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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended July 31, 2010

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

For the transition period from _____to _____

COMMISSION FILE NUMBER 000-52738

DORAL ENERGY CORP.(Exact name of registrant as specified in its charter)

|NEVADA                                                             | 98-0555508                                     
|------------------------------------------------------------------ | -----------------------------------------------
|State or other jurisdiction of incorporation or
      organization | (I.R.S. Employer Identification
      No.)     
|                                                                   |                                                
|3300 N. "A" Street, Bldg 2, Suite 218                              |                                                
|Midland, TX                                                        | 79705                                          
|(Address of principal executive offices)                           | (Zip Code)                                     
|                                                                   |                                                
|Registrant's telephone number, including area code:                | (432) 789-1180                                 
|                                                                   |                                                
|Securities registered pursuant to Section 12(b) of the
      Act:  | NONE.                                          
|                                                                   |                                                
|Securities registered pursuant to Section 12(g) of the
      Act:  | Common Stock, $0.001 Par
      Value Per Share.

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by Rule 405 of the Securities Act. Yes [ 
 ]    No [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes
[   ]    No [X]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]No [   ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Date File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files.
Yes [   ]    No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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

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

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity, as of the last business day of the registrants most recently completed
second fiscal quarter: $11,627,165 as of January 29, 2010,based on an average of the closing bid price of $0.14 and the closing
ask price of $0.15 as quoted by the OTCBulletin Board on
that date.

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
As of November 10, 2010, the Registrant had 111,433,086 shares of common
stock outstanding.

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DORAL ENERGY CORP.

ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDED JULY
31, 2010

TABLE OF CONTENTS

PAGEPART I
      3ITEM 1.
      BUSINESS
      3ITEM 1A.
      RISK FACTORS
      6ITEM 2.
      PROPERTIES
      12ITEM 3.
      LEGAL PROCEEDINGS
      16ITEM 4.
      (REMOVED AND RESERVED)
      16PART II
      17ITEM 5.
      MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
        MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
      17ITEM 6.
      SELECTED FINANCIAL DATA.
      18ITEM 7.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS
      18ITEM 7A.
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
      24ITEM 8.
      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
      25ITEM 9.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE
      26ITEM 9AT.
      CONTROLS AND PROCEDURES
      26ITEM 9B.
      OTHER INFORMATION
      27PART III
      28ITEM 10.
      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
      28ITEM 11.
      EXECUTIVE COMPENSATION
      30ITEM 12.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
        AND RELATED STOCKHOLDER MATTERS
      31ITEM 13.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
        INDEPENDENCE
      34ITEM 14.
      PRINCIPAL ACCOUNTING FEES AND SERVICES
      35ITEM 15.
      EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
      36SIGNATURES
      39


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PART I

The information in this discussion contains forward-looking
statements. These forward-looking statements involve risks and uncertainties,
including statements regarding the Company's capital needs, business strategy
and expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate, "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks described below, and, from time to time, in other reports the Company
files with the United States Securities and Exchange Commission (the SEC).
These factors may cause the Company's actual results to differ materially from
any forward-looking statement. The Company disclaims any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements.

As used in this Annual Report, the terms we, us,
  our, Doral, Doral Energy, and the Company
  mean Doral Energy Corp. and its wholly owned subsidiary, unless otherwise indicated.
  All dollar amounts in this Annual Report are expressed in U.S. dollars, unless
  otherwise indicated.

ITEM
1.            BUSINESS

General

Doral Energy Corp. was incorporated on October 25, 2005 under
the laws of the State of Nevada under the name Language Enterprises Corp. On
January 7, 2008, we completed a 25-for-1 forward stock split of our common
stock. As a result of the stock split, our authorized capital increased from
100,000,000 shares of common stock, with a par value of $0.001 per share, to
2,500,000,000 shares of common stock, with a par value of $0.001 per share (the
"2008 Forward Split"). On April 28, 2008, we changed our name from Language
Enterprises Corp. to Doral Energy Corp. To effect the name change, we
incorporated a wholly-owned subsidiary (SubCo) and completed a merger of SubCo
with and into the Company, with the Company continuing as the surviving entity.
Other than the name change, no changes were made to our articles of
incorporation as a result of the merger. On January 12, 2009, we completed a
6.25 -for-1 reverse split of our common stock, decreasing our authorized share
capital from 2,500,000,000 shares of common stock, par value $0.001 per share,
to 400,000,000 shares of common stock, par value $0.001 per share (the "2009
Reverse Split"). On September 14, 2009, we completed a 5-for-1 forward split of
our common stock, increasing our authorized capital to 2,000,000,000 shares of
common stock, par value $0.001 per share (the "2009 Forward Split"). Pursuant to
the Nevada Revised Statutes, shareholder approval of the above actions was not
required.

As Language Enterprises Corp., we previously operated a
translation brokerage business, acting as an intermediary between clients and
independent, professional translators. In early 2008, as Doral Energy Corp., we
changed our business focus from translation services to the oil and gas
industry. We are now an oil and gas exploitation and production company focused
on identifying, acquiring and operating under-performing and under-producing oil
and gas properties in the Permian Basin of West Texas and New Mexico.

Our principal executive offices are located at 3300 N. "A"
Street, Bldg 2, Suite 218, Midland, TX 79705, and our telephone number is (432)
789-1180. Our internet website can be found at www.doralenergycorp.com. Our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act of 1934 will be available through our internet website as soon as
reasonably practical after we electronically file such material with, or furnish
it to, the Securities and Exchange Commission.

Business Development

From our inception, we have built our asset base via the
acquisition and divestiture of undervalued oil and gas assets. Our acquisitions
are geographically focused in the Permian Basin of western Texas and
southeastern New Mexico, which we have identified as the most attractive region
in which to develop our business. The Permian Basin has been a top US oil and
gas producing region for over 80 years. Because of its long history as a top
producing region, the Permian Basin has attracted a wide spectrum of energy
producing companies. In

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addition to hosting operations from virtually every major oil
and gas company, the Permian Basin is also home to many independent operators of
varying sizes.

Our existing business model is predicated on seeking out and
acquiring under-performing and under-producing oil and gas properties owned by
independent operators with the goal of creating value by improving the
performance and production of those properties. The goal is to focus on the
acquisition of producing properties with strong proven reserves and considerable
undrilled proved undeveloped, shallow, low-risk reserves that can be developed
with reasonably low levels of forward risk. By targeting properties with
predominately shallow, low-risk, in fill proved undeveloped drilling locations
and reserves, geological and reserve risks can be effectively mitigated.

Pure Gas Partners II, L.P.

On September 13, 2010, we entered into a non-binding letter of
intent to combine our operations with Pure Gas Partners II, L.P. (Pure Gas).
The business combination is expected to be effected through the issuance of
shares of our common stock, resulting in a change of control, with Pure Gas
expected to own approximately 80% of our outstanding common stock upon
completion of the transaction. Pure Gas is a limited partnership with interests
in approximately 600,000 gross acres located within New Mexico. Pure Gas net
acreage consists of approximately 300,000 net acres with approximately 30,000
net acres located within the Permian Basin of Southeastern New Mexico. 98% of
all of Pure Gas acreage is held by production (HBP), with the largest
percentage being fee mineral. Pure Gas owns varying operated and non-operated
working interests, ranging from 1% to 50%, in approximately 75 gross wells
located within Eddy, Lea, Roosevelt and Chaves counties, New Mexico, with net
current production of approximately 230 BOEPD. We expect to conduct a reverse
split of our common stock and change our name as part of this transaction. It is
expected that E. Willard Gray, II, our current sole executive officer, will
remain as our Chairman and Chief Executive Officer, while Larry Risely, of Pure
Gas, is expected to become our President and Chief Operating Officer.

If the proposed business combination with Pure Gas is completed
as expected, of which there is no assurance, we expect to focus our combined
operations on becoming a significant non-operated player within the Permian
Basin. This strategy is expected to include working closely with Pure Gas
current operators to continue to develop their current acreage position as well
as seeking out new drilling opportunities with proven Permian operators. We also
expect to continue operating our existing Chaves and Roosevelt County
assets.

Completion of this transaction is subject to the execution of
binding definitive agreements. We are currently working diligently with Pure
Gas management on the preparation of these agreements.

Hedging Transactions

In previous years, we entered into a costless collar hedging
position, and later a combination of a swap and costless collar, which provided
us with partial protection against variations in the price of crude oil. Upon
completing the sale of the certain oil and gas properties located in Eddy
County, New Mexico (the Hanson Properties), we closed out all of our hedging
positions. We have chosen not to enter into any hedging positions at this time
but reserve the right to do so at a later date if deemed prudent by our Board of
Directors.

Competitive Business Conditions

We operate in the oil and gas industry, which is a highly
competitive environment. Competition is particularly intense with respect to the
acquisition of desirable producing properties, the acquisition of oil and gas
prospects suitable for enhanced production efforts, marketing oil and natural
gas, and the hiring of experienced personnel. Our competitors in oil and gas
acquisition, development, and production include the major oil companies in
addition to numerous independent oil and gas companies, individual proprietors
and drilling programs. Many of these competitors possess and employ financial
and personnel resources substantially greater than those which are available to
us and may be able to pay more for desirable producing properties and prospects
and to define, evaluate, bid for, and purchase a greater number of producing
properties and prospects than we can. Our ability to acquire additional
properties and to find and develop reserves in the future will depend on our
ability to identify, evaluate, and select suitable properties and to consummate
transactions in such a highly competitive environment, in competition with these
companies. Also, there is substantial competition for capital available for
investment in the oil and gas industry.

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The actual price range of crude oil is largely established by
major crude oil purchasers and commodities trading. Pricing for natural gas is
based on regional supply and demand conditions. To this extent, we work to
insure that we receive competitive oil and natural gas prices comparable to
other producers in the areas which we operate. There is little risk of domestic
overproduction at current prices is not deemed to be significant. We view our
primary pricing risk to be related to a potential decline in oil and natural gas
prices to a level which could render our current production uneconomical.

We are not subject to such third-party gathering systems for
our oil production. All oil production is transported by the oil purchaser by
trucks with competitive trucking costs in the area.

Major Customers

For the fiscal year ended July 31, 2010, we had oil and natural
gas sales to four customers, Navajo Refining Company, ConocoPhillips Company,
DCP Midstream LP, and Frontier Field Services. Currently, ConocoPhillips Company
purchases 100% of our crude oil production. However, we believe that the loss of
this customer would not materially impact our business, because we could readily
find other purchasers for our oil produced.

Government and Environmental Regulation

The oil and gas industry is subject to heavy regulation at the
federal, state and local levels. These regulations include regulations:

- requiring permits for the drilling of wells,
- requiring the posting of bonds for drilling and/or operating wells,
- governing the location of wells,
- governing the methods used to drill wells,
- governing surface area usage and the restoration of the land upon which
  wells are drilled,
- governing the plugging and abandoning of wells and the disposal of waste
  materials used in or generated in drilling operations, and
- setting certain environmental conservation restrictions.

The cost of complying with these regulations is high and these
regulations can have the effect of limiting our ability to engage in oil and gas
exploration activities and when or where those activities take place. Some of
these laws and regulations, including the federal Comprehensive Environmental
Response, Compensation and Liability Act (also known as CERCLA or the
Superfund law), may impose strict liability for environmental damage caused by
hazardous wastes released during oil and gas exploration and production
activities. As a result, we could become liable for the costs of environmental
cleanups, environmental damages and, in some cases, consequential damages,
regardless of whether or not there was any negligence or fault on our part. In
some cases, regulations may also require oil and gas production levels to be
kept at a level that is lower than what would be economically optimal. In other
cases, we may be completely prohibited from drilling exploratory or production
wells in certain environmentally sensitive areas even if we believe that there
are economically viable oil and gas deposits in those areas. If we violate any
of these environmental laws or regulations, we could become subject to heavy
fines or sanctions and/or be required to incur significant costs for
environmental clean up and remediation. In addition, neighboring landowners and
other third parties could file claims for personal injury claims or for damage
to property or natural resources caused by oil and gas exploration activities.

We believe that we are currently in substantial compliance with
all applicable environmental laws and regulations. To date, we have not been
required to expend substantial amounts of money in complying with these laws and
regulations and we anticipate that the costs associated with future compliance
will not have a materially adverse effect on our financial position. However,
the laws and regulations governing the oil and gas industry are subject to
constant change as environmental issues relating this industry remain highly
politicized. Proposals and proceedings affecting oil and gas exploration
activities are periodically presented to Congress and federal regulatory bodies
as well as to state legislative and regulatory bodies. We cannot predict when or
whether such proposals may become effective. There is no assurance that the
future regulatory environment for oil and gas activities will be consistent with
the current regulatory environment. We will need to constantly monitor
developments in environmental and other laws and regulations applicable to oil
and gas activities in order to ensure compliance. There is no assurance that we
will be able to meet the costs associated with regulatory compliance in the
future.

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Employees

As of July 31, 2010, we employed two (2) full-time employees.
Our employees are not represented by a labor unit. We consider our relations
with our employees to be satisfactory and have never experienced a work stoppage
or strike.

We retain certain engineers, geologists, landmen, pumpers, and
other personnel on a contract or fee basis as necessary for our field and office
operations.

ITEM
1A.          RISK FACTORS

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

We have an operating deficit and have incurred losses since
inception.

To date, our operations have not been profitable and we may
never be able to achieve profitability.

Our future performance depends upon our ability to obtain
capital to find or acquire additional oil and natural gas reserves that are
economically recoverable.

Unless we successfully replace the reserves that we produce,
our reserves will decline, resulting eventually in a decrease in oil and natural
gas production and lower revenues and cash flows from operations. The business
of exploring for, developing or acquiring reserves is capital intensive. Our
ability to make the necessary capital investment to maintain or expand our oil
and natural gas reserves is limited by our relatively small size. Further, we
may commence drilling operations on our properties and any other properties that
we acquire in an effort to increase production, which would require more capital
than we have available from cash flow from operations or our existing debt
facilities. In such case, we would be required to seek additional sources of
financing or limit our participation in the additional drilling. In addition,
our drilling activities are subject to numerous risks, including the risk that
no commercially productive oil or gas reserves will be encountered.

The successful implementation of our business plan is
subject to risks inherent in the oil and gas business, which if not adequately
managed could result in additional losses.

Our oil and gas operations will be subject to the economic
risks typically associated with exploitation and development activities,
including the necessity of making significant expenditures to locate and acquire
properties and to drill development wells. In addition, the availability of
drilling rigs and the cost and timing of drilling, completing and, if warranted,
operating wells is often uncertain. In conducting exploitation and development
activities, the presence of unanticipated formation pressure or irregularities
in formations, miscalculations or accidents may cause our exploitation,
development and, if warranted, production activities to be unsuccessful. This
could result in a total loss of our investment in a particular well. If
exploitation and development efforts are unsuccessful in establishing proved
reserves and development activities cease, the amounts accumulated as unproved
costs will be charged against earnings as impairments.

In addition, the availability of a ready market for our oil and
gas production depends on a number of factors, including the demand for and
supply of oil and gas and the proximity of reserves to pipelines and other
facilities. Our ability to market such production depends in substantial part on
the availability and capacity of gathering systems, pipelines and processing
facilities, in most cases owned and operated by third parties. A failure to
obtain such services on acceptable terms could materially harm our proposed oil
and gas business. We may be required to shut in wells for lack of a market or
because of inadequacy or unavailability of pipelines or gathering system
capacity. If that occurs, we would be unable to realize revenue from those wells
until arrangements are made to deliver such production to market.

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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.

The future performance of our oil and gas business will depend
upon an ability to identify, acquire and develop oil and gas reserves that are
economically recoverable. Success will depend upon the ability to acquire
working and net revenue interests in properties upon which oil and gas reserves
are ultimately discovered in commercial quantities, and the ability to develop
prospects that contain proven oil and gas reserves to the point of production.
Without successful acquisition, exploitation, and development activities, we
will not be able to develop oil and gas reserves or generate revenues. There are
no assurances oil and gas reserves will be identified or acquired on acceptable
terms, or that oil and gas deposits will be discovered in sufficient quantities
to enable us to recover our exploitation 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 assurances can be given that our
exploitation and development activities will result in the discovery of any
reserves. Operations may be curtailed, delayed or canceled as a result of lack
of adequate capital and other factors, such as lack of availability of rigs and
other equipment, title problems, weather, compliance with governmental
regulations or price controls, mechanical difficulties, or unusual or unexpected
formation pressures, and or work interruptions. In addition, the costs of
exploitation and development may materially exceed our initial estimates.

The oil and gas exploration and production industry
historically is 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, but are not
limited to:

|(a) | weather conditions in the United States and
    elsewhere;                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------
|(b) | economic conditions, including demand for petroleum-based
      products, in the United States and elsewhere;               
|(c) | actions by OPEC, the Organization of Petroleum Exporting
      Countries;                                                   
|(d) | political instability in the Middle East and other major
      oil and gas producing regions;                               
|(e) | governmental regulations, both domestic and
    foreign;                                                                    
|(f) | domestic and foreign tax policy;                                                                                            
|(g) | the pace adopted by foreign governments for the
      exploration, development, and production of their national
  reserves;
|(h) | the price of foreign imports of oil and gas;                                                                                
|(i) | the cost of exploring for, producing and delivering oil
      and gas; the discovery rate of new oil and gas reserves;      
|(j) | the rate of decline of existing and new oil and gas
      reserves;                                                         
|(k) | available pipeline and other oil and gas transportation
      capacity;                                                     
|(l) | the ability of oil and gas companies to raise
    capital;                                                                  
|(m) | the overall supply and demand for oil and gas;
  and                                                                        
|(n) | 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. Commodity prices are expected to
continue to fluctuate significantly in the future.

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Hedging transactions may limit potential gains on increases
to oil and gas prices.

We do not have any hedging positions at this time. If we do
enter into hedging transactions, they will likely be for a portion of our
expected production for the purpose of reducing the risk of fluctuations in oil
and gas prices. Although these hedging transactions would be expected to provide
us with some protection in the event of a decrease in oil and gas prices, they
would also be expected to limit our potential gains in the event that oil and
gas prices increase. If we choose not to engage in hedging arrangements in the
future, we may be more adversely affected by changes in oil and natural gas
prices than our competitors, who may or may not engage in hedging
arrangements.

We may encounter difficulty in obtaining equipment and
services.

Higher oil and natural gas prices and increased oil and natural
gas drilling activity generally stimulate increased demand and result in
increased prices and unavailability for drilling rigs, crews, associated
supplies, equipment and services. While we have recently been successful in
acquiring or contracting for services, we could experience difficulty obtaining
drilling rigs, crews, associated supplies, equipment and services in the future.
These shortages could also result in increased costs or delays in timing of
anticipated development or cause interests in oil and natural gas leases to
lapse. We cannot be certain that we will be able to implement our drilling plans
or at costs that will be as estimated or acceptable to us.

Our ability to produce oil and gas from our oil and gas
assets may be adversely affected by a number of factors outside of our control.

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 formation pressures, fires,
blowouts, 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 excessive 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 contaminated 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. In addition, the
marketability of oil and gas that may be acquired or discovered may be
influenced by numerous factors beyond our control. These factors include the
proximity and capacity of oil and gas, gathering systems, pipelines and
processing equipment, market fluctuations in oil and natural gas prices, taxes,
royalties, land lease tenure, allowable production volumes, and environmental
protection regulations.

If we are unable to maintain our working interests in
leases, our business will be adversely affected.

Our oil and gas assets are held under oil and gas leases. A
failure to meet the specific requirements of each lease may cause that lease to
terminate or expire. There are no assurances the obligations required to
maintain those leases will be met and that we will be able to meet the rental
obligations under federal, state and private oil and gas leases. If we are
unable to make rental payments and satisfy any other conditions on a timely
basis, we may lose our rights in the properties that we may acquire.

Title deficiencies could render our leases worthless.

The existence of a material title deficiency can render a lease
worthless and can result in a large expense to our business. In acquiring oil
and gas leases or undivided interests in oil and gas leases we may 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 may 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 specific oil or gas interest. This is customary practice in the oil and
gas industry. As a result, we may be unaware of deficiencies in the
marketability of the title to the lease. Such deficiencies could render the
lease worthless.

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

Our oil and gas 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 its operations with policy
limits and retention liability customary in the industry. We maintain well
control, re-drill, environmental cleanup, and liability insurance on all of our
field production and future drilling operations. However, the occurrence of a
significant adverse event on such prospects that would happen to be 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.

Complying with environmental and other government
regulations could be costly and could negatively impact prospective production.

The oil and gas business is governed by numerous laws and
regulations at various levels of government. These laws and regulations govern
the operation and maintenance of our facilities, the discharge of materials into
the environment and other environmental protection issues. Such laws and
regulations may, among other potential consequences, require that we acquire
permits before commencing drilling and restrict the substances that can be
released into the environment with drilling and production activities. Under
these laws and regulations, we could be liable for personal injury, clean-up
costs and other environmental and property damages, as well as administrative,
civil and criminal penalties. Prior to commencement of drilling operations, we
may secure limited insurance coverage for sudden and accidental environmental
damages as well as environmental damage that occurs over time. However, we do
not believe that insurance coverage for the full potential liability of
environmental damages is available at a reasonable cost. Accordingly, we could
be liable, or could be required to cease production on properties, if
environmental damage occurs.

The costs of complying with environmental laws and regulations
in the future may harm our business. Furthermore, future changes in
environmental laws and regulations could occur, resulting in stricter standards
and enforcement, larger fines and liability, and increased capital expenditures
and operating costs, any of which could have a material adverse effect on our
financial condition or 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 will be
competing 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 it does, as well as companies in
other industries supplying energy, fuel and other needs to consumers. Larger
competitors, by reason of their size and relative financial strength, can more
easily access capital markets than we can and may enjoy a competitive advantage
in the recruitment of qualified personnel. They may be able to absorb the burden
of any changes in laws and regulation in the jurisdictions in which we do
business and handle longer periods of reduced prices for oil and gas more easily
than we can. 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 oil and gas properties will depend
upon its ability to conduct efficient operations, evaluate and select suitable
properties, implement advanced technologies and consummate transactions in a
highly competitive environment.

The loss of our key persons, or our failure to attract and
retain additional personnel could adversely affect our business.

Our success depends greatly upon the efforts, abilities, and
decision-making of our sole executive officer, Everett Willard Gray, II. The
loss of Mr. Gray would have an adverse effect on our business prospects. We
do

Page 9 of 39

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not currently maintain "key-man" life insurance and there is no
contract in place assuring the services of Mr. Gray for any length of time. In
the event that we should lose our officers and we are unable to find suitable
replacements, we may not be able to develop our business, in which case
investors might lose all of their investment.

If we issue additional shares of common stock in the future
this may result in dilution to our existing stockholders.

Our articles of incorporation authorize the issuance of
2,000,000,000 shares of common stock. Our board of directors has the authority
to issue additional shares of common stock up to the authorized capital stated
in the articles of incorporation. Our board of directors may choose to issue
some or all of such shares to provide additional financing in the future. The
issuance of any such shares may result in a reduction of the book value or
market price of the outstanding shares of our common stock. It will also cause a
reduction in the proportionate ownership and voting power of all other
stockholders.

We have never paid dividends and do not intend to pay any in
the foreseeable future, which may delay or prevent recovery of your investment.

We have never paid any cash dividends and currently do not
intend to pay any dividends in the foreseeable future. If we do not pay
dividends, this may delay or prevent recovery of your investment. To the extent
that we require additional funding currently not provided for in our financing
plan, it is possible that our funding sources might prohibit the payment of
dividends.

The trading price of our common stock may be volatile, with
the result that an investor may not be able to sell any shares acquired at a
price equal to or greater than the price paid by the investor.

Our common stock is quoted on the OTC Bulletin Board under the
symbol "DRLY. Companies quoted on the OTC Bulletin Board have traditionally
experienced extreme price and volume fluctuations. In addition, our stock price
may be adversely affected by factors that are unrelated or disproportionate to
our operating performance. Market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. As a result of this potential price and volume volatility, an
investor may have difficulty selling any of our common stock that they acquire
that a price equal or greater than the price paid by the investor.

Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation
system.

Because our securities constitute "penny stocks" within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule
15g-9 under the Securities Exchange Act of 1934 (the Exchange Act). The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             

Page 10 of 39

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|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those 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 acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.

Page 11 of 39

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ITEM
2.            PROPERTIES

GENERAL BACKGROUND

We have built our asset base primarily through property
acquisitions and divestitures that are geographically focused in the Permian
Basin of West Texas and southeastern New Mexico, which we have identified as the
most attractive region in which to develop our business. Our properties consist
of working and royalty interests owned by us in various oil and gas wells and
oil and gas lease acreage located in both Chaves and Roosevelt Counties, New
Mexico. These properties were acquired by us in a transaction completed by us in
two transactions:

| | (i)  | properties consisting of 6,800 acres of operated
      producing oil and gas assets located in Chaves County and Roosevelt
      County, New Mexico, acquired for $1,700,000 on June 14, 2010;
and
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                   
| | (ii) | properties consisting of additional working interests in
      the same areas as (i), for a price of $20,000 on July 15,
  2010.                                                                  

Oil and Gas Acreage

The following table sets forth the developed leasehold acreage
held by us as of July 31, 2010. Gross acres are the total number of acres we
have a working interest. Net acres are the sum of our fractional working
interests owned in the gross acres.

