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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, 2009

[   ] 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.)           
|                                                                   |                                                
|415 West Wall, Suite 500                                           |                                                
|Midland, TX                                                        | 79701                                          
|(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: $23,832,724 based on a price of $3.05,being the last price at which the shares of the Registrant's
common stock were sold on the OTC Bulletin Boardprior to
the end of the most recently completed second fiscal quarter.

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 12, 2009, the Registrant had 87,116,480 shares of
common stock outstanding.

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DORAL ENERGY CORP.

ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JULY 31,
2009

TABLE OF CONTENTS

PAGEPART I
      3ITEM 1.
      BUSINESS
      3ITEM 1A.
      RISK FACTORS
      7ITEM 2.
      PROPERTIES
      13ITEM 3.
      LEGAL PROCEEDINGS
      21ITEM 4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
      21PART II
      22ITEM 5.
      MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
        MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
      22ITEM 7.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS
      23ITEM 8.
      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
      29ITEM 9.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE
      30ITEM 9AT.
      CONTROLS AND PROCEDURES
      30ITEM 9B.
      OTHER INFORMATION
      31PART III
      33ITEM 10.
      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
      33ITEM 11.
      EXECUTIVE COMPENSATION
      35ITEM 12.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
        AND RELATED STOCKHOLDER MATTERS
      36ITEM 13.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
        INDEPENDENCE
      38ITEM 14.
      PRINCIPAL ACCOUNTING FEES AND SERVICES
      40ITEM 15.
      EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
      41SIGNATURES
      44


Page 2 of 44

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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 with the
goal of creating value by improving the performance and production of those
properties. Our business strategy is to seek out and acquire oil and gas
properties with proven, low risk reserves that are underperforming or are
under-exploited due to such reasons as poor production and completion practices,
the use of outdated and obsolete equipment, a lack of regular maintenance, or a
lack of the necessary capital to develop proved developed non-producing (PDNP)
and proved undeveloped (PUD) reserves.

Our principal executive offices are located at 415 West Wall
Street, Suite 500, Midland, Texas 79701, and our telephone number is (432)
789-1180. Our internet website can be found at www.doralenergy.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.

Page 3 of 44

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Business Development

From our inception, we have built our asset base primarily
through property acquisitions and we plan to continue building our asset base in
this manner. 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 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 plan is to seek out and acquire 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. Our 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. Further, our business development strategy
involves finding acquisitions that can be paid for with a combination of cash
and shares of our common stock, with an emphasis toward minimizing the cash
outlay at the time of acquisition in order to preserve available cash for the
exploitation and development of our properties in order to enhance production
and create value. In order to increase the overall success of our acquisitions
effort, we use our headquarters here in Midland and our industry contacts to
seek out acquisitions through negotiated sales, avoiding bid situations, which
also tends to reduce our acquisition costs when compared to industry
metrics.

As of July 31, 2009, our estimated total proved reserves had a
pre-tax PV10 (present value of future net revenues before income taxes
discounted at 10%) of approximately $56.5 million and a Standardized Measure of
Discounted Future Net Cash Flows of approximately $39.6 million. The difference
between these two amounts is the effect of income taxes. We are presenting the
pre-tax PV-10 value, which is a non-GAAP financial measure, because it is a
widely used industry standard which we believe is useful to those who may review
this Annual Report when comparing our asset base and performance to other
comparable oil and gas companies.

As of July 31, 2009, we have a portfolio of oil and natural gas
  reserves, with approximately 91.9% of our proved reserves consisting of oil
  and 8.1% consisting of natural gas. Of those reserves, approximately 15.7% of
  our proved reserves are classified as proved developed producing, or PDP,
  approximately 4.8% of our proved reserves are classified as proved developed
  non-producing, or PDNP, and approximately 79.5% of our proved reserves
  are classified as proved undeveloped, or PUD.

Hedging Transactions

In August 2008, we entered into a costless collar hedging
position, which provided us with partial protection against variations in the
price of crude oil. The net effect of the costless collar was to set a floor of
$100 on the price to be received for each barrel of production covered and a
ceiling of $131 for each barrel of production covered.

During 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 per
barrel, covers the period from January 2009 through June 2010 and effectively
guarantees us $94 per barrel on an average of our first 2,250 barrels of
production each month. From July 2010 through December 2011, there is a costless
collar in effect on an average of 1,850 barrels per month, guaranteeing a
minimum of $60 per barrel and a maximum of $94 per barrel.

A costless collar or zero cost collar involves the
simultaneous purchase of a put option and sale of a call option. The put option
sets a floor for the covered position, while the call option sets a cap for the
covered position. There is no net cost in entering into the costless collar as
the cost of purchasing the put is offset by the proceeds of the call.

Page 4 of 44

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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.

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 presently committed to using the services and existing
gas gathering systems of the companies that purchase our natural gas production.
This commitment is tied to existing natural gas purchasing contracts associated
with our production. This commitment potentially gives such gathering companies
certain short-term relative monopolistic powers to set gathering,
transportation, and treating costs, because obtaining the services of an
alternative gathering company would require substantial additional costs since
an alternative gathering company would be required to lay a new pipeline and/or
obtain new rights-of-way to any lease from which we are selling production. We
are not subject to such third-party gathering systems for our oil production. A
very small amount of our oil production is sold through a crude oil purchaser
oil pipeline. All other oil production is transported by the oil purchaser by
trucks with competitive trucking costs in the area.

Major Customers

For the fiscal year 2009, ending July 31, 2009, we had oil and
natural gas sales to four customers, Navajo Refining Company, ConocoPhillips
Company, DCP Midstream LP, and Frontier Field Services, which represented
approximately 91.0%, 6.9%, 2.0%, and 0.1% of our oil and natural gas revenues,
respectively. However, we believe that the loss of these customers would not
materially impact our business, because we could readily find other purchasers
for our oil and natural gas 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

Page 5 of 44

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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.

Employees

As of July 31, 2009, we employed 10 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.

Page 6 of 44

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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.

We have not met all of our obligations under the Macquarie
Credit Agreement and Macquarie could exercise its security rights on our
properties. We will require additional financing to repay the amounts owed under
the Macquarie Credit Agreement.

We did not meet our minimum quarterly operating cash flow and
minimum quarterly production volume targets for the period ended October 31,
2008, and we did not meet our minimum quarterly operating cash flow targets for
the periods ending January 31, 2009 and April 30, 2009, as set under the
Macquarie Credit Agreement. As a result, Macquarie has the right to terminate
its commitments under the Macquarie Credit Agreement and to declare the amounts
owed to be immediately due and payable. If they exercise this right, Macquarie
will also have the right to seize any of our properties over which they have a
security interest, including the Eddy County Properties. The amounts owed by us
under the Macquarie Credit Agreement are currently due and payable, and we do
not currently have sufficient financial resources to repay the amounts owed. We
have entered into a forbearance agreement, pursuant to which Macquarie has
agreed not exercise their rights or remedies with respect to our failure to pay
until at least January 29, 2009 (the Forbearance Period). There is no
assurance that we will be able to pay the amounts due to Macquarie by the end of
the Forbearance Period and there is no assurance that Macquarie will not
exercise their rights and remedies in the future.

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 Hanson Project 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

Page 7 of 44

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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.

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

Page 8 of 44

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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.

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

We have entered into hedging transactions for a portion of our
expected production to reduce the risk of fluctuations in oil and gas prices.
Although these hedging transactions provide us with some protection in the event
of a decrease in oil and gas prices, they may also 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.

Page 9 of 44

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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 largely upon the efforts, abilities, and
decision-making of Paul C. Kirkitelos, Chairman of our Board, Chief Financial
Officer, Treasurer, and Secretary; Everett Willard Gray II, Chief Executive
Officer and

Page 10 of 44

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Vice-Chairman; H. Patrick Seale, President and Chief Operating
Officer; and C. Martin Bloodworth, Vice President of Operations. The loss of
these individuals would have an adverse effect on our business prospects. We do
not currently maintain "key-man" life insurance and there is no contract in
place assuring the services of Dr. Kirkitelos, Mr. Gray, Mr. Seale, or Mr.
Bloodworth 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.

Our management currently owns a large portion of our
outstanding stock and may act to influence certain types of corporate actions,
to the detriment of other stockholders.

Our management currently owns approximately 35.7% of our
outstanding stock, with Dr. Paul C. Kirkitelos owning approximately 27.3%, and
Mr. Everett Willard Gray, II owning approximately 6.7% . Accordingly, they may
exercise significant influence over all matters requiring stockholder approval,
including the election of directors and the determination of significant
corporate actions. This concentration could also have the effect of delaying or
preventing a change in control that could otherwise be beneficial to our
stockholders.

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:

Page 11 of 44

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|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                                                                                                                             
|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 12 of 44

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ITEM
2.             
PROPERTIES

GENERAL BACKGROUND

From our inception, we have built our asset base primarily
through property acquisitions 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.

As of July 31, 2009, our estimated proved reserves had a
pre-tax PV10 (present value of future net revenues before income taxes
discounted at 10%) of approximately $56.5 million and a Standardized Measure of
Discounted Future Net Cash Flows of approximately $39.6 million. All of these
reserves and values are currently contained in our Hanson Project, located in
Eddy County, New Mexico.

The following table summarizes our total net proved reserves,
pre-tax PV10 values, and Standardized Measure of Discounted Future Net Cash
Flows as of July 31, 2009.

StandardizedMeasure ofDiscountedGeographic
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Pre-Tax
    
    
    Future NetArea
    
    (Bbls)
    
    
    (MCF)
    
    
    (BOE)
    
    
    PV10 Value
    
    
    Cash FlowsNew Mexico
    
    3,078,306
    
    
    1,636,350
    
    
    3,351,031
    
    $
    56,509,505
    
    $
    39,609,312Texas
    
    0
    
    
    0
    
    
    0
    
    $
    -
    
    $
    -Totals
    
    3,078,306
    
    
    1,636,350
    
    
    3,351,031
    
    $
    56,509,505
    
    $
    39,609,312


Proved Reserves

Our estimates of total proved reserves as of July 31, 2009
(SEC Reserves) are based on an independent, third-party reserve assessment and
report prepared by Russell Hall & Associates of Midland, Texas, independent
petroleum engineers, in accordance with the provisions of SFAS 69, Disclosures
About Oil and Gas Producing Activities. The estimates of proved reserves are
inherently imprecise and are continually subject to revision based on production
history, results of additional exploitation and development, price changes, and
other factors.

Our 3,351,031 BOE of total proved SEC Reserves, which consist
of approximately 91.9% oil and 8.1% natural gas, are summarized below as of July
31, 2009, on a pre-tax PV10 value and Standardized Measure of Discounted Future
Net Cash Flow basis. Our reserve estimates have not been filed with any Federal
authority or agency (other than the SEC).

As of July 31, 2009, all of our proved reserves are located in
the State of New Mexico. Approximately 15.7% of the total proved reserves have
been classified as proved developed producing, or PDP. Proved developed
non-producing, or PDNP reserves make up approximately 4.8% of the total proved
reserves. Proved undeveloped, or PUD reserves constitute approximately 79.5%
of the total proved reserves as of July 31, 2009.

Our total proved SEC Reserves had a net pre-tax PV10 value as
of July 31, 2009 of approximately $56.5 million and a Standardized Measure of
Future Net Cash Flows (the Standardized Measure) of approximately $39.6 __
million. PDP reserves represent a PV10 value of approximately $8.3 million, or
14.7% of the pre-tax PV10 value, and a Standardized Measure of $5.8 million.
PDNP reserves represent an additional pre-tax PV10 value of $2.3 million, or
4.1%, and a Standardized Measure of $1.6 million. The remaining $45.9 million of
pre-tax PV10, or 81.2%, and $32.1 million of Standardized Measure are associated
with the PUD reserves. On October 28, 2009, we acquired a 40% working interest
in certain oil and gas properties in Eddy County, New Mexico that we refer to as
the Cave Pool Project. The SEC Reserves presented in this Annual Report do not
include the Cave Pool Project as those properties were acquired after our fiscal
year ended July 31, 2009.

Page 13 of 44

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StandardizedMeasure of% of
    
    
    
    
    
    Discounted
    
    
    FutureGeographic
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Total
    
    
    Pre-Tax
    
    
    Future Net
    
    
    CapitalArea
    
    (Bbls)
    
    
    (MCF)
    
    
    (BOE)
    
    
    Proved
    
    
    PV10 Value
    
    
    Cash Flows
    
    
    ExpendituresNew Mexico:PDP
    
    516,679
    
    
    50,639
    
    
    525,119
    
    
    15.7%
    
    $
    8,333,774
    
    $
    5,841,408
    
    $
    -PDNP
    
    138,022
    
    
    134,793
    
    
    160,488
    
    
    4.8%
    
    $
    2,318,136
    
    $
    1,624,857
    
    $
    728,399PUD
    
    2,423,606
    
    
    1,450,918
    
    
    2,665,426
    
    
    79.5%
    
    $
    45,857,595
    
    $
    32,143,047
    
    $
    23,439,277TotalProved:
    
    3,078,307
    
    
    1,636,350
    
    
    3,351,032
    
    
    100.0%
    
    $
    56,509,505
    
    $
    39,609,312
    
    $
    24,167,676Texas:PDP
    
    0
    
    
    0
    
    
    0
    
    
    0.0%
    
    $
    -
    
    $
    -
    
    $
    -PDNP
    
    0
    
    
    0
    
    
    0
    
    
    0.0%
    
    $
    -
    
    $
    -
    
    $
    -PUD
    
    0
    
    
    0
    
    
    0
    
    
    0.0%
    
    $
    -
    
    $
    -
    
    $
    -TotalProved:
    
    0
    
    
    0
    
    
    0
    
    
    0.0%
    
    $
    -
    
    $
    -
    
    $
    -Total:PDP
    
    516,679
    
    
    50,639
    
    
    525,119
    
    
    15.7%
    
    $
    8,333,774
    
    $
    5,841,408
    
    $
    -PDNP
    
    138,022
    
    
    134,793
    
    
    160,488
    
    
    0.0%
    
    $
    2,318,136
    
    $
    1,624,857
    
    $
    728,399PUD
    
    2,423,606
    
    
    1,450,918
    
    
    2,665,426
    
    
    0.0%
    
    $
    45,857,595
    
    $
    32,143,047
    
    $
    23,439,277TotalProved:
    
    3,078,307
    
    
    1,636,350
    
    
    3,351,032
    
    
    15.7%
    
    $
    56,509,505
    
    $
    39,609,312
    
    $
    24,167,676


These total proved SEC Reserves were evaluated using fixed
prices of $65.12/Bbl and $3.628/MCF, the actual prices received as of July 31,
2009. The SEC Reserves compare favorably to Dorals independent third-party
proved reserves prepared in accordance with the standards set by the Society of
Petroleum Engineers (SPE Reserves) also by Russell Hall & Associates,
independent petroleum engineers, as of July 1, 2009. Our SPE Reserves were
evaluated using NYMEX oil and gas prices $50.00/Bbl & $3.75/MMBtu for 2009,
$55.00/Bbl & $4.00/MMBtu for 2010, $60.00/Bbl & $4.50/MMBtu for 2011,
and $65.00/Bbl & $5.00/MMBtu thereafter, respectively, with no further
escalation. Dorals total proved SPE Reserves as of July 1, 2009 (as reported in
August 2009) were 4,064,441 Bbls oil and 2,473,586 MCF gas (4,476,705 BOE); with
PDP SPE Reserves of 514,481 Bbls and 61,715 MCF (524,767 BOE  11.7% of total
proved); PDNP SPE Reserves of 139,052 Bbls and 135,075 MCF (161,564 BOE  3.6%
of total proved); and PUD SPE Reserves of 3,410,908 Bbls and 2,276,796 MCF
(3,790,374 BOE  84.7% of total proved).

Our SEC Reserves differ from our SPE Reserves mainly in the
area of PUD reserves where only 81 of the 138 PUD locations contained in our SPE
Reserves case were developed in the SEC Reserves due to the capital constraints
imposed on future development drilling under the SEC guidelines.

