934, as amended, 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 August 31, 2007.
This evaluation was carried out under the supervision and with the participation
of our company's management, including our President and Chief Executive Officer
and our Vice President, Finance.

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 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.

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- 25 -

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 Vice President, Finance concluded that our disclosure controls
and procedures are effective 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, as
amended, 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 reports filed under the
Securities Exchange Act of 1934, as amended is accumulated and communicated to
management, including our President and Chief Executive Officer and our Vice
President, Finance 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 beneficial shareholder are an adverse
party or has a material interest adverse to us.

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

Since the completion of our quarter ended May 31, 2007, we
completed the following unregistered sales of our securities:

|1. | On May 17, 2007, we entered into a share issuance
      agreement with EuroEnergy Growth Capital S.A. or EuroEnergy whereby
      EuroEnergy will 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.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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- 26 -

| |     | August 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (c) | On September 18, 2007, we issued 220,994 units of our common
        stock to EuroEnergy at a deemed price of $1.81 per unit pursuant to the
        agreement. We gave EuroEnergy our drawdown request on August 7, 2007 in
        the amount of $400,000. Each warrant contained in the units entitles the
        holder to purchase one common share at an exercise price of $2.26 per
        common share until September 10, 2010.      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (d) | On September 18, 2007, we also issued 260,664 units of
        our common stock to EuroEnergy at a deemed price of $2.11 per unit pursuant
        to the agreement. We gave EuroEnergy our drawdown request on August 21,
        2007 in the amount of $550,000. Each warrant contained in the units entitles
        the holder to purchase one common share at an exercise price of $2.64
        per common share until September 10, 2010.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (e) | On September 27, 2007, we issued 143,541 units of our common
        stock to EuroEnergy at a deemed price of $2.09 per unit pursuant to the
        agreement. We gave EuroEnergy our drawdown request on September 9, 2007
        in the amount of $300,000. Each warrant contained in the units entitles
        the holder to purchase one common share at an exercise price of $2.61
        per common share until October 1, 2010.      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (f) | We issued all of the above units of our common stock to a
      non-U.S. person (as that term is defined in Regulation S of the 1933 Act)
      in an offshore transaction relying on Regulation S promulgated under the
      1933 Act.                                                                                                                                                                                                        

|2. | On August 17, 2007, we issued 20,000,000 restricted
      shares of our common stock to Richard Bullock pursuant to the Lease
      Purchase and Sale Agreement in exchange for a combined 100% working
      interests in 12 state-issued oil and gas leases subject to a royalty to
      the State of Alaska of 16.66667% and a private royalty equal to 5% in
      Alaskas North Slope hydrocarbon province. We issued the 20,000,000 common
      shares to a non-U.S. person (as that term is defined in Regulation S of
      the 1933 Act) in an offshore transaction relying on Regulation S
      promulgated under the 1933 Act.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3. | Default upon Senior Securities.
|------- | -------------------------------

None.

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

None.

|Item 5. | Other Information.
|------- | ------------------

None.

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- 27 -

|Item 6. | Exhibits.
|------- | ---------

The following exhibits, required by Item 601 of Regulation S-B,
are being filed as part of this quarterly report, or are incorporated by
reference where indicated:

|Exhibit |                                                                                                                                                                                                                                                  
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Description                                                                                                                                                                                                                                      
|(3)     | Articles of Incorporation and
      By-laws                                                                                                                                                                                                      
|3.1     | Articles of Incorporation (incorporated
        by reference from our registration statement on Form SB-2 filed on August
        19, 2005)                                                                                                      
|3.2     | By-laws (incorporated
        by reference from our registration statement on Form SB-2 filed on August
        19, 2005)                                                                                                                        
|3.3     | Certificate of change filed with
        the Secretary of State of Nevada on January 2, 2007 and which is effective
        on January 11, 2007 (incorporated by reference from our current report
        on Form 8-K filed on January 12, 2007)
|3.4     | Article of Merger
        filed with the Secretary of State of Nevada on January 11, 2007 (incorporated
        by reference from our current report on Form 8-K filed on February 7,
        2007)                                              
|(10)    | Material Contracts                                                                                                                                                                                                                               
|10.1    | Private Placement
        Subscription Agreement dated February 23, 2007 (incorporated by reference
        from our current report on Form 8-K filed on June 1, 2007)                                                                           
|10.2    | Lease Purchase and Sale Agreement
        dated May 29, 2007 ((incorporated by reference from our current report
        on Form 8-K filed on May 31, 2007)                                                                                      
|10.3    | Share Issuance
        Agreement dated May 17, 2007 (incorporated by reference from our current
        report on Form 8-K filed on June 1, 2007)                                                                                                
|10.4    | Farm-In Agreement dated June
        8, 2007 (incorporated by reference from our annual report on Form 10-KSB
        filed on June 13, 2007)                                                                                                    
|10.5    | Employment Agreement
        dated June 8, 2007 (incorporated by reference from our annual report on
        Form 10-KSB filed on June 13, 2007)                                                                                                 
|10.6    | Escrow Agreement dated June 8,
        2007 (incorporated by reference from our annual report on Form 10-KSB
        filed on June 13, 2007)                                                                                                     
|10.7    | Consulting Agreement
        dated June 8, 2007 (incorporated by reference from our annual report on
        Form 10-KSB filed on June 13, 2007)                                                                                                 
|10.8    | Consulting Agreement dated June
        8, 2007 (incorporated by reference from our annual report on Form 10-KSB
        filed on June 13, 2007)                                                                                                 
|10.9    | Subscription
        Agreement between Trius Energy, LLC and our company (incorporated by reference
        from our current report on Form 8-K filed on October 19, 2007)                                                                       
|10.10*  | Amendment
        to Employment Agreement dated October 19, 2007                                                                                                                                                                                 
|10.11*  | Amendment
        to Consulting Agreement dated October 19, 2007                                                                                                                                                                                 
|(21)    | Subsidiaries                                                                                                                                                                                                                                     
|21.1    | Fox Petroleum
        (Alaska) Inc., incorporated in Alaska                                                                                                                                                                                      
|21.2    | Fox Energy Exploration Limited,
        incorporated in England and Wales                                                                                                                                                                        
|(31)    | Section 302
        Certification                                                                                                                                                                                                                
|31.1*   | Section
        302 Certification of Richard Moore                                                                                                                                                                                               
|31.2*   | Section
      302 Certification of Alexander Craven                                                                                                                                                                                              
|(32)    | Section 906 Certification                                                                                                                                                                                                                        
|32.1*   | Section
      906 Certification of Richard Moore                                                                                                                                                                                                 
|32.2*   | Section 906 Certification
      of Alexander Craven                                                                                                                                                                                              

*Filed herewith

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- 28 -

SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

FOX PETROLEUM INC.

|/s/ Richard Moore                                                    | 
|-------------------------------------------------------------------- | 
|By: Richard Moore                                                    | 
|President, Chief Executive Officer and Director                      | 
|(Principal Executive Officer)                                        | 
|Dated: October 22, 2007                                              | 
|                                                                     | 
|                                                                     | 
|/s/ Alexander Craven                                                 | 
|By: Alexander Craven                                                 | 
|Vice President, Finance, Secretary, Treasurer and Director           | 
|(Principal Financial Officer and Principal Accounting
      Officer) | 
|Dated: October 22, 2007                                              | 

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