---

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 1934

For the quarterly period ended November
  30, 2007

OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT

For 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: 72,970,833 shares
of common stock issued and outstanding as of January 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 November 30, 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.

---

- 3 -

FOX PETROLEUM INC.

(An Exploration Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2007

(Stated in US Dollars)

(Unaudited)

---

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  INTERIM CONSOLIDATED BALANCE SHEETS
  November 30, 2007 and February 28, 2007
  (Stated in US Dollars)
  (Unaudited)

|                                                               |   | November 30, |   |   | February 28, |  
|-------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|ASSETS                                                         |   | 2007         |   |   | 2007         |  
|                                                               |   |              |   |   |              |  
|Current                                                        |   |              |   |   |              |  
|Cash                                                           | $ | 452,590      |   | $ | 119,051      |  
|Cash - restricted                                              |   | 30,000       |   |   | -            |  
|Prepaid expenses                                               |   | 49,691       |   |   | -            |  
|                                                               |   |              |   |   |              |  
|                                                               |   | 532,281      |   |   | 119,051      |  
|Oil and gas interests  Note 4                                 |   | 5,372,993    |   |   | -            |  
|                                                               |   |              |   |   |              |  
|                                                               | $ | 5,905,274    |   | $ | 119,051      |  
|                                                               |   |              |   |   |              |  
|LIABILITIES                                                    |   |              |   |   |              |  
|                                                               |   |              |   |   |              |  
|Current                                                        |   |              |   |   |              |  
|Accounts payable
      and accrued liabilities  Notes 4 and 5 | $ | 825,174      |   | $ | 40,467       |  
|Due to related parties  Note
      5                          |   | 29,975       |   |   | 29,975       |  
|                                                               |   |              |   |   |              |  
|                                                               |   | 855,149      |   |   | 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:                                        |   |              |   |   |              |  
|72,970,833
      common shares (February 28, 2007: 49,300,000  |   |              |   |   |              |  
|common shares)                                                 |   | 72,971       |   |   | 49,300       |  
|Additional paid-in capital                                     |   | 6,760,631    |   |   | 118,600      |  
|Share subscriptions  Note 6                                   |   | 500,000      |   |   | -            |  
|Deficit accumulated during the exploration stage               |   | (2,283,477   | ) |   | (119,291     | )
|                                                               |   |              |   |   |              |  
|                                                               |   | 5,050,125    |   |   | 48,609       |  
|                                                               |   |              |   |   |              |  
|                                                               | $ | 5,905,274    |   | $ | 119,051      |  

SEE ACCOMPANYING NOTES
  F-1

---

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
  for the three and nine months ended November 30, 2007 and 2006 and
  for the period November 4, 2004 (Date of Inception) to November 30, 2007
  (Stated in US Dollars)
  (Unaudited)