In certain leases, our ownership varies at different depths;
therefore, the net acreage in these leases is calculated with consideration of
the varying ownership interests.

|All Acreage in New Mexico  |  | Developed |  |  | Undeveloped |  |  | Total | 
|-------------------------- |  | --------- |  |  | ----------- |  |  | ----- | 
|                           |  |           |  |  |             |  |  |       | 
|Gross acreage, approximate |  | 1,260     |  |  | 1,000       |  |  | 2,260 | 
|Net acreage, approximate   |  | 992       |  |  | 734         |  |  | 1,726 | 

Reserves

As of July 31, 2010, we have a portfolio of oil and natural gas
reserves, with approximately 100% of our proved reserves consisting of oil and
no natural gas. Our proved reserves and the standardized measure of discounted
future net cash flows of our interests in proved oil and gas reserves at July
31, 2010 are set forth below:

|                           |  |            |  |  |             |  |   | Discounted  | 
|-------------------------- |  | ---------- |  |  | ----------- |  | - | ----------- | 
|                           |  |            |  |  |             |  |   | Future Net  | 
|                           |  |            |  |  |             |  |   | Cash Flow   | 
|                           |  |            |  |  | Natural Gas |  |   | (at 10% per | 
|Proved Reserves            |  | Oil (Bbls) |  |  | (MCF)       |  |   | year)       | 
|                           |  |            |  |  |             |  |   |             | 
|Developed                  |  | 121,000    |  |  | 0.00        |  | $ | 2,334,000   | 
|Undeveloped                |  | 906,000    |  |  | 0.00        |  | $ | 1,818,000   | 
|Total, before income taxes |  | 1,027,000  |  |  | 0.00        |  | $ | 4,152,000   | 

Changes in Proved Undeveloped Reserves

Our proved undeveloped reserves as of our fiscal year ended July
  31, 2010 were substantially less than our proved undeveloped reserves as of
  our previous fiscal year ended July 31, 2009. Proved undeveloped reserves as
  of July 31, 2009 were entirely contained in our Hanson Properties located in
  Eddy County, New Mexico. Effective June 15, 2010, we sold the Hanson Properties
  for total proceeds of $10,370,990.

Page 12 of 39

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Revisions to SEC Oil and Gas Reserve Reporting Requirements.

Effective December 31, 2008, the SEC effected revisions designed
  to modernize the oil and gas company reserves reporting requirements. The revisions
  are effective for annual reports filed on or after December 15, 2009. Among
  other things, the revised reporting requirements include:

- Commodity PricesEconomic predictibility of reserves and discounted cash
  flows are now based on a 12-month average commodity price unless contractual
  arrangements designate the price to be used.
- Disclosure of Unproved ReservesProbable and possible reserves may be
  disclosed separately on a voluntary basis.
- Proved Undeveloped ReservesReserves may be classified as proved
  undeveloped if there is a high degree of confidence that the quantities will
  be recovered and they are scheduled to be drilled within the next five years.
- Reserves Estimation Based on New TechnologiesReserves may be estimated
  through the use of reliable technology in addition to flow tests and
  production history.
- Reserve Personnel and Estimation Process DisclosureAdditional disclosure
  is required regarding the qualifications of the chief technical person who
  oversees the reserves estimation process and internal controls used to assure
  the objectivity of the reserve estimates.

The required revisions to modernize the oil and gas reserve
disclosures have been incorporated into our July 31, 2010 reserve reports and in
the aggregate were not considered material to our reserves.

Preparation of Reserve Estimates

The proved reserves estimates contained in the above tables at
July 31, 2010 are based primarily on reserve reports prepared by of Joe C. Neal
& Associates, independent petroleum consultants to the Company. Joe C. Neal
& Associates is an independent petroleum engineering consulting firm that
has been providing petroleum consulting services throughout the world for 35
years. Joe C. Neal & Associates has extensive experience calculating
reserves for other companies operating in the Permian Basin region and, as such,
we believe that they have sufficient experience to estimate our reserves. Joe C.
Neal & Associates is a Texas registered professional engineering firm. Our
primary contact at Joe C. Neal & Associates is Alan Neal. Mr. Neal is a
Licensed Professional Engineer in the State of Texas

The present values of the proved reserves as of July 31, 2010
identified in the tables are prepared by discounting future projected net cash
flows computed with constant oil prices of $69.67 per barrel (Bbl) and constant
future production and development costs less estimated future income tax
expense. The estimated future net cash flows are then discounted at a rate of 10
percent per year.

When estimating our reserves we engage independent registered
engineering firms to prepare reserve reports based on records, geological and
engineering reports and other data that we provide to them. Included in this
information is historical production data from our wells, historical lease
operating expenses and differentials, updated working interest and net revenue
interest information and geological and geophysical information from operators.
These engineering firms are permitted to consult freely with our officers and
employees. Our Chief Executive Officer, Everett Willard Gray, II, reviews the
report prepared by the independent engineering firm and the assumptions relied
upon in such report.

Reserve reports prepared by petroleum engineers and used by the
Company are, by their very nature, inexact and subject to changes and revisions.
Proved developed reserves are reserves expected to be recovered from existing
wells with existing equipment and methods. Proved undeveloped reserves are
expected to be recovered from new wells drilled to known reservoirs on undrilled
acreage for which existence and recoverability of such reserves can be estimated
with reasonable certainty, or from existing wells where a relatively major
expenditure is required to establish production. No estimates of reserves have
been included in any reports to any federal agency other than the SEC.

See Supplemental Information on Oil and Gas Producing
Activities included as part of our consolidated financial statements. A copy of
the Joe C. Neal & Associates, Inc. report Estimated Reserves and Future Net
Revenue as of August 1, 2010, Attributable to Interests Owned by Doral Energy,
Corp. In Certain Properties Located in Texas (SEC Case) is attached as Exhibit
99.1 to this Annual Report on Form 10-K.

Wells

Page 13 of 39

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The following summarizes the Company's productive oil and gas
wells as of July 31, 2010. Productive wells are producing wells and wells
capable of production. Gross wells are the total number of wells in which the
company has an interest. Net wells are the sum of the Company's fractional
working interests owned in the gross wells.

YearendedJuly 31,2010Oil and gas wells, New Mexico:Gross
    
    63.00Net
    
    49.59


Production Sales Volume, Sales Price and Production Costs

The following summarizes our net production sold for the years
  ended July 31, 2010 and 2009:

|                                   |  | July 31, |  |  | July 31, | 
|---------------------------------- |  | -------- |  |  | -------- | 
|                                   |  | 2010     |  |  | 2009     | 
|Production sales:                  |  |          |  |  |          | 
|Oil (barrels)                      |  | 25,818   |  |  | 33,701   | 
|Natural gas (thousands cubic feet) |  | 4,885    |  |  | 8,880    | 
|Total (barrels oil equivalent)     |  | 26,633   |  |  | 35,181   | 

Set forth in the following schedule is the average sales price
per unit of oil, expressed in barrels ("bbl"), and of natural gas, expressed in
thousand cubic feet ("mcf") and average cost of production produced by us for
the past two fiscal years.

|                                |   | Year
      ended July 31, | 
|------------------------------- | - | ------------------------- | 
|                                |   | 2010                      | 
|Average sales price:            |   |                           | 
|Gas (per mcf)                   | $ | 3.36                      | 
|Oil (per bbl)                   | $ | 71.07                     | 
|Average cost of production:     |   |                           | 
|Average production cost ($/boe) | $ | 13.90                     | 

*Gas sold is a byproduct of oil production; costs associated
with the gas sold are included in the cost of oil production.

We had no production or sales during the fiscal year ended July
31, 2008.

Drilling and Other Exploratory and Development Activities

We did not drill any exploratory or development wells, and did
not engage in any other exploratory activities during the last three fiscal
years.

We do not anticipate investing in or purchasing assets and/or
property for the purpose of capital gains. It is our intention to purchase
assets and/or property for the purpose of enhancing our primary business
operations. We are not limited as to the percentage amount of our assets we may
use to purchase any additional assets or properties.

Present Activities

As of July 31, 2010, we were not in the process of drilling any
development or exploratory wells or conducting completion operations on any
development or exploratory well.

Delivery Commitments

As of July 31, 2010, the Company had no obligations or delivery
commitments under any existing contracts.

Page 14 of 39

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Other Projects and Properties

Pure Gas Partners II, L.P.

On September 13, 2010, we entered into a non-binding letter of
  intent to combine our operations with Pure Gas Partners II, L.P. (Pure
  Gas). The business combination is expected to be effected through the
  issuance of shares of our common stock, resulting in a change of control, with
  Pure Gas expected to own approximately 80% of our outstanding common stock upon
  completion of the transaction. Pure Gas is a limited partnership with interests
  in approximately 600,000 gross acres located within New Mexico. Pure Gas
  net acreage consists of approximately 300,000 net acres with approximately 30,000
  net acres located within the Permian Basin of Southeastern New Mexico. 98% of
  all of Pure Gas acreage is held by production (HBP), with the largest
  percentage being fee mineral. Pure Gas owns varying operated and non-operated
  working interests, ranging from 1% to 50%, in approximately 75 gross wells located
  within Eddy, Lea, Roosevelt and Chaves counties, New Mexico, with net current
  production of approximately 230 BOEPD. We expect to conduct a reverse split
  of our common stock and change our name as part of this transaction. It is expected
  that E. Willard Gray, II, our current sole executive officer, will remain as
  our Chairman and Chief Executive Officer, while Larry Risely, of Pure Gas, is
  expected to become our President and Chief Operating Officer.

Completion of this transaction is subject to the execution of
binding definitive agreements. We are currently working diligently with Pure
Gas management on the preparation of these agreements.

Sale of Hanson Properties

On June 15, 2010, we sold our properties in Eddy County, New
  Mexico (the “Hanson Properties”) to Alamo Resources LLC. The sale
  was completed pursuant to our agreement (the “Alamo Agreement”)
  with Alamo dated April 30, 2010. Under the terms of the Alamo Agreement, the
  base purchase price paid by Alamo for the Hanson Properties was $10,000,000
  subject to the customary adjustments. The total estimated adjusted purchase
  price on closing was $10,370,990, with $6,484,567 paid to Macquarie Bank Limited
  to discharge our obligations under the Macquarie Credit Agreement. Net proceeds
  received by us on completion of the sale were $3,735,023.

Under the Alamo Agreement, Alamo has also agreed to pay up to
two additional production incentive payments (PIPs) of $750,000 each. The
first PIP will be payable if Alamo increases gross production from the Hanson
Properties by 500 BOE/day based on a 30 day average within 24 months after the
sale is completed. The second PIP is payable if Alamo increases gross production
by a further 500 BOE/day (ie. a total increase of 1,000 BOE/day) during the same
24 month period.

Cave Pool Project  Eddy County, New Mexico

On October 28, 2009, Doral West Corp. (Doral West), a wholly
owned subsidiary of Doral Energy Corp., entered into an agreement (the Blugrass
Agreement) with Blugrass Energy Inc. (Blugrass) to purchase a 40% working
interest in certain oil and gas properties (the Cave Pool Unit Properties)
located in and around the Cave Pool Unit in Eddy County, New Mexico,
approximately 5 miles northwest of Loco Hills, New Mexico. The effective date of
the acquisition was October 12, 2009. The Cave Pool Unit properties are
comprised of the Cave Pool Unit and ten (10) leases that make up approximately
2,800 gross acres of leasehold, which we have designated as the Cave Pool
Project. The Cave Pool Project is comprised of a total of 39 wells completed in
the Grayburg formation in the Grayburg Jackson Pool.

Pursuant to the provisions of the Blugrass Agreement, Blugrass
agreed to assign to us a 40% interest in all of Blugrass right, title and
interest in the Cave Pool Properties, and to assign to us operatorship of the
Cave Pool Properties. In addition, Blugrass agreed to pay for the first $200,000
of well repairs and workovers. In consideration of this, we agreed to:

| | 1. | Share with Blugrass access to appropriate Doral
      proprietary geological and engineering data and information to enhance the
      re-development of the Cave Pool Unit Properties;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                        
| | 2. | Pay for and cause the preparation of an independent
      third-party reserve report on the Cave Pool Unit Properties to be
      prepared;                                            

Page 15 of 39

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| | 3. | Pay for and obtain title opinions for the leases
      contained in the Cave Pool Project; and
| | -- | ----------------------------------------------------------------------------------------------
| |    |                                                                                               
| | 4. | Be assigned as the Operator of the Cave Pool
    Project.                                     

As of the date of filing of this Annual Report, Blugrass is in
default of their obligations under the Blugrass Agreement. In particular,
Blugrass has failed to assign operatorship of the Cave Pool Properties to us,
and has not made the necessary workover expenditures. In addition, records
examined in Eddy County, New Mexico and the New Mexico Oil Conservation Division
indicate that Blugrass may not have acquired proper title to the Cave Pool
Properties. We are currently considering our options with respect to these
properties, including voiding the Blugrass Agreement or negotiating amended
terms with Blugrass.

ITEM
3.            LEGAL
PROCEEDINGS

We are not currently a party to any legal proceedings outside
of ordinary routine proceedings incidental to our business and which, in the
aggregate, do not involve amounts greater than 10% of our current assets.

ITEM
4.            (REMOVED
AND RESERVED)

Page 16 of 39

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PART II

|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------------

Market Information

Quotations for our common stock were entered on the OTC
Bulletin Board (the OTCBB) under the symbol LNGG beginning on April 20, 2007.
Our symbol was changed to LNGE on January 8, 2008 upon completion of our
25-for-1 forward stock split. As a result of our name change to Doral Energy
Corp., our symbol was changed to DENG on April 30, 2008. On January 23, 2009, as
a result of our 1-for-6.25 reverse stock split, our symbol was changed to DEGY.
On September 14, 2009, as a result of our 5-for-1 forward stock split, our
symbol was changed to DRLY.

The high and the low bid prices for our shares for the last two
fiscal years as reported by the OTCBB were:

Fiscal Quarter
      High
      Low2009 Q1 (ended Oct. 31, 2008)
    $0.00
    $0.002009 Q2 (ended Jan. 31, 2009)
    $0.30
    $0.022009 Q3 (ended Apr. 30, 2009)
    $0.64
    $0.302009 Q4 (ended Jul. 31, 2009)
    $0.624
    $0.502010 Q1 (ended Oct. 31, 2009)
    $0.60
    $0.352010 Q2 (ended Jan. 31, 2010)
    $0.39
    $0.142010 Q3 (ended Apr. 30, 2010)
    $0.135
    $0.0152010 Q4 (ended Jul. 31, 2010)
    $0.06
    $0.028


The above quotations have been adjusted to reflect the 2008
Forward Split, the 2009 Reverse Split and the 2009 Forward Split. Quotations
provided by the OTCBB reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.

Holders

As of November 10, 2010, there were 111,433,086 shares of our
common stock issued and outstanding that are held of record by 15 registered
stockholders. We believe that a number of stockholders hold their shares of our
common stock in brokerage accounts and registered in the name of stock
depositories.

Dividends

We have not declared any dividends on our common stock since
our inception. There are no dividend restrictions that limit our ability to pay
dividends on our common stock in our Articles of Incorporation or Bylaws. Our
governing statute, Chapter 78 of the Nevada Revised Statutes (the NRS), does
provide limitations on our ability to declare dividends. Section 78.288 of the
NRS prohibits us from declaring dividends where, after giving effect to the
distribution of the dividend:

|(a) | we would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                                                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) | our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed, if we were to be
      dissolved at the time of distribution, to satisfy the preferential rights
      upon dissolution of stockholders who may have preferential rights and
      whose preferential rights are superior to those receiving the distribution
      (except as otherwise specifically allowed by our Articles of
      Incorporation).

Recent Sales of Unregistered Securities

All unregistered sales of our equity securities made during the
year ended July 31, 2010 have been reported by us in our Quarterly Reports or in
our Current Reports filed with the SEC during the year.

Page 17 of 39

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ITEM
6.            SELECTED
FINANCIAL DATA.

Not Applicable.

ITEM
7.           
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Restatement of Prior Results

As of October 21, 2010, our management has determined that the
accounting treatment of the assets held for sale reported in our previously
filed condensed consolidated financial statements contained in our Quarterly
Report on Form 10-Q as of, and for the three and nine month periods ended, April
30, 2010 to be incorrect. Management has determined that under Full Cost
accounting, the sale of the properties reported for the period ended April 30,
2010 does not meet the criteria for assets held for sale or discontinued
operations.

To reflect the correction, we intend to restate the unaudited
consolidated financial statements as of, and for the three and nine month
periods ended, April 30, 2010. The restatement will result in no impact to net
income for the relevant periods.

RESULTS OF OPERATION

Summary of Year End Results

|                                                   |   | Year Ended
      July 31 |   |   | Percentage |  
|-------------------------------------------------- | - | ------------------------ | - | - | ---------- | -
|                                                   |   | 2010                     |   |   | 2009       |  
|                                                   |   |                          |   |   |            |  
|Revenue                                            | $ | 1,664,209                |   | $ | 1,832,146  |  
|Expenses                                           |   | (14,434,344              | ) |   | (4,104,645 | )
|Gain on financial instrument derivatives           |   | 197,940                  |   |   | -          |  
|Loss on settlement of debt                         |   | (272,557                 | ) |   | -          |  
|Other income                                       |   | 18,106                   |   |   | -          |  
|Interest Expense                                   |   | (911,043                 | ) |   | (947,705   | )
|Net gain(loss) on oil and gas derivative contracts |   | (67,020                  | ) |   | 1,317,839  |  
|Income Tax Benefit (Expense )                      |   | 8,071                    |   |   | (9,602     | )
|Net Loss                                           | $ | (13,796,638              | ) | $ | (1,911,967 | )

Revenues

Effective June 15, 2010, we sold certain of our oil and gas
properties located in Eddy County, New Mexico (the Hanson Properties) to Alamo
Resources LLC (Alamo).

During the year ended July 31, 2010, the Hanson Properties
generated revenue of $1,510,352 compared to revenues of $1,830,110 for the year
ended July 31, 2009. The decrease in revenues was primarily due to the decrease
in production volume as a result of the sale of the properties on June 15, 2010.
Revenues from the sale of oil and gas are recognized based on the actual volume
of oil and gas sold to purchasers.

On June 30, 2010, the Company completed the acquisition of
approximately 6,800 gross acres of operated producing oil and gas assets (the
Stearns Properties) located in Chavez County and Roosevelt County, New Mexico.
The total purchase price for the Stearns Properties was $1,700,000. The Stern
Properties generated revenue of $153,857 for the year ended July 31, 2010.

Page 18 of 39

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Operating Expenses

Our operating expenses for the years ended July 31, 2010 and
2009, consisted of the following:

|                                              |   | Year Ended
      July 31, |  |   | Percentage |  
|--------------------------------------------- | - | ------------------------- |  | - | ---------- | -
|                                              |   | 2010                      |  |   | 2009       |  
|                                              |   |                           |  |   |            |  
|Operating Costs                               | $ | 1,657,931                 |  | $ | 1,780,266  |  
|Production Taxes                              |   | 163,980                   |  |   | 265,780    |  
|Depreciation, Depletion, and Amortization     |   | 394,643                   |  |   | 451,994    |  
|Accretion Expense                             |   | 36,717                    |  |   | 74,820     |  
|Loss (gain) on sale of oil and gas properties |   | 9,043,801                 |  |   | (131,288   | )
|General and Administrative                    |   | 3,137,272                 |  |   | 1,663,073  |  
|Total                                         | $ | 14,434,344                |  | $ | 4,104,645  |  

For the year ended July 31, 2010 and 2009, the operating expenses
  for continuing operations changed from $4,104,645 to $14,434,344. The increase
  of $10,329,639 was mainly due loss on sale of oil and gas properties for $9,043,801
  and due to the increase in general and administrative expenses of $1,474,199.
  The increase was due to increases in legal and professional fees. During the
  year ended July 31, 2010, legal and professional fees in the amount of $384,775
  were paid through the issuance of stock or stock options. During the twelve
  months ended July 31, 2010, we issued 9.6 million common shares valued at $374,400
  for professional services.

Price Risk Management Activities

In 2008 we entered into commodity derivative financial instruments
  intended to hedge our exposure to market fluctuations of oil and gas prices.
  Upon completing the sale of the Hanson Properties, we closed out all commodity
  derivative contracts. As of the date of filing of this Annual Report we did
  not have any hedging positions in place. During the twelve months ended July
  31, 2010, we recognized a loss of $67,020 which includes realized hedge settlements
  received for the difference between the hedged price and the market price.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

|                          |   | At July
      31, |   |   | At July
      31, |   |  | Percentage | 
|------------------------- | - | ----------------- | - | - | ----------------- | - |  | ---------- | 
|                          |   | 2010              |   |   | 2009              |   |  | Increase / | 
|                          |   |                   |   |   |                   |   |  | (Decrease) | 
|Current Assets            | $ | 154,317           |   | $ | 1,310,324         |   |  | (88.22%)   | 
|Current Liabilities       |   | (1,968,215        | ) |   | (7,538,514        | ) |  | (73.89%)   | 
|Working Capital (Deficit) | $ | (1,813,898        | ) | $ | (6,228,190        | ) |  | (70.88%)   | 

Cash Flows

|                                              |   | Year
      Ended    |   |   | Year
      Ended    |  
|--------------------------------------------- | - | ------------------- | - | - | ------------------- | -
|                                              |   | July
      31, 2010 |   |   | July
      31, 2009 |  
|Cash Flows Used in Operating
      Activities | $ | (1,952,454          | ) | $ | (868,000            | )
|Cash Flows From Investing Activities          |   | 8,716,751           |   |   | 21,005              |  
|Cash Flows Used in Financing
      Activities |   | (7,172,078          | ) |   | 1,229,301           |  
|Net Increase (Decrease) in Cash During Period | $ | (407,781            | ) | $ | 382,306             |  

On June 15, 2010, we completed the sale of the Hanson
Properties (Hanson Sale) for a total purchase price of $10,370,990. We used
the sales proceeds from the Hanson Sale to repay the Macquarie loan of $6.5
million toward principal and interest and purchased the Stearns Properties for
$1.7 million. The rest of the proceeds were used for working capital.

Page 19 of 39

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At July 31, 2010, we had cash in the amount of $29,025, and a
  working capital deficit of $1,813,898, as compared to cash in the amount of
  $436,806 and a working capital deficit of $6,228,190 as of July 31, 2009. The
  decrease in working capital was due to the discharge of the Macquarie loan subsequent
  to the sale of Hanson properties.

In addition, our stockholders' equity was $191,756 at July 31,
2010 compared to stockholders' equity of $12,672,117 at July 31, 2009.

Our accumulated deficit increased from $2,534,094 at July 31,
  2009 to $16,330,732 at July 31, 2010. The increase is due mainly to the loss
  on sale of assets and loss from operations. As of July 31, 2010, we have ceased
  all hedging activities.

We do not have sufficient funds to continue our operating activities.
  Future operating activities are expected to be funded by revenues, reduced costs
  and by other means of capital financing. We have engaged C.K. Cooper & Company,
  Inc. (CK Cooper) to assist us in seeking financing opportunities.
  Pursuant to our agreement with CK Cooper, we issued a total of 9,600,000 shares
  of our common stock to CK Cooper and its nominees. See the report of Malone
  Bailey, LLP regarding our financial statements for the years ended July 31,
  2010 and July 31, 2009 included with this Annual Report.

Pure Gas Loan

On September 28, 2010, we entered into a loan and security
agreement (the Pure Loan Agreement) with Pure Gas Partners II, L.P. (Pure
Gas), pursuant to which Pure Gas agreed to loan to us $250,000 with interest
payable thereon at a rate of 5% per annum. We agreed to make monthly
installments of accrued interest beginning on November 1, 2010 and on the first
day of each successive month thereafter, with a final payment of all remaining
amounts payable under the Pure Loan Agreement on account of principal and
interest due on March 31, 2011 (the Due Date). We have the right to prepay all
amounts due on account of principal at any time prior to the Due Date. As
collateral for all amount payable under the Pure Loan Agreement, we granted to
Pure Gas a security interest in all of the Companys assets.