SUMMARY OF OIL AND NATURAL GAS PROPERTIES AND PROJECTS

Hanson Project  Eddy County, New Mexico

The Hanson Project, our first producing acquisition, was
acquired in July 2008 from Hanson Energy, a small independent operator based in
Artesia, New Mexico. The Hanson Project is comprised of 66 leases which cover a
leasehold of approximately 7,868 acres, all of which is located on the
northwestern end of the Permian Basin along the Artesia-Vacuum Trend, in eastern
Eddy County, east of the city of Artesia, NM. Doral Energy Corp. is the Operator
of all leases in the Hanson Project. At the time of the acquisition, the Hanson
Project contained a total of 186 wells: 161 producing wells (143 oil wells &
18 gas wells), 12 shut-in wells, and 13 water injection wells. The
Artesia-Vacuum Trend is generally viewed as consisting of thirteen reservoirs
along the Upper San Andres and Grayburg Platform. While the Artesia-Vacuum Trend
is a relatively mature play, recent development of lower permeability Grayburg
sandstones in the Grayburg Jackson Pool reservoir has reversed the decline of

Page 14 of 44

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production and is an active focus of current development. Our
Hanson Project leases convey the shallow rights, generally extending from the
surface to a depth of approximately 3,500 feet, generally down through the
Grayburg and San Andres formations along with the Fren, Seven Rivers, Queen,
Loco Hills, Premier, and other productive zones generally found within this
stratigraphic column.

As of July 31, 2009, the Hanson Project contains total proved
SEC Reserves of 3.078 million barrels of oil (MMBO) and 1.636 billion cubic
feet of natural gas (BCFG), equal to 3.35 million barrels of oil equivalent
(MMBOE). Of these total proved reserves, 0.52 MMBOE are classified as proved
developed producing (PDP) reserves, 0.16 MMBOE are classified as proved
developed non-producing (PDNP) reserves, and 2.67 MMBOE are classified as
proved undeveloped (PUD) reserves. These SEC Reserves contain 81 PUD drilling
locations on the Hanson Project leasehold, which represent 58.7% of the 138 PUD
locations contained in our SPE Reserves evaluation, and 47.1% of the 172
undeveloped locations that we have identified on the Hanson Project leases and
carry in our in-house reserves.

We currently own a 100% working interest (WI) and an average
net revenue interest (NRI) of 74.70% in 55 of the 66 leases in the Hanson
Project. We also own an average working interest of 84.40% and an average net
revenue interest of 67.10% in the remaining 11 leases in the Hanson Project. For
the Hanson Project overall, we own an average 97.5% WI and an average 73.5% NRI
in the 66 leases when considered as a whole.

The Hanson Project properties were acquired from Hanson Energy
in July 2008 for the following consideration:

| | (a) | $5,000,000 in cash;                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------
| | (b) | 5,600,000 post 2009 Reverse Split and 2009 Forward Split
      shares of our common stock; and                        
| | (c) | An overriding royalty interest of 2.5% of 8/8ths of the
      oil and gas produced from the Hanson Project
properties.

To complete the acquisition of the Hanson Project properties,
on July 29, 2008, Doral entered into a Senior First Lien Secured Credit
Agreement (the Macquarie Credit Agreement) with Macquarie Bank Limited
(Macquarie). Under the terms of the Macquarie Credit Agreement, Macquarie
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). The amounts owed by us under the Macquarie Credit Agreement
were due on July 30, 2009, however, Macquarie has agreed to forbear from
exercising any of its remedies under the Macquarie Credit Agreement until at
least January 29, 2010. The details of the Macquarie Credit Agreement are set
out under heading Item 7  Managements Discussion and Analysis of Financial
Condition and Results of Operation. We are currently seeking to refinance the
amounts owed by us under the Macquarie Credit Agreement.

In connection with entering into the Macquarie Credit
Agreement, we granted to Macquarie Investment, LLC (MAC), a subsidiary of
Macquarie, a net profits interest (the MAC NPORRI) over the Hanson Project
properties. The MAC NPORRI entitles MAC to 35% of the net profits from the
Hanson Project properties (proceeds less associated production and capital
costs) beginning after all amounts due under the Macquarie Credit Agreement have
been repaid. Once MAC has earned $5,000,000 under the MAC NPORRI, the MAC NPORRI
net profits interest automatically reduces to 20%.

Over the past year, our improvement efforts in the Hanson
Project have primarily involved:

| | (a) | the inspection and evaluation of existing Project wells,
      pumping units, and production facilities to ascertain and ensure
      operational efficiency;                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | testing of producing wells to ascertain accurate daily
      oil, gas and water production rates, and the testing of water injection
      rates to determine injectivity rates and pressures;
| | (c) | performing mechanical repair job workovers to restore
      non-productive wells to production;                                                                                               
| | (d) | performing repair and clean-out workovers, including well
      chemical treatments and acid stimulations to improve production rates;
      and                                              
| | (e) | improving downhole pump designs and improving production
      facility equipment, piping, and flowlines to increase operational
      efficiencies.                                          

During our July 31, 2009 fiscal year, we completed the Phase 0
Initial Well Repair Job Work Program, a first stage improvement work program
which carried out mechanical repair jobs on 17 wells in the Hanson Project from
November 2008 through January 2009. Post-job well tests on these 17 wells showed
that the mechanical repair jobs restored 64.5 barrels of oil production per day
(BOPD) to the Hanson Projects daily production,

Page 15 of 44

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which was 164% of the pre-job estimate of 39.3 BOPD. In
repairing these 17 wells, we found that none of the downhole pumps were working,
and more over, all of the pumps were of the wrong type (highly inefficient
travelling-barrel design pumps), the wrong size (1-1/2 diameter instead of the
proper 1-1/4 diameter pumps for these types of wells), and set at the wrong
depth in the wells (above instead of below the perforations). Additionally, all
of the wells exhibited very heavy paraffin in the tubing, in the casing, and in
the pumps themselves. The 17 wells were restored to production with the proper
1-1/4 bottom-hold-down downhole pumps, installed proper the depth below the
perforations, set to pump at the proper pumping speed pump strokes per minute,
and optimizing pumping time intervals to efficiently pump the oil and water from
the wells based on the amount of inflow from the formation. The repair jobs also
carried out the cutting and removing paraffin from the tubing and wellbore,
replacing bad rods and tubing where required, replacing and repairing wellheads,
and repairing flowlines. The total gross expenditures for the work program were
$278,931 which was 87.1% of the AFE estimates. Since the initial program was
completed, we have carried out mechanical repair jobs on an additional 14 wells
in the Hanson Project with similar results. We estimate that an additional 75
wells in the Hanson Project are currently in need of similar repairs to restore
production to more optimum rates, representing a significant opportunity to
further increase Hanson Projects daily production.

In addition to increasing production through repair jobs and
improvements on existing wells, it is our long-term goal to create additional
value by implementing an infill development drilling program on the Hanson
Project properties. Almost all of the current producing wells in the Hanson
Project were drilled on 40-acre well spacing per well. Over the past 20-30
years, offset operators along the Artesia-Vacuum Trend have determined that
shallow wells like those in the Hanson Project actually drain less than 20 acres
in these shallow reservoirs like the Grayburg, San Andres, Premier, Fren, and
others. These operators have successfully carried out infill drilling programs
on 20-acre spacing with very good success, accessing and developing oil and gas
reserves that would not have been produced otherwise by the original wells
drilled on 40-acre spacing patterns. By carrying out an infill development
drilling program to redevelop the Hanson Project leases on 20-acre well spacing,
we anticipate that we will increase production from the Hanson Project
properties. We have identified over 250 potential 20-acre infill drilling
locations on the Eddy County Properties, and 172 of these locations have been
classified as proved undeveloped locations in our in-house reserves. In
completing the independent third-party SEC Reserve report for the Hanson Project
as of July 31, 2009, Russell Hall & Associates included 81 (47.2%) of these
172 undrilled infill locations as PUD locations due to capital constraints
imposed of PUD development capital under SEC reserve guidelines. An infill
development drilling program for the Hanson Project is expected to take several
years to complete.

In 2008, our engineers and geologists worked to develop the
initial infill development drilling program for the Hanson Project properties
(the Phase 1 Development Program). The proposed Phase 1 Development Program
called for the drilling and completion of 21 infill development wells on 20-acre
spacing at an estimated cost of approximately $9.6 million in order to develop
gross reserves of approximately 1.98 MMBOE (million barrels of oil equivalent)
in 2009. However, when we presented this very detailed Phase 1 Development
Program to Macquarie Bank in November 2008 (as required under the terms of the
Macquarie Credit Agreement), Macquarie informed us that the bank was not funding
any new drilling programs at that time due to uncertainties arising from the
precipitous drop in the price of oil over the last half of 2008 and a lack of
available capital. As a result, our management and Macquarie agreed that we
would withdraw the Phase 1 Development Program at that time and re-submit it in
early 2010.

We anticipate that the Phase 1 Development Program or an infill
20-acre development drilling program with the same or similar wells and targets
will move forward in the coming months, hopefully beginning in early 2010. In
addition, drilling costs have decreased significantly in recent months, making
the capital investment required smaller and thus making the drilling program
more economic. Also, continuing work by our engineers and geologists has shown
that a majority of the drilling in the Hanson Project can be achieved using air
drilling instead of conventional fluid drilling which will reduce our drilling
costs even further. In any event, the selection and timing of infill wells to be
drilled under any infill development drilling program in the Hanson Project will
be made based on: (i) continuing new geological interpretations and structure
and net pay maps of the pay zones being prepared; (ii) updated development
drilling well reserves based on both the cumulative production to-date and
estimated ultimate recovery of offset wells from the target reservoirs; (iii)
the presence of previously undeveloped and un-produced intervals in target pay
zones present on the lease; (iv) volumetric reserve calculations where
appropriate; (v) the status of lease production facilities and capacities; and
(vi) access to gas sales markets for casinghead gas production. Readers are
cautioned, however, that there is no assurance that the infill development plan
will proceed when scheduled, as currently proposed, or at all.

Page 16 of 44

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Production History

The following table shows our net production volumes (net of
royalties and amounts due to others), the average daily total net production
rate, the average sales prices received, the average production costs (lifting
costs) for oil and natural gas for the Hanson Project properties for the periods
indicated.

Year
        Ended July 31,2009
      
      
      2008
      
      
      2007Item
      
      
      Net
      
      
      Net
      
      
      NetOil Production (Bbls)
      
      
      33,701
      
      
      0
      
      
      0Natural Gas Production (MCF)
      
      
      8,880
      
      
      0
      
      
      0Total Production (BOE)
      
      
      35,181
      
      
      0
      
      
      0Daily Avg. Production (BOE/day)
      
      
      96.4
      
      
      0
      
      
      0Average Sales Price:Oil ($/Bbl)
      
      $
      53.48
      
      $
      0.00
      
      $
      0.00Natural Gas ($/MCF)
      
      $
      2.29
      
      $
      0.00
      
      $
      0.00Total ($/BOE)
      
      $
      52.02
      
      $
      0.00
      
      $
      0.00Average Production Cost ($/BOE)
      
      $
      14.63
      
      $
      0.00
      
      $
      0.00Average Production Taxes ($/BOE)
      
      $
      7.31
      
      $
      0.00
      
      $
      0.00


During the fiscal year ending July 31, 2009, our gross production
  totalled 46,166 Bbls oil and 12,164 MCF gas (48,193 BOE), which resulted in
  Doral net production totals of 33,701 Bbls oil and 8,880 MCF gas (35,181 BOE).
  The average oil price receive during the year was $53.48/BO, and the average
  gas price received was $2.29/MCF, yielding an average total price of $52.02/BOE.
  Total lease operating expenses during the fiscal year of $2.046 million yielded
  an average production cost of $58.16/BOE for the fiscal year ending July 31,
  2009. The average production tax rate paid during the fiscal year was $7.55/BOE.

The average sales price amounts above are calculated by
dividing revenue from oil sales by the volume of oil sold in barrels. The
average gas sales price amounts above are calculated by dividing revenue from
gas sales by the volume of gas sold, in MCF. The total average sales price
amounts are calculated by dividing total revenues by total volume sold, BOE. The
average production costs above are calculated by dividing production costs by
total production in BOE.

Productive Wells

The following table represents our ownership of gross and net
productive oil and gas wells as of July 31, 2008.

Oil
        Wells
      
      
      Gas
        Wells
      
      
      Total
        WellsState
      
      Gross(1)
      
      
      Net(2)
      
      
      Gross(1)
      
      
      Net(2)
      
      
      Gross(1)
      
      
      Net(2)New Mexico
      
      143
      
      
      139.20
      
      
      18
      
      
      18.00
      
      
      161
      
      
      157.20Texas
      
      0
      
      
      0.00
      
      
      0
      
      
      0.00
      
      
      0
      
      
      0.00Total Wells
      
      143
      
      
      139.20
      
      
      18
      
      
      18.00
      
      
      161
      
      
      157.20


|(1) | Gross wells refers to the number of wells in which Doral
      owns a working interest.                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(2) | Net wells represents the number of wells attributable to
      our proportionate working interest in the respective gross
  wells.

Page 17 of 44

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Developed and Undeveloped Acreage

The following table summarizes the approximate gross and net
developed and undeveloped acreage owned by Doral as of July 31, 2009. Net
acreage is our working interest percentage ownership of gross acreage. Acreage
in which our interest is limited to a royalty or overriding royalty interest
only is excluded from this table.

UndevelopedDeveloped
        Acreage(1)
      
      
      Acreage(2)
      
      
      Total
        AcreageState
      
      Gross(3)
      
      
      Net(4)
      
      
      Gross(3)
      
      
      Net(4)
      
      
      Gross(3)
      
      
      Net(4)New Mexico
      
      6,089
      
      
      5,940.5
      
      
      1,779
      
      
      1,703.9
      
      
      7,868
      
      
      7,644.4Texas
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Total Acreage
      
      6,089
      
      
      5,940.5
      
      
      1,779
      
      
      1,703.9
      
      
      7,868
      
      
      7,644.4


|(1) | Developed acreage consists of spacing unit acres spaced
      assignable to productive wells.                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Undeveloped acreage is considered to be those leased
      acres on which wells have not been drilled or completed to a point that
      would permit the production of commercial quantities of oil and gas,
      regardless of whether or not such acreage contains underlying proved
      reserves.
|(3) | Gross acres refers to the number of acres in which we own
      a working interest.                                                                                                                                                                                                                     
|(4) | Net acres represents the number of acres attributable to
      our proportionate working interest ownership in the gross
  acreage.                                                                                                                                                                     

Drilling Activities

The following table shows the number of gross and net
productive and dry development wells and exploratory wells drilled by us during
the last three fiscal years. We did not drill any development or exploratory
wells during the fiscal year ending July 31, 2009, and have not drilled any
development or exploratory wells over the past 3 fiscal years.

Year Ended July 31,2009
      
      
      2008
      
      
      2007Gross
      
      
      Net
      
      
      Gross
      
      
      Net
      
      
      Gross
      
      
      NetDevelopment WellsDrilled:Productive
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Dry
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Totals
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Exploratory Wells Drilled:Productive
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Dry
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Totals
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Total Wells Drilled:Productive
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Dry
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0Total Wells
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0
      
      
      0
      
      
      0.0


Present Activities

As of July 31, 2009, we were not in the process of drilling any
development or exploratory wells or conducting completion operations on any
development or exploratory well.

Page 18 of 44

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We are currently in the process of carrying out recompletion
operations on one previously suspended well, the Mustang 28 Federal #1 well,
located on the Companys Federal S lease of the Hanson Project, approximately
0.5 mile south of Loco Hills, NM. This well was originally drilled to 5,490 as
a Paddock test well by Anadarko Petroleum Corp. in October 2001 and had been
suspended since Anadarko ceased Paddock testing in early 2002. The wellbore was
acquired by Doral as part of the Hanson Project which included rights from the
surface to a depth of 4,000 on the Federal S lease. Doral is in the process of
recompleting this well as a Grayburg-San Andres completion in the Grayburg
Jackson Pool.