|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   | November 4,   |  
|--------------------------------------- | - | ------------------ | - | - | ----------------- | - | - | ------------- | - | - | ---------- | - | - | ------------- | -
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   | 2004 (Date of |  
|                                        |   | Three months ended |   |   | Nine months ended |   |   | Inception) to |  
|                                        |   | November 30,       |   |   | November 30,      |   |   | November30,   |  
|                                        |   | 2007               |   |   | 2006              |   |   | 2007          |   |   | 2006       |   |   | 2007          |  
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Revenue                                 |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Interest income                         | $ | 942                |   | $ | -                 |   | $ | 8,130         |   | $ | -          |   | $ | 8,130         |  
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Expenses:                               |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Accounting and audit fees               |   | 14,309             |   |   | 2,519             |   |   | 49,421        |   |   | 9,289      |   |   | 82,934        |  
|Advertising and
      public relations  |   | 783,648            |   |   | -                 |   |   | 1,547,423     |   |   | -          |   |   | 1,547,423     |  
|Bank charges                            |   | 3,344              |   |   | 19                |   |   | 6,389         |   |   | 86         |   |   | 7,027         |  
|Consulting fees
       Note 5          |   | 82,170             |   |   | -                 |   |   | 121,170       |   |   | -          |   |   | 121,170       |  
|Filing and transfer agent               |   | 4,608              |   |   | 210               |   |   | 6,626         |   |   | 1,415      |   |   | 12,734        |  
|Legal fees                              |   | 42,569             |   |   | -                 |   |   | 96,327        |   |   | -          |   |   | 124,451       |  
|Management fees  Note 5                |   | 49,073             |   |   | 1,500             |   |   | 121,073       |   |   | 4,500      |   |   | 145,073       |  
|Mineral property
      acquisition and  |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|exploration costs                       |   | -                  |   |   | -                 |   |   | -             |   |   | 5,000      |   |   | 17,000        |  
|Office and miscellaneous
       Note 5 |   | 50,770             |   |   | 750               |   |   | 100,727       |   |   | 3,445      |   |   | 110,635       |  
|Insurance                               |   | 10,586             |   |   | -                 |   |   | 10,586        |   |   | -          |   |   | 10,586        |  
|Travel and entertainment                |   | 64,901             |   |   | -                 |   |   | 112,574       |   |   | -          |   |   | 112,574       |  
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|                                        |   | 1,105,978          |   |   | 4,998             |   |   | 2,172,316     |   |   | 23,735     |   |   | 2,291,607     |  
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Net loss for the period                 | $ | (1,105,036         | ) | $ | (4,998            | ) | $ | (2,164,186    | ) | $ | (23,735    | ) | $ | (2,283,477    | )
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Basic and diluted loss per share        | $ | (0.02              | ) | $ | (0.00             | ) | $ | (0.04         | ) | $ | (0.00      | ) |   |               |  
|                                        |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|Weighted average number of shares       |   |                    |   |   |                   |   |   |               |   |   |            |   |   |               |  
|outstanding                             |   | 71,554,449         |   |   | 49,200,000        |   |   | 58,581,155    |   |   | 49,200,000 |   |   |               |  

SEE ACCOMPANYING NOTES
  F-2

---

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  for the nine months ended November 30, 2007 and 2006 and
  for the period November 4, 2004 (Date of Inception) to November 30, 2007
  (Stated in US Dollars)
  (Unaudited)

|                                                       |   |                   |   |   |               |   |   | November 4,   |  
|------------------------------------------------------ | - | ----------------- | - | - | ------------- | - | - | ------------- | -
|                                                       |   |                   |   |   |               |   |   | 2004 (Date of |  
|                                                       |   | Nine months ended |   |   | Inception) to |  
|                                                       |   | November 30,      |   |   | November 30,  |  
|                                                       |   | 2007              |   |   | 2006          |   |   | 2007          |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Operating Activities                                   |   |                   |   |   |               |   |   |               |  
|Net loss
      for the period                          | $ | (2,164,186        | ) | $ | (23,735       | ) | $ | (2,283,477    | )
|Donated services and rent                              |   | -                 |   |   | 6,750         |   |   | 21,000        |  
|Change in
      non-cash working capital balances      |   |                   |   |   |               |   |   |               |  
|related to operations:                                 |   |                   |   |   |               |   |   |               |  
|Prepaid expenses                                       |   | (49,691           | ) |   | (3,321        | ) |   | (49,691       | )
|Accounts
      payable and accrued liabilities         |   | 784,707           |   |   | -             |   |   | 825,174       |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Net cash used in operating activities                  |   | (1,429,170        | ) |   | (20,306       | ) |   | (1,486,994    | )
|                                                       |   |                   |   |   |               |   |   |               |  
|Investing Activity                                     |   |                   |   |   |               |   |   |               |  
|Increase
      in oil and gas interests                |   | (3,407,291        | ) |   | -             |   |   | (3,407,291    | )
|                                                       |   |                   |   |   |               |   |   |               |  
|Net cash used in investing activity                    |   | (3,407,291        | ) |   | -             |   |   | (3,407,291    | )
|                                                       |   |                   |   |   |               |   |   |               |  
|Financing Activities                                   |   |                   |   |   |               |   |   |               |  
|Issuance of common shares                              |   | 4,700,000         |   |   | -             |   |   | 4,846,900     |  
|Share subscriptions                                    |   | 500,000           |   |   | -             |   |   | 500,000       |  
|Advance from related parties                           |   | -                 |   |   | 10,000        |   |   | 29,975        |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Net cash provided by financing activities              |   | 5,200,000         |   |   | 10,000        |   |   | 5,376,875     |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Increase (decrease) in cash and restricted cash during |   |                   |   |   |               |   |   |               |  
|the period                                             |   | 363,539           |   |   | (10,306       | ) |   | 482,590       |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Cash, beginning of period                              |   | 119,051           |   |   | 17,714        |   |   | -             |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Cash and restricted cash, end of period                | $ | 482,590           |   | $ | 7,408         |   | $ | 482,590       |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Cash and restricted cash consist of:                   |   |                   |   |   |               |   |   |               |  
|Cash                                                   | $ | 452,590           |   | $ | 7,408         |   | $ | 452,590       |  
|Cash - restricted                                      |   | 30,000            |   |   | -             |   |   | 30,000        |  
|                                                       |   |                   |   |   |               |   |   |               |  
|                                                       | $ | 482,590           |   | $ | 7,408         |   | $ | 482,590       |  
|                                                       |   |                   |   |   |               |   |   |               |  
|Non-cash transactions  Note 8                         |   |                   |   |   |               |   |   |               |  