We executed a non-binding letter of intent to enter into a
proposed business combination transaction with Pure Gas, whereby we are expected
to acquire all of Pure Gas oil and gas properties located in Eddy, Lea and
Chaves Counties, New Mexico. The proposed business combination is expected to
result in a change in control, with Pure Gas owning approximately 80% of the
combined entity. Completion of the proposed business combination is subject to
the execution of final binding documentation and the approval of Pure Gas
stakeholders. If the business combination is not completed on or before January
1, 2011, or such other date agreed to by us and Pure Gas in writing, Pure Gas
may declare us to be in default under the Loan Agreement and may deem the
amounts payable under the Pure Loan Agreement to be immediately due and payable.

Loan Agreement with Everett Willard Gray, II

On June 11, 2010, we entered into an agreement with Everett
Willard Gray, II, our Chief Executive Officer and Chairman of our Board of
Directors, for the principal sum of $68,800 on account of amounts advanced by
Mr. Gray to us for payment of certain operating and administrative expenses.
Under the terms of our loan agreement with Mr. Gray, we have agreed to pay to
Mr. Gray a total of $75,680 on account of principal and interest on or before
July 30, 2010.

Under the terms of our loan agreement with Mr. Gray, we have
paid Mr. Gray a total of $75,680 on account of principal and interest in June,
2010.

W.S. Oil and Gas Limited Convertible Note

On August 24, 2009, we issued a convertible promissory note
(the WS Oil Note) in the principal amount of $250,000 to W.S. Oil and Gas
Limited (WS Oil and Gas), a limited partnership controlled by Everett Willard
Gray, II, our Chairman and Chief Executive Officer and a holder of more than
five percent of our common stock. Under the terms of the Note, we were required
to repay to WS Oil and Gas a total of $500,000, payable in installments as
follows:

| | (i) | 24 monthly installments of $16,666.67 beginning November
      1, 2009; and
| | --- | ---------------------------------------------------------------------------

Page 20 of 39

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| | (ii) | 12 monthly installments of $8,333.33 beginning November
      1, 2011.
| | ---- | ----------------------------------------------------------------------

We are currently in default under the terms of the WS Oil Note.
As such, WS Oil and Gas shall have the right to convert any remaining principal
and interest due under the WS Oil Note into shares of our common stock at a
conversion price equal to the greater of four times the fair market value of our
common stock at the time the conversion right is exercised, and $0.05. WS Oil
and Gas has not yet exercised any of its default rights, however, there is no
assurance that they will not do so in the future. We are currently in
discussions with WS Oil and Gas to renegotiate the terms of the amounts owed
under the WS Oil Note.

On March 8, 2010, WS Oil and Gas assigned $35,000 of the amount
due under the WS Oil Note to War Chest Multi-Strategy Fund, LLC (War Chest).
On March 8, 2010, we executed a Debt Settlement Agreement with War Chest to
settle the outstanding debt assigned to War Chest. We converted the $35,000 owed
to War Chest into 1,060,606 shares of our common stock at a price of $0.033 per
share. On April 29, 2010, WS Oil and Gas assigned an additional $7,500 of the
amounts due under the WS Oil Note to War Chest and an additional $7,500 to
Barclay Lyons, LLC. We agreed to convert the $7,500 owed to each of War Chest
and Barclay Lyons ($15,000 in aggregate) into 375,000 shares of our common stock
(750,000 shares in aggregate) at a conversion price of $0.02 per share.

The issuances were completed pursuant to the provisions of Rule
506 of Regulation D of the Securities Act on the basis that War Chest and
Barclay Lyons are accredited investors as defined in Regulation D.

As of July 31, 2010, the date of our most recently available
financial statements, we owed $450,000 under the WS Oil Note. On September 16,
2010, WS Oil and Gas assigned an additional $25,000 in indebtedness due under
the WS Oil Note to each of War Chest and Barclay Lyons. We agreed to convert the
$25,000 owed to each of War Chest and Barclay Lyons ($50,000 in aggregate) into
2,000,000 shares of our common stock (4,000,000 shares in aggregate) issued to
each of War Chest and Barclay Lyons.

Ajootian Loan

On March 3, 2010, we entered into an agreement (the Ajootian
Loan Agreement) with Edward Ajootian, pursuant to which Mr. Ajootian loaned to
us $50,000 (the Loan Amount) and surrendered a $0.10 Convertible Note with a
principal amount of $200,000 (the Convertible Note Indebtedness) issued to Mr.
Ajootian in December 2009 for cancellation, in exchange for our agreement
to:

| | (a) | repay the Loan Amount on May 1, 2010 with interest at a
      rate of 15% per annum, calculated from the date the Loan Amount was
      advanced to us;                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                
| | (b) | repay the Convertible Note Indebtedness on May 1, 2010,
      with interest at a rate of 15% per annum, calculated from December 14,
      2009; and                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                
| | (c) | issue to Mr. Ajootian share purchase warrants (the Warrants)
        entitling the holder to purchase up to 2,000,000 shares of our common
        stock at a price of $0.05 per share for a period ending three years from
        the date of issuance. The Warrants contain full ratchet anti-dilution
        provisions.

As a result of the Ajootian Loan Agreement, the Convertible
Note Indebtedness ceased to be a convertible indebtedness. We evaluated the
application of ASC 470-50-40/55 (formerly APB26) Debtors Accounting for a
Modification or Exchange of Debt Instrument and concluded that the revised
terms constituted a debt extinguishment for accounting purposes rather than a
debt modification. As such, we recorded a loss on debt extinguishment of
$272,557 which is included in our Statement of Operations for the year ended
July 31, 2010. See Note 7 to the audited financial statements included with this
Annual Report.

As of July 31, 2010, Doral paid $250,000 towards the principal
and $17,188 towards the interest.

Convertible Note Issuance

On September 1, 2010, we issued a convertible note in the amount
  of $50,000, payable on March 1, 2011 or upon written demand, with interest accruing
  at a rate of 21% per annum. The outstanding principal due on the note may be
  converted into shares of our common stock at a 50% discount to the average fair
  market value of our common stock for the five consecutive trading days prior
  to the date the conversion right is exercised, but not to exceed 135% of the
  low bid price of our common stock on September 1, 2010. In the event of a reverse
  stock split, the ceiling price is not to be adjusted.

Page 21 of 39

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OFF-BALANCE SHEET ARRANGEMENTS

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and
Results of Operations discusses our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On an
ongoing basis, management evaluates our estimates and judgments, including those
related to revenue recognition, recovery of oil and gas reserves, financing
operations, and contingencies and litigation.

Oil and Gas Properties

We follow the full cost method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells used to find proved reserves,
and to drill and equip development wells including directly related overhead
costs and related asset retirement costs are capitalized.

Under this method, all costs, including internal costs directly
related to acquisition, exploration and development activities are capitalizable
as oil and gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. Doral assesses the realizability
of unproved properties, if any, on at least an annual basis or when there has
been an indication that impairment in value may have occurred. Impairment of
unproved properties is assessed based on management's intention with regard to
future exploration and development of individually significant properties and
our ability to obtain funds to finance such exploration and development. If the
results of an assessment indicate that the properties are impaired, the amount
of the impairment is added to the capitalized costs to be amortized.

The provision for depreciation and depletion of oil and gas
properties is computed on the unit-of-production method. Under this method, we
compute the provision by multiplying the total unamortized costs of oil and gas
properties including future development, site restoration, and dismantlement
abandonment costs, but excluding costs of unproved properties by an overall rate
determined by dividing the physical units of oil and gas produced during the
period by the total estimated units of proved oil and gas reserves. This
calculation is done on a country-by-country basis. As of July 31, 2010, all of
our oil production operations are conducted in the United States of America. The
cost of unevaluated properties not being amortized, to the extent there is such
a cost, is assessed quarterly to determine whether the value has been impaired
below the capitalized cost. The cost of any impaired property is transferred to
the balance of oil and gas properties being depleted. The costs associated with
unevaluated properties relate to projects which were undergoing exploration or
development activities or in which we intend to commence such activities in the
future. We will begin to amortize these costs when proved reserves are
established or impairment is determined.

Capitalized costs of oil and gas properties (net of related
deferred income taxes) may not exceed a ceiling amount equal to the present
value, discounted at 10% per annum, of the estimated future net cash flows from
proved oil and gas reserves plus the cost of unevaluated properties (adjusted
for related income tax effects). Should capitalized costs exceed this ceiling,
the excess is charged to earnings as an impairment expense, net of its related
reduction of the deferred income tax provision. The present value of estimated
future net cash flows is computed by applying period-end oil and gas prices of
oil and natural gas to estimated future production of

Page 22 of 39

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proved oil and gas reserves as of period-end, less estimated
future expenditures (at period-end rates) to be incurred in developing and
producing the proved reserves and assuming continuation of economic conditions
existing at period-end. The present value of proved reserves future net cash
flows excludes future cash outflows associated with settling asset retirement
obligations that have been accrued on the balance sheet (following SEC Staff
Accounting Bulletin No. 106).

In accordance with Financial Accounting Standards Board
Accounting Standards Codification (ASC) Topic 410 Asset Retirement and
Environmental Obligations," we report a liability for any legal retirement
obligations on our oil and gas properties. The asset retirement obligations
represent the estimated present value of the amounts expected to be incurred to
plug, abandon, and remediate the producing properties at the end of their
productive lives, in accordance with state laws, as well as the estimated costs
associated with the reclamation of the property surrounding. The Company
determines the asset retirement obligations by calculating the present value of
estimated cash flows related to the liability. The asset retirement obligations
are recorded as a liability at the estimated present value as of the asset's
inception, with an offsetting increase to producing properties. Periodic
accretion of the discount related to the estimated liability is recorded as an
expense in the statement of operations. The estimated liability is determined
using significant assumptions, including current estimates of plugging and
abandonment costs, annual inflation of these costs, the productive lives of
wells, and a risk-adjusted interest rate. Changes in any of these assumptions
can result in significant revisions to the estimated asset retirement
obligations. Revisions to the asset retirement obligations are recorded with an
offsetting change to producing properties, resulting in prospective changes to
depletion and depreciation expense and accretion of the discount. Because of the
subjectivity of assumptions and the relatively long lives of most of the wells,
the costs to ultimately retire the Company's wells may vary significantly from
prior estimates. As of July 31, 2010, our asset retirement obligation was
$618,900.

Reserve Estimates

Our estimate of proved reserves is based on the quantities of
oil and gas that geological and engineering data demonstrate, with reasonable
certainty, to be recoverable in future years from known reservoirs under
existing economic and operating conditions. The accuracy of any reserve estimate
is a function of the quality of available data, engineering and geological
interpretation and judgment. For example, we must estimate the amount and timing
of future operating costs, severance taxes, development costs and workover
costs, all of which may in fact vary considerably from actual results. In
addition, as prices and cost levels change from year to year, the estimate of
proved reserves also changes. Any significant variance in these assumptions
could materially affect the estimated quantity and value of our reserves. As
such, our reserve engineers review and revise our reserve estimates at least
annually.

Despite the inherent imprecision in these engineering
estimates, our reserves are used throughout our financial statements. For
example, since we use the units-of-production method to amortize our oil and gas
properties, the quantity of reserves could significantly impact our DD&A
expense. Our oil and gas properties are also subject to a ceiling limitation
based in part on the quantity of our proved reserves. Finally, these reserves
are the basis for our supplemental oil and gas disclosures.

Revenue and Cost Recognition

We use the sales method to account for sales of crude oil and
  natural gas. Under this method, revenues are recognized based on actual volumes
  of oil and gas sold to purchasers. The volumes sold may differ from the volumes
  to which Doral is entitled based on the interest in the properties. These differences
  create imbalances which are recognized as a liability only when the imbalance
  exceeds the estimate of remaining reserves. We had no imbalances as of July
  31, 2010. Costs associated with production are expensed in the period incurred.

Page 23 of 39

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Stock-based Compensation.

We estimate the fair value of stock option awards on the date
of grant using the Black-Scholes option pricing model. This valuation method
requires the input of certain assumptions, including expected stock price
volatility, expected term of the award, the expected risk-free interest rate,
and the expected dividend yield of the Companys stock . The risk-free interest
rate used is the U.S. Treasury yield for bonds matching the expected term of the
option on the date of grant. Our dividend yield is zero, as we do not pay a
dividend. Because of our limited trading experience of our common stock and
limited exercise history of our stock option awards, estimating the volatility
and expected term is very subjective. We base our estimate of our expected
future volatility, on peer companies whose common stock has been trading longer
than ours, along with our own limited trading history while operating as an oil
and natural gas producer. Future estimates of our stock volatility could be
substantially different from our current estimate, which could significantly
affect the amount of expense we recognize for our stock-based compensation
awards.

Income Taxes

Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently payable plus
deferred income taxes related to certain income and expenses recognized in
different periods for financial and income tax reporting purposes. Deferred
income tax assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible when assets are
recovered or settled. Deferred income taxes are also recognized for tax credits
that are available to offset future income taxes. Deferred income taxes are
measured by applying currently enacted tax rates to the differences between
financial statement and income tax reporting. We routinely assess the
realizability of our deferred tax assets. If we conclude that it is more likely
than not that some portion or all of the deferred tax assets will not be
realized under accounting standards, the tax asset would be reduced by a
valuation allowance. We consider future taxable income in making such
assessments. Numerous judgments and assumptions are inherent in the
determination of future taxable income, including factors such as future
operating conditions (particularly as related to prevailing oil and natural gas
prices).

Derivatives

Derivative financial instruments that are utilized to manage or
reduce commodity price risk related to our production are accounted for under
the provisions of FASC 815-25 (formerly SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities). Under this pronouncement, derivatives are
carried on the balance sheet at fair value. If the derivative is not designated
as a hedge, changes in the fair value are recognized in other income (expense).

We are permitted to net the fair values of derivative assets
and liabilities for financial reporting purposes, if such assets and liabilities
are with the same counterparty and subject to a master netting arrangement. We
have elected to employ net presentation of derivative assets and liabilities
when these conditions are met. When derivative assets and liabilities are
presented net, the fair value of the right to reclaim collateral assets
(receivable) or the obligation to return cash collateral (payable) is also
offset against the net fair value of the corresponding derivative. We routinely
exercise our contractual right to net realized gains against realized losses
when settling with our swap counterparty.

ITEM
7A.          QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

Page 24 of 39

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ITEM
8.             
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Financial Statements of Doral Energy Corp.

|(a) | Report of Independent Registered Public Accounting Firm
      of Malone & Bailey PC, Certified Public Accountants and Business
      Consultants;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                  
|(b) | Consolidated Balance Sheets as of July 31, 2010 and
      2009                                                                                   
|    |                                                                                                                                                  
|(c) | Consolidated Statements of Expenses for the years ended
      July 31, 2010 and 2009                                                             
|    |                                                                                                                                                  
|(d) | Consolidated Statements of Stockholders Equity for the
      years ended July 31, 2010 and 2009                                                 
|    |                                                                                                                                                  
|(e) | Consolidated Statements of Cash Flows for the years ended
      July 31, 2010 and 2009                                                           
|    |                                                                                                                                                  
|(f) | Notes to the Consolidated Financial
  Statements                                                                                                 

Page 25 of 39

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Financial Statements:
  Audited financial statements as of July 31, 2010, including:

Financial Statements of Doral Energy Corp.

|Report of Independent Registered Public Accounting Firm
      of Malone Bailey LLP               | F-1
|------------------------------------------------------------------------------------------------ | ---
|                                                                                                 |    
|Consolidated Balance Sheets as of July 31, 2010 and 2009                                         | F-2
|                                                                                                 |    
|Consolidated Statements of Expenses for the years ended
      July 31, 2010 and 2009             | F-3
|                                                                                                 |    
|Consolidated Statements of Stockholders Equity for
      the years ended July 31, 2010 and 2009 | F-5
|                                                                                                 |    
|Consolidated Statements of Cash Flows for the years ended
      July 31, 2010 and 2009           | F-6
|                                                                                                 |    
|Notes to the Consolidated Financial Statements                                                   | F-7

F-i

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors 
  Doral Energy Corp. 
  Midland,
  Texas

We have audited the accompanying consolidated balance sheets of
  Doral Energy Corp. as of July 31, 2010 and 2009 and the related consolidated
  statements of operations, stockholders equity, and cash flows for the years
  then ended. These consolidated financial statements are the responsibility of
  the Company's management. Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform an audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The Company
  is not required to have, nor were we engaged to perform, an audit of its
  internal control over financial reporting. Our audit included consideration of
  internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose of
  expressing an opinion on the effectiveness of the Companys internal control
  over financial reporting. Accordingly, we express no such opinion. An audit also
  includes examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements, assessing the accounting principles
  used and significant estimates made by management, as well as evaluating the
  overall financial statement presentation. We believe that our audits provide a
  reasonable basis for our opinion.

In our opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of Doral Energy
  Corp. as of July 31, 2010 and 2009 and the results of their operations and cash
  flows for the years then ended, in conformity with accounting principles
  generally accepted in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that Doral will continue as a going concern. As discussed in
  Note 3 to the consolidated financial statements, Doral has negative working
  capital and recurring losses from operations, which raises substantial doubt
  about its ability to continue as a going concern. Managements plans regarding
  those matters are described in Note 3. The consolidated financial statements do
  not include any adjustments that might result from the outcome of this
  uncertainty.

/s/ MaloneBailey, LLP

www.malone-bailey.com
  Houston,
  Texas

November 15, 2010

F-1

---

Doral Energy Corp.Consolidated Balance SheetsJuly 31, 2010 and 2009

|                                                                                                                                                  |   | July 31,    |   |   | July 31,   |  
|------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                                                                                                                  |   | 2010        |   |   | 2009       |  
|ASSETS                                                                                                                                            |   |             |   |   |            |  
|Current assets                                                                                                                                    |   |             |   |   |            |  
|Cash and cash equivalents                                                                                                                         | $ | 29,025      |   | $ | 436,806    |  
|Accounts receivable, net of allowance
      for doubtful accounts of $-                                                                           |   | 104,045     |   |   | 232,934    |  
|Receivable from Alamo                                                                                                                             |   | 21,247      |   |   | -          |  
|Restricted cash                                                                                                                                   |   | -           |   |   | 170,377    |  
|Current derivative asset                                                                                                                          |   | -           |   |   | 468,607    |  
|Prepaid insurance and other                                                                                                                       |   | -           |   |   | 1,600      |  
|Total current
      assets                                                                                                                        |   | 154,317     |   |   | 1,310,324  |  
|                                                                                                                                                  |   |             |   |   |            |  
|Property and Equipment, net of depreciation                                                                                                       |   | 146,020     |   |   | 247,111    |  
|                                                                                                                                                  |   |             |   |   |            |  
|Oil and gas properties, Proved, using full cost method of accounting,
      net of accumulated depletion and amortization of $48,270 and $419,068 |   | 2,306,669   |   |   | 19,897,062 |  
|Deferred federal income tax                                                                                                                       |   | -           |   |   | 85,213     |  
|Other Assets                                                                                                                                      |   | 228,268     |   |   | 210,087    |  
|                                                                                                                                                  |   |             |   |   |            |  
|Total assets                                                                                                                                      | $ | 2,835,274   |   | $ | 21,749,797 |  
|                                                                                                                                                  |   |             |   |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                              |   |             |   |   |            |  
|Current liabilities                                                                                                                               |   |             |   |   |            |  
|Accounts payable                                                                                                                                  | $ | 266,050     |   | $ | 333,698    |  
|Accounts payable  related
      party                                                                                                            |   | 45,777      |   |   | 81,183     |  
|Accrued liabilities                                                                                                                               |   | 129,306     |   |   | 55,537     |  
|Current portion of long-term debt                                                                                                                 |   | 1,020,849   |   |   | 6,636,372  |  
|Current portion of notes payable related party                                                                                                    |   | -           |   |   | 150,000    |  
|Convertible note payable, net
      of discount of $0 and $118,523, respectively                                                                  |   | -           |   |   | 181,477    |  
|Notes payable to related party, net of discount
      of $-                                                                                       |   | 450,000     |   |   | -          |  
|Current derivative liability                                                                                                                      |   | 56,233      |   |   | -          |  
|Current deferred income tax                                                                                                                       |   | -           |   |   | 94,144     |  
|Other current liabilities                                                                                                                         |   | -           |   |   | 6,103      |  
|Total current liabilities                                                                                                                         |   | 1,968,215   |   |   | 7,538,514  |  
|                                                                                                                                                  |   |             |   |   |            |  
|                                                                                                                                                  |   |             |   |   |            |  
|Notes payable, net of discount of $0 and $181,746,
      respectively                                                                             |   | -           |   |   | 480,784    |  
|Notes payable to related party, net of discount of $- and $250,000,
      respectively Noncurrent derivative liability                            |   | -           |   |   | 54,728     |  
|Asset retirement obligation                                                                                                                       |   | 618,900     |   |   | 903,654    |  
|Long-term debt (less current maturities)                                                                                                          |   | 56,403      |   |   | -          |  
|Total
      liabilities                                                                                                                           |   | 2,643,518   |   |   | 9,077,680  |  
|                                                                                                                                                  |   |             |   |   |            |  
|STOCKHOLDERS EQUITY                                                                                                                              |   |             |   |   |            |  
|Common stock, $0.001 par value, 2,000,000,000 shares authorized,106,508,876
      and 86,937,470 shares issued and outstanding, respectively      |   | 106,509     |   |   | 86,937     |  
|Additional paid-in capital                                                                                                                        |   | 16,415,979  |   |   | 15,119,274 |  
|Accumulated deficit                                                                                                                               |   | (16,330,732 | ) |   | (2,534,094 | )
|                                                                                                                                                  |   |             |   |   |            |  
|Total stockholders equity                                                                                                                        |   | 191,756     |   |   | 12,672,117 |  
|Total
      liabilities and stockholders equity                                                                                                  | $ | 2,835,274   |   | $ | 21,749,797 |  

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

F-2

---

Doral Energy Corp.Consolidated Statements of ExpensesFor the years ended July 31, 2010 and 2009

|                                                    |   | 2010        |   |   | 2009       |  
|--------------------------------------------------- | - | ----------- | - | - | ---------- | -
|Revenue - oil and gas sales                         | $ | 1,664,209   |   | $ | 1,832,146  |  
|                                                    |   |             |   |   |            |  
|Expenses:                                           |   |             |   |   |            |  
|Operating Costs                                     |   | 1,657,931   |   |   | 1,780,266  |  
|Production taxes                                    |   | 163,980     |   |   | 265,780    |  
|Depreciation, depletion, and amortization           |   | 394,643     |   |   | 451,994    |  
|Accretion expense                                   |   | 36,717      |   |   | 74,820     |  
|Loss (gain) on sale of oil and gas properties       |   | 9,043,801   |   |   | (131,288   | )
|General and administrative                          |   | 3,137,272   |   |   | 1,663,073  |  
|Total expense                                       |   | 14,434,344  |   |   | 4,104,645  |  
|Loss from operations                                |   | 12,770,135  |   |   | (2,272,499 | )
|                                                    |   |             |   |   |            |  
|Other income (expense):                             |   |             |   |   |            |  
|Gain on financial instrument derivatives            |   | 197,940     |   |   | -          |  
|Loss on settlement of debt                          |   | (272,557    | ) |   | -          |  
|Other Income                                        |   | 18,106      |   |   | -          |  
|Interest expense                                    |   | (911,043    | ) |   | (947,705   | )
|Net gain (loss) on oil and gas derivative contracts |   | (67,020     | ) |   | 1,317,839  |  
|Loss before income taxes                            |   | (13,804,709 | ) |   | (1,902,365 | )
|Income tax expense (benefit)                        |   | (8,071      | ) |   | 9,602      |  
|Loss from Continuing Operations                     |   | (13,796,638 | ) |   | (1,911,967 | )
|                                                    |   |             |   |   |            |  
|Net loss per share:                                 |   |             |   |   |            |  
|Basic and diluted                                   | $ | (.15        | ) | $ | (.02       | )
|Weighted average shares outstanding:                |   |             |   |   |            |  
|Basic and diluted                                   |   | 90,106,491  |   |   | 86,132,823 |  