Delivery Commitments

As of July 31, 2009, the Company had no obligations or delivery
commitments under any existing contracts.

Other Projects and Properties

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 is 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 Doral now designates as the Cave Pool Project. The
Cave Pool Project currently produces approximately 10 BOEPD from a total of 39
wells completed in the Grayburg formation in the Grayburg Jackson Pool.

The Cave Pool Unit Properties are located adjacent to 3 leases
that are a part of our Hanson Project, which contain 6 wells producing from the
Grayburg and San Andres formations and 9 PUD locations in the Square Lake Field.
As operator of the Cave Pool Project, we envision a re-development of the Cave
Pool Unit Properties as a 20-acre 5-spot Grayburg waterflood project which has
the potential to develop significant undeveloped reserves.

The Cave Pool Unit Properties were acquired by Blugrass from
Robinhood LLC on October 12, 2009. Under the terms of the Blugrass Agreement, we
have acquired a 40% interest is all of Blugrass right, title and interest in
the Cave Pool Unit Properties, including the production on-hand and sales
generated from the properties after the effective date of October 12, 2009. In
consideration for this interest Doral has 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;                                            
| |    |                                                                                                                                                                                        
| | 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.                                                                                                                              

For their part, Blugrass has agreed to pay for the first
$200,000 of well repairs and workovers on the Cave Pool Unit Properties, with
Doral West and Blugrass proportionately sharing the cost of all repairs and
workovers thereafter. An initial 10 Cave Pool Project wells have been identified
for repair jobs and will be re-worked by Doral in the near future, adding to the
daily production from the Project.

In addition, the Blugrass Agreement provides that, if Blugrass
  chooses to sell their remaining interest in the Cave Pool Unit Properties, Doral
  will have a preferential right to purchase that interest at the greater of:

| | (a) | $2,000,000; or                                                                                                
| | --- | --------------------------------------------------------------------------------------------------------------
| | (b) | $40,000 per producing net barrel of oil equivalent per
      day (BOEPD) from the Cave Pool Unit Properties.

Page 19 of 44

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The following table shows the effect of the acquisition of the
Cave Pool Project on our productive wells after October 12, 2009. The Cave Pool
Project will increase our number of Oil Wells to 179 wells (gross) and 153.50
wells (net); our Gas Wells to 19 wells (gross) and 18.40 wells (net); and our
Total Productive Wells to 198 wells (gross) and 172.00 wells (net).

Oil
        Wells
      
      
      Gas
        Wells
      
      
      Total
        WellsProject
      
      Gross(1)
      
      
      Net(2)
      
      
      Gross(1)
      
      
      Net(2)
      
      
      Gross(1)
      
      
      Net(2)Hanson Project
      
      143
      
      
      139.20
      
      
      18
      
      
      18.00
      
      
      161
      
      
      157.20Cave Pool Project
      
      36
      
      
      14.40
      
      
      1
      
      
      0.40
      
      
      37
      
      
      14.80Total Wells
      
      179
      
      
      153.60
      
      
      19
      
      
      18.40
      
      
      198
      
      
      172.00


| | (1) | Gross wells refers to the number of wells in which Doral
      owns a working interest.                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------
| | (2) | Net wells represents the number of wells attributable to
      our proportionate working interest in the respective gross
  wells.

Correspondingly, the following table shows the effect of the
acquisition of the Cave Pool Project on our Developed and Undeveloped Acreage
after October 12, 2009. The Cave Pool Project will increase our Developed
Acreage to 7,329 acres (gross) and 6,436.5 acres (net); our Undeveloped Acreage
to 3,139 acres (gross) and 2,247.9 acres (net); and our Total Acreage to 10,468
acres (gross) and 8,684.4 acres (net) in Eddy County, New Mexico.

UndevelopedDeveloped
        Acreage(1)
      
      
      Acreage(2)
      
      
      Total
        AcreageProject
      
      Gross(3)
      
      
      Net(4)
      
      
      Gross(3)
      
      
      Net(4)
      
      
      Gross(3)
      
      
      Net(4)Hanson Project
      
      6,089
      
      
      5,940.5
      
      
      1,779
      
      
      1,703.9
      
      
      7,868
      
      
      7,644.4Cave Pool Project
      
      1,240
      
      
      496.0
      
      
      1,360
      
      
      544.0
      
      
      2,600
      
      
      1,040.0Total Acreage
      
      7,329
      
      
      6,436.5
      
      
      3,139
      
      
      2,247.9
      
      
      10,468
      
      
      8,684.4


| | (1) | Developed acreage consists of spacing unit acres spaced
      assignable to productive wells.                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Undeveloped acreage is considered to be those leased
      acres on which wells have not been drilled or completed to a point that
      would permit the production of commercial quantities of oil and gas,
      regardless of whether or not such acreage contains underlying proved
      reserves.
| | (3) | Gross acres refers to the number of acres in which we own
      a working interest.                                                                                                                                                                                                                     
| | (4) | Net acres represents the number of acres attributable to
      our proportionate working interest ownership in the gross
  acreage.                                                                                                                                                                     

Miltex Properties  Cochran County, Texas

On January 15, 2009, we entered into an agreement (the Miltex
Agreement) with Miltex Oil Company (Miltex) for the acquisition of six (6)
San Andres waterflood units located in Cochran County, Texas (the Miltex
Properties). Pursuant to the terms of the Miltex Agreement and pursuant to
amendment agreements dated February 23, 2009, March 31, 2009, and April 21,
2009, we paid to Miltex a total of $245,000 in cash and a total of 250,000 post
2009 Forward Split shares towards the purchase of the Miltex Properties.

On July 30, 2009, we assigned our right to purchase the Miltex
Properties to Legacy Reserves LP in consideration for a total of $750,000 in
cash, consisting of $600,000 for the assignment of our right to purchase the
Miltex Properties, plus an additional $150,000 to reimburse us for amounts due
to a third party for brokering the sale of the Miltex Properties.

Slape Oil Company, Inc. and Flaming S, Inc.  Cochran
& Hockley Counties, Texas

On May 5, 2009 and May 15, 2009, respectively, we entered into
agreements for the acquisition of Flaming S, Inc. (Flaming S) and Slape Oil
Company, Inc. (Slape Oil). Flaming S and Slape Oil are oil and gas
corporations with producing properties in Cochran and Hockley Counties, Texas.
In July 2009, the agreements

Page 20 of 44

---

to acquire Flaming S and Slape Oil were cancelled. A total of
400,000 shares of Doral restricted common stock issued to the shareholders of
Flaming S and Slape Oil as deposits were returned to the Company.

ITEM
3.               
LEGAL PROCEEDINGS

We are not 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.               
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to our security holders during the
fourth quarter of our fiscal year ended July 31, 2009.

Page 21 of 44

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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
      Low2008
      Q1 (ended Oct. 31, 2007)
    $0.00
    $0.002008
      Q2 (ended Jan. 31, 2008)
    $0.50
    $0.002008
      Q3 (ended Apr. 30, 2008)
    $0.075
    $0.002008
      Q4 (ended Jul. 31, 2008)
    $0.00
    $0.002009
      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
    $0.50


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 12, 2009, there were 87,116,470 shares of our
  common stock issued and outstanding that are held of record by 31 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, 2009 have been reported by us in our Quarterly Reports or in
our Current Reports filed with the SEC during the year.

Page 22 of 44

---

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


RESULTS OF OPERATION

|Summary of Year End Results            |   |                          |   |   |            |   |  |                       | 
|-------------------------------------- | - | ------------------------ | - | - | ---------- | - |  | --------------------- | 
|                                       |   | Year
      Ended July 31 |   |   | Percentage |  
|                                       |   | 2009                     |   |   | 2008       |   |  | Increase / (Decrease) | 
|Revenue                                | $ | 1,832,146                |   | $ | -          |   |  | n/a                   | 
|Expenses                               |   | (4,235,933               | ) |   | (493,929   | ) |  | 757.6%                | 
|Gain on Sale of Oil and Gas Properties |   | 131,288                  |   |   | -          |   |  | n/a                   | 
|and Other                              |   |                          |   |   |            |   |  |                       | 
|Interest Expense                       |   | (947,705                 | ) |   | (9,943     | ) |  | 9,431.4%              | 
|Price Risk Management Activities       |   | 1,317,839                |   |   | -          |   |  | n/a                   | 
|Income Tax Expense                     |   | 9,602                    |   |   | -          |   |  | n/a                   | 
|Net Loss                               | $ | (1,911,967               | ) | $ | (503,872   | ) |  | 279.5%                | 

Revenues

During the year ended July 31, 2009 we recognized revenues from
the sale of crude oil and natural gas of $1,832,146. Revenues recognized from
the Eddy County Properties were lower than those recognized for the year ended
July 31, 2008 by the previous operators, Hanson Energy. See Note 3 to the
unaudited financial statements included in this Annual Report. We believe that
the primary reason that revenues were lower for the year ended July 31, 2009 is
that the average price of crude oil was significantly lower during the year
ended July 31, 2009 as compared to the comparable year ended July 31, 2008. This
decrease was partially offset by an increase in the volume of oil produced.
Revenues from the sale of oil and gas are recognized based on the actual volume
of oil and gas sold to purchasers. Although we have begun to incrementally
increase production from the Hanson Project Properties by making improvements to
existing well facilities, our revenues are also subject to fluctuations in the
market price of crude oil and natural gas. Although we have entered into hedging
positions that provide us with partial protection against price decreases,
prolonged downturns in the price of crude oil and natural gas will have an
adverse effect on our revenues. See Risk Factors.

Under the terms of the Macquarie Credit Agreement, we are
required, on a monthly basis, to pay to Macquarie 100% of our net operating cash
flows from all sources (including, but not limited to the Hanson Project
Properties) less an allocated amount for our general and administrative
expenses, until all amounts advanced under the Macquarie Credit Agreement have
been repaid. The amount allocated for our general and administrative expenses
was equal to $125,000 per month up to March 31, 2009, and since that date has
been equal to 10% of our net operating cash flows for the month. The amounts
paid to Macquarie are applied to interest and principal payable under the
Macquarie Credit Agreement.

Operating Expenses

Our operating expenses for the years ended July 31, 2009 and
2008, consisted of the following:

|                                          |   | Year Ended July 31, |  |   | Percentage | 
|----------------------------------------- | - | ------------------- |  | - | ---------- | 
|                                          |   | 2009                |  |   | 2008       | 
|Operating Costs                           | $ | 1,780,266           |  | $ | -          | 
|Production Taxes                          |   | 265,780             |  |   | -          | 
|Depreciation, Depletion, and Amortization |   | 451,994             |  |   | 144        | 
|Accretion Expense                         |   | 74,820              |  |   | -          | 
|General and Administrative                |   | 1,663,073           |  |   | 493,785    | 
|Total                                     | $ | 4,235,933           |  | $ | 493,929    | 

Our expenses for the year ended July 31, 2009 increased
substantially as compared to the year ended July 31, 2008. Operating costs are
the costs associated with our oil and gas production activities for the period.

Page 23 of 44

---

Production taxes are severance and ad valorem taxes payable in
respect of the oil and gas production from our properties.

Our expenses for the year ended July 31, 2008 were
significantly lower as we had little to no operations during that period.
Expenses for the year ended July 31, 2009 are expected to be more indicative of
our future expenses. However, expenses in future periods may be significantly
greater depending upon the extent of any developmental activities that we engage
in on our properties.

Price Risk Management Activities

We previously entered into a costless collar hedging
position, which provides us with partial protection against variations in the
price of crude oil. The net effect of the costless collar was to set a floor of
$100 on the price to be received for each barrel of production covered and a
ceiling of $131 for each barrel of production covered. The number of barrels of
our production covered by the costless collar for production months through July
2011 was as follows:

Aug 2008 - Dec 2008: 1,900 barrels per
month Jan 2009 - Dec 2009: 1,700 barrels per month Jan 2010 - Dec 2010:
1,600 barrels per month Jan 2011 - Jul 2011: 1,400 barrels per month

During 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 2,250 barrels of production each month.
From July 2010 through December 2011, there is a costless collar in effect on an
average of 1,850 barrels per month, guaranteeing a minimum of $60 a barrel and a
maximum of $94 a barrel.

Included in price risk management activities for the year ended
July 31, 2009 are hedge settlements of $903,960. These settlements represent the
difference between the hedge prices of $100 and the actual price received for
the volumes hedged for the months of August  December 2008 and the difference
between the hedge price of $94 and the actual price received for the volumes
hedged for the months of January 2009 through July 2009.

During the year ended July 31, 2009, we recognized a derivative
asset of $413,879, with the change in fair value reflected in other income.

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital           |   |                        |   |   |                        |   |  |                       | 
|------------------------- | - | ---------------------- | - | - | ---------------------- | - |  | --------------------- | 
|                          |   |                        |   |   |                        |   |  | Percentage            | 
|                          |   | At
      July 31, 2009 |   |   | At
      July 31, 2008 |   |  | Increase / (Decrease) | 
|Current Assets            | $ | 1,310,324              |   | $ | 687,136                |   |  | 90.7%                 | 
|Current Liabilities       |   | (7,538,514             | ) |   | (271,251               | ) |  | 2,679.2%              | 
|Working Capital (Deficit) | $ | (6,228,190             | ) | $ | 415,885                |   |  | (1,397.6)%            | 

|Cash Flows                                    |   |                     |   |   |                     |  
|--------------------------------------------- | - | ------------------- | - | - | ------------------- | -
|                                              |   | Year Ended          |   |   | Year Ended          |  
|                                              |   | July
      31, 2009 |   |   | July
      31, 2008 |  
|Cash Flows Used in Operating Activities       | $ | (868,000            | ) | $ | (294,632            | )
|Cash Flows Used in Investing Activities       |   | (375,578            | ) |   | (5,097,090          | )
|Cash Flows From Financing Activities          |   | 1,625,884           |   |   | 5,415,000           |  
|Net Increase (Decrease) in Cash During Period | $ | 382,306             |   | $ | 23,278              |  

As at July 31, 2009, we had a working capital deficit of $6,228,190.

Page 24 of 44

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Although the Hanson Project Properties generate cash flows,
under the terms of our Macquarie Credit Agreement with Macquarie, until we have
repaid all amounts advanced by Macquarie, we are required to pay Macquarie 100%
of our net operating cash flows from all sources, less an allocated amount for
our general administrative expenses. As such, until such time as we have repaid
all amounts advanced to us by Macquarie, we expect that our primary sources of
financing will be additional advances from Macquarie under the Macquarie Credit
Agreement, other forms of debt financing, and proceeds from the sale of our
common stock. We are currently seeking to refinance our existing debt, including
the amounts owed under the Macquarie Credit Agreement. However, there is no
assurance that we will be able to refinance our existing debt or that we will be
able to obtain additional financing in the future. If we sell additional shares
of our common stock, existing stockholders will experience a dilution of their
proportionate interests in our Company.

Macquarie Credit Agreement

Under the terms of the Macquarie Credit Agreement, Macquarie
agreed to provide us 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). Advances under the Macquarie Credit Agreement were used to fund
our acquisition of, and improvements on, the Hanson Project Properties and for
working capital purposes. Future advances are subject to prior approval by
Macquarie, and we are required to submit to Macquarie an estimate of expenses
for work to be performed on our properties.

We did not meet our minimum quarterly operating cash flow and
minimum quarterly production volume targets for the period ended October 31,
2008, and we did not meet our minimum quarterly operating cash flow targets for
the periods ending January 31, 2009 and April 30, 2009. Under the terms of the
Macquarie Credit Agreement, Macquarie has the right to declare us in default of
our obligations and to declare the amounts due under the Macquarie Credit
Agreement to be immediately payable. Macquarie has not yet exercised these
rights and has not provided us with any indications that it intends to do so at
this time. However, there is no assurance that Macquarie will not exercise its
right to declare us in default in the future.