SEE ACCOMPANYING NOTES
  F-3

---

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)
  for the period November 4, 2004 (Date of Inception) to November 30, 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 | )

/contd

SEE ACCOMPANYING NOTES
  F-4

---

Continued

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)
  for the period November 4, 2004 (Date of Inception) to November 30, 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      |  
|                                                     |  |            |   |  |   |            |  |                |        |   |           |         |   |            |   |   |                 |   |   |             |           |   |            |  
|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    |  
|                                                     |  |  at $1.81 |   |  |   |            |  | 220,994        |        |   | 221       |         |   | 399,779    |   |   | -               |   |   | -           |           |   | 400,000    |  
|                                                     |  |  at $2.11 |   |  |   |            |  | 260,664        |        |   | 261       |         |   | 549,739    |   |   | -               |   |   | -           |           |   | 550,000    |  
|                                                     |  |  at $2.09 |   |  |   |            |  | 143,541        |        |   | 144       |         |   | 299,856    |   |   | -               |   |   | -           |           |   | 300,000    |  
|                                                     |  |  at $2.44 |   |  |   |            |  | 81,904         |        |   | 82        |         |   | 199,918    |   |   | -               |   |   | -           |           |   | 200,000    |  
|                                                     |  |  at $2.37 |   |  |   |            |  | 105,485        |        |   | 105       |         |   | 249,895    |   |   | -               |   |   | -           |           |   | 250,000    |  
|                                                     |  |  at $1.95 |   |  |   |            |  | 179,487        |        |   | 179       |         |   | 349,821    |   |   | -               |   |   | -           |           |   | 350,000    |  
|                                                     |  |  at $1.69 |   |  |   |            |  | 236,686        |        |   | 237       |         |   | 399,763    |   |   | -               |   |   | -           |           |   | 400,000    |  
|Capital stock issued for oil
      and gas interests |  |            |  |  |   | 20,000,000 |  |                | 20,000 |   |           | 981,702 |   |            | - |   |                 | - |   |             | 1,001,702 |  
|                                                     |  |            |   |  |  |            |  | 400,000        |        |   | 400       |         |   | 963,600    |   |   | -               |   |   | -           |           |   | 964,000    |  
|Share subscriptions                                  |  |            |   |  |   |            |  | -              |        |   | -         |         |   | -          |   |   | 500,000         |   |   | -           |           |   | 500,000    |  
|Net loss for the period                              |  |            |   |  |   |            |  | -              |        |   | -         |         |   | -          |   |   | -               |   |   | (2,164,186  | )         |   | (2,174,186 | )
|                                                     |  |            |   |  |   |            |  |                |        |   |           |         |   |            |   |   |                 |   |   |             |           |   |            |  
|Balance, November 30, 2007                           |  |            |   |  |   |            |  | 72,970,833     |        | $ | 72,971    |         | $ | 6,760,631  |   | $ | 500,000         |   | $ | (2,283,477  | )         | $ | 5,050,125  |  

|* | 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
  F-5

---

FOX PETROLEUM INC.
  (An Exploration Stage Company)
  NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)

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

While the information presented in the
  accompanying nine months to November 30, 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 nine months
  ended November 30, 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 exploration stage. The Company
  has oil and gas interests in Alaska, North Sea and Texas and has not yet determined
  whether these properties contain reserves that are economically recoverable.
  The recoverability of amounts from the properties will be dependent upon the
  discovery of economically recoverable reserves, confirmation of the Companys
  interest in the underlying properties, the ability of the Company to obtain
  necessary financing to satisfy the expenditure requirements under the property
  agreements and to complete the development of the properties and upon future
  profitable production or proceeds for the sale thereof.