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

F-3

---

Doral Energy Corp.Consolidated Statements of Cash FlowsFor the years ended July 31, 2010 and 2009

|                                                                                  |   | 2010        |   |   | 2009       |  
|--------------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                                                  |   |             |   |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |             |   |   |            |  
|Net loss                                                                          | $ | (13,796,638 | ) | $ | (1,911,967 | )
|Adjustments to reconcile net loss to cash used
      by operating activities      |   |             |   |   |            |  
|Depreciation, depletion and amortization                                          |   | 394,643     |   |   | 451,994    |  
|Accretion                                                                         |   | 36,717      |   |   | 74,820     |  
|Amortization of debt discount and deferred financing
      costs                  |   | 657,936     |   |   | 540,886    |  
|Unrealized loss (gain) on derivative
      instruments, net                       |   | 215,939     |   |   | (413,879   | )
|Loss on settlement of debt                                                        |   | 272,557     |   |   | -          |  
|Loss on sale of oil and gas properties
      and other                            |   | 9,043,801   |   |   | (131,288   | )
|Share based compensation                                                          |   | 954,958     |   |   | 381,335    |  
|Changes in operating assets and
      liabilities:                                |   |             |   |   |            |  
|Accounts receivable                                                               |   | 78,888      |   |   | (232,934   | )
|Prepaid expenses
      and other current assets                                   |   | 1,600       |   |   | 64,076     |  
|Deposits                                                                          |   | -           |   |   | (3,244     | )
|Other Assets                                                                      |   | (96,008     | ) |   | -          |  
|Accounts payable                                                                  |   | 188,725     |   |   | 229,751    |  
|Accounts
      payable  related party                                            |   | (35,406     | ) |   | 30,264     |  
|Accrued Liabilities and other                                                     |   | 144,870     |   |   | 45,594     |  
|Other current
      liabilities                                                   |   | (6,103      | ) |   | (2,339     | )
|Deferred tax liability                                                            |   | (8,931      | ) |   | 8,931      |  
|NET CASH USED BY OPERATING ACTIVITIES                                             |   | (1,952,452  | ) |   | (868,000   | )
|                                                                                  |   |             |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |   |             |   |   |            |  
|Deposits paid to acquire Miltex properties                                        |   | -           |   |   | (325,000   | )
|Net proceeds from sale of right to purchase
      Miltex properties               |   | -           |   |   | 600,000    |  
|Change in note proceeds restricted as to use                                      |   | 170,377     |   |   | 396,583    |  
|Proceeds from sale of oil and gas properties
      and other                      |   | 10,370,990  |   |   | -          |  
|Purchase of property and equipment                                                |   | (13,068     | ) |   | (78,626    | )
|Purchase of oil and gas properties                                                |   | (1,811,550  | ) |   | (571,952   | )
|CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES                             |   | 8,716,749   |   |   | (375,578   | )
|                                                                                  |   |             |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |   |             |   |   |            |  
|Proceeds from issuance of notes payable                                           |   | 250,000     |   |   | 1,566,348  |  
|Repayments of notes payable                                                       |   | (7,247,078  | ) |   | (166,711   | )
|Deferred financing costs incurred                                                 |   | (175,000    | ) |   | (119,623   | )
|Proceeds from sale of common stock                                                |   | -           |   |   | 30,025     |  
|Deposit paid to investor advisor                                                  |   | -           |   |   | (80,738    | )
|                                                                                  |   |             |   |   |            |  
|CASH FLOWS (USED IN) PROVIDED BY FINANCING
      ACTIVITIES                       |   | (7,172,078  | ) |   | 1,625,884  |  
|                                                                                  |   |             |   |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |   | (407,781    | ) |   | 382,306    |  
|Cash and cash equivalents, beginning of period                                    |   | 436,806     |   |   | 54,500     |  
|Cash and cash equivalents, end
      of period                                    | $ | 29,025      |   | $ | 436,806    |  
|                                                                                  |   |             |   |   |            |  
|Supplemental disclosures of cash flow information:                                |   |             |   |   |            |  
|Interest paid                                                                     | $ | 178,330     |   | $ | (364,754   | )
|Income taxes paid                                                                 |   |             |   |   | -          |  
|Noncash investing and financing activities:                                       |   |             |   |   |            |  
|Fixed assets acquired through
      the issuance of notes payable                 | $ | -           |   | $ | 197,519    |  
|Stock issued to extend closing of Miltex                                          |   | -           |   |   | 147,500    |  
|Shares issued in connection with
      note settlement                            |   | 103,750     |   |   | 125,000    |  
|Shares issued for exercise of stock option in
      exchange for accounts payable |   | 257,568     |   |   |            |  
|Asset retirement obligation for
      Stern and Nordstrand Acquisition            |   | 613,389     |   |   |            |  
|Derivative associated with convertible debt                                       |   | 200,000     |   |   |            |  
|Revision to asset retirement obligation                                           |   | 135,163     |   |   | -          |  

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

F-4

---

Doral Energy Corp.Consolidated Statements of Stockholders EquityJuly 31, 2010

|                                                                    |  |             |  |   |         |  |   | Additional |  |   |             |   |   |             |  
|------------------------------------------------------------------- |  | ----------- |  | - | ------- |  | - | ---------- |  | - | ----------- | - | - | ----------- | -
|                                                                    |  | Common      |  |   | Par     |  |   | Paid-In    |  |   | Accumulated |   |   |             |  
|                                                                    |  | Shares*     |  |   | Amount  |  |   | Capital    |  |   | Deficit     |   |   | Total       |  
|                                                                    |  |             |  |   |         |  |   |            |  |   |             |   |   |             |  
|Balance, July 31, 2008                                              |  | 85,862,000  |  | $ | 85,862  |  | $ | 14,188,489 |  | $ | (622,127    | ) | $ | 13,652,224  |  
|                                                                    |  |             |  |   |         |  |   |            |  |   |             |   |   |             |  
|Shares issued for:                                                  |  |             |  |   |         |  |   |            |  |   |             |   |   |             |  
|Cash                                                                |  | 79,470      |  |   | 79      |  |   | 29,946     |  |   | -           |   |   | 30,025      |  
|Services                                                            |  | 550,000     |  |   | 550     |  |   | 299,050    |  |   | -           |   |   | 299,600     |  
|Extension on asset purchase agreement                               |  | 250,000     |  |   | 250     |  |   | 147,250    |  |   | -           |   |   | 147,500     |  
|Exercise of stock
      options                                     |  | 196,000     |  |   | 196     |  |   | 97,804     |  |   | -           |   |   | 98,000      |  
|Discount on convertible debt                                        |  |             |  |   |         |  |   | 150,000    |  |   | -           |   |   | 150,000     |  
|Stock based compensation                                            |  | -           |  |   | -       |  |   | 206,735    |  |   | -           |   |   | 206,735     |  
|Net loss                                                            |  | -           |  |   | -       |  |   | -          |  |   | (1,911,967  | ) |   | (1,911,967  | )
|                                                                    |  |             |  |   |         |  |   |            |  |   |             |   |   |             |  
|Balance, July 31, 2009                                              |  | 86,937,470  |  | $ | 86,937  |  | $ | 15,119,274 |  | $ | (2,534,094  | ) | $ | 12,672,117  |  
|Shares issued for                                                   |  |             |  |   |         |  |   |            |  |   |             |   |   |             |  
|Services                                                            |  | 14,600,000  |  |   | 14,600  |  |   | 549,799    |  |   |             |   |   | 564,399     |  
|Shares issued in connection
      with note 
            conversion |  | 1,810,606   |  |   | 1,811   |  |   | 101,939    |  |   |             |   |   | 103,750     |  
|Exercise of stock options                                           |  | 3,160,800   |  |   | 3,161   |  |   | 254,408    |  |   |             |   |   | 257,569     |  
|Stock based compensation                                            |  | -           |  |   | -       |  |   | 390,559    |  |   |             |   |   | 390,559     |  
|Net Loss                                                            |  |             |  |   |         |  |   |            |  |   | (13,796,638 | ) |   | (13,796,638 | )
|Balance, July 31, 2010                                              |  | 106,508,876 |  |   | 106,509 |  |   | 16,415,979 |  |   | (16,330,732 | ) |   | 191,756     |  

|* | The common stock issued has been retroactively restated
        to reflect a reverse stock split of four new shares of common stock for
        25 old shares of common stock, effective January 23, 2009 and a forward
        stock split of five new shares of common stock for one old share of common
        stock, effective September 14, 2009. The number of authorized shares and
        the par value per share, as well as certain per share information, as
        referred to in these financial statements have been restated where applicable
        to give retroactive effect of the forward stock split.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

F-5

---

Doral Energy Corp.Notes to Consolidated Financial Statements

NOTE 1  ORGANIZATION AND BUSINESS OPERATIONS

We were incorporated under the laws of Nevada, USA, on October
  25, 2005 as Language Enterprises Corp. Our principal executive offices are in
  Midland, Texas. In February 2008, we formed Doral West Corp., a wholly owned
  subsidiary to participate in future acquisitions. Effective April 28, 2008,
  Language Enterprise Corp. changed its name to Doral Energy Corp.

In 2008, we acquired certain oil and gas properties and changed
  our business focus to that of a company engaged in the acquisition, operation,
  exploration and development of oil and gas properties and prospects. The future
  plan is to acquire additional producing properties with strong proven reserves
  and considerable undrilled inventory that can be explored and developed with
  reasonable levels of forward risk. We anticipate financing these acquisitions
  with a combination of cash and shares of common stock.

The Company is a licensed oil and gas operator in the state of
  New Mexico.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements of the Company have been prepared in
  accordance with generally accepted accounting principles in the United States
  of America (GAAP) and the Securities and Exchange Commission Act
  1934.

Use of estimates

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

Management believes that it is reasonably possible the following
  material estimates affecting the financial statements could significantly change
  in the coming year: (1) estimates of proved oil and gas reserves, and (2) forecast
  forward price curves for natural gas and crude oil. The oil and gas industry
  in the United States has historically experienced substantial commodity price
  volatility, and such volatility is expected to continue in the future. Commodity
  prices affect the level of reserves that are considered commercially recoverable;
  significantly influence Dorals current and future expected cash flows;
  and impact the PV10 derivation of proved reserves presented in Doral supplemental
  oil and gas reserve disclosures made herein.

Reclassification

Certain prior period amounts have been reclassified to conform
  to current period presentation.

Principles of consolidation

The consolidated financial statements include the accounts of
  Doral Energy Corp. and its 100% owned subsidiary Doral West Corporation.

F-6

---

Cash and cash equivalents

For purposes of the balance sheet and statement of cash flows,
  we consider all highly liquid debt instruments purchased with maturity of three
  months or less to be cash equivalents. At July 31, 2010 and 2009, we had no
  cash equivalents. We may, in the normal course of operations, maintain cash
  balances in excess of federally insured limits. We had cash balances of $29,025
  and $436,806 as of July 31, 2010 and 2009 respectively.

Restricted cash

At July 31, 2010 and 2009, we had restricted cash of $NIL
  and $170,377 respectively. The restricted cash represents proceeds from
  the revolving loan payable to Macquarie (See Note 7) which are restricted as
  to use under the terms of the credit agreement. These funds may be used to pay
  lease operating expenses, note interest, certain fees associated with obtaining
  the note and certain general and administrative expenses. The Macquarie loan
  was paid off during the period ended July 31, 2010 and all of the restricted
  cash was transferred to available cash

Deferred financing cost

In connection with debt financing, $252,827 and $190,970
  in debt financing costs were written off to interest expense during the year
  ended July 31, 2010 and 2009, respectively.

Concentrations of Credit Risk

All of our receivables are due from oil and natural gas purchasers.
  We sold approximately 96% and 4% of our oil and natural gas production to two
  customers during the year ended July 31, 2010. At July 31, 2010, these two customers
  accounted for approximately 98% and 2%, respectively of accounts receivable.

Property and Equipment

Property and equipment is stated at cost. Depreciation is
  computed on a straight-line basis over the estimated useful lives ranging from
  three to five years.

Oil and gas properties

Full Cost Method

We account for oil and natural gas producing activities using
  the full cost method of accounting as prescribed by the United States Securities
  and Exchange Commission (SEC). Accordingly, all costs incurred in the acquisition,
  exploration, and development of proved oil and natural gas properties, including
  the costs of abandoned properties, dry holes, geophysical costs and annual lease
  rentals are capitalized. All general and administrative corporate costs unrelated
  to drilling activities are expensed as incurred. Sales or other dispositions
  of oil and natural gas properties are accounted for as adjustments to capitalized
  costs, with no gain or loss recorded unless the ratio of capitalized costs to
  proved reserves would significantly change, or to the extent that the sale proceeds
  exceed our capitalized costs.

Depletion of evaluated oil and natural gas properties is computed
  on the units of production method based on proved reserves. The net capitalized
  costs of proved oil and natural gas properties are subject to a full cost ceiling
  limitation in which the costs are not allowed to exceed their related estimated
  future net revenues discounted at 10%, net of tax considerations. In accordance
  with SEC release 33-8995, prices based on the preceding 12-months' average price
  based on closing prices on the first day of each month, or prices defined by
  existing contractual arrangements, are used in deriving future net revenues
  discounted at 10%, net of tax. The application of the full cost method of accounting
  for oil and gas properties generally results in higher capitalized costs and
  higher depreciation, depletion and amortization rates compared to the successful
  efforts method of accounting for oil and gas properties.

F-7

---

We follow the full cost method of accounting for its oil and
  natural gas properties, whereby all costs incurred in connection with the acquisition,
  exploration for and development of petroleum and natural gas reserves are capitalized.
  Such costs include lease acquisition, geological and geophysical activities,
  rentals on non-producing leases, drilling, completing and equipping of oil and
  gas wells and administrative costs directly attributable to those activities
  and asset retirement costs. Disposition of oil and gas properties are accounted
  for as a reduction of capitalized costs, with no gain or loss recognized unless
  such adjustment would significantly alter the relationship between capital costs
  and proved reserves of oil and gas, in which case the gain or loss is recognized
  to income.

Ceiling test

The full cost ceiling test is an impairment test prescribed
  by SEC Regulation S-X Rule 4-10. Under full cost accounting rules, for each
  cost center, capitalized costs of proved properties, less accumulated amortization
  and related deferred income taxes, shall not exceed an amount (the "cost ceiling")
  equal to the sum of (a) the present value of future net cash flows from estimated
  production of proved oil and gas reserves, based on current economic and operating
  conditions, discounted at 10 percent, plus (b) the cost of properties not being
  amortized, plus (c) the lower of cost or estimated fair value of any unproved
  properties included in the costs being amortized, less (d) any income tax effects
  related to differences between the book and tax basis of the properties involved.
  If capitalized costs exceed this limit, the excess is charged as an impairment
  expense. As of July 31, 2010 and 2009, our capitalized did not exceed this limit
  and hence no write down is necessary.

Asset retirement obligation

ASC 410-20, "Asset Retirement Obligations," addresses financial
  accounting and reporting for obligations associated with the retirement of tangible
  long-lived assets and the associated asset retirement costs. ASC 410-20 requires
  that the fair value of a liability for an asset retirement obligation be recognized
  in the period in which it is incurred. The associated asset retirement costs
  are capitalized as part of the carrying cost of the asset.

Our asset retirement obligations represent our best estimate
  of the fair value of our future abandonment costs associated with our oil and
  gas properties, including the costs of removal and disposition of tangible equipment,
  site and environmental restoration. We estimate the fair value of our retirement
  costs in the period in which the liability is incurred, if a reasonable estimate
  can be made. The determination of the fair value of an asset retirement obligation
  generally involves estimating the fair value of the obligation at the end of
  the property's useful life and then discounting it to present value using a
  credit adjusted, risk free rate of return. Estimating future asset removal costs
  is difficult and requires management to make estimates and judgments regarding
  the expected removal and site restoration costs, timing and present value discount
  rates. Changes in the estimated useful life and the fair value of the asset
  retirement obligation are imprecise since the removal activities will generally
  occur several years in the future and asset removal technologies and costs are
  constantly changing, as are political, environmental and safety considerations
  that may ultimately impact the amount of the obligations.

Derivatives

Derivative financial instruments that are utilized to manage
  or reduce commodity price risk related to our production are accounted for under
  the provisions of FASC 815-25 (formerly SFAS No. 133 "Accounting for Derivative
  Instruments and Hedging Activities"). Under this pronouncement, derivatives
  are carried on the balance sheet at fair value. If the derivative is not designated
  as a hedge, changes in the fair value are recognized in other income (expense).

We are permitted to net the fair values of derivative assets
  and liabilities for financial reporting purposes, if such assets and liabilities
  are with the same counterparty and subject to a master netting arrangement.
  We have elected to employ net presentation of derivative assets and liabilities
  when these conditions are met. When derivative assets and liabilities are presented
  net, the fair value of the right to reclaim collateral assets (receivable) or
  the obligation to return cash collateral (payable) is also offset against the
  net fair value of the corresponding derivative. We routinely exercise our contractual
  right to net realized gains against realized losses when settling with our swap
  counterparty.

As of July 31, 2010, we have discontinued the hedging activities.

F-8

---

Income Taxes

The Company accounts for income taxes under the provisions
  of FASB ASC Topic No. 740 (formerly SFAS No. 109,Accounting for Income Taxes)
  which provides for an asset and liability approach in accounting for income
  taxes. Under this approach, deferred tax assets and liabilities are recognized
  based on anticipated future tax consequences, using currently enacted tax laws,
  attributable to temporary differences between the carrying amounts of assets
  and liabilities for financial reporting purposes and the amounts calculated
  for income tax purposes.

In recording deferred income tax assets, the Company considers
  whether it is more likely than not that some portion or all of the deferred
  income tax assets will be realized. The ultimate realization of deferred income
  tax assets is dependent upon the generation of future taxable income during
  the periods in which those deferred income tax assets would be realizable. The
  Company considers the scheduled reversal of deferred income tax liabilities
  and projected future taxable income for this determination. The Company established
  a full valuation allowance and reduced its net deferred tax asset, principally
  related to the Company's net operating loss carryovers, to zero as of December
  31, 2010 and 2009. The Company will continue to assess the valuation allowance
  against deferred income tax assets considering all available information obtained
  in future reporting periods. If the Company achieves profitable operations in
  the future, it may reverse a portion of the valuation allowance in an amount
  at least sufficient to eliminate any tax provision in that period. The valuation
  allowance has no impact on the Company's net operating loss ("NOL") position
  for tax purposes, and if the Company generates taxable income in future periods
  prior to expiration of such NOLs, it will be able to use its NOLs to offset
  taxes due at that time.

Contingencies

Legal

The Company is subject to environmental laws and regulations
  of various U.S. jurisdictions. These laws, which are constantly changing, regulate
  the discharge of materials into the environment and may require the Company
  to remove or mitigate the environmental effects of the disposal or release of
  petroleum or chemical substances at various sites.

Environmental

Environmental costs that relate to current operations are
  expensed or capitalized as appropriate. Costs are expensed when they relate
  to an existing condition caused by past operations and will not contribute to
  current or future revenue generation. Liabilities related to environmental assessments
  and/or remedial efforts are accrued when property or services are provided or
  can be reasonably estimated.

Revenue and cost recognition

We use the sales method to account for sales of crude oil
  and natural gas. Under this method, revenues are recognized based on actual
  volumes of oil and gas sold to purchasers. The volumes sold may differ from
  the volumes to which Doral is entitled based on the interest in the properties.
  These differences create imbalances which are recognized as a liability only
  when the imbalance exceeds the estimate of remaining reserves. We had no production,
  revenue or imbalances as of July 31, 2010. Costs associated with production
  are expensed in the period incurred.

F-9

---

Stock-Based Compensation

ASC 718, "Compensation-Stock Compensation" requires recognition
  in the financial statements of the cost of employee services received in exchange
  for an award of equity instruments over the period the employee is required
  to perform the services in exchange for the award (presumptively the vesting
  period). We measure the cost of employee services received in exchange for an
  award based on the grant-date fair value of the award. We account for non-employee
  share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees."

Stock based compensation for fiscal years ended 2010 and 2009
  were $954,958 and $381,335 respectively. These amounts are recorded
  as General and Administrative expenses.

Loss per Common Share

The Company accounts for earnings (loss) per share in accordance
  with FASB ASC Topic No. 260 - 10 (formerly SFAS No. 128,Earnings per Share),
  which establishes the requirements for presenting earnings per share ("EPS").
  FASB ASC Topic No. 260 - 10 requires the presentation of "basic" and "diluted"
  EPS on the face of the statement of operations. Basic EPS amounts are calculated
  using the weighted average number of common shares outstanding during each period.
  Diluted EPS assumes the exercise of all stock options, warrants and convertible
  securities having exercise prices less than the average market price of the
  common stock during the periods, using the treasury stock method. When a loss
  from continuing operations exists, as in the periods presented in these condensed
  consolidated financial statements, potential common shares are excluded from
  the computation of diluted EPS because their inclusion would result in an anti-dilutive
  effect on per share amounts.

Fair value of financial instruments

The carrying value of cash and cash equivalents, accounts
  payable and accrued expenses and other liabilities approximates fair value due
  to the short term maturity of these instruments. The carrying value of the notes
  payable are believed to approximate their fair value as of July 31, 2010 based
  upon the relatively short period these instruments have been outstanding.

F-10

---

New Accounting Pronouncements

Effective December 14, 2009, the Company adopted FASB ASC
  Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock
  (formerly Emerging Issues Task Force Issue No. 07-5,Determining Whether
  an Instrument or Embedded Feature is Indexed to an Entity's Own Stock).
  The adoption of FASB ASC Topic No. 815 - 40's requirements can affect the accounting
  for warrants and many convertible instruments with provisions that protect holders
  from a decline in the stock price (or "down-round" provisions). As a result
  of Doral issuing a convertible note on December 14, 2009, the Company adopted
  ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own
  Stock (formerly Emerging Issues Task Force Issue No. 07-5,Determining
  Whether an Instrument or Embedded Feature is Indexed to an Entity's Own Stock).
  As such, the Company's outstanding warrants are classified as liabilities as
  of July 31, 2010 as these underlying units and warrants contain exercise price
  reset features and are no longer deemed to be indexed to the Company's own stock.
  See Note 12 for further discussion.

In June 2009, the FASB issued guidance which amends the consolidation
  guidance applicable to variable interest entities. This guidance is included
  in FASB ASC 810, Consolidation. The amendments significantly reduce the
  previously required quantitative consolidation analysis, and require ongoing
  reassessments of whether a company is the primary beneficiary of a variable
  interest entity. This new guidance also requires enhanced disclosures about
  an enterprise's involvement with a variable interest entity. The Company adopted
  this statement effective January 1, 2010. The adoption of the new guidance in
  FASB ASC 810 did not impact the Company's consolidated financial statements.

In January 2010, the FASB issued authoritative guidance intended
  to improve disclosures about fair value measurements. The guidance requires
  entities to disclose significant transfers in and out of fair value hierarchy
  levels, the reasons for the transfers and to present information about purchases,
  sales, issuances and settlements separately in the reconciliation of fair value
  measurements using significant unobservable inputs (Level 3). Additionally,
  the guidance clarifies that a reporting entity should provide fair value measurements
  for each class of assets and liabilities and disclose the inputs and valuation
  techniques used for fair value measurements using significant other observable
  inputs (Level 2) and significant unobservable inputs (Level 3). This guidance
  was effective for Doral on January 1, 2010, except for the disclosures about
  purchases, sales, issuances and settlements in the Level 3 reconciliation, which
  will be effective for interim and annual periods beginning after December 15,
  2010. As this guidance provides only disclosure requirements, the adoption of
  this standard did not impact the Company's results of operations, cash flows
  or financial position.

The Company does not expect that the adoption of recently
  issued accounting pronouncements will have a material impact on its financial
  position, results of operations, or cash flows.

Note 3 - GOING CONCERN

At July 31, 2010, the company had cash and cash equivalents
  of $29,025 and working capital deficit of $1,813,898. The Company believes
  that its existing capital resources may not be adequate to enable it to execute
  its business plan. These conditions raise substantial doubt as to the Company's
  ability to continue as a going concern. The Company estimates that it will require
  additional cash resources during 2011 based on its current operating plan and
  condition.

The Company expects cash flows from operating activities to
  improve, primarily as a result of an increase in revenue and reduction of costs,
  although there can be no assurance thereof. The accompanying consolidated financial
  statements do not include any adjustments that might be necessary should we
  be unable to continue as a going concern. If we fail to generate positive cash
  flow or obtain additional financing, when required, we may have to modify, delay,
  or abandon some or all of our business and expansion plans.

F-11

---

NOTE 4 -DISPOSITIONS OF EDDY COUNTY PROPERTIES

On April 30, 2010, management executed a contract to sell
  its domestic oil and gas properties located in Eddy County, New Mexico (the
  "Hanson Properties") and fixed assets, except for fixed assets located in its
  corporate office in Midland Texas, to Alamo Resources LLC ("Alamo"). The transaction
  was closed on June 15, 2010 and funds were received in the month of June, 2010.
  The total purchase price on closing was $10,370,990. In addition, Alamo
  has agreed to pay up to two additional production incentive payments ("PIP")
  of $750,000 each. The first PIP will be payable if Alamo increases gross
  production from the Properties by 500 BOE/day based on a 30 day average within
  24 months after closing. The second PIP will be payable if Alamo increases gross
  production by a further 500 BOE/day (ie. a total increase of 1,000 BOE/day)
  during the same 24 month period.

The Company initially reported the disposition as "asset held
  for sale" or "discontinued operation" with the estimated loss on sales of oil
  and gas properties of $8,952,224 for the period ended April 30, 2010. Upon
  further research, it was determined that the sale of the properties does not
  meet the criteria for "asset held for sale" or "discontinued operation." Hence,
  the Company filed an 8K to announce its intention to restate its April 30, 2010
  financial statements. The restatement will result in no impact to Net Income
  for the interim period April 30, 2010.