Due to our managements decision to temporarily postpone our
proposed Infill Development Plan for the Hanson Project Properties in response
to the precipitous decline in the price of oil from mid-2008, the due date for
the amounts owed by us under the Macquarie Credit Agreement was moved up from
July 30, 2011 to July 30, 2009. Macquarie has agreed to forbear from exercising
its remedies under the Macquarie Credit Agreement until at least January 29,
2010. 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)                                                                                               

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.         

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

Page 25 of 44

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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.         

As of July 31, 2009, we owed Macquarie $5,888,196. We are
currently seeking to refinance the amounts owed by us under the Macquarie Credit
Agreement, however there is no assurance that we will be able to do so.

Other Debt Financings

On February 24, 2009, we borrowed $100,000 from Green Shoe
Investments Ltd. (Green Shoe) with interest payable at a rate of 5% per annum.
The loan is unsecured and due on or before March 1, 2011.

On April 29, 2009, we borrowed $87,000 from Green Shoe. The
amount borrowed from Green Shoe is due on or before May 1, 2011, bears interest
at a rate of 5% per annum, and is unsecured.

On May 28, 2009, we received $150,000 in debt financing from
Green Shoe Investments Ltd. (Green Shoe) On June 10, 2009 we entered into an
agreement dated effective as of May 28, 2009 (the Green Shoe Note Agreement)
with Green Shoe whereby, in exchange for the $150,000 provided by Green Shoe, we
agreed to issue a convertible note in the principal amount of $300,000. The
convertible note is due 10 business days after the earlier of the maturity date
of the amounts owed to Macquarie Bank Limited (Macquarie) under the terms of
our $50,000,000 Senior First Lien Secured Credit Agreement (the Macquarie
Credit Agreement) with Macquarie (including any extensions granted thereon) and
the date, if any, that we are able to close a financing (or combination of
financing) sufficient to enable us to repay all of the amounts owned by us under
the Macquarie Credit Agreement (a Qualified Refinancing). The principal amount
of the convertible note may be converted into shares of our common stock at a
rate of $1.00 per share.

Under the terms of the Green Shoe Note Agreement, if we are
able to obtain a Qualified Refinancing, the unpaid principal amount of the
convertible note outstanding after the due date described above will earn
interest at a rate of 18% per annum. If we are not able to obtain a Qualified
Refinancing on or before the maturity date of the Macquarie Credit Agreement and
we dispose of the properties acquired by us from Hanson Energy in August 2008
(including a realization by any second debtors of their security interest in
these properties), no interest shall be payable on the $300,000 convertible
note, however we will be required to issue to Green Shoe an additional
convertible note in the principal amount of $150,000 on the same terms and
conditions as the $300,000 convertible note except that no interest shall be
payable on the principal amount of the $150,000 convertible note.

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.     

In the event that we default under the terms of the Note, W.S.
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 four times the fair market value of our common stock at the
time the conversion right is exercised, and $0.05. A default under the Note
includes a default by us under any instrument for borrowed money in excess of
$50,000, provided that any default existing as of the date the Note was issued
is not considered an event of default under the Note unless such default
persists for a period of 6 months after the date the Note was issued.

Page 26 of 44

---

RESTATEMENT OF FINANCIAL STATEMENTS FOR JULY 31, 2008,
OCTOBER 31, 2008, JANUARY 31, 2009 AND APRIL 30, 2009

When preparing our financial statements for the fiscal year
ended July 31, 2009, we determined that the original valuation model for the net
profit overriding royalty interest (the MAC NPORRI) granted to Macquarie in
connection with the Macquarie Credit Agreement contained errors that resulted in
an overstatement of the value of the MAC NPORRI. After discovering this issue,
we engaged an independent economist to re-evaluate the value of the MAC NPORRI,
resulting in a substantially lower value being assigned to the NPORRI at the
date of grant than the value originally assigned for accounting purposes.
Correcting this overvaluation is expected to result in our recording
approximately $5.1 million less in interest expense and approximately $3.3
million less in net losses for the full fiscal year ended July 31, 2009 than
originally anticipated

Also as a result of this correction, on November 4, 2009, our
management and Board of Directors concluded that our audited financial
statements for the year ended July 31, 2008, and our unaudited financial
statements for the interim periods ended October 31, 2008, January 31, 2009 and
April 30, 2009, (collectively, the Relevant Periods) should no longer be
relied upon and will be restated. Correcting the above valuation error is
expected to have the following effects on our financial statements for the
Relevant Periods:

Year ended July 31, 2008

Financial
      Statement Item
    Increase (Decrease)Oil and gas
      properties
    $5,118,254Notes payable
    $5,118,254


Three months ended October 31, 2008

Financial
      Statement Item
    Increase (Decrease)Oil and gas
      properties
    $5,107,408Notes payable
    $5,098,946Depletion expense
    $10,846Interest expense
    $(19,308)Net loss
    $8,462


Three months ended January 31, 2009

Financial
      Statement Item
    Increase (Decrease)Oil and gas
      properties
    $5,104,771Deferred federal
      income tax assets
    $(1,775,537)Depletion expense
    $2,637Interest expense
    $(5,098,946)Income tax benefit
    $(1,775,537)Net loss
      $(3,320,772)


Three months ended April 30, 2009

Financial
      Statement Item
    Increase (Decrease)Oil and gas
      properties
    $5,099,918Deferred federal
      income tax assets
    $(1,775,537)Depletion expense
    $4,853Net loss
    $4,853


We expect to file restated financial statements for the
Relevant Periods as soon as practicable.

Our Board of Directors discussed the decision to restate our
financial statements for the Relevant Periods with the Companys independent
registered public accounting firm, Malone & Bailey, PC.

Page 27 of 44

---

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

The preparation of financial statements in conformity with
generally accepted accounting principles (GAAP) in the United States has
required our management to make assumptions, estimates and judgments that affect
the amounts reported in the financial statements, including the notes thereto,
and related disclosures of commitments and contingencies, if any. Our
significant accounting policies are disclosed in the notes to the audited
financial statements for the fiscal year ended July 31, 2009 included in this
Annual Report on Form 10-K.

The consolidated financial statements presented with this
Quarterly Report on Form 10-Q have been prepared in accordance with generally
accepted accounting principles in the United States of America for interim
financial information. These financial statements do not include all information
and footnote disclosures required for an annual set of financial statements
prepared under United States generally accepted accounting principles. In the
opinion of our management, all adjustments (consisting solely of normal
recurring accruals) considered necessary for a fair presentation of the
financial position, results of operations and cash flows as at April 30, 2009,
and for all periods presented in the attached financial statements, have been
included. Interim results for the period ended April 30, 2009 are not
necessarily indicative of the results that may be expected for the fiscal year
as a whole.

Our significant accounting policies are disclosed at Note 2 to
the unaudited financial statements included in this Quarterly Report.

Derivatives

Derivative financial instruments, utilized to manage or reduce
commodity price risk related to our production, are accounted for under the
provisions of SFAS No. 133, Accounting for Derivative Instruments and for
Hedging Activities, and related interpretations and amendments. Under this
statement, derivatives are carried on the balance sheet at fair value. Effective
August 2008, if the derivative is not designated as a hedge, changes in the fair
value are recognized in other income (expense).

We adopted Financial Accounting Standards Board (FASB) Staff
Position (FSP) FASB Interpretation (FIN)No. 39-1, "Amendment of FASB
Interpretation No. 39," (FSP FIN No. 39-1) which effectively amends FIN No. 39,
"Offsetting of Amounts Related to Certain Contracts." FSP FIN No. 39-1 permits
the netting of 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 FSP FIN No.
39-1 conditions are met. FSP FIN No. 39-1 also requires that 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 and option
counterparties. At April 30, 2009, derivative assets include the net market
value of derivative assets and liabilities due to the right of offset in the
settlement of these contracts.

Page 28 of 44

---

ITEM
8.               
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

|Financial Statements of Doral Energy Corp.                                                                                                        |    
|------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|                                                                                                                                                  |    
|Report of Independent Registered Public
      Accounting Firm of Malone & Bailey PC, Certified Public Accountants
      and Business Consultants; | F-1
|                                                                                                                                                  |    
|Consolidated Balance Sheets as of July 31,
      2009 and 2008                                                                                    | F-3
|                                                                                                                                                  |    
|Consolidated Statements of Expenses for the
      years ended July 31, 2009 and 2008                                                              | F-4
|                                                                                                                                                  |    
|Consolidated Statements of Stockholders
      Equity for the years ended July 31, 2009 and 2008                                                  | F-5
|                                                                                                                                                  |    
|Consolidated Statements of Cash Flows for
      the years ended July 31, 2009 and 2008                                                            | F-6
|                                                                                                                                                  |    
|Notes to the Consolidated Financial
      Statements                                                                                              | F-7

Page 29 of 44

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Financial Statements:Audited financial statements as of July 31, 2009, including:

Financial Statements of Doral Energy Corp.

|Report of Independent Registered Public Accounting Firm of
      Malone & Bailey PC              | F-1
|------------------------------------------------------------------------------------------------ | ---
|                                                                                                 |    
|Consolidated Balance Sheets as of July 31, 2009 and 2008                                         | F-2
|                                                                                                 |    
|Consolidated Statements of Expenses for the years ended July
      31, 2009 and 2008             | F-3
|                                                                                                 |    
|Consolidated Statements of Stockholders Equity for the
      years ended July 31, 2009 and 2008 | F-5
|                                                                                                 |    
|Consolidated Statements of Cash Flows for the years ended
      July 31, 2009 and 2008           | F-6
|                                                                                                 |    
|Notes to the Consolidated Financial Statements                                                   | F-7

---

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, 2009 and 2008 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, 2009 and 2008 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.

As discussed in Note 4 to the financial statements, the Company's
  oil and gas properties and notes payable at July 31, 2008 were understated.
  This discovery was made subsequent to the issuance of the fiscal 2008 financial
  statements. The financial statements have been restated to increase the oil
  and gas properties and the notes payable.

/s/ Malone & Bailey, PC

www.malone-bailey.com 
  Houston, Texas

November 13, 2009

---

Doral Energy Corp. 
  Consolidated Balance Sheets 
  July 31, 2009 and 2008

|                                                                                    |   | 2009       |   |   | 2008       |  
|----------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                                    |   |            |   |   | (Restated) |  
|ASSETS                                                                              |   |            |   |   |            |  
|Current assets                                                                      |   |            |   |   |            |  
|Cash and cash equivalents                                                           | $ | 436,806    |   | $ | 54,500     |  
|Accounts receivable, net of allowance for doubtful
      accounts of $-             |   | 232,934    |   |   | -          |  
|Restricted cash  note proceeds
      restricted as to use                          |   | 170,377    |   |   | 566,960    |  
|Current derivative asset                                                            |   | 468,607    |   |   | -          |  
|Prepaid insurance                                                                   |   | 1,600      |   |   | 65,676     |  
|Total current assets                                                                |   | 1,310,324  |   |   | 687,136    |  
|                                                                                    |   |            |   |   |            |  
|Office equipment, net of depreciation                                               |   | 247,111    |   |   | 104        |  
|Oil and gas properties- Proved, using full
      cost method of accounting , net of |   |            |   |   |            |  
|accumulated depreciation, depletion and amortization
      of $419,068 and $0,      |   |            |   |   |            |  
|respectively                                                                        |   | 19,897,062 |   |   | 19,834,246 |  
|Deferred federal income tax                                                         |   | 85,213     |   |   | -          |  
|Deferred financing cost                                                             |   | -          |   |   | 58,040     |  
|Security deposit                                                                    |   | 210,087    |   |   | 1,105      |  
|                                                                                    |   |            |   |   |            |  
|Total assets                                                                        | $ | 21,749,797 |   | $ | 20,580,631 |  
|                                                                                    |   |            |   |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                |   |            |   |   |            |  
|Current liabilities                                                                 |   |            |   |   |            |  
|Accounts payable                                                                    | $ | 333,698    |   | $ | 201,947    |  
|Accounts payable  related
      party                                              |   | 81,183     |   |   | 50,919     |  
|Accrued interest payable                                                            |   | 55,537     |   |   | 9,943      |  
|Current portion
      of long term debt                                             |   | 6,636,372  |   |   | -          |  
|Current portion of notes payable to related party                                   |   | 150,000    |   |   | -          |  
|Convertible note
      payable, net of discount of $118,523 and $0,                 |   |            |   |   |            |  
|respectively                                                                        |   | 181,477    |   |   | -          |  
|Deferred income
      tax                                                           |   | 94,144     |   |   | -          |  
|Other current liabilities                                                           |   | 6,103      |   |   | 8,442      |  
|Total current liabilities                                                           |   | 7,538,514  |   |   | 271,251    |  
|                                                                                    |   |            |   |   |            |  
|Notes payable, net of discount of $0 and $181,746,
      respectively               |   | 480,784    |   |   | 5,738,254  |  
|Notes payable to related party, net of discount of $250,000
      and $0,           |   |            |   |   |            |  
|respectively                                                                        |   | 100,000    |   |   | -          |  
|Noncurrent derivative liability                                                     |   | 54,728     |   |   | -          |  
|Asset retirement obligation                                                         |   | 903,654    |   |   | 918,902    |  
|Total liabilities                                                                   |   | 9,077,680  |   |   | 6,928,407  |  
|                                                                                    |   |            |   |   |            |  
|STOCKHOLDERS EQUITY                                                                |   |            |   |   |            |  
|Common stock, $0.001 par value, 400,000,000
      shares authorized, 86,937,470     |   |            |   |   |            |  
|and 85,862,000 shares issued and outstanding,
      respectively                    |   | 86,937     |   |   | 85,862     |  
|Additional paid-in capital                                                          |   | 15,119,274 |   |   | 14,188,489 |  
|Accumulated deficit                                                                 |   | (2,534,094 | ) |   | (622,127   | )
|Total stockholders equity                                                          |   | 12,672,117 |   |   | 13,652,224 |  
|                                                                                    |   |            |   |   |            |  
|Total liabilities and stockholders equity                                          | $ | 21,749,797 |   | $ | 20,580,631 |  

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

---

Doral Energy Corp. 
  Consolidated Statements of Operations 
  For the years ended July 31, 2009 and 2008

|                                                       |   | 2009       |   |   | 2008       |  
|------------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                       |   |            |   |   |            |  
|Oil and gas sales revenue                              | $ | 1,832,146  |   | $ | -          |  
|                                                       |   |            |   |   |            |  
|Expenses:                                              |   |            |   |   |            |  
|Operating costs                                        |   | 1,780,266  |   |   | -          |  
|Production taxes                                       |   | 265,780    |   |   | -          |  
|Depreciation, depletion and amortization               |   | 451,994    |   |   | 144        |  
|Accretion expense                                      |   | 74,820     |   |   | -          |  
|General and administrative                             |   | 1,663,073  |   |   | 493,785    |  
|Total expense                                          |   | 4,235,933  |   |   | 493,929    |  
|Operating loss                                         |   | (2,403,787 | ) |   | (493,929   | )
|                                                       |   |            |   |   |            |  
|Other income (expense):                                |   |            |   |   |            |  
|Gain on sale of oil and gas properties
      and other |   | 131,288    |   |   | -          |  
|Interest expense                                       |   | (947,705   | ) |   | (9,943     | )
|Price risk management activities                       |   | 1,317,839  |   |   | -          |  
|Loss before income taxes                               |   | (1,902,365 | ) |   | (503,872   | )
|Income tax expense                                     |   | 9,602      |   |   | -          |  
|Net loss                                               | $ | (1,911,967 | ) | $ | (503,872   | )
|                                                       |   |            |   |   |            |  
|Net loss per share:                                    |   |            |   |   |            |  
|Basic and diluted                                      | $ | (0.02      | ) | $ | (0.01      | )
|                                                       |   |            |   |   |            |  
|Weighted average shares outstanding:                   |   |            |   |   |            |  
|Basic and diluted                                      |   | 86,132,823 |   |   | 80,242,022 |  