These financial statements have been
  prepared in accordance with generally accepted accounting principles applicable
  to a going concern, which assumes that the Company will be able to meet its
  obligations and continue its operations for its next twelve months. Realization
  values may be substantially different from carrying values as shown and these
  financial statements do not give effect to adjustments that would be necessary
  to the carrying values and classification of assets and liabilities should the
  Company be unable to continue as a going concern. At November 30, 2007, the
  Company has a working capital deficiency of $322,868, has not yet achieved profitable
  operations, has accumulated losses of $2,283,477 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.

F-6

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 2

|Note 3 | Principles of Consolidation
|------ | ---------------------------

These consolidated financial statements
  include the accounts of the Company and 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
|------ | ---------------------

| | i)   | 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. These
        leases are 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 $1,001,702, the transferors historical cost. The valuation is
        based the SEC Staff Accounting Bulletin, Topic 5, G.                                                                                                                                                                                                                                                                                                                                                             
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ii)  | 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 and have since been merged into one traditional license. 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 and final interpretation. To acquire the option, the Company
        shall pay an additional 46.67% of the dry-hole costs of an exploration
        well.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | iii) | Pursuant to a subscription agreement dated October 9,
        2007, the Company acquired a 22.5% joint venture interest in a gas well
        called the Spears Gas Unit 2, Well #1 in the Gomez Field, Pecos County,
        Texas in consideration for US$500,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | iv)  | By a purchase agreement dated October 10, 2007 and amended
        November 2, 2007, the Company acquired 8 oil and gas leases located in
        the North Slope of the State of Alaska for US$850,000, payable in instalments
        on or before December 7, 2008, including $600,000 paid by the issuance
        of 400,000 common shares of the Company. The fair value of the shares
        issued was $964,000 and consequently a further $364,000 has been recorded
        for this portion of the purchase agreement. At November 30, 2007, the
        Company had paid a total of $800,000 in cash and shares and $50,000 was
        included in accounts payable, which was paid subsequent to November 30,
        2007. These leases are subject to a royalty of 16.66667% to the State
        of Alaska and a private royalty equal to 5%.                                                                                                                               

F-7

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 3

|Note 4 | Oil and Gas Interests (contd)
|------ | -------------------------------

| | v)  | By a purchase agreement dated October 10, 2007, the
        Company acquired 6 oil and gas leases located in Cook Inlet of the State
        of Alaska for US$750,000, payable in instalments on or before March 7,
        2008. At November 30, 2007, the Company had paid $200,000 and $550,000
        is included in accounts payable. Subsequent to November 30, 2007, a further
        $250,000 was paid. Included in these leases are 3 unissued leases that
        the vendors own the rights thereto. Should the unissued leases not be
        issued by September 1, 2008, the Company has the option to have the vendor
        repay $375,000 to the Company. These leases are subject to a royalty of
        16.66667% to the State of Alaska and a private royalty equal to 5%.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | vi) | On November 16, 2007, the Company entered into a farm-out
        agreement dated November 8, 2007 wherein the Company would be assigned
        a total of 46% interest in a license block in the UK North Sea. In consideration
        for the assignment, the Company must pay for 89% of the cost of drilling
        an exploration well. The Company is also required to pay for 46% of license
        costs.                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | At November 30, 2007, no costs have been incurred for
        this interest. The spud date of the well shall be before December 31,
        2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|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 |  |   | Nine months ended |  |   | Inception) to | 
| |                          |   | November 30,       |  |   | November 30,      |  |   | November 30,  | 
| |                          |   | 2007               |  |   | 2006              |  |   | 2007          |  |   | 2006  |  |   | 2007          | 
| |                          |   |                    |  |   |                   |  |   |               |  |   |       |  |   |               | 
| | Consulting fees          | $ | 64,865             |  | $ | -                 |  | $ | 103,865       |  | $ | -     |  | $ | 103,865       | 
| | Management fees          |   | 43,073             |  |   | 1,500             |  |   | 109,073       |  |   | 4,500 |  |   | 133,073       | 
| | Office and miscellaneous |   | -                  |  |   | 750               |  |   | -             |  |   | 2,250 |  |   | 7,000         | 
| |                          |   |                    |  |   |                   |  |   |               |  |   |       |  |   |               | 
| |                          | $ | 107,938            |  | $ | 2,250             |  | $ | 212,938       |  | $ | 6,750 |  | $ | 243,938       | 

Included in these amounts is the fair
  value of services and office premises provided by an officer during the nine
  month period ended November 30, 2006.