During the year ended July 31, 2010 and 2009, the Hanson Properties
  generated revenues of $1,510,352 and $1,832,146 respectively and operating
  loss of $177,147 and $213,900.

The Company received additional $391,132 from the sale
  of the properties for its oil inventory. The Company incurred post closing expenditures
  of $70,674. As a result the loss on sale of assets was $9,043,801 as
  of July 31, 2010.

NOTE 5 - OIL AND GAS PROPERTIES

Acquisition of Oil and Gas in Chavez and Roosevelt County
  from John Stearns

On June 14, 2010, the Company completed the acquisition of
  6,800 acres of operated producing oil and gas assets (the "Stearns Properties")
  located in Chavez County and Roosevelt County, New Mexico. The total purchase
  price for the Stearns Properties was $1,700,000. The acquisition of the
  Stearns Properties was completed pursuant to that purchase and sale agreement
  entered into by the Company on June 14, 2010 (the "Stearns Agreement").

The Stearns Properties consists of 15 leases currently producing
  approximately 54 BOPD (8/8ths), with working interests ranging from 37.9% to
  100%, with associated net revenue interests ranging from 32.3% to 87.5% . Current
  production is from the Permian Age, San Andres Formation, which produces at
  a depth of approximately 4,100 feet.

The Stearns Properties generated revenues of $153,857
  and operating loss of $116,094 for 2010.

The effective date of this purchase was June 1, 2010. The
  $1,700,000 purchase price was allocated to lease and well equipments. Asset
  retirement obligations of $413,888 were recorded in connection with this
  acquisition.

F-12

---

Acquisition of Chaves and Roosevelt County O&G properties
  from Nordstrand Engineering

On July 15, 2010, the company acquired additional working interest
  in the same areas from Nordstrand Engineering at a cost including purchase price,
  legal and engineering fees of $41,550. The acquisition includes 3 producing
  oil fields and 20 wells (Chaves County Properties). The acquisition
  of the Chaves County Properties was completed pursuant to the terms of the Purchase
  and Sale Agreement dated July 15, 2010 between Nordstrand Engineering (the Nordstrand).
  The total cost of $41,550 was allocated to lease and well equipments. Asset
  retirement obligations of $205,012 were record in connection with this acquisition.

The operation of the Chaves County Properties has not commenced
  as of July 31, 2010.

The following table summarizes the estimated fair values of the
  assets acquired and liabilities assumed at the date of acquisition.

|                              |   |            |  |   | Chaves     | 
|----------------------------- | - | ---------- |  | - | ---------- | 
|                              |   | Stearns    |  |   | County     | 
|                              |   | Properties |  |   | Properties | 
|                              |   |            |  |   |            | 
|Proved Oil and Gas properties |   |            |  |   |            | 
|Wells and equipments          | $ | 1,700,000  |  | $ | 41,550     | 
|Asset Retirement Obligation   |   | 410,188    |  |   | 203,200    | 
|                              |   |            |  |   |            | 
|Total assets acquired         | $ | 2,110,188  |  | $ | 244,750    | 
|                              |   |            |  |   |            | 
|Long term liabilities:        |   |            |  |   |            | 
|Asset Retirement Obligation   | $ | 410,188    |  | $ | 203,200    | 
|                              |   |            |  |   |            | 
|Total liabilities assumed     | $ | 410,188    |  | $ | 203,200    | 
|                              |   |            |  |   |            | 
|Net assets acquired           | $ | 1,700,000  |  | $ | 41,550     | 

Unaudited Pro Forma Operating Results

The following table reflects the unaudited pro forma results
  of operations as though the Stearns acquisitions had occurred on August 1, 2009.
  The pro forma amounts are not necessarily indicative of the results that may
  be reported in the future;

|                                                   |   | Doral       |   |   | Stearns    |  |   | July 31, 2010 |  
|-------------------------------------------------- | - | ----------- | - | - | ---------- |  | - | ------------- | -
|                                                   |   | Historical  |   |   | Historical |  |   | Combined      |  
|                                                   |   |             |   |   |            |  |   |               |  
|Revenues  oil and gas sales                       | $ | 1,664,209   |   | $ | 913,973    |  | $ | 2,578,182     |  
|                                                   |   |             |   |   |            |  |   |               |  
|Expenses:                                          |   |             |   |   |            |  |   |               |  
|Operating costs                                    |   | 1,657,931   |   |   | 334,654    |  |   | 1,992,585     |  
|Production taxes                                   |   | 163,980     |   |   | 73,737     |  |   | 237,717       |  
|Depreciation, depletion and amortization           |   | 394,643     |   |   | -          |  |   | 394,643       |  
|Accretion expense                                  |   | 36,717      |   |   | -          |  |   | 36,717        |  
|Loss (gain) on sale of oil and gas properties      |   | 9,043,801   |   |   | -          |  |   | 9,043,801     |  
|General and administrative                         |   | 3,137,272   |   |   | -          |  |   | 3,137,272     |  
|Total expenses                                     |   | 14,433,344  |   |   | 408,391    |  |   | 14,842,735    |  
|Loss from operations                               |   | (12,770,135 | ) |   | 505,582    |  |   | (12,264,553   | )
|                                                   |   |             |   |   |            |  |   |               |  
|Other income (expense):                            |   |             |   |   |            |  |   |               |  
|Gain on financial instrument derivatives           |   | 197,940     |   |   |            |  |   | 197,940       |  
|Loss on settlement of debt                         |   | (272,557    | ) |   |            |  |   | (272,557      | )
|Other Income                                       |   | 18,106      |   |   |            |  |   | 18,106        |  
|Interest Expense                                   |   | (911,043    | ) |   | -          |  |   | (911,043      | )
|Net gain(loss) on oil and gas derivative contracts |   | (67,020     | ) |   |            |  |   | (67,020       | )
|Loss before income                                 |   | (13,804,709 | ) |   | 505,582    |  |   | (13,299,127   | )
|Income tax expense                                 |   | (8,071      | ) |   | -          |  |   | (8,071        | )
|Loss from continuing operations                    |   | (13,796,638 | ) |   | 505,582    |  |   | (13,291,056   | )
|Net loss per share:                                | $ | (0.15       | ) | $ |            |  |   |               |  
|Basic and diluted                                  |   |             |   |   |            |  |   |               |  
|Weighted shares outstanding                        |   |             |   |   |            |  |   |               |  
|Basic and diluted                                  |   | 90,106,491  |   |   |            |  |   |               |  

The prior year information was not presented as the management
  has determined that it is impractical to obtain the information as defined by
  ASC 250-10-45-9(a).

F-13

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Cave Pool Project  Eddy County, New Mexico

On October 28, 2009, Doral West Corp. (Doral West),
  a wholly owned subsidiary of Doral Energy Corp., entered into an agreement (the
  Blugrass Agreement) with Blugrass Energy Inc. (Blugrass)
  to purchase a 40% working interest in certain oil and gas properties (the Cave
  Pool Unit Properties) located in and around the Cave Pool Unit in Eddy
  County, New Mexico, approximately 5 miles northwest of Loco Hills, New Mexico.
  The effective date of the acquisition was October 12, 2009. However, due to
  legal issues, the transaction was not closed. See ITEM 2 in this Form 10K.

As of July 31, 2010, Blugrass is in default of their obligations
  under the Blugrass Agreement due to a breach of various representations and
  warranties. Doral and Blugrass are currently in negotiations to amend the terms
  of the Blugrass Agreement to avoid legal actions that could prove to be costly
  to both parties. As of July 31, 2010, the Company has paid in excess of $200,000
  in expenses related to environmental issues related to the Cave Pool properties
  and recorded it as expenses as Doral is seeking to divest the interest in the
  Cave Pool Properties if it is successful in amending the terms of the Blugrass
  Agreement

NOTE 6  ASSET RETIREMENT OBLIGATION

Asset retirement obligation activity for the years ended July
  31, 2010 and 2009 are as follows:

|                                                        |   | 2010     |   |   | 2009    |  
|------------------------------------------------------- | - | -------- | - | - | ------- | -
|Asset retirement obligations, beginning of
      period | $ | 903,654  |   | $ | 918,902 |  
|Asset retirement obligation incurred                    |   | 613,389  |   |   | -       |  
|Change in estimate                                      |   | (135,163 | ) |   | (90,068 | )
|Change due to sale of Hanson O&G properties             |   | (799,697 | ) |   | -       |  
|Accretion expense                                       |   | 36,717   |   |   | 74,820  |  
|Asset retirement obligations, end of period             | $ | 618,900  |   | $ | 903,654 |  

NOTE 7  NOTES PAYABLE

Notes payable consist of the following as of July 31, 2010 and
  2009:

|                                                                  |   | 2010       |   |   | 2009      | 
|----------------------------------------------------------------- | - | ---------- | - | - | --------- | 
|Little Bay Consulting                                             | $ | 520,000    |   | $ | 520,000   | 
|Green Shoe Investments, net of discount of $0 and $118,523        |   | 487,000    |   |   | 668,477   | 
|Macquarie Ltd.                                                    |   | -          |   |   | 5,888,196 | 
|Note payable to related party, net of discount of $0 and $250,000 |   | 450,000    |   |   | 250,000   | 
|Other                                                             |   | -          |   |   | 40,000    | 
|Vehicle and trailer notes                                         |   | 70,249     |   |   | 181,960   | 
|Total notes payable                                               |   | 1,527,249  |   |   | 7,548,633 | 
|Less: current portion                                             |   | (1,470,849 | ) |   | 6,917,849 | 
|Noncurrent notes payable                                          | $ | 56,403     |   | $ | 630,784   | 

Repayments are as follows:

Fiscal 2011
      Fiscal 2012
      Fiscal 2013
      Fiscal 2014
      Fiscal 2015 and 
        thereafter$1,470,849
      $56,403
      $
      $
      $ F-14


---

Little Bay Notes Payable

On March 7, 2008, Doral entered into a loan agreement with Little
  Bay Consulting SA (Little Bay) pursuant to which Little Bay agreed
  to loan the Company $220,000. On July 18, 2008, Doral received an additional
  $100,000 from Little Bay. The loans from Little Bay are unsecured, carry an
  annual interest rate of 5.0%, are due July 1, 2010, and July 18, 2010 respectively
  and are nonconvertible. As of July 31, 2010, the loan is in default. Doral is
  currently working with the lender to get extension on the maturity date

During October 2008, Doral borrowed additional $200,000 from
  Little Bay Consulting SA. The loans are unsecured, carry an annual interest
  rate of 5.0%, and are due October 1, 2010 and is currently in default. The Company
  is in the process to re-negotiate with the lender.

Green Shoe Investments

In May 2009, Doral borrowed $150,000 and agreed to repay $300,000
  to Greenshoe Investments Ltd. The loan is unsecured, carries an annual interest
  rate of 0.0%, is due ten days after the maturity of our Macquarie Credit Agreement
  and is convertible at $1 per share. The difference in proceeds and the repayment
  amount resulted in a discount of $150,000 that was being amortized over the
  term using the effective interest method. As of April 30, 2010, the discount
  had been fully amortized. As of July 31, 2010, the Company repaid the $300,000
  convertible note in full.

In May, 2009, Doral also agreed to pay Greenshoe additional $150,000
  if the Company sells, transfers or otherwise disposes of all or substantially
  all of the Hanson Properties, including, but not limited to, any realization
  by a secured debtor of the Company of their security interest in the Hanson
  Properties. On April 30, 2010, management executed a contract to sell its domestic
  oil and gas properties located in Eddy County, New Mexico (the Hanson
  Properties) and fixed assets, to Alamo Resources LLC (Alamo),
  see Note 4. As a result, the Company is obligated to make the payment to Greenshoe.

As of July 31, 2010, the Company paid Greenshoe the $150,000
  and it was included in the loss on sale of assets.

As of July 31, 2010, the Company still owed Green Shoe Investments
  $487,000 in notes payable from 2008.

Macquarie Credit Agreement

On July 29, 2008, the Company entered into a Senior First Lien
  Secured Credit Agreement (the Credit Agreement) with Macquarie Bank
  Limited (Macquarie). Under the terms of the Credit Agreement, Macquarie
  has agreed to provide Doral with: (i) a maximum of $25,000,000 under a revolving
  loan (the Revolving Loan); and (ii) a maximum of $25,000,000 under
  a term loan (the Term Loan). Upon closing of the Credit Agreement,
  Macquarie advanced $2,500,000 of the Revolving Loan and $2,800,000 of the Term
  Loan. These advances are subject to an upfront advance fee of 1.00% of the total
  amount advanced. The advances were used to fund the acquisition of the Eddy
  County Properties and for working capital purposes. Future advances are subject
  to the approval of Macquarie.

The Term Loan and the Revolving Loan are secured by all of the
  assets of the Company. Interest accrued on the Term Loan and the Revolving Loan
  is payable monthly beginning on September 20, 2008. The Credit Agreement requires
  that Doral must pay 100 percent of net operating cash flow to Macquarie monthly
  beginning on September 20, 2008. This payment will be applied first to accrued
  interest and fees, second to principal on the Term Loan and last to principal
  on the Revolving Loan.

On November 11, 2009, we entered into an agreement with Macquarie
  dated November 9, 2009, pursuant to which Macquarie agreed not to exercise their
  rights or remedies with respect to our failure to pay the amounts due under
  the Macquarie Credit Agreement until at least January 29, 2010.

F-15

---

To obtain Macquaries agreement to forbear from exercising
  its remedies, we:

| | (a) | paid Macquarie a fee of $25,000;                                                                     
| | --- | -----------------------------------------------------------------------------------------------------
| |     |                                                                                                      
| | (b) | agreed to an increased interest rate on amounts
        owed under the Macquarie Credit Agreement to:
| |     |                                                                                                      
| |     | (i)                                                                                                  
| |     |                                                                                                      
| |     | (ii)                                                                                                 

The $25,000 fee was paid during the six months ended January
  31, 2010 through an increase in the balance of our Revolving Loan.

In addition, the terms of the forbearance agreement provide that,
  if we do not receive a valid offer to purchase some or all of the Hanson Project
  Properties by November 30, 2009 and we have accounts payable greater than $125,000
  that are past due, we will be required to pay Macquarie an additional fee of
  $50,000, and interest rates under the Macquarie Credit Agreement will increase
  as follows:

| | (i)  | with respect to the Revolving Loan, 4.0% over LIBOR
        in respect of amounts earning interest tied to LIBOR, and 2.25% over prime
        in respect of amounts earning interest tied to the prime rate; and
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                  
| | (ii) | with respect to the Term Loan, 7.5% over LIBOR in respect
        of amounts earning interest tied to LIBOR, and 5.75% over prime in respect
        of amounts earning interest tied to the prime rate.         

The $50,000 fee was paid during the six months ended January
  31, 2010 through an increase in the balance of our Revolving Loan.

If we do not receive a valid offer to purchase some or all of
  the Hanson Project Properties by December 31, 2009 and we have accounts payable
  greater than $100,000 that are past due, we will be required to pay Macquarie
  an additional fee of $100,000 and interest rates under the Macquarie Credit
  Agreement will increase as follows:

| | (i)  | with respect to the Revolving Loan, 5.5% over LIBOR
        in respect of amounts earning interest tied to LIBOR, and 3.75% over prime
        in respect of amounts earning interest tied to the prime rate; and
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                  
| | (ii) | with respect to the Term Loan, 9.0% over LIBOR in respect
        of amounts earning interest tied to LIBOR, and 7.25% over prime in respect
        of amounts earning interest tied to the prime rate.         

Based upon the non-binding offers that we have received for the
  purchase of our properties, we have not been required to pay the additional
  $100,000 fee.

On March 8, 2010, we entered into an agreement (the Forbearance
  Agreement) with Macquarie pursuant to which Macquarie further agreed not
  to exercise their rights or remedies with respect to our failure to pay the
  amounts due under the Macquarie Credit Agreement until at least April 1, 2010
  (the Forbearance Period). The Forbearance Agreement dated March
  8, 2010 supersedes all prior forbearance agreements related to the Macquarie
  Credit Agreement.

F-16

---

Under the terms of the Forbearance Agreement, to we agreed to:

| | (a) | Pay a fee of $100,000, the amount for which was advanced
        by Macquarie under the Term Loan portion of the Macquarie Credit Agreement;                                                                     
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | increase the interest rate on amounts owed under the
        Macquarie Credit Agreement to:                                                                                                                      
| | (c) | with respect to the Revolving Loan, 7.0% over LIBOR
        in respect of amounts earning interest tied to LIBOR, and 5.25% over prime
        in respect of amounts earning interest tied to the prime rate, and
| | (d) | with respect to the Term Loan, 10.5% over LIBOR in respect
        of amounts earning interest tied to LIBOR, and 8.75% over prime in respect
        of amounts earning interest tied to the prime rate.        

Under the terms of the Forbearance Agreement, if at any time
  during the Forbearance Period we divest greater than 50% of our working interest
  in the properties that we acquired from Hanson Energy in July 2008 (the Hanson
  Properties), and such divesture results in all monetary obligations being
  fully repaid to Macquarie, Macquarie has agreed to reconvey the Net Profits
  Interest conveyed as part of the Macquarie Credit Agreement to us upon full
  repayment to Macquarie of the amounts owed under the Macquarie Credit Agreement
  and payment of the greater of:

| | (a) | $500,000; and                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                
| | (b) | 25% of the price received for
        the Hanson Properties less the amounts owed under the Macquarie Credit
        Agreement.

The Forbearance Period was extended due to Doral delivering Macquarie
  a purchase and sale agreement with a non-affiliate by April 1, 2010. To qualify
  for the extension, the purchaser would be required to provide a down payment
  of $500,000 or otherwise provide satisfactory evidence that it is capable of
  completing the transaction.

On April 30, 2010, the Company has entered into a new forbearance
  agreement with Macquarie under Macquarie Credit Agreement. Macquarie further
  agreed not to exercise their rights or remedies with respect to our failure
  to pay the amounts due under the Macquarie Credit Agreement until at least June
  15, 2010 (the Forbearance Period). The Forbearance Agreement dated
  April 30, 2010 supersedes all prior forbearance agreements related to the Macquarie
  Credit Agreement.

Under the terms of the Forbearance Agreement, to we agreed to:

| | (a) | Pay all principal and accrued interest outstanding on
        the Loan shall be due and payable on the first Business Day following
        the termination or expiration of the Forbearance Period
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under the terms of the Forbearance Agreement, if at any time
  during the Forbearance Period we divest greater than 50% of our working interest
  in the properties that we acquired from Hanson Energy in July 2008 (the Hanson
  Properties), and such divesture results in all monetary obligations being
  fully repaid to Macquarie, Macquarie has agreed to reconvey the Net Profits
  Interest conveyed as part of the Macquarie Credit Agreement to us upon full
  repayment to Macquarie of the amounts owed under the Macquarie Credit Agreement
  and payment of the $500,000 which will be paid by Doral to Macquaire Investment
  LLC at the closing of such divestiture. The $500,000 has been accounted for
  as loss on sale of assets as of July 31, 2010.

In accordance with the loan agreements, the Company made principal
  payments of $114,001 during the nine months ended April 30, 2010.

On June 15, 2010, Doral sold certain oil and gas properties located
  in Eddy County, New Mexico (the Hanson Properties) to Alamo 3

F-17

---

NOTE 8  RELATED PARTY TRANSATIONS

In July 2009, we borrowed $250,000 from W.S. Oil and Gas
  Limited, a partnership which is controlled by our CEO. The note has a stated
  interest rate of 0% and matures November 1, 2012. The lender had the option
  to convert any remaining principal and interest due under this note into shares
  of our common stock at a conversion price equal to four times the fair market
  value of our common stock at the time the conversion right is exercised in the
  event of default. We are required to make 24 monthly payments of $16,667
  beginning November 1, 2009 and then 12 monthly payments of $8,333 thereafter.
  The payments total $500,000 resulting in an effective interest rate of 49%.
  The difference in proceeds and the repayment amount resulted in a discount of
  $250,000 that is being amortized over the term using the effective interest
  method. As of April 30, 2010, the total discount of $250,000 was amortized
  due to the default in the loan as noted.

On November 11, 2009, we agreed with W.S. Oil and Gas Limited
  to amend the terms of the convertible promissory note issued to them. As amended,
  in the event of a default under the terms of the note, WS Oil and Gas shall
  have the right to convert any remaining principal and interest due under the
  note into shares of our common stock at a conversion price equal to the greater
  of (a) four times the fair market value of our common stock at the time the
  conversion right is exercised; and (b) $0.05. As of April 30, 2010, the
  required principal payments have not been made and the note is currently in
  default. WS Oil and Gas Limited has not elected to convert any remaining principal
  and interest due under the note into shares of our common stock.

The conversion feature was contingent on the event of default
  on the note. We evaluated this note for a possible contingent beneficial conversion
  feature and determined there was not a beneficial conversion feature since the
  conversion price exceeds the fair market value of the common stock. We evaluated
  the loan for derivative accounting consideration under FASB ASC 815-15 and FASB
  ASC 815-40. We determined the embedded conversion option in the convertible
  note meet the criteria for classification as a derivative liability under FASB
  ASC 815-15 and FASB ASC 815-40. Therefore, derivative accounting was not applicable
  for the note. We then evaluated the conversion option under FASB ASC 470-20
  for a beneficial conversion feature and determined none existed.

On March 8, 2010, WS Oil and Gas assigned $35,000 of the
  amount due under the W.S. Oil Note to War Chest Multi-Strategy Fund, LLC ("War
  Chest"). On March 8, 2010, we executed a Debt Settlement Agreement with War
  Chest to settle the outstanding debt and changed the conversion price on this
  note to a fixed conversion price of $0.033. The holder converted the $35,000
  into 1,060,606 shares of our common stock.

On April 29, 2010, WS Oil and Gas assigned $15,000 of
  the amount due under the WS Oil Note to War Chest Multi-Strategy Fund LLC ("War
  Chest"). On March 8, 2010, we executed a Debt Settlement agreement with War
  Chest to settle the outstanding debt and changed the conversion price on this
  note to a fixed conversion price of $0.02. The holder converted the $15,000
  into 750,000 shares of our common stock.

As a result of the modification of the terms of the conversion
  features of the $35,000 and $15,000 notes above, Doral applied ASC 470-50-40/55
  (formerly APB 26) "Debtor's Accounting for a Modification or Exchange of Debt
  Instrument" and concluded that the revised terms constituted a debt extinguishment
  rather than debt modification because the change in the fair value of the embedded
  conversion features immediately before and after the modification exceeded 10%
  of the original loan balance. Accordingly, the Company recorded a total of $53,750
  as loss on debt extinguishment on the two notes above.

On June 11, 2010, we entered into an agreement with Everett
  Willard Gray, II, our Chief Executive Officer and Chairman of our Board of Directors,
  for the principal sum of $68,800 on account of amounts advanced by Mr. Gray
  to us for payment of certain operating and administrative expenses. Under the
  terms of our loan agreement with Mr. Gray, we have paid Mr. Gray a total of
  $75,680 on account of principal and interest in June, 2010.

Accounts payable to Will Gray represent amounts owed for reimbursement
  of general and administrative costs paid on behalf of Doral.

F-18

---

NOTE 9  VEHICLE AND TRAILER NOTES

During the year ended July 31, 2009, we entered into two note
  agreements to finance the acquisition of a vehicle and an office trailer. These
  notes require monthly payments of principal and interest, bear interest at rates
  between 5.75% and 9.69%, are secured by the assets they financed, and mature
  in five years.

During the year ended July 31, 2010, Doral paid off one of
  the notes to finance the acquisition of a vehicle.

NOTE 10  CONVERTIBLE NOTE PAYABLE AND DERIVATIVES

On December 14, 2009, we received cash proceeds of $200,000
  in exchange for a 4% Convertible Note Payable. The note bears interest at 4%
  per year and matured June 30, 2010. The note is convertible only in whole into
  Units at $0.10 per Unit. Each Unit consists of one share of common stock
  and one warrant to purchase a share of common stock at a price of $0.20
  per share for a term of three years. The note contains a ratchet provision which
  adjusts the exercise price of the Units if we issue common stock at a price
  lower than the $0.10 per Unit conversion price in the 4% Convertible Note
  Payable. As a result, the Company assessed the terms of the convertible note
  in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts
  in Entity's Own Stock (formerly Emerging Issues Task Force Issue No. 07-5,Determining Whether an Instrument or Embedded Feature is Indexed to an Entity's
  Own Stock) and determined that the underlying Units are not indexed to the
  Company's common stock and are therefore a derivative which should be valued
  at fair value at the date of issuance and at each subsequent interim period.

As of December 14, 2009 (date of issuance), the fair value
  of the derivatives was $756,689. As a result, we recorded a discount of
  $200,000 on the convertible note, a derivative liability of $756,689,
  and an inception loss of $556,689.