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

---

Doral Energy Corp. 
  Consolidated Statements of Cash Flows 
  For the years ended July 31, 2009 and 2008

|                                                                  |   | 2009       |   |   | 2008       |  
|----------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                  |   |            |   |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                              |   |            |   |   |            |  
|Net loss                                                          | $ | (1,911,967 | ) | $ | (503,872   | )
|Adjustments to reconcile net loss to cash
      used by operating |   |            |   |   |            |  
|activities                                                        |   |            |   |   |            |  
|Depreciation, depletion and amortization                          |   | 451,994    |   |   | 144        |  
|Accretion                                                         |   | 74,820     |   |   | -          |  
|Change in value of derivative
      asset and liability           |   | (413,879   | ) |   | -          |  
|Gain on sale of oil and gas properties and other                  |   | (131,288   | ) |   | -          |  
|Share based compensation                                          |   | 174,600    |   |   | -          |  
|Stock options exercised in exchange for service                   |   | 206,735    |   |   |            |  
|Contribution of rent and salary                                   |   | -          |   |   | 10,501     |  
|Non-cash interest expense                                         |   | 540,886    |   |   | 9,943      |  
|Changes in operating assets and
      liabilities:                |   |            |   |   |            |  
|Accounts receivable                                               |   | (232,934   | ) |   | -          |  
|Prepaid
      expenses and other current assets                   |   | 64,076     |   |   | (65,676    | )
|Deposits                                                          |   | (3,244     | ) |   | (1,105     | )
|Accounts
      payable                                            |   | 229,751    |   |   | 209,055    |  
|Accounts payable 
      related party                            |   | 30,264     |   |   | 46,378     |  
|Accrued
      interest payable                                    |   | 45,594     |   |   | -          |  
|Other current liabilities                                         |   | (2,339     | ) |   | -          |  
|Deferred
      tax liability                                      |   | 8,931      |   |   | -          |  
|NET CASH USED BY OPERATING ACTIVITIES                             |   | (868,000   | ) |   | (294,632   | )
|                                                                  |   |            |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                              |   |            |   |   |            |  
|Deposits paid to acquire Miltex properties                        |   | (325,000   | ) |   | -          |  
|Net proceeds from sale of right to purchase Miltex                |   | 600,000    |   |   | -          |  
|properties                                                        |   |            |   |   |            |  
|Purchase of property and equipment                                |   | (78,626    | ) |   | -          |  
|Purchases of oil and gas properties                               |   | (571,952   | ) |   | (5,097,090 | )
|CASH FLOWS USED IN INVESTING ACTIVITIES                           |   | (375,578   | ) |   | (5,097,090 | )
|                                                                  |   |            |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                              |   |            |   |   |            |  
|Amounts due to related party                                      |   | -          |   |   | -          |  
|Proceeds from issuance of notes payable                           |   | 1,566,348  |   |   | 5,920,000  |  
|Repayments of notes payable                                       |   | (166,711   | ) |   | -          |  
|Deferred financing costs incurred                                 |   | (119,623   | ) |   | (53,000    | )
|Change in note proceeds restricted as to use                      |   | 396,583    |   |   | (572,000   | )
|Proceeds from sale of common stock                                |   | 30,025     |   |   | 120,000    |  
|Deposit paid to investor advisor                                  |   | (80,738    | ) |   | -          |  
|CASH FLOWS PROVIDED BY FINANCING                                  |   | 1,625,884  |   |   | 5,415,000  |  
|ACTIVITIES                                                        |   |            |   |   |            |  
|                                                                  |   |            |   |   |            |  
|NET INCREASE(DECREASE) IN CASH AND CASH                           |   |            |   |   |            |  
|EQUIVALENTS                                                       |   | 382,306    |   |   | 23,278     |  
|Effect of unrealized exchange
      rate changes                  |   | -          |   |   | (46        | )
|Cash and cash equivalents, beginning of period                    |   | 54,500     |   |   | 31,268     |  
|Cash and cash equivalents, end
      of period                    | $ | 436,806    |   | $ | 54,500     |  
|                                                                  |   |            |   |   |            |  
|Supplemental disclosures of cash flow information:                |   |            |   |   |            |  
|Interest paid                                                     | $ | (364,754   | ) |   | -          |  
|Income taxes paid                                                 |   | -          |   | $ | -          |  

---

|Noncash investing and financing activities:                |   |         |  |   |            | 
|---------------------------------------------------------- | - | ------- |  | - | ---------- | 
|Fixed assets acquired through the issuance of
      notes  | $ | 197,519 |  | $ | -          | 
|payable                                                    |   |         |  |   |            | 
|Stock issued for depositCK Cooper                         |   | 125,000 |  |   | -          | 
|Stock issued to extend closing
      of Miltex acquisition |   | 147,500 |  |   | -          | 
|Stock issued for purchase of oil and gas properties        |   |         |  |   | 14,000,000 | 
|Asset retirement obligation incurred                       |   |         |  |   | 918,902    | 

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

---

Doral Energy Corp. 
  Consolidated Statements of Stockholders Equity 
  For the years ended July 31, 2009 and 2008

AdditionalCommon
      
      
      Par
      
      
      Paid-In
      
      
      AccumulatedShares*
      
      
      Amount
      
      
      Capital
      
      
      Deficit
      
      
      TotalBalance, July 31, 2007
      
      80,070,000
      
      $
      80,070
      
      $
      63,780
      
      $
      (118,209
      )
      $
      25,641Fair value of rent andmanagement servicesdonated by Directors
      
      -
      
      
      -
      
      
      10,501
      
      
      -
      
      
      10,501Shares issued for:Purchase of oil and gas
      
      5,600,000
      
      
      5,600
      
      
      13,994,400
      
      
      -
      
      
      14,000,000propertyCash
      
      192,000
      
      
      192
      
      
      119,808
      
      
      -
      
      
      120,000Net loss
      
      -
      
      
      -
      
      
      -
      
      
      (503,872
      )
      
      (503,872
      )Foreign currency translation
      
      -
      
      
      -
      
      
      -
      
      
      (46
      )
      
      (46
      )adjustmentTotal comprehensive
      
      
      
      
      
      
      
      
      
      
      (503,918
      )lossBalance, July 31, 2008
      
      85,862,000
      
      
      85,862
      
      
      14,188,489
      
      
      (622,127
      )
      
      13,652,224Shares issued for:Cash
      
      79,470
      
      
      79
      
      
      29,946
      
      
      -
      
      
      30,025Services
      
      550,000
      
      
      550
      
      
      299,050
      
      
      -
      
      
      299,600Extension on asset
      
      250,000
      
      
      250
      
      
      147,250
      
      
      -
      
      
      147,500purchase agreementExercise of stock options
      
      196,000
      
      
      196
      
      
      97,804
      
      
      -
      
      
      98,000Discount on convertible
      
      
      
      
      
      
      
      150,000
      
      
      -
      
      
      150,000debtStock based compensation
      
      -
      
      
      -
      
      
      206,735
      
      
      -
      
      
      206.735Net 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


|* | 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.

---

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.

On July 29, 2008, we acquired certain oil and gas properties
  and changed their 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.

---

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, 2009 and 2008, we had no
  cash equivalents. We may, in the normal course of operations, maintain cash
  balances in excess of federally insured limits. As of July 31, 2009, we had
  cash balances of $186,806 in excess of federally insured limits.

Restricted cash  note proceeds restricted as to use

At July 31, 2009, we had $170,377 of restricted cash.
  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.

Deferred financing cost

In connection with debt financing, we paid $190,970 in
  fees, of which $58,040 was paid in prior year. These fees were written off
  to interest expense during the year ended July 31, 2009. (See Note 7)

Concentrations of Credit Risk

All of our receivables are due from oil and natural gas purchasers.
  We sold approximately 90% and 6% of our oil and natural gas production to two
  customers during the year ended July 31, 2009. At July 31, 2009, these two customers
  accounted for approximately 60% and 7%, respectively of accounts receivable.

Office 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

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.

Depletion and depreciation of proved oil and gas properties
  is calculated on the units-of-production method based upon estimates of proved
  reserves. Such calculations include the estimated future costs to develop proved
  reserves. Oil and gas reserves are converted to a common unit of measure based
  on the energy content of 6,000 cubic feet of gas to one barrel of oil. Costs
  of unevaluated properties are not included in the costs subject to depletion.
  These costs are assessed periodically for impairment.

Ceiling test

In applying the full cost method, we perform an impairment
  test (ceiling test) at each reporting date, whereby the carrying value of oil
  and gas property and equipment is limited to the estimated present value
  of the future net revenues from its proved reserves, discounted at a 10-percent
  interest rate and based on current economic and operating conditions, plus the
  cost of properties not being amortized, plus the lower of cost or fair market
  value of unproved properties included in costs being amortized, less the income
  tax effects related to any book and tax basis differences of the properties.
  As of July 31, 2009, no impairment of oil and gas properties was recorded.

---

Asset retirement obligation

In accordance with SFAS No. 143, Accounting for Asset
  Retirement Obligations, we record the fair value of a liability for asset
  retirement obligations (ARO) in the period in which an obligation
  is incurred and records a corresponding increase in the carrying amount of the
  related long-lived asset. Our asset retirement obligations primarily relate
  to the abandonment of oil and gas properties. The present value of the estimated
  asset retirement cost is capitalized as part of the carrying amount of oil and
  gas properties and is depleted over the useful life of the asset. The settlement
  date fair value is discounted at our credit adjusted risk-free rate in determining
  the abandonment liability. The abandonment liability is accreted with the passage
  of time to its expected settlement fair value. Revisions to such estimates are
  recorded as adjustments to ARO and capitalized asset retirement costs and are
  charged to operations in the period in which they become known. At the time
  the abandonment cost is incurred, we are required to recognize a gain or loss
  if the actual costs do not equal the estimated costs included in ARO.

The amounts recognized for ARO are based upon numerous estimates
  and assumptions, including future abandonment costs, future recoverable quantities
  of oil and gas, future inflation rates, and the credit adjusted risk free interest
  rate.

Derivatives

Derivative financial instruments, utilized to manage or reduce
  commodity price risk related to our production, are accounted for under the
  provisions of SFAS No. 133, Accounting for Derivative Instruments and
  for 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. At July 31, 2009, derivative assets include the net market value
  of derivative assets and liabilities due to the right of offset in the settlement
  of these contracts.

Environmental

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 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.

Future income taxes

Income taxes are accounted for using the asset/liability method
  of income tax allocation. Future income taxes are recognized for the future
  income tax consequences attributable to differences between the carrying values
  of assets and liabilities and their respective income tax bases. Future income
  tax assets and liabilities are measured using income tax rates expected to apply
  to taxable income in the years in which temporary differences are expected to
  be recovered or settled. The effect on future income tax assets and liabilities
  of a change in income tax rates is included in earnings in the period that such
  change in income tax rates is enacted. Future income tax assets are recorded
  in the financial statements if realization is considered more likely than not.

---

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, 2009. Costs associated with production
  are expensed in the period incurred.

Loss per share

Basic net loss per common share is computed by dividing net
  loss by the weighted-average number of common shares outstanding during the
  period. Diluted net loss per common share is determined using the weighted-average
  number of common shares outstanding during the period, adjusted for the dilutive
  effect of common stock equivalents. In periods when losses are reported, the
  weighted-average number of common shares outstanding excludes common stock equivalents,
  because their inclusion would be anti-dilutive.

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, 2009 based
  upon the relatively short period these instruments have been outstanding.

New Accounting Pronouncements

In June 2009, the FASBissued SFAS No. 168, The
  FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
  Accounting Principles  a replacement of FASB Statement No. 162
  (SFAS 168). The FASB Accounting Standards Codification, (Codification
  or ASC) became the source of authoritative GAAP recognized by the
  FASB to be applied by nongovernmental entities. Rules and interpretive releases
  of the SEC under authority of federal securities laws are also sources of authoritative
  GAAP for SEC registrants. On the effective date of SFAS 168, the Codification
  superseded all then-existing non-SEC accounting and reporting standards. All
  other non-grandfathered non-SEC accounting literature not included in the Codification
  became non-authoritative.

Following SFAS 168, the FASB will no longer issue new standards
  in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force
  Abstracts; instead, it will issue Accounting Standards Updates (ASUs).
  The FASB will not consider ASUs as authoritative in their own right; rather
  these updates will serve only to update the Codification, provide background
  information about the guidance, and provide the bases for conclusions on the
  change(s) in the Codification. SFAS No. 168 is incorporated in ASC Topic 105,Generally Accepted Accounting Principles.We will adopt SFAS No. 168 in
  the first quarter of fiscal 2010, and the Company will provide reference to
  both the Codification topic reference and the previously authoritative references
  related to Codification topics and subtopics, as appropriate.

On December 31, 2008, the SEC published the final rules and
  interpretations updating its oil and gas reporting requirements. Many of the
  revisions are updates to definitions in the existing oil and gas rules to make
  them consistent with the petroleum resource management system, which is a widely
  accepted stand for the management of petroleum resources that was developed
  by several industry organizations. Key revisions include changes to the pricing
  used to estimate reserves utilizing a 12-month average price rather than a single
  day spot price which eliminates the ability to utilize subsequent prices to
  the end of a reporting period when the full cost ceiling was exceeded and subsequent
  pricing exceeds pricing at the end of the reporting period, the ability to include
  nontraditional resources in reserves, the use of new technology for determining
  reserves, and permitting disclosure of probable and possible reserves. The SEC
  will require companies to comply with the amended disclosure requirements for
  registration statements filed after January 1, 2010, and for annual reports
  on Form 10-K for fiscal years ending on or after December 15, 2009. Early adoption
  is not permitted. We will adopt the provisions of this

---

pronouncement effective August 1, 2009, and we are currently
  assessing the impact that the adoption will have on our disclosures, operating
  results, financial position and cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures
  about Derivative Instruments and Hedging Activities (SFAS 161),
  an amendment of FASB Statement No. 133, Accounting for Derivative Instruments
  and Hedging Activities (SFAS 133). SFAS 161 requires entities
  to provide qualitative disclosures about the objectives and strategies for using
  derivatives, quantitative data about the fair value of and gains and losses
  on derivative contracts, and details of credit-risk-related contingent features
  in their hedged positions. The standard is effective for financial statements
  issued for fiscal years and interim periods beginning after November 15, 2008,
  with early application encouraged but not required. SFAS 161 will be effective
  for us on August 1, 2009. SFAS 161 also requires entities to disclose more information
  about the location and amounts of derivative instruments in financial statements
  how derivatives and related hedges are accounted for under SFAS 133 and how
  the hedges affect the entitys financial position, financial performance,
  and cash flows. We are currently evaluating whether the adoption of SFAS 161
  will have an impact on our financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The
  Fair Value Option for Financial Assets and Financial Liabilities (SFAS
  159). SFAS 159 permits companies to elect to measure many financial instruments
  and certain other items at fair value. Upon adoption of SFAS 159, a company
  may elect the fair value option for eligible items that exist at the adoption
  date. Subsequent to the initial adoption, the election of the fair value option
  should only be made at initial recognition of the asset or liability or upon
  a remeasurement event that gives rise to new-basis accounting. The decision
  about whether to elect the fair value option is applied on an instrument-by-instrument
  basis, is irrevocable and is applied only to an entire instrument and not only
  to specified risks, cash flows or portions of that instrument. SFAS No. 159
  does not affect any existing accounting standards that require certain assets
  and liabilities to be carried at fair value nor does it eliminate disclosure
  requirements included in other accounting standards. We adopted SFAS No. 159
  effective August 1, 2008 and did not elect the fair value option for any existing
  eligible items.