Included in accounts payable and accrued
  liabilities at November 30, 2007 is $Nil (February 28, 2007: $10,000) owed to
  directors of the Company for unpaid management fees and $3,000 (February 28,
  2007: $Nil) owed to a director of the Company for unpaid consulting fees and
  $1,392 (February 28, 2007: $Nil) paid by the directors for travel and telephone
  expenses.

F-8

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 4

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

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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-9

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 5

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

Commitments:  (contd)

| | a) | Share Issuance Agreement  (contd)                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | v)                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | vi)                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | vii)                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | viii)                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | ix)                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | During November 2007, the Company received
        a total of $500,000 from the subscriber for the issuance of units including
        481,628 common shares and share purchase warrants at $1.04 per unit. Each
        share purchase warrant to be issued will entitle the subscriber to purchase
        one additional common share at $1.30 per share until three years from
        issuance.

F-10

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 6

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

Commitments:  (contd)

| | b) | Share Purchase Warrants:                                                                                                                                                                               
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                        
| |    | As at November 30, 2007, there are 3,370,833 share purchase
        warrants outstanding entitling the holders thereof the right to purchase
        one common share for each warrant held as follows:

Number of
      ExerciseWarrants
      Price
      Expiry Date100,000
      $1.25
      February
        23, 20101,886,792
      $1.33
      May 17, 2010155,280
      $2.01
      August 1, 2010220,994
      $2.26
      September 10, 2010260,664
      $2.64
      September 10, 2010143,541
      $2.61
      October 1,
        201081,904
      $3.05
      October
        26, 2010105,485
      $2.96
      October 26, 20101,797,487
      $2.44
      October
        26, 2010236,686
      $2.11
      November 28, 20103,370,833


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:

| |                           |  | November 30, 2007 |  |  | February 28, 2007 | 
| | ------------------------- |  | ----------------- |  |  | ----------------- | 
| |                           |  |                   |  |  | Weighted          | 
| |                           |  |                   |  |  | Average           | 
| |                           |  | Number of         |  |  | Exercise          | 
| |                           |  | Warrants          |  |  | Price             | 
| |                           |  |                   |  |  |                   | 
| | Balance, beginning of the |  |                   |  |  |                   | 
| | period                    |  | 100,000           |  |  | $1.25             | 
| | Issued                    |  | 3,270,833         |  |  | $1.78             | 
| |                           |  |                   |  |  |                   | 
| | Balance, end of period    |  | 3,370,833         |  |  | $1.77             | 

F-11

---

Fox Petroleum Inc.
  (An Exploration Stage Company)
  Notes to the Interim Consolidated Financial Statements
  November 30, 2007
  (Stated in US Dollars)
  (Unaudited)  Page 7

|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 nine months ended November 30, 2007, the Company issued
  20,000,000 common shares valued at $1,001,762, the transferors historical
  cost, and issued 400,000 common shares valued at $964,000, the fair value of
  the common shares. These transactions were excluded from the statements of cash
  flows.

F-12

---

- 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 crude oil 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. We have oil and gas leases in Alaska, farm-in interests in
the licenses covering blocks in the UK North Sea, and joint venture interests in
a gas well in Texas.

Our Oil and Gas Projects

Spears Gas Unit 2, Well #1

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

Drilling activities commenced in November 2007 for the
reworking of the gas well and the initial test production from the gas well came
onstream in early January 2008. Workover operations continue on the well to
establish a stable flow rate from the well., and the final stage of the process
currently about to start is the acidizing of the well.

We are currently considering other similar oil and gas well
re-entry opportunities in this area. Given the nature of the projects, it is not
possible to define exact locations of our targets for 2008. However, we intend
to participate in a minimum of 4 workover projects onshore in the United States
in 2008 at an estimated cost of $800,000.