On March 3, 2010, Doral entered into a cancellation agreement
  of the December 14, 2009 Convertible note and agreed to issue 2,000,000 warrant
  shares to the lender. In return, the lender agreed to loan the company an additional
  $50,000 and to remove the conversion feature embedded in the original convertible
  note. As a result, the $200,000 convertible note has become a simple promissory
  note with principal of $250,000 with interest rate of 15% and matures on
  May 1st, 2010. Doral evaluated the application of, ASC 470-50-40/55
  (formerly APB26) "Debtor's Accounting for a Modification or Exchange of Debt
  Instrument" and concluded that the revised terms constituted a debt extinguishment
  rather than a debt modification because the present value of the cash flows
  under the terms of the new instrument, was greater than 10% from the present
  value of the remaining cash flows under the terms of the original notes. On
  March 3, 2010, we determined the derivative liability associated with the embedded
  conversion features of the original $200,000 note to be $60,364 and
  unamortized discount to be $163,434. These amounts have been included in
  the loss on debt extinguishment that totaled $271,357 as of July 31, 2010.

The 2,000,000 warrants issued have a life of three years from
  the issuance date and each warrant share entitles the holder to purchase one
  common shares of the Company at a price of $0.05 per share. The warrants
  contain ratchet provisions which adjust the exercise price and the number of
  shares to be issued upon conversion if the Company issues common stock at a
  price lower than the fixed conversion prices.

As a result, the Company adopted ASC Topic No. 815 - 40, Derivatives
  and Hedging - Contracts in Entity's Own Stock (formerly Emerging Issues
  Task Force Issue No. 07-5,Determining Whether an Instrument or Embedded
  Feature is Indexed to an Entity's Own Stock) and determined that the underlying
  Units are not indexed to the Company's common stock and should be valued at
  fair value at the date of issuance and at each subsequent interim period.

On March 3, 2010 (date of issuance), we recorded the fair
  value derivative liability for $114,502. This amount is included in the
  loss on debt extinguishment that totaled $271,357 as of July 31, 2010.

F-19

---

The revaluation of the derivative as of July 31, 2010 resulted
  in a value of derivative liability of $56,233. The decrease in value resulted
  in a gain on derivatives of $58,269.

The fair value of the derivative was determined using the Black-Scholes
  option pricing model with the following assumptions:

December 14,
      
      
      March 3,
      
      
      July 31,2009
      
      
      2010
      
      
      2010Stock price on the measurement date
      $
      0.25
      
      $
      0.62
      
      $
      .31Fair value of Warrant on measurement date
      $
      N/A
      
      $
      0.06
      
      $
      .03Fair value of Unit on measurement date
      $
      0.47
      
      $
      N/A
      
      $
      N/AWarrant term
      
      3 years
      
      
      3 years
      
      
      2.59Unit term
      
      0.54 years
      
      
      N/A
      
      
      N/AWarrant volatility
      
      202 %
      
      
      198%
      
      
      222%Unit volatility
      
      139%
      
      
      N/A
      
      
      N/AExpected dividends
      
      0%
      
      
      0%
      
      
      0%


In order to determine the value of the Units on the measurement
  date, we estimated the fair value of the warrants using the Black-Scholes option
  pricing model and the assumptions above and added that to the fair value of
  the common stock on the measurement date.

As of July 31, 2010, Doral paid $250,000 towards the principal
  and $17,188 towards the interest.

NOTE 11  COMMITMENTS AND CONTINGENCIES

A former consultant filed a civil action against the Company
  for money damages. The Company does not believe the allegations have merit,
  but management agreed to settle all claims for $38,500 on July 28, 2010 and
  accrued a liability accordingly.

From time to time Doral may become involved in litigation in
  the ordinary course of business. At the present time the Companys management
  is not aware of any such litigation.

The Company, as an owner or lessee and operator of oil and gas
  properties, is subject to various federal, state and local laws and regulations
  relating to discharge of materials into, and protection of, the environment.
  These laws and regulations may, among other things, impose liability on the
  lessee under an oil and gas lease for the cost of pollution clean-up resulting
  from operations and subject the lessee to liability for pollution damages. In
  some instances, the Company may be directed to suspend or cease operations in
  the affected area. We maintain insurance coverage, which we believe is customary
  in the industry, although we are not fully insured against all environmental
  risks. The Company is not aware of any environmental claims existing as of July
  31, 2010, which have not been provided for, covered by insurance or otherwise
  have a material impact on its financial position or results of operations. There
  can be no assurance, however, that current regulatory requirements will not
  change, or past non-compliance with environmental laws will not be discovered
  on the Companys properties.

F-20

---

NOTE 12  INCOME TAXES

Deferred income taxes are recorded at the expected tax rate of
  35%. SFAS No. 109, ASC 740 Accounting for Income Taxes, the
  provision for income taxes is computed using the asset and liability method.
  Under the asset and liability method, deferred income tax assets and liabilities
  are determined based on the differences between the financial reporting and
  tax bases of assets and liabilities and are measured using the currently enacted
  tax rates and laws. A valuation allowance is provided for the amount of deferred
  tax assets that, based on available evidence, are not expected to be realized.
  Reconciliation between actual tax expense (benefit) and income taxes computed
  by applying the combined U.S. federal income tax rate and state income tax rate
  to net loss is as follows:

|                                           |   | July 31,   |   |  | July 31, |  
|------------------------------------------ | - | ---------- | - |  | -------- | -
|                                           |   | 2010       |   |  | 2009     |  
|Computed at U.S. and State statutory rates | $ | (2,724,445 | ) |  | (667,524 | )
|Changes in valuation allowance             |   | 2,716,374  |   |  | 677,126  |  
|Total                                      | $ | (8,071     | ) |  | 9,602    |  

|                                    |   | July 31,   |   |  | July 31, |  
|----------------------------------- | - | ---------- | - |  | -------- | -
|                                    |   | 2010       |   |  | 2009     |  
|Deferred tax asset attributable to: |   |            |   |  |          |  
|Other items                         | $ | 265,876    |   |  | (9,602   | )
|Prior Year True Up                  |   | (8,931     | ) |  |          |  
|Net operating loss                  | $ | 2,467,500  |   |  | 677,126  |  
|                                    |   |            |   |  |          |  
|Less: valuation allowance           |   | (2,716,374 | ) |  | (677,126 | )
|                                    |   |            |   |  |          |  
|Total                               | $ | (8,071     | ) |  | (9,602   | )

The components giving rise to the deferred tax assets described
  above have been included in the accompanying consolidated balance sheet as noncurrent
  assets. As of July 31, 2010 and 2009, the deferred tax assets are net of a valuation
  allowance of $2,733,376 and $677,126 respectively, based on the amount that
  management believes will ultimately be realized. Realization of deferred tax
  assets is dependent upon sufficient future taxable income during the period
  that deductible temporary differences and carry-forwards are expected to be
  available to reduce taxable income. At July 31, 2010, Doral had loss carry-forwards
  of approximately $7.3 million for tax purposes which will begin to expire in
  2026.

F-21

---

NOTE 13 - STOCKHOLDERS' EQUITY

Effective September 14, 2009, the Company amended its Articles
  of Incorporation by a forward split of its issued and authorized capital on
  a 5-for-1 basis. Accordingly, the Company's outstanding shares were increased
  on a 5-for-1 basis such that each shareholder now holds five shares for each
  one share previously held. All share and per-share data (except par value) have
  been adjusted to reflect the retroactive effect of the reverse stock split for
  all periods presented.

In August 2008, Doral completed an additional private placement
  of 8,040 shares of common stock at a price of $0.63 per share and received
  total cash proceeds of $5,025.

In January 2009, Doral issued 250,000 shares of common stock
  at a price of $0.50 per share and received services totaling $125,000.

In March 2009, Doral received subscription proceeds of $25,000
  for the sale of 71,430 shares of common stock under Doral's $0.35 per share
  offering. The shares subscribed for have not yet been issued by the Company;
  however, they are reflected in outstanding shares for accounting purposes.

In April 2009, Doral entered into an agreement to modify the
  terms of their letter agreement with Miltex. Doral issued 125,000 shares of
  the company’s common stock at a price of $0.57 in exchange for an extension
  of the closing date of their agreement. In May 2009, Doral issued an additional
  125,000 shares of the Company’s common stock at a price of $0.61 per share
  in exchange for an additional extension of the closing date of their agreement.
  The Company recorded the stock payments as deposit and later included it as
  gain on sale of oil and gas properties when it sold its Miltex’s right
  during the year ended July 31, 2009.

In June 2009, Doral issued 300,000 shares of its common stock
  in exchange for services. The shares were valued at $0.58 per share for a total
  of $174,600 based on the market value of the shares on the date of grant. The
  shares vested immediately.

In June and July 2009, Doral issued 196,000 shares of its
  common stock as a result of the exercise of stock options with a strike price
  of $0.50 per share or $98,000 total. Doral and the holder of the option
  agreed to offset amounts payable for legal fees of $98,000 in lieu of the
  receipt of cash for the exercise price.

Settlement of notes payable into common shares

On March 8, 2010, we issued 1,060,606 shares of our common
  stock to settled outstanding notes payable of $70,000 See Note 7.

On April 29, 2010, we issued 750,000 shares of our common
  stock to settled outstanding notes payable of $33,750. See Note 7.

F-22

---

Warrants

The following warrants were issued during the year ended
  July 31, 2010 to convertible note holders. (see Note10)

There were no warrants outstanding prior to July 31, 2009.

|                                             |  |           |  |   |           |  |  | Weighted-   |  |   |           | 
|-------------------------------------------- |  | --------- |  | - | --------- |  |  | ----------- |  | - | --------- | 
|                                             |  |           |  |   |           |  |  | average     |  |   |           | 
|                                             |  |           |  |   | Weighted- |  |  | Remaining   |  |   |           | 
|                                             |  | Number of |  |   | average   |  |  | Contractual |  |   | Aggregate | 
|                                             |  | Shares    |  |   | Exercise  |  |  | Term        |  |   | Intrinsic | 
|                                             |  |           |  |   | Price     |  |  | (years)     |  |   | Value     | 
|Outstanding at July 31, 2009                 |  | -         |  | $ | -         |  |  |             |  |   |           | 
|Granted                                      |  | 2,000,000 |  | $ | .03       |  |  |             |  |   |           | 
|Exercised                                    |  | -         |  |   | -         |  |  |             |  |   |           | 
|Forfeited                                    |  | -         |  | $ | -         |  |  |             |  |   |           | 
|Expired                                      |  | -         |  |   | -         |  |  |             |  |   |           | 
|Outstanding and Exercisable at July 31, 2010 |  | 2,000,000 |  | $ | .03       |  |  | 2.59        |  | $ | -         | 

The following summarizes our outstanding warrants and their respective
  exercise prices at July 31, 2010 (share amounts in thousands):

SharesExercise
      
      
      UnderlyingPrice
      
      
      Warrants$
      .03
      
      
      2,000,000


Stock options

Stock option activity summary is presented in the table below:

|                                             |  |            |   |   |           |   |  | Weighted-   |  |   |           | 
|-------------------------------------------- |  | ---------- | - | - | --------- | - |  | ----------- |  | - | --------- | 
|                                             |  |            |   |   |           |   |  | average     |  |   |           | 
|                                             |  |            |   |   | Weighted- |   |  | Remaining   |  |   |           | 
|                                             |  | Number of  |   |   | average   |   |  | Contractual |  |   | Aggregate | 
|                                             |  | Shares     |   |   | Exercise  |   |  | Term        |  |   | Intrinsic | 
|                                             |  |            |   |   | Price     |   |  | (years)     |  |   | Value     | 
|Outstanding at July 31, 2008                 |  | -          |   |   | -         |   |  | -           |  |   |           | 
|Granted                                      |  | 500,000    |   |   | 0.50      |   |  |             |  |   |           | 
|Exercised                                    |  | (196,000   | ) |   | 0.50      |   |  |             |  |   |           | 
|Forfeited                                    |  | -          |   |   |           |   |  |             |  |   |           | 
|Expired                                      |  | -          |   |   |           |   |  |             |  |   |           | 
|Outstanding at July 31, 2009                 |  | 304,000    |   | $ | .50       |   |  |             |  |   |           | 
|Granted                                      |  | 5,094,000  |   | $ | .07       |   |  |             |  |   |           | 
|Exercised                                    |  | (3,160,800 | ) |   | (.08      | ) |  |             |  |   |           | 
|Forfeited                                    |  | -          |   | $ |           |   |  |             |  |   |           | 
|Expired                                      |  | -          |   |   | -         |   |  |             |  |   |           | 
|Outstanding and Exercisable at July 31, 2010 |  | 2,237,200  |   | $ | .11       |   |  | 4.78        |  | $ | -         | 

As of July 31, 2010, Doral has 2,237,200 exercisable options
  shares outstanding.

F-23

---

In June 2009, Doral granted options to purchase 500,000 shares
  of common stock at an exercise price of $0.50 per share for a term of five years
  to a third party in exchange for services. The options were fully vested upon
  issuance and were valued at $206,735. The fair value of the options granted
  during 2009 was estimated at the date of grant using the Black-Scholes option-pricing
  model with the following assumptions:

|Estimated market value of stock on grant date | $ 0.58   
|--------------------------------------------- | ---------
|Risk-free interest rate                       | 2.71%    
|Dividend yield                                | 0.00%    
|Volatility factor                             | 126%     
|Expected life                                 | 2.5 years

In June and July 2009, Doral issued 196,000 options were exercised
  for a total of $98,000. Doral and the holder of the option agreed to offset
  amounts payable for legal fees of $98,000 in lieu of the receipt of cash for
  the exercise price.

On October 27, 2009, we issued options to purchase 200,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $0.33 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $76,931.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.39   
|--------------------------------------------- | -------
|Risk-free interest rate                       | 1.51%  
|Dividend yield                                | 0.00%  
|Volatility factor                             | 216.53%
|Expected life                                 | 5      

On December 3, 2009, we issued options to purchase 200,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $0.26 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $56,766.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.29   
|--------------------------------------------- | -------
|Risk-free interest rate                       | 2.14%  
|Dividend yield                                | 0.00%  
|Volatility factor                             | 202.29%
|Expected life                                 | 5      

On December 17, 2009, we issued options to purchase 594,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $0.18 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $125,093.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.22   
|--------------------------------------------- | -------
|Risk-free interest rate                       | 2.24%  
|Dividend yield                                | 0.00%  
|Volatility factor                             | 202.29%
|Expected life                                 | 5      

F-24

---

On March 24, 2010, we issued options to purchase 1,000,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $.025 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $39,082.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.04 
|--------------------------------------------- | -----
|Risk-free interest rate                       | 2.62%
|Dividend yield                                | 0.00%
|Volatility factor                             | 193% 
|Expected life                                 | 5    

On April 16, 2010, we issued options to purchase 1,100,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $.03 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $31,969.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.03 
|--------------------------------------------- | -----
|Risk-free interest rate                       | 2.49%
|Dividend yield                                | 0.00%
|Volatility factor                             | 190% 
|Expected life                                 | 5    

On July 28, 2010, we issued options to purchase 2,000,000 shares
  of common stock to an entity for professional services. The options were vested
  immediately and had an exercise price of $.025 and a term of five years. The
  fair value of the options granted during the year ended July 31, 2010 was estimated
  at the date of grant using the Black-Scholes option-pricing model at $60,653.
  The following assumptions were used in the model:

|Estimated market value of stock on grant date | $.031
|--------------------------------------------- | -----
|Risk-free interest rate                       | 1.75%
|Dividend yield                                | 0.00%
|Volatility factor                             | 200% 
|Expected life                                 | 5    

Exercise of stock options

In October 2009, we issued 125,000 shares of common stock in
  exchange for the exercise of stock options with an exercise price of $0.33 per
  share. We agreed to reduce amounts payable to the holder in exchange for the
  exercise price of $41,250 which would have been due upon exercise. We received
  no cash proceeds upon the exercise of the stock options.

On November 10, 2009, we issued 54,000 shares of common stock
  in exchange for the exercise of stock options with an exercise price of $0.33
  per share. We agreed to reduce amounts payable to the holder in exchange for
  the exercise price of $17,820 which would have been due upon exercise. We received
  no cash proceeds upon the exercise of the stock options.

On December 3, 2009, we issued 103,000 shares of common stock
  in exchange for the exercise of stock options with an exercise price of $0.26
  per share. We agreed to reduce amounts payable to the holder in exchange for
  the exercise price of $26,780 which would have been due upon exercise. We
  received no cash proceeds upon the exercise of the stock options.

F-25

---

On December 17, 2009, we issued 594,000 shares of common stock
  in exchange for the exercise of stock option with an exercise price of $0.18
  per share. We agreed to reduce amounts payable to the holder in exchange for
  the exercise price of $106,920 which would have been due upon exercise.
  We received no cash proceeds upon the exercise of the stock options.

On March 24, 2010, we issued 821,900 shares of common stock
  in exchange for the exercise of stock option with an exercise price of $0.03
  per share. We received no cash proceeds upon the exercise of the stock options
  and recorded the exercise price of $20,548 which would have been due upon
  exercise of 821,900 shares as current period expense.

On April 16, 2010, we issued 1,100,000 shares of common stock
  in exchange for the exercise of stock option with an exercise price of $0.03
  per share. We received no cash proceeds upon the exercise of the stock options
  and recorded the exercise price of $33,000 which would have been due upon
  exercise of 1,100,000 shares as current period expense.

On July 28, 2010, we issued 362,900 shares of common stock
  in exchange for stock option with an exercise price of $.03 per share. We
  received no cash proceeds upon the exercise of the stock options and recorded
  the exercise price of $11,250 which would have been due upon exercise of
  362,900 shares as current period expense.

Stock issued for services

On May 28, 2010, a total of 5,000,000 shares were issued to
  employees of Doral under its 2009 Stock Incentive Plan. The shares had a fair
  value of $190,000 and were recognized as stock based compensation as of
  July 31, 2010.

On July 12, 2010, the Company entered into one year consulting
  agreement with "Financial Advisor" Company, to provide services to advise the
  Company regarding strategic matter. Either party may terminate this agreement
  without penalty after the six month anniversary of the agreement. Doral is contractually
  liable to pay the "Financial Advisor" 9,600,000 shares at fair value of $374,400.
  The company valued the shares based on market value on the date of agreement,
  and recognized a compensation expense of $374,400 since shares have vested
  and are non-forfeitable as of July 31, 2010.

NOTE 14 - DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT
  ACTIVITIES

On August 6, 2008, in accordance with a requirement of the
  Credit Agreement, Doral entered into a Costless Collar with Macquarie. The net
  effect of the costless collar is that if the monthly average price of NYMEX
  WTI Crude Oil futures drops below $100 per barrel, the Company effectively
  receives $100 for each barrel of production covered by the costless collar.
  If the NYMEX WTI Crude Oil futures price rises above $131 per barrel, the
  Company receives $131 per barrel for each barrel of production covered by
  the costless collar. The result is a "floor" on the price of $100 and a
  "ceiling" of $131.

In December 2008, we re-structured our hedge position to guarantee
  more near-term income by closing out our old position and using the value realized
  to enter into a combination of a swap and a costless collar, with more volume
  hedged in the near term. The swap, with a fixed price of $94, covers the
  period from January 2009 through June 2010 and effectively guarantees us $94
  per barrel on an average of our first 2250 barrels of production each month.
  From July 2010 through December 2011, there is a costless collar in effect on
  an average of 1850 barrels per month, guaranteeing a minimum of $60 a barrel.

F-26

---

In 2008, we entered into commodity derivative financial instruments
  intended to hedge our exposure to market fluctuations of oil and natural gas
  prices. We adopted ASC 815-25 (see below).

ASC 815-25 (formerly SFAS No. 133 Accounting for Derivative
  Instruments and Hedging Activities) requires that all derivative instruments
  be recorded on the balance sheet at their fair value. Changes in the fair value
  of each derivative is recorded each period in current earnings or other comprehensive
  income, depending on whether the derivative is designated as part of a hedge
  transaction and, if it is, the type of hedge transaction. To make this determination,
  management formally documents the hedging relationship and its risk-management
  objective and strategy for undertaking the hedge, the hedging instrument, the
  item, the nature of the risk being hedged, how the hedging instruments
  effectiveness in offsetting the hedged risk will be assessed, and a description
  of the method of measuring effectiveness. This process includes linking all
  derivatives that are designated as cash-flow hedges to specific cash flows associated
  with assets and liabilities on the balance sheet or to specific forecasted transactions.
  Based on the above, management has determined the swaps noted above do not qualify
  for hedge accounting treatment.

For the year ended July 31, 2009 and 2010, we had a net derivative
  asset of $413,879 and a net derivative liability of $NIL with the change in
  fair value reflected in other income (expense). Realized hedge gains totaled
  $903,960 and $67,080 for the year ended July 31, 2009 and 2010. (See NOTE 15)

As of July 31, 2010, we had closed out all commodity derivative
  contracts.

NOTE 15  FAIR VALUE MEASUREMENTS

Dorals commodity derivatives are measured at fair value
  in the financial statements. Dorals financial assets and liabilities are
  measured using input from three levels of the fair value hierarchy. A financial
  asset or liability classification within the hierarchy is determined based on
  the lowest level input that is significant to the fair value measurement. The
  three levels are as follows:

| | Level 1  | Inputs are unadjusted quoted
        prices in active markets for identical assets or liabilities that Doral
        has the ability to access at the measurement date.                                                                                                                                                                                                                                                                                  
| | --------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Level 2  | Inputs include quoted prices
        for similar assets and liabilities in active markets, quoted prices for
        identical or similar assets or liabilities in markets that are not active,
        inputs other than quoted prices that are observable for the asset or liability
        and inputs that are derived principally from or corroborated by observable
        market data by correlation or other means (market corroborated inputs).
| |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Level 3  | Unobservable inputs reflect
        Dorals judgments about the assumptions market participants would
        use in pricing the asset of liability since limited market data exists.
        Doral develops these inputs based on the best information available, using
        internal and external data.                                                                                                                                             

F-27

---

The following table presents Dorals assets and liabilities
  recognized in the balance sheet and measured at fair value on a recurring basis
  as of July 31, 2009

|                      |   | Input Levels for Fair Value | 
|--------------------- | - | --------------------------- | 
|                      |   |                             | 
|Description           |   | Level 1                     | 
|Assets:               |   |                             | 
|Commodity derivatives | $ | -                           | 
|                      | $ | -                           | 
|Liabilities:          |   |                             | 
|Derivative liability  | $ | -                           | 
|Commodity derivatives |   | -                           | 
|                      | $ | -                           | 

The following table presents Dorals assets and liabilities
  recognized in the balance sheet and measured at fair value on a recurring basis
  as of July 31, 2010:

|                      |   | Input Levels for Fair Value Measurements | 
|--------------------- | - | ---------------------------------------- | 
|Description           |   | Level 1                                  | 
|Assets:               |   |                                          | 
|Commodity derivatives | $ | -                                        | 
|                      | $ | -                                        | 
|Liabilities:          |   |                                          | 
|Derivative liability  | $ | -                                        | 
|Commodity derivatives |   | -                                        | 
|                      | $ | -                                        | 

F-28

---

NOTE 16 - SUBSEQUENT EVENTS

In October 2010, we issued 924,200 shares of common stock
  in exchange for the exercise of stock options with an exercise price of $0.028
  per share. We agreed to reduce amounts payable to the holder in exchange for
  the exercise price of $25,878 which would have been due upon exercise. We received
  no cash proceeds upon the exercise of the stock options.

In August, 2010, we settled $28,500 in accrued salaries
  by assigning title to one of our vehicles which had a carrying book value that
  approximated the accrued amount.

On September 1, 2010, Doral Energy Corp. (the "Company") issued
  a convertible note (the "AFLP Note") to the Angirekula Family Limited Partnership
  ("AFLP") in the amount of $50,000. The AFLP Note is payable on March 1,
  2011 or upon written demand by AFLP and accrues interest at a rate of twenty-one
  percent (21%) per annum. Under the terms of the AFLP Note, AFLP may at any time
  convert the outstanding principal of the AFLP Note into fully-paid non-assessable
  shares of the Company's common stock at a 50% discount to the average fair market
  value of the Company's common stock for the five consecutive trading days prior
  to the date the conversion right is exercised but not to exceed 135% of the
  low bid price of the Company's common stock on September 1, 2010. In the event
  of a reverse stock split, the ceiling price will not be adjusted. The note is
  unsecured.

On September 15, 2010, WS Oil and Gas assigned $25,000
  of the amount due under the WS Oil Note to War Chest Multi-Strategy Fund LLC
  ("War Chest"). On September 21, 2010, we executed a Debt Settlement agreement
  with War Chest to settle the outstanding debt and changed the conversion price
  on this note to a fixed conversion price of $.0125. The holder converted
  the $25,000 into 2,000,000 shares of our common stock.