In September 2006, the FASB issued SFAS No. 157, Fair
  Value Measurements (SFAS 157). SFAS No. 157 defines fair value,
  establishes a framework for measuring fair value and expands disclosures about
  fair value measurements. SFAS No. 157 does not impose fair value measurements
  on items not already accounted for at fair value; rather it applies, with certain
  exceptions, to other accounting pronouncements that either require or permit
  fair value measurements. Under SFAS No. 157, fair value refers to the price
  that would be received to sell an asset or paid to transfer a liability in an
  orderly transaction between market participants in the principal or most advantageous
  market. The standard clarifies that fair value should be based on the assumptions
  market participants would use when pricing the asset or liability. In February
  2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB
  Statement No. 157 (FSP FAS 157-2), which delays the effective date
  of SFAS 157 for all non-financial assets and liabilities, except those that
  are recognized or disclosed at fair value in the financial statements on a recurring
  basis, until fiscal years beginning after November 15, 2008. These non-financial
  items include assets and liabilities such as non-financial assets and liabilities
  assumed in a business combination, reporting units measured at fair value in
  a goodwill impairment test and asset retirement obligations initially measured
  at fair value. Effective August 1, 2008, we adopted SFAS 157 for fair value
  measurements not delayed by FSP FAS No. 157-2. The adoption resulted in additional
  disclosures as required by the pronouncement (See Note 13 Fair Value Measurements)
  related to our fair value measurements for oil and gas derivatives but no change
  in our fair value calculation methodologies. Accordingly, the adoption had no
  impact on our financial condition or results of operations.

NOTE 3 - GOING CONCERN

As of July 31, 2009 We intend to raise additional working
  capital either through private placements, public offerings and/or bank financing.
  We are actively pursuing such alternatives in conjunction with its financial
  advisor, C.K. Cooper & Company, Inc. We are also identifying merger and/or
  acquisition candidates of strategic and financial benefit to our plans for growth.
  As of July 31, 2009, no acquisition or merger agreements have yet been closed.
  To the extent that funds generated from any private placements, public offerings
  and/or bank financing are insufficient, Doral will have to raise additional
  working capital through other channels. No assurance can be given that additional
  financing will be available, or if available, will be on terms acceptable to
  Doral.

This factor raises substantial doubt about our ability to
  continue as a going concern. The consolidated financial statements do not include
  any adjustments that might be necessary if we are unable to continue as a going
  concern.

---

NOTE 4  RESTATEMENT

When preparing our financial statements for the fiscal year ended
  July 31, 2009, we determined that the original valuation model for the net profit
  overriding royalty interest (the MAC NPORRI) granted to Macquarie
  in connection with the Macquarie Credit Agreement contained errors that resulted
  in an overstatement of the value of the MAC NPORRI. After discovering this issue,
  we engaged an independent economist to re-evaluate the value of the MAC NPORRI
  at its inception, resulting in a substantially lower value being assigned to
  the NPORRI at the date of grant than the value originally assigned for accounting
  purposes. The value of the NPORRI originally resulted in a discount to the oil
  and gas properties and notes payable by $5.3 million. Correcting this overvaluation
  resulted in our increasing the value of oil and gas properties and notes payable
  by approximately $5.1 million as of July 31, 2008.

NOTE 5  OIL AND GAS PROPERTIES

Acquisition of Eddy County Properties

On July 29, 2008, the Company acquired a working interest in
  66 producing oil fields and approximately 186 wells (the Eddy County Properties)
  in and around Eddy County, New Mexico. The acquisition of the Eddy County Properties
  was completed pursuant to the terms of the Purchase and Sale Agreement dated
  April 25, 2008, as amended on July 17, 2008, (the Hanson Energy Agreement)
  between J. Warren Hanson, an individual doing business as Hanson Energy, and
  his wife, Kathie Hanson, and the Company. Under the terms of the Hanson Energy
  Agreement, Hanson Energy transferred to Doral all of its right, title and interest
  in and to the Eddy County Properties, together with all of Hanson Energys
  right, title and interest in and to the lands, wells and hydrocarbons associated
  with the Eddy County Properties, and to the oil and gas sales contracts related
  thereto (collectively, the Assets).

The Eddy County Properties consist of approximately 7,800 acres
  and are located along the Artesia-Vacuum Trend near the northwestern edge of
  the Permian Basin. As a result of the acquisition of the Eddy County Properties,
  Doral currently holds a 100% working interest and an average of a 74.7% net
  revenue interest in 55 of the 66 leases. In addition, the Company holds an average
  of an 84.4% working interest and an average of a 67.1% net revenue interest
  in the remaining 11 leases. Dorals leasehold rights vary between leases,
  but they generally extend from the surface to approximately 3,500 feet in depth.
  Doral has been entitled to production from the Eddy County Properties since
  August 1, 2008.

As consideration for the Assets, Doral paid to Hanson Energy
  the following consideration:

|(a) | Upon execution of the Hanson Energy Agreement, a deposit
        (the Deposit) of $100,000 in cash plus and 80,000 shares of
        common stock;                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                              
|(b) | Upon execution of the Amendment Agreement to the Hanson
        Energy Agreement dated July 17, 2008, an amount of $150,000 in cash, paid
        as an increase to the Deposit amount;      
|    |                                                                                                                                                                                              
|(c) | Upon closing, $4,750,000 in cash and 1,040,000 shares
        of our common stock, and an overriding royalty interest of 2.5% of 8/8
        on the oil and gas produced from the Assets; and
|    |                                                                                                                                                                                              
|(d) | On November 24, 2008, $463,408 in cash as a final purchase
        price adjustment.                                                                                                         

|The total purchase price was as follows:                               |   |            |  
|---------------------------------------------------------------------- | - | ---------- | -
|Cash paid to Hanson Energy                                             | $ | 5,000,000  |  
|Common stock issued to Hanson Energy (7,000,000 shares valued
      at |   | 14,000,000 |  
|$2.00 per share based on last traded stock
      price)                |   |            |  
|Cash paid for other acquisition costs                                  |   | 97,090     |  
|Asset retirement obligation incurred                                   |   | 918,902    |  
|Total purchase price                                                   |   | 20,015,992 |  
|Less: Net profits overriding royalty interest                          |   | (181,746   | )
|Net purchase price                                                     | $ | 19,834,246 |  

---

The total purchase price was allocated to proved oil and gas
  properties, as this was the only asset purchased.

The following table reflects selected pro forma financial information
  as if the acquisition of the Eddy County Properties had occurred as of the beginning
  of the year ended July 31, 2008:

YearendedJuly 31,2008Revenues  oil and gas
      $
      2,165,565Net loss
      $
      (846,401
      )Loss per share
      $
      (0.01
      )


The pro forma financial information above includes the actual
  results of Doral for the year ended July 31, 2008 adjusted by the following:

- Revenue and direct operating expenses of the Eddy County Properties for
    the year ended July 31, 2008;
- Incremental depreciation, depletion and accretion expense, using units of
    production method, resulting from the purchase of the Eddy County Properties;
- Estimated increase in general and administrative expense as a result of
    the purchase of the Eddy County Properties;
- Interest expense and amortization of deferred financing costs; and
- Shares issued for the acquisition of the Eddy County Properties.

Oil and gas properties

We recognized depletion expense of $419,068 during the year ended
  July 31, 2009.

NOTE 6  ASSET RETIREMENT OBLIGATION

Asset retirement obligation activity for the years ended July
  31, 2009 and 2008 are as follows:

|                                                        |   | 2009    |   |   | 2008    | 
|------------------------------------------------------- | - | ------- | - | - | ------- | 
|Asset retirement obligations, beginning of
      period | $ | 918,902 |   | $ | -       | 
|Asset retirement obligation incurred                    |   | -       |   |   | 918,902 | 
|Change in estimate                                      |   | (90,068 | ) |   | -       | 
|Accretion expense                                       |   | 74,820  |   |   | -       | 
|Asset retirement obligations, end of period             | $ | 903,654 |   | $ | 918,902 | 

NOTE 7  NOTES PAYABLE

Notes payable consist of the following as of July 31, 2009 and
  2008:

|                                                           |   | 2009      |  |   | 2008      | 
|---------------------------------------------------------- | - | --------- |  | - | --------- | 
|Little Bay Consulting                                      | $ | 520,000   |  | $ | 320,000   | 
|Green Shoe Investments, net of discount of $118,523        |   | 668,477   |  |   | 300,000   | 
|Macquarie Ltd.                                             |   | 5,888,196 |  |   | 5,118,254 | 
|Note payable to related party, net of discount of $250,000 |   | 250,000   |  |   | -         | 
|Other                                                      |   | 40,000    |  |   | -         | 
|Vehicle and trailer notes                                  |   | 181,960   |  |   | -         | 
|Total notes payable                                        |   | 7,548,633 |  |   | 5,738,254 | 
|Less: current portion                                      |   | 6,917,849 |  |   | -         | 
|Noncurrent notes payable                                   | $ | 630,784   |  | $ | 5,738,254 | 

Repayments are as follows:

---

Fiscal 2010
      Fiscal 2011
      Fiscal 2012
      Fiscal 2013
      Fiscal 2014 and thereafter$7,036,372*
      $622,000**
      $185,000**
      $85,000**
      $73,784


* amount includes $118,523 unamortized discount for Green Shoe
  Investments

** amount includes $250,000 unamortized discount for related
  party note payable

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.

During October 2008, Doral borrowed $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.

Green Shoe Investments

In May 2008, Doral signed loan agreements for $250,000 with Greenshoe
  Investments Ltd. (Greenshoe). On July 18, 2008, Doral received an
  additional $50,000 of loan from Greenshoe. The loans from Greenshoe are unsecured,
  carry an annual interest rate of 5.0%, are due July 1, 2010, and July 18, 2010
  respectively and are nonconvertible.

During February and April 2009, Doral borrowed a total of $187,000
  from Green Shoe Investments. The loans are unsecured and carry an annual interest
  rate of 5.0% . The notes mature $100,000 on March 1, 2011 and $87,000 on May
  1, 2011.

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 August 10, 2009 and is convertible at $1 per share. The
  difference in proceeds and the repayment amount resulted in a discount of $150,000
  that is being amortized over the term using the effective interest method. As
  of July 31, 2009, $181,477 was amortized leaving $118,523 to be amortized in
  fiscal 2010. This loan is currently in default.

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.At July 31, 2009, the applicable interest rate
  under the Term Loan and the Revolving Loan was 6.785% and 3.285%, respectively.
  The effective interest rates on the Term and Revolving Loans combined is approximately
  130%.

Provided that the Company submitted a Development Plan (as such
  term is defined in the Credit Agreement) acceptable to Macquarie (at its sole
  discretion) by January 15, 2009, the Credit Agreement would have matured on
  July 30, 2011. Since the Company failed to submit an acceptable Development
  Plan to Macquarie, the maturity date

---

has been moved up to July 30, 2009. In connection with the Credit
  Agreement, Doral granted Macquarie a net profits overriding royalty interest
  (NPORRI) in the Eddy County Properties. Beginning on the maturity
  date of the Credit Agreement, or earlier if all amounts advanced under the Credit
  Agreement are repaid before that date, Doral will pay Macquarie 35% of its net
  profits on the Eddy County Properties. After Macquarie has received $5,000,000,
  this percentage will drop to 20% in perpetuity. We valued the NPORRI at $181,476
  resulting in a discount of $181,746 on the Term and Revolving loans at July
  31, 2008 with a corresponding reduction in proved oil and gas properties. The
  discount on the notes payable was initially being amortized over the life of
  the debt using the effective interest method. The unamortized amount of the
  discount was written off to interest expense in the second quarter of 2009 as
  a result of our technical default on certain covenants of the loan agreement.

The NPORRI is convertible into our common stock contingent on
  the following conditions being met:

- Dorals Common Stock is listed on the American Stock Exchange or another
    exchange approved by Macquarie;
- No more than 65 percent of Dorals common stock is held by affiliates
    or insiders of the Company; and
- The average trading volume of the shares of common stock on the exchange
    is equal to or greater than 50% of the outstanding shares of common stock;

The NPORRI is convertible at Doral or Macquaries option
  after the conversion requirements listed above are met. After either party issues
  a notice of conversion, the NPORRI will be valued by investment bankers approved
  by both parties. The number of shares to be issued will be determined by dividing
  the value of the NPORRI by the volume weighted average trading price of the
  common stock for the 60 days prior to conversion. The conversion feature expires
  on July 29, 2018. Because the conversion option is contingent on future events,
  no value has been assigned to this conversion feature.

The Credit Agreement also contains events of default which are
  customary for such financings. The events of default include, but are not limited
  to, default of payment; failure to comply with any term, condition or covenant
  of the Credit Agreement; bankruptcy or insolvency related defaults; judgment
  pertaining to receivership or liquidation; federal tax lien or judgment against
  us of more than $100,000; our failure to comply with any government regulations
  on our properties; the operator is removed or withdraws and no replacement is
  acceptable to Macquarie; a change in control occurs; or a material adverse event
  occurs.

We have failed to meet the minimum quarterly operating cash flow
  and minimum quarterly sales volume requirements set out in the Credit Agreement
  for the year ended July 31, 2009. Under the terms of the Credit Agreement, Macquarie
  has the right to declare us in default of our obligations and to declare the
  amounts due under the Credit Agreement to be immediately payable. Macquarie
  has not yet exercised these rights and has not provided us with any indications
  that it intends to do so at this time. However, there is no assurance that Macquarie
  will not exercise its right to declare us in default in the future. As a result
  of the failure to meet these minimum requirements, we reclassified amounts due
  under the notes to current liabilities, and we wrote off all unamortized deferred
  financing costs and unamortized discounts on the notes.

Upon an event of default, Macquarie has the right under the Credit
  Agreement to: (i) accelerate payment on all outstanding promissory notes and
  loans due; (ii) sell any collateral; and (iii) carry out our rights under our
  operating agreements with respect to our Eddy County Properties.

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.

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) | with respect to the Term 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.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.         

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.         

During the year ended July 31, 2009, we borrowed an additional
  $739,348 under the Credit Agreement in order to pay the additional purchase
  price adjustment for the acquisition of the Hanson Properties and for other
  working capital purposes.

Note payable to related party

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. 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 July 31, 2009, $0 was amortized leaving $250,000 to be
  amortized in fiscal 2010 - 2012.

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.

Other

In May 2009, the Company received $40,000 from Citibank. The
  amount carries no interest, is unsecured and is due 90 days after a closing
  with Macquarie Bank Limited, which has not yet occurred.

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.

---

Convertible note payable

On May 28, 2009, we received $150,000 in debt financing
  from Green Shoe Investments Ltd. (Green Shoe) On June 10, 2009 we
  entered into an agreement dated effective as of May 28, 2009 (the Green
  Shoe Note Agreement) with Green Shoe whereby, in exchange for the $150,000
  provided by Green Shoe, we agreed to issue a convertible note in the principal
  amount of $300,000. The convertible note is due 10 business days after the
  earlier of the maturity date of the amounts owed to Macquarie Bank Limited (Macquarie)
  under the terms of our $50,000,000 Senior First Lien Secured Credit Agreement
  (the Macquarie Credit Agreement) with Macquarie (including any extensions
  granted thereon) and the date, if any, that we are able to close a financing
  (or combination of financing) sufficient to enable us to repay all of the amounts
  owned by us under the Macquarie Credit Agreement (a Qualified Refinancing).
  The principal amount of the convertible note may be converted into shares of
  our common stock at a rate of $1.00 per share.

Under the terms of the Green Shoe Note Agreement, if we are
  able to obtain a Qualified Refinancing, the unpaid principal amount of the convertible
  note outstanding after the due date described above will earn interest at a
  rate of 18% per annum. If we are not able to obtain a Qualified Refinancing
  on or before the maturity date of the Macquarie Credit Agreement and we dispose
  of the properties acquired by us from Hanson Energy in August 2008 (including
  a realization by any second debtors of their security interest in these properties),
  no interest shall be payable on the $300,000 convertible note, however we
  will be required to issue to Green Shoe an additional convertible note in the
  principal amount of $150,000 on the same terms and conditions as the $300,000
  convertible note except that no interest shall be payable on the principal amount
  of the $150,000 convertible note.

NOTE 8  COMMITMENTS AND CONTINGENCIES

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, 2009, 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.

Cochran County Properties Agreement

On January 15, 2009, Doral entered into a letter agreement
  with Miltex Oil Company (Miltex) to acquire three oil and gas leases
  located in Cochran County, Texas for a total purchase price of $2.2 million.
  Under the terms of the letter agreement, Doral paid a deposit of $100,000
  in January 2009 and must pay the remaining $2.1 million by February 27,
  2009. In February 2009, Doral paid an additional $100,000 to extend the
  closing date of the transaction to March 31, 2009, increasing the total purchase
  price of the properties to $2.3 million. The $100,000 deposit is included
  in deposits on the balance sheet at April 30, 2009.