Cook Inlet, Alaska

Lease Purchase Agreement with Daniel Donkel and Samuel
Cade

On October 10, 2007, through Fox Petroleum (Alaska) Inc., we
entered into a lease purchase agreement with Daniel Donkel and Samuel Cade to
acquire 6 oil and gas leases located in the Cook Inlet, Alaska in consideration
for $750,000. 3 of these 6 oil and gas leases have not been issued and the
titles still remain with Alaska Department of Natural Resources. These leases
are subject to a total of 5% overriding royalty interests to Daniel Donkel and
Samuel Cade and a royalty of 16.67% to the State of Alaska.

---

- 6 -

Our primary focus in Alaska for the first quarter of 2008 is
the Catchers Mitt prospect located in the Cook Inlet, Alaska. We have put into
place a four-stage development program on the Catchers Mitt prospect in order
to begin drilling.

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

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

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

Stage four is the purchase of the available seismic data on the
leases. We are targeting 12 to 15 lines of seismic data over the prospect, which
were acquired by other oil and gas companies. Our geophysicists are currently
conducting a quality assurance analysis of the targeted data before we purchase
them.

We expect to complete the program in the first quarter of
2008.

North Slope, Alaska

Lease Purchase Agreement with Fox Petroleum
LLC

On August 14, 2007, we acquired 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. These leases were
assigned to our wholly owned subsidiary, Fox Petroleum (Alaska) Inc. We have
combined 100% working interests in 11 state-issued oil and gas leases subject to
a royalty of 16.67% to the State of Alaska and a private royalty of 5% in North
Slope, Alaska. 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 a notice
of the high bidder.

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.

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

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

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

---

- 7 -

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

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

Lease Purchase Agreement with Daniel Donkel and Samuel
Cade

On October 10, 2007, our wholly owned subsidiary, Fox Petroleum
(Alaska) Inc., entered into a purchase agreement with Daniel Donkel and Samuel
Cade to acquire a 100% working interest on 8 oil and gas leases located in the
North Slope, Alaska in consideration for $250,000 and 400,000 shares of our
common stock. On November 2, 2007, the purchase agreement was amended to add us
as a party to the purchase agreement. These leases are subject to a total of 5%
overriding royalty interests to Daniel Donkel and Samuel Cade and a royalty of
16.67% to the State of Alaska.

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

UK North Sea

Farm-In Agreement with Granby Enterprises Limited and
Atlantic Petroleum UK Limited

On July, 31, 2007, through our wholly owned UK subsidiary, Fox
Energy Exploration Limited, we acquired a total of 33.33% interests in a UK
petroleum production license under a farm-in agreement dated June 8, 2007 with
Granby Enterprises Limited and Atlantic Petroleum UK Limited. The license P1211
covers blocks 14/9a and 14/14b located in the UK North Sea.

Pursuant to this farm-in agreement, we paid more than
$2,000,000 cost for the hi-density 2D seismic survey over the Anglesey prospect
located in the license. We acquired the seismic data on the Anglesey prospect
and are currently analyzing these data. Pending the final analysis of all
relevant data, we expect to be able to define a drilling location in the first
quarter of 2008, and hopefully commence drilling programs in the second half of
2008. We may have to spend approximately $4,000,000 for our share of the cost of
drilling an exploration well under the agreement. However, we are in active
negotiations with other UK North Sea venturers to optimize our equity position
in the license by inviting interested parties to participate in drilling the
well in return for a percentage of our interests in the license at a promote
uplift, meaning that we would charge more than 1% of our costs for each 1%
farmed-out (e.g. 1.5% or 2% charged to farminee per 1% farmed-out). This could
substantially reduce our expenditure exposure on the well, but could lead to our
having a reduced holding in the license. Furthermore, there is no assurance that
we will be able to reach an agreement with any of these venturers.

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Farm-In Agreement with Valiant North Sea Limited and
Petrofac Energy Developments Limited

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

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

Under a separate verbal agreement with Aimwell Energy Ltd, we
agreed to transfer a 4.6% carried interest (10% of our acquired interest) to
Aimwell Energy Ltd. in recognition of its experience and technical support in
defining and developing the prospect. The beneficial owners of Aimwell Energy
Ltd. are members of our board of advisors, but will receive no cash or stock
payment, other than the carried interest.