On September 28, 2010, the Company entered into a loan and
  security agreement (the "Loan Agreement") with Pure Gas Partners II, L.P. ("Pure
  Gas"), pursuant to which Pure Gas agreed to loan to the Company $250,000
  with interest payable thereon at a rate of 5% per annum. The Company has agreed
  to make monthly installments of accrued interest beginning on November 1, 2010
  and on the first day of each successive month thereafter, with a final payment
  of all remaining amounts payable under the Loan Agreement on account of principal
  and interest due on March 31, 2011 (the "Due Date"). The Company has the right
  to prepay all amounts due on account of principal at any time prior to the Due
  Date. As collateral for all amount payable under the Loan Agreement, the Company
  granted to Pure Gas a security interest in all of the Company's assets.

F-29

---

NOTE 17 - SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING
  ACTIVITIES (UNAUDITED)

There are numerous uncertainties inherent in estimating quantities
  of proved crude oil and natural gas reserves. Crude oil and natural gas reserve
  engineering is a subjective process of estimating underground accumulations
  of crude oil and natural gas that cannot be precisely measured. The accuracy
  of any reserve estimate is a function of the quality of available data and of
  engineering and geological interpretation and judgment.

The Company retained an independent reserve engineer to perform
  an evaluation of proved reserves as of July 31, 2010 and 2009. Results of drilling,
  testing and production subsequent to the date of the estimates may justify revision
  of such estimates. Accordingly, reserve estimates are often different from the
  quantities of crude oil and natural gas that are ultimately recovered. All of
  the Companys reserves are located in the United States.

The following supplemental unaudited information regarding Dorals
  oil and gas activities is presented pursuant to the disclosure requirements
  of SFAS No. 69. The standardized measure of discounted future net cash flows
  is computed by applying fiscal year-end prices of oil and gas to the estimated
  future production of proved oil and gas reserves, less estimated future expenditures
  (based on fiscal year-end cost estimates assuming continuation of existing economic
  conditions) to be incurred in developing and producing the proved reserves,
  less estimated future income tax expenses (based on fiscal year-end statutory
  tax rates) to be incurred on pre-tax net cash flows less tax basis of the properties
  and available credits, and assuming continuation of existing economic conditions.
  The estimated future net cash flows are then discounted using a rate of 10 percent
  per year to reflect the estimated timing of the future cash flows.

Capitalized Costs Relating to Oil and Gas Producing Activities
  as of July 31, 2010 and 2009:

|                                                                 |   | 2010      |  |   | 2009       | 
|---------------------------------------------------------------- | - | --------- |  | - | ---------- | 
|Proved properties                                                |   |           |  |   |            | 
|Mineral interests                                                | $ | -         |  | $ | -          | 
|Wells, equipment and facilities                                  |   | 2,354,939 |  |   | 20,316,131 | 
|Total proved properties                                          |   | 2,354,939 |  |   | 20,316,131 | 
|                                                                 |   |           |  |   |            | 
|Unproved properties                                              |   |           |  |   |            | 
|Mineral interests                                                | $ | -         |  | $ | -          | 
|Uncompleted wells, equipment and facilities                      |   | -         |  |   | -          | 
|Total unproved properties                                        |   | -         |  |   | -          | 
|                                                                 |   |           |  |   |            | 
|Less: accumulated depreciation, depletion and
      amortization |   | 48,270    |  |   | 419,068    | 
|Net capitalized costs                                            | $ | 2,306,669 |  | $ | 19,897,062 | 

Costs Incurred in Oil and Gas Producing Activities for the Years
  Ended July 31, 2010 and 2009:

|                                   |   | 2010      |  |   | 2009    | 
|---------------------------------- | - | --------- |  | - | ------- | 
|Acquisition of proved properties   | $ | 1,741,550 |  | $ | 571,953 | 
|Acquisition of unproved properties |   | -         |  |   | -       | 
|Development costs                  |   | 70,000    |  |   | 363,566 | 
|Exploration costs                  |   | -         |  |   | -       | 
|Total
      costs incurred         | $ | 1,811,550 |  | $ | 935,519 | 

F-30

---

Results of Operations for Oil and Gas Producing Activities for
  the Year Ended July 31, 2010 and 2009:

|                                                            |   | 2010      |   |   | 2009      |  
|----------------------------------------------------------- | - | --------- | - | - | --------- | -
|Revenues                                                    | $ | 1,807,409 |   | $ | 1,832,146 |  
|Production costs                                            |   | 1,863,652 |   |   | 2,046,043 |  
|Exploration expenses                                        |   | -         |   |   | -         |  
|Depreciation, depletion and amortization                    |   | 394,643   |   |   | 419,068   |  
|Accretion expense                                           |   | 36,717    |   |   | 74,820    |  
|Income (loss) before income tax                             |   | (487,603  | ) |   | (707,785  | )
|Income tax                                                  |   | -         |   |   | -         |  
|Results of operations from oil and gas producing activities | $ | (487,603  | ) | $ | (707,785  | )

Proved Reserves:

Dorals proved oil and natural gas reserves have been estimated
  by independent petroleum engineers. Proved reserves are the estimated quantities
  that geologic and engineering data demonstrate with reasonable certainty to
  be recoverable in future years from known reservoirs under existing economic
  and operating conditions. Proved developed reserves are the quantities expected
  to be recovered through existing wells with existing equipment and operating
  methods. Due to the inherent uncertainties and the limited nature of reservoir
  data, such estimates are subject to change as additional information becomes
  available. The reserves actually recovered and the timing of production of these
  reserves may be substantially different from the original estimate. Revisions
  result primarily from new information obtained from development drilling and
  production history; acquisitions of oil and natural gas properties; and changes
  in economic factors. All proved reserves are located in the United States. Proved
  reserves as of July 31, 2009 and 2010 are summarized in the table below:

Proved Natural Gas and Oil Reserves at July 31, 2009:

|                                          |  | Oil        |   |  | Gas        |  
|----------------------------------------- |  | ---------- | - |  | ---------- | -
|                                          |  | (Bbls)     |   |  | (Mcf)      |  
|Proved reserves - beginning of period     |  | 4,928,090  |   |  | 3,222,420  |  
|Purchase of minerals in place             |  | (33,701    | ) |  | (8,880     | )
|Production                                |  | (1,816,083 | ) |  | (1,577,190 | )
|Proved reserves - end of period           |  | 3,078,306  |   |  | 1,636,350  |  
|Proved developed reserves - end of period |  | 516,679    |   |  | 50,639     |  

Proved Natural Gas and Oil Reserves at July 31, 2010:

|                                          |  | Oil       |  |  | Gas   | 
|----------------------------------------- |  | --------- |  |  | ----- | 
|                                          |  | (Bbls)    |  |  | (Mcf) | 
|Proved reserves - beginning of period     |  | 1,029,546 |  |  | -     | 
|Purchase of minerals in place             |  | 2,345     |  |  | -     | 
|Production                                |  | -         |  |  | -     | 
|Proved reserves - end of period           |  | -         |  |  | -     | 
|Proved developed reserves - end of period |  | 1,027,201 |  |  |       | 

F-31

---

Standardized Measure of Discounted Future Net Cash Flows at July
  31, 2010 and 2009:

|                                                             |   | 2010        |   |   | 2009        |  
|------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|Future cash inflows                                          | $ | 71,567,654  |   | $ | 206,396,306 |  
|Future production costs                                      |   | (27,256,670 | ) |   | (48,313,327 | )
|Future development costs                                     |   | (20,396,280 | ) |   | (24,167,676 | )
|Future income taxes                                          |   | (7,627,197  | ) |   | (40,049,802 | )
|10% annual discount for estimated timing of
      cash flows |   | (13,459,497 | ) |   | (54,256,189 | )
|Standardized measure of discounted future net cash flows:    | $ | 2,828,010   |   | $ | 39,609,312  |  

F-32

---

Future cash inflows are computed by applying year-end commodity
  prices, adjusted for location and quality differentials on a property-by-property
  basis, to year-end quantities of proved reserves, except in those instances
  where fixed and determinable price changes are provided by contractual arrangements
  at year-end.

In our 2010 year-end reserve report, we used the average price
  of oil at the first of the month for the preceding twelve months period which
  is $69.67 per barrel. No gas reserve was estimated for the new properties

In our 2009 year-end reserve report, we used the July 31, 2009
  NYMEX oil price of $50.00 per barrel and NYMEX natural gas price of $3.75 per
  MMbtu, adjusted by property for energy content, quality, transportation fees,
  and regional price differentials.

Future production and development costs, which include dismantlement
  and restoration expense, are computed by estimating the expenditures to be incurred
  in developing and producing the Companys proved crude oil and natural
  gas reserves at the end of the year, based on the year-end costs, and assuming
  continuation of existing economic conditions. While the Company believes that
  future operating costs can be reasonably estimated, future prices are difficult
  to estimate since market prices are influenced by events beyond its control.
  Future global economic and political events will most likely result in significant
  fluctuations in future oil prices, while future U.S. natural gas prices will
  continue to be influenced by primarily domestic market factors, including supply
  and demand, weather patterns and public policy.

Future income tax expenses are computed by applying the appropriate
  year-end statutory tax rates to the estimated future pretax net cash flows relating
  to the Companys proved crude oil and natural gas reserves, less the tax
  basis of the properties involved. The future income tax expenses give effect
  to tax credits and allowances, but do not reflect the impact of general and
  administrative costs and exploration expenses of ongoing operations relating
  to the Companys proved crude oil and natural gas reserves.

Changes in Standardized Measure of Discounted Future Net Cash
  Flows for the Year Ended July 31, 2010 and 2009:

|                                                       |   | 2010        |   |   | 2009        |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|Beginning of period                                    | $ | 39,609,312  |   | $ | 100,823,493 |  
|(Purchase of minerals in place)                        |   | 4,152,322   |   |   | -           |  
|Sales of minerals in place                             |   | (37,789,320 | ) |   | -           |  
|Net changes in prices and production costs             |   | -           |   |   | (98,826,251 | )
|Sales of oil and gas produced, net of production costs |   | (1,819,989  | ) |   | 213,897     |  
|Net change in income taxes                             |   | (1,324,315  | ) |   | 34,287,522  |  
|Timing and other                                       |   | -           |   |   | 3,110,651   |  
|End of period                                          | $ | 2,828,010   |   | $ | 39,609,312  |  

F-33

---

ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE


None.

ITEM 9AT.        CONTROLS
AND PROCEDURES

Disclosure Controls and Procedures

In the year ending July 31, 2010, Dorals management team
conducted tests of its disclosure control and procedures that are designed to
ensure that information required to be disclosed by the issuer in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.

We carried out an evaluation, under the supervision and with
the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that, due to the loss of a number of employees, we
no longer have the capacity to ensure that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms.

In managements opinion, based on the assessment completed for
the year ended July 31, 2010, and as of July 31, 2010, the disclosure controls
and procedures are not operating effectively.

There have been no changes in internal control over financial
reporting during the fourth quarter that could materially affect or is
reasonably likely to affect our internal control over financial reporting.

Management's Report on Internal Control Over Financial
Reporting

Dorals management is responsible for establishing and
maintaining systems of adequate internal control over financial reporting, as
such term is defined in Exchange Act Rule 13a-15(f) and Disclosure Controls and
Procedures as such term is defined in Exchange Act Rule 13a-15(e) . Because of
its inherent limitations, internal control over financial reporting and
disclosure controls and procedures may not prevent or detect misstatements.

In the year ending July 31, 2010 Dorals management team
conducted tests of its internal control over financial reporting in accordance
with the standards set forth by the Public Company Accounting Oversight Board
("PCAOB") in the United States. In accordance with these standards, management
assessed and tested, on a sample basis, Dorals internal control over financial
reporting according to a comprehensive risk analysis using the Internal Control
- Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission ("COSO"). It is management's opinion that the testing
methodology of the internal control framework is appropriate and provides
reasonable assurance as to the integrity and reliability of the internal control
over financial reporting.

In management's opinion, based on the assessment completed for
the year ended July 31, 2010, and as of July 31, 2010, the internal controls
over financial reporting are not operating effectively. This is due to limited
personnel and a lack of segregation of duties. In connection with the
preparation of this report, we discovered that, due to the difficulty
experienced by management in applying complex accounting standards, our control
environment is dependent upon a review function and the ability to recognize and
obtain assistance for complex transactions, which does not exist. The
ineffectiveness of these controls resulted in adjustments related to the
recording of stock based compensation and purchase price adjustment.

The annual report does not include an attestation report of the
Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the

Page 26 of 39

---

Companys registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only managements report in this annual report.

Changes in internal control over financial reporting

There were no changes in our internal control over financial
reporting during our most recent fiscal quarter that materially affected, or
were reasonably likely to materially affect, our internal control over financial
reporting.

ITEM
9B.            OTHER
INFORMATION

All information required to be disclosed in a report on Form
8-K since the end of our third fiscal quarter ended April 30, 2010 has been
previously reported by us on Form 8-K.

Page 27 of 39

---

PART III

ITEM
10.            DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors and their ages and titles
are as follows:

|Name                     | Age | Position                                                                                                      
|------------------------ | --- | --------------------------------------------------------------------------------------------------------------
|                         |     |                                                                                                               
|Everett Willard Gray, II | 35  | Chairman, Chief Executive Officer, Chief Financial
      Officer, President, Secretary, Treasurer and Director
|                         |     |                                                                                                               
|Brad E. Heidelberg       | 35  | Director                                                                                                      

Set forth below is a brief description of the background and
business experience of our executive officers and directors:

Everett Willard Gray, II has been our Vice Chairman,
Chief Executive Officer and a member of our Board of Directors since December
10, 2008. Mr. Gray is a seasoned executive who has been extensively involved in
entrepreneurial ventures in oil field production as an angel investor and
advisor/consultant to exploration and production start ups. Mr. Gray also has a
diverse background gained from sales and marketing positions with a number of
Fortune 500 companies, including Prudential Financial, Pharmacia Corp.,
Medtronic Inc., and Guidant Corporation.

In April 2007, Mr. Gray founded WS Oil & Gas Limited, which
provides merger and acquisition and capital raising consulting services to
businesses in the energy sector. From August 2006 to March 2007, Mr. Gray was
the CEO and President of Well Renewal Inc., a micro-cap exploration and
production company quoted on the Pink Sheets. Mr. Gray was also a director of
Well Renewal Inc. from April 2006 to March 2007. From July 2002 to July 2006,
Mr. Gray worked as a sales representative for, in turn, Medtronic Inc., Guidant
Corporation and FoxHollow Technologies Inc.

Mr. Gray received his B.S. in Business Management from Texas
State University. While attending Texas State, Mr. Gray was a member of the golf
team, earning Southland Conference All-Academic Honors, as well as being a
member of the Southland Conference Golf Championship team.

Brad E. Heidelberg has been a member of our Board of
Directors since June 4, 2010. For the past five years, Mr. Heidelberg has been a
practicing attorney in Midland, Texas.

Term of Office

Members of our Board of Directors are appointed to hold office
until the next annual meeting of our stockholders or until his or her successor
is elected and qualified, or until he or she resigns or is removed in accordance
with the provisions of the Nevada Revised Statutes (the NRS). Our officers are
appointed by our Board of Directors and hold office until removed by the Board.

Significant Employees

Other than Mr. Gray and Mr. Heidelberg, we do not currently
have any significant employees.

Audit Committee and Audit Committee Financial Expert

Our Board of Directors does not maintain a separately
designated standing audit committee. As a result, our entire Board of Directors
acts as our audit committee. Our Board of Directors does not have an audit
committee charter. None of our directors meets the definition of an "audit
committee financial expert." We may explore the appointment of a financial
expert to our Board of Directors in the future; however, the cost of doing so
may be prohibitive.

Page 28 of 39

---

CODE OF ETHICS

We adopted a Code of Ethics applicable to our principal
executive officer and principal financial officer and certain other finance
executives, which is a code of ethics as defined by applicable rules of the
SEC. Our Code of Ethics is attached as an exhibit to our Annual Report on Form
10-KSB filed with the SEC on October 30, 2007. If we make any amendments to our
Code of Ethics other than technical, administrative, or other non-substantive
amendments, or grant any waivers, including implicit waivers, from a provision
of our Code of Ethics to our principal executive officer and principal financial
officer, or certain other finance executives, we will disclose the nature of the
amendment or waiver, its effective date and to whom it applies in a Current
Report on Form 8-K filed with the SEC.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than 10% of our
equity securities (collectively, the Reporting Persons), to file reports of
ownership and changes in ownership with the SEC. Reporting Persons are required
by SEC regulations to furnish us with copies of all forms they file pursuant to
Section 16(a). Based on our review of the copies of such forms received by us,
other than as described below, no other reports were required for those persons.

During the fiscal year ended July 31, 2010, the following
persons have failed to file, on a timely basis, the identified reports required
by Section 16(a) of the Exchange Act:

|Name and Principal Position                         | Number of Late 
      Reports | Transactions Not 
      Timely Reported | Known Failures to 
      File a Required Form
|--------------------------------------------------- | ----------------------------- | --------------------------------------- | ---------------------------------------------
|Everett Willard Gray, II                            | 25                            | 25                                      | None                                         
|Chairman, Chief Executive Officer, Chief            |                               |                                         |                                              
|Financial Officer, President, Secretary,            |                               |                                         |                                              
|Treasurer and
      Director                        |                               |                                         |                                              
|                                                    |                               |                                         |                                              
|Brad E. Heidelberg                                  | None                          | None                                    | None                                         
|Director                                            |                               |                                         |                                              
|                                                    |                               |                                         |                                              
|Paul C. Kirkitelos                                  | None                          | None                                    | None                                         
|Former Chairman, Former CFO, Former                 |                               |                                         |                                              
|Secretary, Former
      Treasurer & Former Director |                               |                                         |                                              
|                                                    |                               |                                         |                                              
|H. Patrick Seale(3)                                 |                               |                                         |                                              
|Former President, Former COO & Former               | 2                             | 2                                       | None                                         
|Director                                            |                               |                                         |                                              

Page 29 of 39

---

ITEM
11.            EXECUTIVE
COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth total compensation paid to or
earned by our named executive officers, as that term is defined in Item
402(m)(2) of Regulation S-K during the fiscal years ended July 31, 2010 and
2009.

SUMMARY COMPENSATION TABLEName & Principal Position
      Year 
        Ended 
        July 31,
      Salary 
        ($)
      Bonus 
        ($)
      Stock 
        Awards 
        ($)
      Option 
        Awards 
        ($)
      Non-Equity 
        Incentive 
        Plan 
        Compen- 
        sation ($)
      Nonqualified 
        Deferred 
        Compen- 
        sation 
        Earnings 
        ($)
      All Other 
        Compen- 
        sation 
        ($)
      Total 
        ($)Everett Willard Gray, II(1)
        Chairman, CEO, CFO, 
        President, Secretary, 
        Treasurer & Director
      2010 
        2009
      $180,000 
        $180,000
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $12,586 
        $12,586
      $192,586 
        $192,586Paul C. Kirkitelos(2)
        Former Chairman, Former 
        CFO, Former Secretary, 
        Former Treasurer & 
        Former Director
      2010 
        2009
      $0 
        $30,000
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $30,000H. Patrick Seale(3)
        Former President, Former 
        COO & Former Director
      2010 
        2009
      $150,000 
        $180,000
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $150,000 
        $180,000


|(1) | Pursuant to a verbal agreement, we pay Mr. Gray a salary
      of $180,000 per year, beginning May 23, 2009. In addition, we provide Mr.
      Gray with a vehicle allowance in the amount of $1,048.86 per
  month.                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Dr. Kirkitelos was our President and CEO from November
      21, 2007 to December 10, 2008, our Chief Financial Officer, Secretary and
      Treasurer from November 21, 2007 to February 8, 2010 and a Director from
      December 24, 2007 to March 31, 2010. On February 1, 2010, we entered into
      a settlement agreement with Dr. Kirkitelos pursuant to which we agreed to
      pay Dr. Kirkitelos $60,000 for previously accrued and unpaid
      compensation.                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | Pursuant to a verbal agreement, we paid Mr. Seale $15,000
      per month for his services. Mr. Seale acted as a member of our Board of
      Directors and as our Chief Operating Officer from August 11, 2008 to June
      16, 2010, our President from December 10, 2008 to June 16, 2010 and our
      Chief Financial Officer, Secretary and Treasurer from February 8, 2010 to
      June 16, 2010. Pursuant to a separation agreement dated June 15, 2010, we
      agreed to pay Mr. Seale the amount of $150,000 for his services during
      fiscal 2010 to that date.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

As of our fiscal year ended July 31, 2010, no equity awards had
been granted to our named executive officers as that term is defined in Item
402(m)(2) of Regulation S-K.

DIRECTOR COMPENSATION TABLE

The following table sets forth the compensation paid to our
directors during our July 31, 2010 fiscal year, other than directors who were
also named executive officers as that term is defined in Item 402(m)(2).
Compensation paid to directors who were also named executive officers during our
July 31, 2010 fiscal year is set out in the tables above.

Page 30 of 39

---

Name
    Fees Earned or
      Paid in Cash ($)
    Stock Awards
      ($)
    Option Awards
      ($)
    Non-Equity Incentive
      Plan Compensation ($)
    Nonqualified Deferred
      Compensation Earnings ($)
    All Other
      Compensation ($)
    Total ($)Brad E. Heidelberg
    $2,400(1)
    $0
    $0
    $0
    $0
    $25,000
    $27,400


| | (1) | On June 4, 2010, Mr Brad E. Heidelberg was appointed as
        director of the Company to fill the vacancy created by the resignation
        of Dr. Paul Kirkitelos. We paid Mr. Heidelberg a lump sum $25,000 upon
        his appointment as a member of our Board of Directors in consideration
        for his agreement to join our Board. In addition, pursuant to a verbal
        agreement, we paid Brad Heidelberg an additional $2,400 for his services
        during the year ended July 31, 2010.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EMPLOYMENT CONTRACTS

We have no termination of employment or change-in-control
arrangements with any of our executive officers or directors. We have no written
compensation agreements with any of our executive officers or directors.

|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------------

EQUITY COMPENSATION PLANS

The following table sets forth certain information concerning
all equity compensation plans previously approved by stockholders and all
previous equity compensation plans not previously approved by stockholders, as
of the most recently completed fiscal year.

Equity Compensation Plan Information

Plan Category
    Number of Securities to be Issued
      Upon Exercise of Outstanding Options, Warrants and Rights
      (a)
    Weighted-Average Exercise Price of
      Outstanding Options, Warrants and Rights (b)
    Number of Securities Remaining Available
      for Future Issuance Under Equity Compensation Plans (Excluding
      Securities Reflected in column (a)) (c)Equity Compensation Plans Approved By Security Holders
    None
    Not Applicable
    NoneEquity Compensation Plans Not Approved By Security
      Holders
    1,216,000
    $0.17
    3,606,000


2009 Stock Incentive Plan

Effective April 29, 2009, our Board of Directors adopted our
2009 Stock Incentive Plan (the "2009 Plan"). The purpose of the 2009 Plan is to
enhance our long-term stockholder value by offering opportunities to our
directors, officers, employees and eligible consultants (Participants) to
acquire and maintain stock ownership in us in order to give these persons the
opportunity to participate in our growth and success, and to encourage them to
remain in our service.

The 2009 Plan allows us to grant awards to our officers,
directors and employees. In addition, we may grant awards to individuals who act
as consultants to us, so long as those consultants do not provide services
connected to the offer or sale of our securities in capital raising transactions
and do not directly or indirectly promote or maintain a market for our
securities.

Page 31 of 39

---

On adoption, a total of 8,500,000 shares of our common stock
were available for issuance under the 2009 Plan. Effective July 28, 2010, we
amended and restated our 2009 Plan to increase the total number of shares
authorized for issuance under the 2009 Plan to 14,500,000 shares. However, under
the terms of the 2009 Plan, at any time after August 1, 2010, the authorized
number of shares available under the 2009 Plan may be increased by our Board of
Directors, provided that the total number of shares issuable under the 2009 Plan
cannot exceed 15% of the total number of shares of common stock outstanding.

Awards may be granted in the form of options to purchase shares
of our common stock (Option Awards) or in the form of shares of our common
stock (Stock Awards). Option Awards granted under the 2009 Plan may be made in
the form of incentive stock options and non-qualified stock options. Incentive
stock options granted under the 2009 Plan are those intended to qualify as
incentive stock options as defined under Section 422 of the Internal Revenue
Code. However, in order to qualify as incentive stock options under Section
422 of the Internal Revenue Code, the 2009 Plan must be approved by our
stockholders within 12 months of its adoption. The 2009 Plan has not been
approved by our stockholders and there is no assurance that the 2009 Plan will
be approved by our stockholders. Non-qualified stock options granted under the
2009 Plan are option grants that do not qualify as incentive stock options under
Section 422 of the Internal Revenue Code. Stock Awards may be made subject to
such terms, conditions and restrictions as the plan administrator may, in its
sole discretion, decide, including transfer restrictions and vesting provisions.

The above description of the 2009 Plan does not purport to
be complete, and is qualified in its entirety by reference to the full text of
the 2009 Plan as amended and restated, which was attached as an exhibit to our
Current Report on Form 8-K filed with the SEC on July 30, 2010 and is
incorporated by reference herein.