On March 31, 2009, the Company entered into an agreement to
  modify the terms of their letter agreement with Miltex to increase the purchase
  price by $125,000. Of this increase, Doral paid $25,000 in earnest money
  and an additional $100,000 was added to the purchase price due at closing,
  making the total purchase price $2,425,000. Doral has until April 21, 2009
  to complete the acquisition of the Cochran County Properties. In order to complete
  the acquisition of the Cochran County Properties, Doral will be required to
  pay Miltex an additional $2,235,981.90 by April 21, 2009. The required payment
  amount includes $2,200,000 for the remainder of the purchase price and $35,981.90
  for the value of oil in Miltexs storage tanks as of March 1, 2009. The
  $25,000 deposit is included in deposits on the balance sheet at April 30,
  2009.

On April 21, 2009, Doral entered into an agreement to modify
  the terms of their letter agreement with Miltex. The deadline for Dorals
  proposed acquisition of the Miltex Properties has been changed from April 21,
  2009 to May 29,

---

2009, with extension clauses to adjust the closing date to July
  31, 2009, if necessary. The effective date of the proposed Miltex Properties
  acquisition, however, remains at the original date of March 1, 2009. If closing
  occurs by the May 29, 2009 scheduled closing date, the revised total acquisition
  cost of the Miltex Properties will be $2,635,000 plus 25,000 shares of the Companys
  common stock, of which $2,400,000 will be payable to Miltex at closing. If the
  closing date is extended to June 30, 2009, the Company will pay an additional
  $10,000 to Miltex and will issue an additional 25,000 shares of the Companys
  common stock. If the closing date is extended to July 31, 2009, the Company
  will pay to Miltex an additional $50,000. The shares to be issued to Miltex
  will be issued pursuant to the registration exemptions provided by Regulation
  D of the Securities Act of 1933 (the Securities Act). The Company
  has granted piggy-back registration rights to Miltex.

On May 22, 2009, Doral notified Miltex of its intention to extend
  the closing date of the proposed acquisition of Cochran County Properties owned
  by Miltex. Under the amended terms of Dorals agreement with Miltex, Doral
  has the right to extend the closing date for the Miltex Properties from May
  29, 2009 to June 30, 2009 by paying Miltex and additional $10,000 and issuing
  to Miltex an additional 25,000 shares of its common stock. These amounts were
  paid subsequent to year end and included in deposit on the balance sheet April
  30, 2009.

On June 26, 2009, Doral extended the closing date of the proposed
  acquisition to July 31, 2009. To extend the closing date, the Company paid Miltex
  $50,000 as provided under the amended terms of its agreement with Miltex.

On July 30, 2009, Doral entered into an agreement (the Assignment
  Agreement) whereby it agreed to assign its right to purchase Miltex Properties
  from Miltex. Under the terms of the Assignment Agreement, the assignee (the
  Assignee) agreed to pay the Company an aggregate of $633,472 in
  consideration for the Company agreeing to assign its rights under the Assignment
  Agreement.

Closing of the assignment was completed on July 31, 2009, the
  same day that the Assignee completed the acquisition of the Miltex Properties.
  Prior to closing, the Company and the Assignee verbally agreed to amend the
  terms of the Assignment Agreement such that the Assignee paid to the Company
  $600,000 for the assignment of the Companys right to purchase the Miltex
  Properties plus an additional $150,000 to reimburse the Company for amounts
  due to a third party for brokering the sale of the Miltex Properties.

Miltex agreed to the assignment in consideration for the Company
  agreeing that, if the Company sells any of its oil and gas properties located
  in Eddy County, New Mexico on or before October 21, 2009, Miltex may require
  the Company to repurchase the 50,000 shares of the Companys common stock
  previously issued to Miltex under the terms of their agreement for the purchase
  and sale of the Miltex Properties. The Company has agreed to repurchase the
  shares issued to Miltex at the greater of $3.00 per share or the current market
  price of the Companys common stock. If the Company does not have sufficient
  funds to repurchase the shares, the Company has agreed to file a registration
  statement for the resale of those shares. The Company did not sell any of its
  Eddy County properties and has not been required to repurchase any shares of
  stock. Doral recognized a gain of $127,500 on the sale.

Investment advisory agreement

On January 26, 2009, Doral entered into an investment advisory
  agreement with a financial advisor. Under the terms of the agreement, Doral
  has agreed to pay $125,000 in cash, of which $25,000 was paid upon execution
  of the agreement with the remaining $100,000 payable in 11 equal monthly installments
  and 50,000 shares of common stock. The shares were valued at $125,000 based
  on the market value of the stock on the date of the agreement. The $25,000 cash
  payment and the $125,000 paid in shares of common stock has been included in
  deposits on the balance sheet at April 30, 2009, based on managements
  expectation that the financial advisor will be successful in obtaining additional
  financing for the Company.

NOTE 9  INCOME TAXES

Deferred income taxes are recorded at the expected tax rate of
  35%. SFAS No. 109 Accounting for Income Taxes requires that deferred
  tax assets be reduced by a valuation allowance if it is more or likely than
  not that some portion or all of the deferred tax asset will not 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:

|                                           |   | 2009     |   |  | 2008     |  
|------------------------------------------ | - | -------- | - |  | -------- | -
|Computed at U.S. and State statutory rates | $ | (667,524 | ) |  | (176,355 | )
|Changes in valuation allowance             |   | 677,126  |   |  | 176,355  |  
|Total                                      | $ | 9,602    |   |  | -        |  
|                                           |   |          |   |  |          |  
|                                           |   | July 31, |   |  | July 31, |  
|                                           |   | 2009     |   |  | 2008     |  
|Deferred tax asset attributable to:        |   |          |   |  |          |  
|Other items                                | $ | (9,602   | ) |  | -        |  
|Net operating loss                         | $ | 677,126  |   |  |          |  
|                                           |   |          |   |  | 217,749  |  
|Less: valuation allowance                  |   | (677,126 | ) |  | (217,749 | )
|                                           |   |          |   |  |          |  
|Total                                      | $ | (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, 2009 and 2008, the deferred tax assets are net of a valuation
  allowance of $677,126 and $217,749 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 carryforwards are expected to be available to reduce
  taxable income. At July 31, 2009, Doral had loss carryforwards of approximately
  $1,900,000 for tax purposes which will begin to expire in 2026.

NOTE 10  STOCKHOLDERS EQUITY

Effective January 7, 2008, the Company amended its Articles of
  Incorporation by splitting its issued and authorized capital on a 25-for-1 basis.
  Accordingly, the Companys authorized capital of common stock has been
  increased from 100,000,000 shares to 2,500,000,000 shares of common stock, $0.001
  par value per share, and the Companys issued and outstanding shares were
  increased on a 25-for-1 basis such that each shareholder now holds twenty five
  shares for each one share previously held. As a result of the stock split, the
  number of Company shares outstanding increased from 4,003,500 to 107,087,500
  on January 7, 2008. All share and per-share data (except par value) have been
  adjusted to reflect the retroactive effect of the forward stock split for all
  periods presented.

Effective January 23, 2009, the Company amended its Articles
  of Incorporation by a reverse split of its issued and authorized capital on
  a 4-for-25 basis. Accordingly, the Companys outstanding shares were decreased
  on a 4-for-25 basis such that each shareholder now holds four shares for each
  25 shares 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.

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 June 2008, Doral completed a private placement of 192,000
  shares of common stock at a price of $0.63 per share and received total cash
  proceeds of $120,000.

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.

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.

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.

Stock Options

There were no options outstanding prior to July 31, 2008.

Stock option activity summary is presented in the table below:

|                             |  |           |   |   |                |  |  | Weighted-        |  |   |           | 
|---------------------------- |  | --------- | - | - | -------------- |  |  | ---------------- |  | - | --------- | 
|                             |  |           |   |   |                |  |  | average          |  |   |           | 
|                             |  |           |   |   | Weighted-      |  |  | Remaining        |  |   | Aggregate | 
|                             |  | Number of |   |   | average        |  |  | Contractual      |  |   | Intrinsic | 
|                             |  | Shares    |   |   | Exercise Price |  |  | **Term (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   |   | $ | 0.50           |  |  | 4.90             |  | $ | 30,400    | 

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

---

NOTE 11  RELATED PARTY TRANSACTIONS

During the year ended July 31, 2008, directors of the Company
  contributed management services with a value of $7,501 and rent with a value
  of $3,000. These items were charged to operations and credited to additional
  paid-in capital during the respective periods.

At July 31, 2008, Doral had accounts payable to the CEO of the
  Company in the amount of $50,919. These amounts represent unpaid salary and
  expense reimbursements.

As of July 31, 2009, Doral had accounts payable to the Chairman
  of the Board and CFO of the Company in the amount of $80,919. These amounts
  represent unpaid salary and expense reimbursements.

As more fully discussed in Note 7, we borrowed $250,000 from
  a partnership controlled by our Chief Executive Officer during the year ended
  July 31, 2009.

NOTE 12  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.

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, we recognized a net derivative asset of $413,879 with the change in
  fair value reflected in other income (expense). Realized hedge gains totaled
  $903,960 for the year ended July 31, 2009.

NOTE 13  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.                                                                                                                                             

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 Measurements | 
|--------------------- | - | ---------------------------------------------- | 
|Description           |   | Level 1                                        | 
|Assets:               |   |                                                | 
|Commodity derivatives | $ | -                                              | 
|                      | $ | -                                              | 

The fair value of commodity derivatives is determined using forward
  price curves derived from market price quotations, externally developed and
  commercial models, with internal and external fundamental data inputs. Market
  price quotations are obtained from independent energy brokers and direct communication
  with market participants.

Note 14  OPERATING LEASES

The Company leased certain office building spaces as its principle
  executive office. Future minimum lease payments under non-cancellable operating
  leases are as follows:

2010
      
      
      2011
      
      
      2012
      
      
      2013
      
      
      2014Office Building Lease
      $
      43,600
      
      $
      44,765
      
      $
      45,445
      
      $
      3,787
      
      $
      -Artesia Yard Lease
      $
      7,650
      
      $
      2,550
      
      $
      -
      
      $
      -
      
      $
      -


NOTE 15  SUBSEQUENT EVENTS

Subsequent events have been reviewed through November 12, 2009.

In October 2009, Doral granted options to purchase 200,000 shares
  of common stock at an exercise price of $0.33 per share for a term of five years
  to a third party in exchange for services.

Subsequent to year end, we issued 179,000 shares of common stock
  upon exercise of stock options.

Cave Pool Project  Eddy County, New Mexico

On October 28, 2009, Doral West 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 is 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 Doral now designates
  as the Cave Pool Project. The Cave Pool Project currently produces approximately
  10 BOEPD from a total of 39 wells completed in the Grayburg formation in the
  Grayburg Jackson Pool.

---

The Cave Pool Unit Properties are located adjacent to 3 leases
  that are a part of our Hanson Project, which contain 6 wells producing from
  the Grayburg and San Andres formations and 9 PUD locations in the Square Lake
  Field. As operator of the Cave Pool Project, we envision a re-development of
  the Cave Pool Unit Properties as a 20-acre 5-spot Grayburg waterflood project
  which has the potential to develop significant undeveloped reserves.

The Cave Pool Unit Properties were acquired by Blugrass from
  Robinhood LLC on October 12, 2009. Under the terms of the Blugrass Agreement,
  we have acquired a 40% interest is all of Blugrass right, title and interest
  in the Cave Pool Unit Properties, including the production on-hand and sales
  generated from the properties after the effective date of October 12, 2009.
  In consideration for this interest Doral has 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;                                                    
| |    |                                                                                                                                                                                            
| | 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.                                                                                                                                      

For their part, Blugrass has agreed to pay for the first $200,000
  of well repairs and workovers on the Cave Pool Unit Properties, with Doral West
  and Blugrass proportionately sharing the cost of all repairs and workovers thereafter.
  An initial 10 Cave Pool Project wells have been identified for repair jobs and
  will be re-worked by Doral in the near future, adding to the daily production
  from the Project.

In addition, the Blugrass Agreement provides Doral with a preferential
  right to purchase all of Blugrass remaining interest in the Cave Pool
  Unit Properties if they choose to sell the properties. The purchase price would
  be the greater of:

| | (a) | $2,000,000; or                                                                                                  
| | --- | ----------------------------------------------------------------------------------------------------------------
| | (b) | $40,000 per producing net barrel of oil equivalent per
        day (BOEPD) from the Cave Pool Unit Properties.

NOTE 16 - 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, 2009. The Company retained an
  in-house reserve engineer, to perform an evaluation of proved reserves as of
  July 31, 2008. 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, 2009 and 2008:

|                                                           |   | 2009       |  |   | 2008       | 
|---------------------------------------------------------- | - | ---------- |  | - | ---------- | 
|Proved properties                                          |   |            |  |   |            | 
|Mineral interests                                          | $ | -          |  | $ | -          | 
|Wells, equipment and facilities                            |   | 20,316,131 |  |   | 19,834,246 | 
|Total proved properties                                    |   | 20,316,131 |  |   | 19,834,246 | 
|                                                           |   |            |  |   |            | 
|Unproved properties                                        |   |            |  |   |            | 
|Mineral interests                                          | $ | -          |  | $ | -          | 
|Uncompleted wells, equipment and
      facilities          |   | -          |  |   | -          | 
|Total unproved properties                                  |   | -          |  |   | -          | 
|                                                           |   |            |  |   |            | 
|Less: accumulated depreciation, depletion and amortization |   | -          |  |   | -          | 
|Net
      capitalized costs                                | $ | 20,316,131 |  | $ | 19,834,246 | 

Costs Incurred in Oil and Gas Producing Activities for the Years
  Ended July 31, 2009 and 2008:

|                                   |   | 2009    |  |   | 2008       | 
|---------------------------------- | - | ------- |  | - | ---------- | 
|Acquisition of proved properties   | $ | 571,953 |  | $ | 18,915,344 | 
|Acquisition of unproved properties |   | -       |  |   | -          | 
|Development costs                  |   | 363,566 |  |   | -          | 
|Exploration costs                  |   | -       |  |   | -          | 
|Total costs
      incurred         | $ | 935,519 |  | $ | 18,915,344 | 

Results of Operations for Oil and Gas Producing Activities for
  the Year Ended July 31, 2009 and 2008:

|                                                            |   | 2009      |   |   | 2008 | 
|----------------------------------------------------------- | - | --------- | - | - | ---- | 
|Revenues                                                    | $ | 1,832,146 |   | $ | -    | 
|Production costs                                            |   | 2,046,043 |   |   | -    | 
|Exploration expenses                                        |   | -         |   |   | -    | 
|Depreciation, depletion and amortization                    |   | 419,068   |   |   | -    | 
|Accretion expense                                           |   | 74,820    |   |   | -    | 
|Income before income tax                                    |   | (707,785  | ) |   | -    | 
|Income tax                                                  |   | -         |   |   | -    | 
|Results of operations from oil and gas producing activities | $ | (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 2008 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  |  
|Production                                |  | (33,701    | ) |  | (8,880     | )
|Net changes in reserves                   |  | (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, 2008:

|                                          |  | Oil       |  |  | Gas       | 
|----------------------------------------- |  | --------- |  |  | --------- | 
|                                          |  | (Bbls)    |  |  | (Mcf)     | 
|Proved reserves - beginning of period     |  | -         |  |  | -         | 
|Purchase of minerals in place             |  | 4,928,090 |  |  | 3,222,420 | 
|Production                                |  | -         |  |  | -         | 
|Proved reserves - end of period           |  | 4,928,090 |  |  | 3,222,420 | 
|                                          |  |           |  |  |           | 
|Proved developed reserves - end of period |  | 964,460   |  |  | 92,930    | 

Standardized Measure of Discounted Future Net Cash Flows at July
  31, 2009 and 2008:

|                                                             |   | 2009        |   |  | 2008         |  
|------------------------------------------------------------ | - | ----------- | - |  | ------------ | -
|Future cash inflows                                          | $ | 206,396,306 |   |  | 568,253,760  |  
|Future production costs                                      |   | (48,313,327 | ) |  | (148,942,130 | )
|Future development costs                                     |   | (24,167,676 | ) |  | (30,984,280  | )
|Future income taxes                                          |   | (40,049,802 | ) |  | (130,763,975 | )
|10% annual discount for estimated timing of
      cash flows |   | (54,256,189 | ) |  | (156,739,882 | )
|Standardized measure of discounted future net cash flows:    | $ | 39,609,312  |   |  | 100,823,493  |  

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 2009 year-end reserve report, we used the July 31, 2009
  NYMEX oil price of $50.00 per barrel and the NYMEX gas price of $3.75 per Mmbtu,
  adjusted by property for energy content, quality, transportation fees and regional
  price differentials. The weighted average price over the lives of the properties
  was $65.12 per Bbl for oil and $3.63 per Mcf for gas. In our 2008 year-end reserve
  report, we used the July 31, 2008 WTI Cushing spot price of $124.17 per Bbl
  and Henry Hub spot natural gas price of $9.26 per MMbtu, adjusted by property
  for energy content, quality, transportation fees, and regional price differentials.
  The weighted average price over the lives of the properties was $127.76 per
  Bbl for oil and $7.66 per Mcf for gas.