Anticipated Cash Requirements

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

Estimated
      Expenses For the Next 12 Month PeriodOperating ExpensesWorkover/Re-entry
        Program  U.S. Onshore
      $  800,000Exploration Costs
        13,300,000Employee and Consultant Compensation
    
      700,000Professional Fees
    
      250,000General and Administrative Expenses
    
      150,000Total
    $
      15,200,000


Workover/Re-entry Program  U.S. Onshore

We are currently considering oil and gas well re-entry
opportunities near the area where the Spears Gas Unit 2, Well #1 is located. We
expect to incur approximately $800,000 for a minimum of 4 workover projects
onshore in the United States during the next 12 months.

Exploration Costs

We estimate that our exploration costs on our leases in Cook
Inlet, Alaska will be approximately $100,000 during the next 12 months, which
will include the costs of completing the four-stage development on the Catchers
Mitt prospect.

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- 9 -

We estimate that our exploration costs on our leases in North
Slope, Alaska will be approximately $200,000 during the next 12 months, which
will include modeling the geological structure surrounding and including the
leases based on the direct and offset data available to us and re-processing the
available seismic data and the use of electromagnetic and gravity survey
process.

We estimate that our exploration costs on our farm-in interests
in the UK North Sea licenses will be approximately $13,000,000 during the next
12 months, which will include drilling 2 exploration wells. These costs may be
substantially reduced depending on our ability to farm out a reasonable
percentage of our interests in the Anglesey and Bourbon prospects. We are
currently negotiating with several North Sea venturers which have shown interest
in participating in the exploration and appraisal of the two prospects. Given
the perceived potential of the prospects by the interested parties, we could
farm out part of our percentage interest on a promote basis whereby the incoming
farminees would acquire such interest by carrying us for a substantial portion
of the cost of drilling the wells.

Employee and Consultant Compensation

Given the early stage of our development and exploration
properties, we intend to continue to outsource our professional and personnel
requirements by retaining consultants on an as needed basis. We estimate that
our consultant and related professional compensation expenses for the next 12
month period will be approximately $200,000. We estimate that our employee
compensation expenses for the next 12 month period will be approximately
$500,000.

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 12 month period to be approximately
$250,000.

General and Administrative Expenses

We anticipate spending $150,000 on general and administrative
costs in the next 12 month period. These costs primarily consist of expenses
such as lease payments, office supplies and office equipment.

Liquidity and Capital Resources

As of November 30, 2007, we had cash of $452,590 and working
capital deficit of $322,868, 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.

Share Issuance Agreement with EuroEnergy Growth Capital
S.A.

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.

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- 10 -

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.

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, 2007.

On October 26, 2007, we issued 81,904 units of our common stock
to EuroEnergy at a deemed price of $2.44 per unit pursuant to the agreement. We
gave EuroEnergy our drawdown request on October 1, 2007 in the amount of
$200,000. Each warrant contained in the units entitles the holder to purchase
one common share at an exercise price of $3.05 per common share until October
26, 2010.

On October 26, 2007, we issued 105,485 units of our common
stock to EuroEnergy at a deemed price of $2.37 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 10, 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 $2.96 per common share until
October 26, 2010.

On October 26, 2007, we issued 179,487 units of our common
stock to EuroEnergy at a deemed price of $1.95 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 23, 2007 in the
amount of $350,000. Each warrant contained in the units entitles the holder to
purchase one common share at an exercise price of $2.44 per common share until
October 26, 2010.

On November 28, 2007, we issued 236,686 units of our common
stock to EuroEnergy at a deemed price of $1.69 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 31, 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 $2.11 per common share until
November 28, 2010.

On November 21, 2007, we gave EuroEnergy our drawdown request
in the amount of $500,000. We have not issued units to EuroEnergy for this
advance 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

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prospective oil and gas properties. The remaining amount that
can be advanced from EuroEnergy under the share issuance agreement is
$2,800,000. EuroEnergy may, at its discretion, take the option to subscribe up
to an additional $5,000,000 if and when we receive the remaining $2,800,000.
However, there is no assurance that EuroEnergy will advance the additional
$5,000,000 to us. We may not obtain financing from anyone other than EuroEnergy
for 24 months from the date of the share issuance agreement, without the prior
written Consent of EuroEnergy. EuroEnergy also retains first right of refusal,
relating to any future financing of our company.

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:

Mineral Property

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

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.

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- 12 -

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.

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.