On May 26, 2009, we filed a Registration Statement on Form S-8
(Registration Number 333-159480) under the Securities Act of 1933, as amended
(the Securities Act), to register 8,500,000 shares of our common stock
available for issuance under the 2009 Plan. On August 10, 2010 we filed a
Registration Statement on Form S-8 (Registration Number 333-168724) under the
Securities Act to register an additional 6,000,000 shares of our common stock
available for issuance under the 2009 Plan as amended and restated.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of November 10,
2010 by: (i) each person (including any group) known to us to own more than five
percent (5%) of any class of our voting securities, (ii) each of our directors
and each of our named executive officers, and (iii) officers and directors as a
group. Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown.

Title of Class
      Name and Address of Beneficial
        Owner
      Amount and Nature of Beneficial Ownership
      Percentage of Common Stock(1)DIRECTORS AND OFFICERSCommon Stock
      Everett Willard Gray, II (2)
        Chairman, Chief Executive Officer, Chief Financial 
        Officer, President, Secretary, Treasurer and 
        Director
      13,668,141 
        (indirect)
      11.4%Common Stock
      Brad E. Heidelberg 
        Director
      0
      0%Common Stock
      Paul C. Kirkitelos 
        Former director and officer
      14,327,600 
        (direct)
      12.8%Common Stock
      H. Patrick Seale(3)
        Former director and officer
      11,250,000 
        (indirect)
      10.1%Common Stock
      All Officers and Directors 
        as a Group (4 persons)
      39,245,741
      32.8%


Page 32 of 39

---

Title of Class
      Name and Address of Beneficial
        Owner
      Amount and Nature of Beneficial Ownership
      Percentage of Common Stock(1)5% STOCKHOLDERSCommon Stock
      Paul C. Kirkitelos 
        Suite 250, 111 N. Sepulveda Blvd. 
        Manhattan Beach, CA 90266
      14,327,600 
        (direct)
      12.8%Common Stock
      H. Patrick Seale(3)
        14942 Sandalfoot Street 
        Houston, TX 77095
      11,250,000 
        (indirect)
      10.1%Common Stock
      Everett Willard Gray, II (2)
        2002 Bedford 
        Midland, Texas 79701
      13,668,141 
        (indirect)
      11.4%Common Stock
      C.K. Cooper & Associates, Inc. 
        18300 Von Karman Ave., Suite 700, 
        Irvine, CA 92612
      5,760,000 
        (direct)
      5.2%


|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights. As a result, the percentage of outstanding shares of any person as
      shown in this table does not necessarily reflect the persons actual
      ownership or voting power with respect to the number of shares of common
      stock actually outstanding on November 10, 2010. As of November 10, 2010,
      there were 111,433,086 shares of our common stock issued and
      outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Everett Willard Gray, II holds the shares listed as
      beneficially owned by him indirectly through WS Oil & Gas Limited, a
      limited partnership controlled by Mr. Gray. The shares listed as
      beneficially owned by Mr. Gray consist of 5,668,141 shares of our common
      stock owned by WS Oil & Gas, plus an additional 8,000,000 shares of
      our common stock issuable upon exercise of the convertible note issued to
      WS Oil & Gas, calculated using the minimum conversion price of $0.05
      per share as set out in the terms of the note. As of the date of filing of
      this Annual Report, an aggregate of $400,000 is due to WS Oil & Gas
      under the convertible note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | H. Patrick Seale holds the shares listed as beneficially
      owned by him indirectly through Seale Energy Partners LP, a limited
      partnership controlled by Mr. Seale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

CHANGES IN CONTROL

We have executed a letter of intent to enter into a proposed
business combination transaction with Pure Gas Partners II, LP (Pure Gas). The
proposed business combination is expected to result in a change in control, with
Pure Gas owning approximately 80% of the combined entity. Completion of the
proposed business combination is subject to the execution of final binding
documentation and the approval of Pure Gas stakeholders.

Page 33 of 39

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ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE


RELATED TRANSACTIONS

Except as disclosed below, none of the following persons has,
during the last two fiscal years, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:

|(a) | any director or officer;                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | any proposed nominee for election as a
director;                                                                                                                                                      
|(c) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to the
      Company's Common Stock;                                       
|(d) | any promoters; or                                                                                                                                                                                     
|(e) | any relative or spouse of any of the foregoing persons,
      or any relative of such spouse, who has the same house as such person or
      who is a director or officer of any parent or
subsidiary.

Issuance of Convertible Promissory Note to W.S. Oil and Gas
Limited

On August 24, 2009, we issued a convertible promissory note
(the Note) in the principal amount of $250,000 to W.S. Oil and Gas Limited, a
limited partnership controlled by Everett Willard Gray, II, our Vice Chairman
and Chief Executive Officer and a holder of more than five percent of our common
stock, in consideration for a loan from W.S. Oil and Gas in the principal amount
of the Note. Under the terms of the Note, we shall repay to W.S. Oil and Gas a
total of $500,000, payable in installments as follows:

| | (i)  | 24 monthly installments of $16,666.67 beginning November
      1, 2009; and
| | ---- | ---------------------------------------------------------------------------
| |      |                                                                            
| | (ii) | 12 monthly installments of $8,333.33 beginning November
      1, 2011.     

We are currently in default under the terms of the WS Oil Note.
As such, WS Oil and Gas shall have the right to convert any remaining principal
and interest due under the WS Oil Note into shares of our common stock at a
conversion price equal to the greater of four times the fair market value of our
common stock at the time the conversion right is exercised, and $0.05. WS Oil
and Gas has not yet exercised any of its default rights, however, there is no
assurance that they will not do so in the future. We are currently in
discussions with WS Oil and Gas to renegotiate the terms of the amounts owed
under the WS Oil Note. As of the date of filing of this Annual Report, we owed
$400,000 under the WS Oil Note.

Loan Agreement with Everett Willard Gray, II

On June 11, 2010, we entered into an agreement with Everett
Willard Gray, II, our Chief Executive Officer and Chairman of our Board of
Directors, for the principal sum of $68,800 on account of amounts advanced by
Mr. Gray to us for payment of certain operating and administrative expenses.
Under the terms of our loan agreement with Mr. Gray, we have agreed to pay to
Mr. Gray a total of $75,680 on account of principal and interest on or before
July 30, 2010.

C.K. Cooper & Associates Inc.

We issued an aggregate of 9,600,000 shares of our common stock
to C.K. Cooper & Associates, Inc. (CK Cooper) and their nominees in
exchange for CK Coopers agreement to provide us with financial advisory
services, including advising us on potential financing, business combination and
asset acquisition opportunities.

DIRECTOR INDEPENDENCE

Our common stock is quoted on the OTC Bulletin Board
inter-dealer quotation system, which does not have director independence
requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be
independent if he or she is also an executive officer or employee of the
corporation. Brad E. Heidelberg is our sole independent director.

Page 34 of 39

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ITEM
14.            PRINCIPAL
ACCOUNTING FEES AND SERVICES

The aggregate fees billed for the fiscal years ended July 31,
2010 and 2009 for professional services rendered by the principal accountant for
the audit of the Corporations annual financial statements and review of the
financial statements included in our Quarterly Reports on Form 10-Q and services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for these fiscal periods were as follows:

|                   | Year Ended July 31, 2010 | Year Ended July 31, 2009
|------------------ | ------------------------ | ------------------------
|Audit Fees         | $120,000                 | $99,000                 
|Audit-Related Fees | $0                       | $0                      
|Tax Fees           | $0                       | $0                      
|All Other Fees     | $0                       | $0                      
|Total              | $120,000                 | $99,000                 

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

Our Board of Directors pre-approves all audit and non-audit
services performed by our independent auditors during the fiscal year.

No non-audit services were provided by our independent auditors
  during the last two fiscal years.

Page 35 of 39

---

ITEM 15.    
       EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

|Exhibit |                                                                                                                                                                                                                                               
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                               
|2.1     | Agreement and Plan of Merger dated April 21, 2008 between
      Language Enterprises Corp. (as surviving entity) and Doral Energy Corp.
      (as merging entity) and changing the name of the surviving entity to Doral
      Energy Corp.(6)
|        |                                                                                                                                                                                                                                               
|3.1     | Articles of Incorporation.(1)                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                               
|3.2     | Certificate of Change Pursuant to NRS 78.209 increasing
      the authorized capital of common stock to 2,500,000,000 shares, par value
      $0.001 per share (25-for-1 Stock Split).(3)                                                     
|        |                                                                                                                                                                                                                                               
|3.3     | Articles of Merger between Language Enterprises Corp. (as
      surviving entity) and Doral Energy Corp. (as merging
      entity).(6)                                                                                                        
|        |                                                                                                                                                                                                                                               
|3.4     | Certificate of Change Pursuant to NRS 78.209 decreasing
      the authorized capital of common stock to 400,000,000 shares, par value
      $0.001 per share (1-for-6.25 Reverse Split).(18)                                                  
|        |                                                                                                                                                                                                                                               
|3.5     | Certificate of Change Pursuant to NRS 78.209 increasing
      the authorized capital of common stock to 2,000,000,000 shares, par value
      $0.001 per share (5-for-1 Stock Split).(29)                                                     
|        |                                                                                                                                                                                                                                               
|3.6     | Bylaws.(1)                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                               
|10.1    | Loan Agreement dated as of March 7, 2008 with Little Bay
      Consulting SA.(4)                                                                                                                                                              
|        |                                                                                                                                                                                                                                               
|10.2    | Letter Agreement dated April 10, 2008 with G2 Petroleum,
      LLC.(5)                                                                                                                                                                        
|        |                                                                                                                                                                                                                                               
|10.3    | Purchase and Sale Agreement dated April 25, 2008 with J.
      Warren Hanson, doing business as Hanson Energy, and his wife Kathie
      Hanson.(7)                                                                                           
|        |                                                                                                                                                                                                                                               
|10.4    | Loan Agreement between the Company (as borrower) and
      Green Shoe Investments Ltd. (as lender) dated May 9, 2008 for the amount
      of $100,000.(8)                                                                                     
|        |                                                                                                                                                                                                                                               
|10.5    | Loan Agreement between the Company (as borrower) and
      Green Shoe Investments Ltd. (as lender) dated May 23, 2008 for the amount
      of $150,000.(9)                                                                                    
|        |                                                                                                                                                                                                                                               
|10.6    | Title Work Agreement dated May 12, 2008 with Arena
      Resources, Inc.(10)                                                                                                                                                                  
|        |                                                                                                                                                                                                                                               
|10.7    | Amendment Agreement to Share Purchase Agreement dated
      July 17, 2008 between J. Warren Hanson, doing business as Hanson Energy,
      his wife Kathie Hanson, and Doral Energy Corp. (formerly Language
      Enterprises Corp.)(11)     
|        |                                                                                                                                                                                                                                               
|10.8    | Loan Agreement dated July 18, 2008 between Doral Energy
      Corp. and Little Bay Consulting SA.(11)                                                                                                                                         
|        |                                                                                                                                                                                                                                               
|10.9    | Loan Agreement dated July 18, 2008 between Doral Energy
      Corp. and Green Shoe Investments Ltd.(11)                                                                                                                                       
|        |                                                                                                                                                                                                                                               
|10.10   | Credit Agreement dated July 29, 2008 between Doral Energy
      Corp. and Macquarie Bank Limited.(12)                                                                                                                                         
|        |                                                                                                                                                                                                                                               
|10.11   | Security Agreement dated July 29, 2008 between Doral
      Energy Corp. and Macquarie Bank Limited.(12)                                                                                                                                       
|        |                                                                                                                                                                                                                                               
|10.12   | Subordination Agreement dated July 29, 2008 between Doral
      Energy Corp., Green Shoe Investments Ltd. and Macquarie Bank
      Limited.(12)                                                                                               
|        |                                                                                                                                                                                                                                               
|10.13   | Subordination Agreement dated July 29, 2008 between Doral
      Energy Corp., Little Bay Consulting SA and Macquarie Bank
      Limited.(12)                                                                                                  
|        |                                                                                                                                                                                                                                               
|10.14   | Net Profits Overriding Royalty Interest Conveyance dated
      July 29, 2008 between Doral Energy Corp. and Macquarie Investments,
      LLC.(12)                                                                                             
|        |                                                                                                                                                                                                                                               
|10.15   | Conversion Agreement dated July 29, 2008 between Doral
      Energy Corp. and Macquarie Investments, LLC.(12)                                                                                                                                 
|        |                                                                                                                                                                                                                                               
|10.16   | Limited Forbearance Agreement dated December 10, 2008
      between Macquarie Bank Limited and Doral Energy Corp.(15)                                                                                                                         
|        |                                                                                                                                                                                                                                               
|10.17   | Loan Agreement dated October 3, 2008 between Doral Energy
      Corp. and Little Bay Consulting SA.(13)                                                                                                                                       
|        |                                                                                                                                                                                                                                               
|10.18   | First Amendment to Credit Agreement between Doral Energy
      Corp. and Macquarie Bank Limited dated November 19, 2008.(16)                                                                                                                  
|        |                                                                                                                                                                                                                                               
|10.19   | Second Amendment to Credit Agreement between Doral Energy
      Corp. and Macquarie Bank Limited dated January 9, 2009.(16)                                                                                                                   
|        |                                                                                                                                                                                                                                               
|10.20   | Letter Agreement dated January 15, 2009 between Doral
      Energy Corp. and Miltex Oil                                                                                                                                                       

Page 36 of 39

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|Exhibit |                                                                                                                                                                           
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                   
|        |                                                                                                                                                                           
|        | Company.(17)                                                                                                                                                              
|        |                                                                                                                                                                           
|10.21   | Engagement Agreement dated January 26, 2009 between Doral
      Energy Corp. and C.K. Cooper & Company, Inc.(19)                                                          
|        |                                                                                                                                                                           
|10.22   | Debt Advisory Agreement dated January 30, 2009 between
      Doral Energy Corp. and C.K. Cooper & Company, Inc.(19)                                                       
|        |                                                                                                                                                                           
|10.23   | Loan Agreement dated February 24, 2009 between Doral
      Energy Corp. (as borrower) and Green Shoe Investments Ltd. (as lender) in
      the amount of $100,000 USD.(20)
|        |                                                                                                                                                                           
|10.24   | Amendment Agreement dated February 13, 2009 to Engagement
      Agreement between Doral Energy Corp. and C.K. Cooper & Company,
      Inc.(20)                            
|        |                                                                                                                                                                           
|10.25   | Amendment Agreement dated March 31, 2009, 2009 to Letter
      Agreement between Doral Energy  Corp. and Miltex Oil
      Company.(21)                                    
|        |                                                                                                                                                                           
|10.26   | Amendment Agreement dated April 21, 2009, 2009 to Letter
      Agreement between Doral Energy Corp. and Miltex Oil
      Company.(22)                                     
|        |                                                                                                                                                                           
|10.27   | 2009 Stock Incentive Plan.(23)                                                                                                                                            
|        |                                                                                                                                                                           
|10.28   | Loan Agreement dated April 29, 2009 between Doral Energy
      Corp. and Green Shoe Investments Ltd. (24)                                                                 
|        |                                                                                                                                                                           
|10.29   | Sale and Purchase Agreement dated May 5, 2009 between
      Doral Energy Corp. and Flaming S, Inc. (24)                                                                   
|        |                                                                                                                                                                           
|10.30   | Sale and Purchase Agreement dated May 15, 2009 between
      Doral Energy Corp. and Slape Oil Company, Inc.(24)                                                           
|        |                                                                                                                                                                           
|10.31   | Convertible Note Agreement dated May 28, 2009 between
      Doral Energy Corp. and Green Shoe Investments Ltd.(25)                                                        
|        |                                                                                                                                                                           
|10.32   | Assignment Agreement dated July 30, 2009.(26)                                                                                                                             
|        |                                                                                                                                                                           
|10.33   | Consent to Assignment Agreement dated for July 29,
      2009.(26)                                                                                                        
|        |                                                                                                                                                                           
|10.34   | Macquarie Forbearance Agreement dated July 30,
      2009.(26)                                                                                                            
|        |                                                                                                                                                                           
|10.35   | Convertible Promissory Note dated August 24, 2009 in the
      principal amount of $250,000 issued to W.S. Oil and Gas
      Limited.(27)                                 
|        |                                                                                                                                                                           
|10.36   | Macquarie Forbearance Agreement dated August 28,
      2009.(28)                                                                                                          
|        |                                                                                                                                                                           
|10.37   | Macquarie Forbearance Agreement dated November 9,
      2009.(30)                                                                                                         
|        |                                                                                                                                                                           
|10.38   | Amendment Agreement to Convertible Promissory Note
      between W.S. Oil and Gas Limited and Doral Energy Corp.(30)                                                      
|        |                                                                                                                                                                           
|10.39   | Form of 4% Convertible Note Subscription Agreement.
      (31)                                                                                                            
|        |                                                                                                                                                                           
|10.40   | Settlement Agreement dated between Doral Energy Corp. and
      Paul C. Kirkitelos dated February 8, 2010.(32)                                                            
|        |                                                                                                                                                                           
|10.41   | Loan and Cancellation of Convertible Note Agreement
      between Doral Energy Corp. and Edward Ajootian dated March 3,
      2010.(33)                                   
|        |                                                                                                                                                                           
|10.42   | Debt Settlement Agreement with War Chest Multi-Strategy
      Fund, LLC dated March 8, 2010.(33)                                                                          
|        |                                                                                                                                                                           
|10.43   | Amendment Agreement dated March 12, 2010 to Debt
      Settlement Agreement with War Chest Multi-Strategy Fund,
      LLC.(33)                                            
|        |                                                                                                                                                                           
|10.44   | Macquarie Forbearance Agreement dated March 8,
      2010.(33)                                                                                                            
|        |                                                                                                                                                                           
|10.45   | Release and Settlement Agreement between Doral Energy
      Corp. and Macquarie Bank Limited dated March 8, 2010.(33)                                                     
|        |                                                                                                                                                                           
|10.46   | Purchase and Sale Agreement dated April 30, 2010 between
      Doral Energy Corp. and Alamo Resources LLC.(34)                                                            
|        |                                                                                                                                                                           
|10.47   | Forbearance Agreement dated April 30, 2010 between Doral
      Energy Corp. and Macquarie Bank Limited.(34)                                                               
|        |                                                                                                                                                                           
|10.48   | Loan Agreement dated June 11, 2010 between Doral Energy
      Corp. and Everett Willard Gray, II.(36)                                                                     
|        |                                                                                                                                                                           
|10.49   | Purchase and Sale Agreement dated June 14, 2010 between
      Doral Energy Corp., John R. Stearns and John R. Stearns Jr.(35)                                             
|        |                                                                                                                                                                           
|10.50   | Amended and Restated 2009 Stock Incentive
      Plan.(37)                                                                                                                 

Page 37 of 39

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|Exhibit |                                                                                                                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                                                       
|        |                                                                                                                                                                                                               
|10.51   | Debt Settlement
        Agreement dated September 16, 2010 between the Company and War Chest Multi-Strategy
        Fund, LLC.(38)                                                                            
|        |                                                                                                                                                                                                               
|10.52   | Debt Settlement
        Agreement dated September 16, 2010 between the Company and Barclay Lyons,
        LLC.(38)                                                                                            
|        |                                                                                                                                                                                                               
|10.53   | Loan Agreement
        dated September 28, 2010 between the Company with Pure Gas Partners II,
        L.P.(38)                                                                                               
|        |                                                                                                                                                                                                               
|10.54   | Secured Convertible
        Promissory Note dated September 1, 2010 between the Company and Angirekula
        Family Limited Partnership.(38)                                                                
|        |                                                                                                                                                                                                               
|10.55   | Separation
        Agreement dated June 15, 2010 between Doral Energy Corp. and H. Patrick
        Seale.                                                                                                     
|        |                                                                                                                                                                                                               
|14.1    | Code of Ethics.(2)                                                                                                                                                                                            
|        |                                                                                                                                                                                                               
|21.1    | List
        of Subsidiaries.                                                                                                                                                                                 
|        |                                                                                                                                                                                                               
|23.1    | Consent
        of Malone & Bailey PC, Certified Public Accountants and Business Consultants.                                                                                                                 
|        |                                                                                                                                                                                                               
|23.2    | Consent of Joe C. Neal & Associates.                                                                                                                                                                          
|        |                                                                                                                                                                                                               
|31.1    | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to Section 302 of the Sarbanes-Oxley Act of 2002.                                                       
|        |                                                                                                                                                                                                               
|32.1    | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.
|        |                                                                                                                                                                                                               
|99.1    | Estimated Reserves
      and Future Net Revenue as of August 1, 2010, Attributable to Interests Owned
      by Doral Energy, Corp. In Certain Properties Located in Texas (SEC Case).                         

|(1)  | Filed as an exhibit to our Registration Statement on Form
      SB-2 filed on September 11, 2006.                        
|---- | -------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended July 31, 2007 filed on October 30, 2007.
|(3)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on January 9, 2008.                                    
|(4)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on March 12, 2008.                                     
|(5)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 16, 2008.                                     
|(6)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 28, 2008.                                     
|(7)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 1, 2008.                                        
|(8)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 13, 2008.                                       
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 21, 2008.                                       
|(10) | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 27, 2008.                                       
|(11) | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 23, 2008.                                      
|(12) | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 4, 2008.                                     
|(13) | Filed as an exhibit to our Current Report on Form 8-K
      filed on October 22, 2008.                                   
|(14) | Filed as an exhibit to our Annual Report on Form 10-K
      filed on October 29, 2008                                    
|(15) | Filed as an exhibit to our Current Report on Form 8-K
      filed on December 11, 2008.                                  
|(16) | Filed as an exhibit to our Current Report on Form 8-K
      filed on January 14, 2009.                                   
|(17) | Filed as an exhibit to our Current Report on Form 8-K
      filed on January 22, 2009.                                   
|(18) | Filed as an exhibit to our Current Report on Form 8-K
      filed on January 29, 2009.                                   
|(19) | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 9, 2009.                                   
|(20) | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 25, 2009.                                  
|(21) | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 6, 2009.                                      
|(22) | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 27, 2009.                                     
|(23) | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 5, 2009.                                        
|(24) | Filed as an exhibit to our Current Report on Form 8-K
      filed on June 2, 2009.                                       
|(25) | Filed as an exhibit to our Quarterly Report on Form 10-Q
      filed on June 15, 2009.                                   
|(26) | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 5, 2009.                                     
|(27) | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 28, 2009.                                    
|(28) | Filed as an exhibit to our Current Report on Form 8-K
      filed on September 2, 2009.                                  
|(29) | Filed as an exhibit to our Current Report on Form 8-K
      filed on September 14, 2009.                                 
|(30) | Filed as an exhibit to our Annual Report on Form 10-K
      filed on November 13, 2009.                                  
|(31) | Filed as an exhibit to our Quarterly Report on Form 10-Q
      filed on December 21, 2009.                               
|(32) | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 8, 2010.                                   
|(33) | Filed as an exhibit to our Quarterly Report on Form 10-Q
      filed on March 22, 2010.                                  
|(34) | Filed as an exhibit to our Current Report on Form 8-K
      filed on May 6, 2010.                                        
|(35) | Filed as an exhibit to our Current Report on Form 8-K
      filed on June 18, 2010.                                      
|(36) | Filed as an exhibit to our Quarterly Report on Form 10-Q
      filed on June 21, 2010.                                   
|(37) | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 30, 2010.                                      
|(38) | Filed as an exhibit to our Current Report on Form 8-K
      filed on October 1, 2010.                                    

Page 38 of 39

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|                        |     | DORAL ENERGY CORP.                                                                                
|----------------------- | --- | --------------------------------------------------------------------------------------------------
|                        |     |                                                                                                   
|                        |     |                                                                                                   
|                        |     |                                                                                                   
|Date: November 15, 2010 | By: | /s/ Everett Willard Gray, II                                                                      
|                        |     | EVERETT WILLARD GRAY, II                                                                          
|                        |     | Chairman, Chief Executive
      Officer, Chief Financial Officer, President, Secretary & Treasurer
|                        |     | (Principal Executive Officer and
      Principal Accounting Officer)                              



Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.



|Date: November 15, 2010 | By: | /s/ Everett Willard Gray, II                                                                      
|----------------------- | --- | --------------------------------------------------------------------------------------------------
|                        |     | EVERETT WILLARD GRAY, II                                                                          
|                        |     | Chairman, Chief Executive
      Officer, Chief Financial Officer, President, Secretary & Treasurer
|                        |     |                                                                                                   
|                        |     |                                                                                                   
|                        |     |                                                                                                   
|                        |     |                                                                                                   
|Date: November 15, 2010 | By: | /s/ Brad E. Heidelberg                                                                            
|                        |     | BRAD E. HEIDELBERG                                                                                
|                        |     | Director                                                                                          

Page 39 of 39

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