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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 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

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- 14 -

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.

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

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successfully address any or all of these risks and
uncertainties. Failure to adequately do so could cause our business, results of
operations and financial condition to suffer.

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

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

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

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

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

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

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 North Slope and Cook Inlet in
  Alaska, 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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- 18 -

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.

---

- 19 -

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
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 Alaska, our joint venture interests in 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;
- actions by OPEC, the Organization of Petroleum Exporting Countries;

---

- 20 -

- 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 our limited ability to influence
operations and associated costs could prevent the realization of our

---

- 21 -

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.

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

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

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

---

- 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

---

- 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 November 30, 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 filing of our last quarterly report, we have completed the
following unregistered sales of securities:

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 October 26, 2007, we issued 81,904 units of our common stock
to EuroEnergy at a deemed price of $2.44 per unit pursuant to the agreement. We
gave EuroEnergy our drawdown request on October 1, 2007 in the amount of
$200,000. Each warrant contained in the units entitles the holder to purchase
one common share at an exercise price of $3.05 per common share until October
26, 2010.

On October 26, 2007, we issued 105,485 units of our common
stock to EuroEnergy at a deemed price of $2.37 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 10, 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 $2.96 per common share until
October 26, 2010.

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- 26 -

On October 26, 2007, we issued 179,487 units of our common
stock to EuroEnergy at a deemed price of $1.95 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 23, 2007 in the
amount of $350,000. Each warrant contained in the units entitles the holder to
purchase one common share at an exercise price of $2.44 per common share until
October 26, 2010.

On November 28, 2007, we issued 236,686 units of our common
stock to EuroEnergy at a deemed price of $1.69 per unit pursuant to the
agreement. We gave EuroEnergy our drawdown request on October 31, 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 $2.11 per common share until
November 28, 2010.

We issued all of above units to a non U.S. person (as that term
is defined in Regulation S of the Securities Act of 1933) in offshore
transactions relying on Regulation S and/or Section 4(2) of the Securities Act
of 1933.

On November 8, 2007, we issued 400,000 restricted shares of our
common stock to Samuel Cade pursuant to the amended purchase agreement as a
portion of consideration to acquire oil and gas leases in North Slope, Alaska.
We issued 400,000 shares relying on Rule 506 of Regulation D and/or Section 4(2)
of the Securities Act of 1933.

|ITEM 3. | DEFAULT UPON SENIOR SECURITIES.                           
|------- | ----------------------------------------------------------
|        |                                                           
|None.   |                                                           
|        |                                                           
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS.
|        |                                                           
|None.   |                                                           
|        |                                                           
|ITEM 5. | OTHER INFORMATION.                                        
|        |                                                           
|None.   |                                                           
|        |                                                           
|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)                                                                         

---

- 27 -

|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 11, 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 12, 2007 (incorporated by
      reference from our annual report on Form 10-KSB filed on June 13,
    2007)                                                                                                                      
|10.8  | Consulting Agreement dated June 12, 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
      (incorporated by reference from our quarterly report on Form 10-QSB filed
      on October 22, 2007)                                                                                              
|10.11 | Amendment to Consulting Agreement dated October 19, 2007
      (incorporated by reference from our quarterly report on Form 10-QSB filed
      on October 22, 2007)                                                                                              
|10.12 | Farm-Out Agreement dated November 8, 2007 between Valiant
      North Sea Limited, Petrofac Energy Developments Limited and Fox Energy
      Exploration Limited (incorporated by reference from our current report on
      Form 8-K filed on November 23, 2007)
|10.13 | Purchase Agreement (North Slope Leases) dated October 10,
      2007 (incorporated by reference from our current report on Form 8-K filed
      on November 28, 2007)                                                                                            
|10.14 | Amendment Agreement No. 1 to Purchase Agreement (North
      Slope Leases) dated November 2, 2007 (incorporated by reference from our
      current report on Form 8-K filed on November 28, 2007)                                                               
|10.15 | Purchase Agreement (Cook Inlet) dated October 10, 2007
      (incorporated by reference from our current report on Form 8-K filed on
      November 28, 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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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: January 22, 2008

*/s/ Alexander Craven*
  By: Alexander Craven
  Vice President, Finance, Secretary, Treasurer and Director
  (Principal Financial Officer and Principal Accounting Officer)
  Dated: January 22, 2008

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