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, 2009 and 2008:

|                                                 |   | 2009        |   |   | 2008        |  
|------------------------------------------------ | - | ----------- | - | - | ----------- | -
|Beginning of period                              | $ | 100,823,493 |   | $ | -           |  
|Purchase of minerals in place                    |   |             |   |   | 152,011,208 |  
|Net changes in prices and production costs       |   | (98,826,251 | ) |   | -           |  
|Sales of oil and gas produced, net of production |   | 213,897     |   |   | -           |  
|costs                                            |   |             |   |   |             |  
|Net change in income taxes                       |   | 34,287,522  |   |   | (51,187,715 | )
|Timing and other                                 |   | 3,110,651   |   |   |             |  
|                                                 |   |             |   |   |             |  
|End of period                                    | $ | 39,609,312  |   | $ | 100,823,493 |  

---

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


On January 22, 2008, Morgan & Company, Chartered
Accountants, resigned as our independent public accountants.

Morgan & Company stated that they were resigning as our
independent auditors due to the relocation of our offices and management from
Canada to the United States. Because of this relocation, Morgan & Company
felt that it was not appropriate for them to continue as our auditors. Following
the resignation of Morgan & Company, we appointed Malone & Bailey PC,
Certified Public Accountants and Business Consultants, of 601 W. Riverside
Avenue, Suite 1940, Spokane, WA 99201 as our new independent registered public
accounting firm on January 26, 2008.

Morgan & Companys reports on our financial statements for
the period from inception (October 25, 2005) to July 31, 2006 and for the fiscal
year ended July 31, 2007 did not contain an adverse opinion or disclaimer of
opinion, nor were they modified or qualified as to uncertainty, audit scope or
accounting principles.

During the period from inception (October 25, 2005) to July 31,
2007 and the subsequent interim period up to and including the date of Morgan
& Companys resignation, there were no disagreements between the Company and
Morgan & Company on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which, if not
resolved to the satisfaction of Morgan & Company, would have caused them to
make reference to the subject matter of the disagreement in connection with
Morgan & Companys report for the financial statements for the past year and
any subsequent interim period up to and including to the date of Morgan &
Companys resignation.

ITEM
9AT.             
CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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
Exchange 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. It should be noted that the design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of
how remote.

Under the supervision and with the participation of our management,
  including our Chief Executive Officer and Chief Financial Officer, we have evaluated
  the effectiveness of our disclosure controls and procedures as required by Exchange
  Act Rule 13a-15(b) as of the end of the period covered by this report. Based
  on that evaluation, our Chief Executive Officer and Chief Financial Officer
  have concluded that our disclosure controls and procedures were not effective
  due to the fact that the Macquarie net profits overriding royalty had been valued
  incorrectly. This resulted in the need to restate the financial statements for
  the year ended July 31, 2008 and subsequent interim periods. Management is implementing
  additional oversight controls to ensure this does not occur in the future.

Managements Annual Report on Internal Control over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

As of the end of the period covered by this Annual Report, we
  carried out an evaluation, under the supervision and with the participation
  of our Chief Executive and Chief Financial Officer, of the effectiveness of
  the design and operation of our internal control over financial reporting. The
  Company's management based its evaluation on criteria set forth in the framework
  in Internal Control--Integrated Framework issued by the Committee of Sponsoring
  Organizations of the Treadway Commission. Based on that assessment, management
  has concluded that the Company's internal control over financial reporting was
  not effective as of July 31, 2009 due to the fact that the Macquarie net profits
  overriding royalty had been valued incorrectly. This resulted in the need to
  restate the financial statements for the year ended July 31, 2008 and subsequent
  interim periods. Management is implementing additional oversight controls to
  ensure this does not occur in the future.

This Annual Report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered

Page 30 of 44

---

public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us 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 the year ended July 31, 2009 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.

ITEM
9B.             
OTHER INFORMATION

Other than the events described below, all information required
to be disclosed in a report on Form 8-K since the end of our third fiscal
quarter ended April 30, 2009 has been previously reported.

Forbearance Agreement  Macquarie Credit Agreement

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.

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)                                                                                               

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.         

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.         

Page 31 of 44

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Amendment to W.S. Oil and Gas Limited Convertible Note

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.

Page 32 of 44

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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 | 34  | Vice-Chairman,
      Chief Executive Officer and Director                 
|Paul C. Kirkitelos       | 40  | Chairman, Chief Financial
      Officer, Secretary, Treasurer and Director
|H. Patrick Seale         | 55  | President, Chief
      Operating Officer and 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.

Paul C. Kirkitelos has been our Chief Financial Officer,
Secretary and Treasurer since November 21, 2007 and a member of our Board of
Directors since December 24, 2007. Dr. Kirkitelos was also our Chief Executive
Officer and President from November 21, 2007 to December 10, 2008. Dr.
Kirkitelos has 12 years of management consulting, R&D, finance, and
operations experience. Dr. Kirkitelos was most recently Chief Operating Officer
of Nutragenetics, a nutritional science and product company. Prior to
Nutragenetics, he co-founded Rabbitt Capital Management, a hedge fund based on
quantitative stock market models. Dr. Kirkitelos also co-founded Web Event
Broadcasting, an Internet video company, where he served as CFO. Previously,
with the strategic consulting firm McKinsey & Company, Dr. Kirkitelos served
high tech and industrial clients on strategy, corporate finance, and operations
studies. Prior to McKinsey, Dr. Kirkitelos was the Director of Applications
Development at Chromavision Medical Systems, where he managed applications
development, supported clinical trials, and managed the FDA approval for the
company's cellular evaluation instrument. This regulatory approval was the
foundation for the company's successful initial public offering (IPO) on Nasdaq.
Dr. Kirkitelos holds M.S. and Ph.D. degrees in Engineering Physics from
University of Virginia, where he worked as a Research Fellow with the NASA
Goddard Space Flight Center studying the nonlinear dynamics of astrophysical
plasma waves. He earned B.S. degrees in both Electrical Engineering and Physics
with Highest Distinction from Worcester Polytechnic Institute.

H. Patrick Seale has been our Chief Operating Officer
since August 11, 2008 and subsequently our President and a member of our Board
of Directors since December 10, 2008. Mr. Seale has more than 33 years of
experience in the domestic and international petroleum industry. Mr. Seale was
previously the President and Executive Vice President of SPI Operations LLC, of
Midland, Texas, where he was a founder and spent seven years directing SPI's
production and reserve growth. While at SPI, Mr. Seale was responsible for the
management and direction of SPIs engineering, development, production, and
field operations. SPI's reserves eventually reached 15 million barrels of oil
equivalent (BOE) in ten West Texas projects. SPI achieved its growth through
strategic acquisitions of under-producing and under-developed properties with
potential for exploitation

Page 33 of 44

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of both existing wells and proved undeveloped reserves. Prior
to his departure, Mr. Seale engineered the sale of a majority interest in SPI's
largest project.

Previously, Mr. Seale was Vice President of Engineering for the
North American Oil and Gas Unit of NatWest Markets, the corporate and investment
banking division of National Westminster Bank, PLC. In this role, Mr. Seale
evaluated the economic feasibility of energy projects and helped determine the
size of the bank's reserve-based lending facilities for projects throughout the
world.

Mr. Seale previously gained international operations and
development experience as Vice President of Operations for both Concept Energy
Corporation in Colombia and Frontera Resources Corporation in the Republic of
Georgia and the Azerbaijan Republic. In these roles he created development and
drilling plans, managed production and drilling operations, and worked with
international banks and investors to obtain equity and debt financing. He was
also Vice President of Engineering for Cabot Oil & Gas Corp. (NYSE: COG),
managing the 800 Bcfe reserve base. Mr. Seale began his career with Exxon
Company USA after graduating with Highest Honors in Petroleum Engineering from
the University of Texas at Austin.

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

Clifton Martin Bloodworth, P.E.was hired as our
Operations Manager on October 13, 2008 and was subsequently appointed our Vice
President of Operations on February 16, 2009. Mr. Bloodworth is responsible for
managing our operations for the Eddy Country Properties. Mr. Bloodworth has more
than 31 years of experience in the petroleum industry. His experience includes
management and direct supervision of technical and field personnel and
operations; production engineering; drilling engineering; reservoir engineering
and reserves determination; secondary and tertiary recovery programs and
techniques; San Andres waterflood operations in West Texas and New Mexico;
production facility design and operation; field production optimization; mergers
and acquisitions; and artificial lift design and operation. Mr. Bloodworth
previously served as Senior Operations Engineer for Concho Oil & Gas, LLC;
Senior Production Engineer for Bass Enterprises Production Co.; Operations
Manager for SPI Operations LLC; Area Supervision and Joint Interest Manager of
Southwest Royalties Inc.; Operations Engineer for Cross Timbers Operating Co.;
and District Manager and District Engineer for Damson Oil Corporation. Mr.
Bloodworth began his career with Mobil Oil Corp. after receiving his Bachelor of
Science in Petroleum Engineering from Texas Tech University. Mr. Bloodworth is a
licensed professional engineer in the State of Texas and a member of the Society
of Petroleum Engineers.

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.

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.

Page 34 of 44

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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, 2009, the following
persons have failed to file, on a timely basis, the identified reports required
by Section 16(a) of the Exchange Act:

|                                                      | Number
      of Late | Transactions Not | Known Failures
      to   
|----------------------------------------------------- | -------------------- | ---------------- | --------------------------
|Name and Principal
      Position                     | Reports              | Timely Reported  | File
      a Required Form
|Paul C. Kirkitelos                                    | 0                    | 0                | None                      
|Chairman, Chief Financial Officer, Secretary,         |                      |                  |                           
|Treasurer and Director                                |                      |                  |                           
|                                                      |                      |                  |                           
|H. Patrick Seale                                      | 1                    | 1                | None                      
|President, Chief Operating Officer and
      Director |                      |                  |                           
|                                                      |                      |                  |                           
|Everett Willard Gray, II                              | 0                    | 0                | None                      
|Vice-Chairman, Chief Executive Officer and            |                      |                  |                           
|Director                                              |                      |                  |                           
|                                                      |                      |                  |                           

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, 2009 and
2008.

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 
        ($)
      Total 
        ($)Paul C. Kirkitelos(1)
        Chairman, CFO,     Secretary, Treasurer &    
        Director
      2009 
        2008
      $0 
        $105,000
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $0
      $0 
        $105,000Everett Willard Gray, II(2)
        Vice-Chairman, CEO &     Director
      2009 
        2008
      $180,000 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $12,586 
        n/a
      $197,586 
        n/aH. Patrick Seale(3)
        President, COO & Director
      2009 
        2008
      $180,000 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $0 
        n/a
      $180,000 
        n/aJonathan Moore(5)
        Former Executive Officer     & Former Director
      2009 
        2008
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0Naomi Moore(6)
        Former Secretary &     Former Director
      2009 
        2008
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0
      n/a 
        $0


Notes:

|(1) | Pursuant to a verbal agreement, we paid Dr. Kirkitelos
      $15,000 per month for his services during fiscal 2008. During fiscal 2009,
      Dr. Kirkitelos has worked without salary or other
  compensation.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 35 of 44

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|(2) | Mr. Gray was appointed as our CEO and Vice-Chairman on
      December 10, 2008. 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.                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Mr. Seale was appointed as our President and Chief
      Operating Officer on August 11, 2008. Pursuant to a verbal agreement, we
      pay Mr. Seale $15,000 per month for his services.                                                                                                                                                                                                                                                              
|(4) | Mr. Moore served as our executive officer from October
      25, 2005 to November 21, 2007 and as a Director from October 25, 2005 to
      December 24, 2007. We did not pay any compensation to Mr. Moore. However
      during the fiscal year ended July 31, 2008, for accounting purposes, we
      recorded in our financial statements the fair value of management services
      provided to us at no cost as contributed management services.
|(5) | Mrs. Moore served as our Secretary until November 21,
      2007 and as a Director until December 24, 2007. We did not pay any
      compensation to Mrs. Moore. However during the fiscal year ended July 31,
      2008, for accounting purposes, we recorded in our financial statements the
      fair value of management services provided to us at no cost as contributed
      management services.                                            

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

As of our fiscal year ended July 31, 2009, 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

See "Summary Compensation Table."

|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
    Not Applicable
    Not Applicable
    Not ApplicableEquity Compensation Plans Not Approved By Security
      Holders
    396,000
    $0.25
    7,700,000


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.

Page 36 of 44

---

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.

A total of 8,500,000 (1,700,000 pre-split) shares of our common
stock are available for issuance under the 2009 Plan. However, under the terms
of the 2009 Plan, at any time after August 1, 2009, 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 10% 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, which was attached as an exhibit to our Current Report on Form
8-K filed with the SEC on May 5, 2009 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,
to register 8,500,000 (1,700,000 pre-split) shares of our common stock available
for issuance under the 2009 Plan.

In addition to the 2009 Stock Incentive Plan, Mr. Bloodworths
employment contract entitles him to 200,000 post-split shares of our common
stock. These shares have not yet been issued to Mr. Bloodworth.

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 12,
2009 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
      Paul C. Kirkitelos 
        Chairman, Chief Financial Officer, Secretary, 
        Treasurer and Director
      24,077,600 
        (direct)
      27.3%Common Stock
      Everett Willard Gray, II(2)
        Vice-Chairman, Chief Executive Officer and 
        Director
      5,917,941 
        (indirect)
      6.7%Common Stock
      H. Patrick Seale(3)
        President, Chief Operating Officer and Director
      1,500,000 
        (indirect)
      1.7%Common Stock
      All Officers and Directors 
        as a Group (3 persons)
      31,495,541
      35.7%


Page 37 of 44

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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 
        Chairman, Chief Financial Officer, Secretary, 
        Treasurer and Director 
        415 West Wall, Suite 500 
        Midland, TX 79701
      24,077,600 
        (direct)
      27.3%Common Stock
      Everett Willard Gray, II(2)
        Vice-Chairman, Chief Executive Officer and 
        Director 
        2002 Bedford 
        Midland, Texas 79701
      5,917,941 
        (indirect)
      6.7%Common Stock
      J. Warren Hanson and Kathie Hanson, Joint 
        Tenants 
        P.O. Box 1348 
        Artesia, NM 88210
      5,544,000 
        (direct)
      6.3%


|(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 12, 2009. As of November 12, 2009,
      there were 88,116,480 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. In addition, WS Oil & Gas
      owns a convertible promissory note issued by us in the amount of $500,000.
      The shares issuable upon conversion of this note have not been listed as
      beneficially owned by Mr. Gray as the conversion rights cannot be
      exercised at this time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(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 are not aware of any arrangement that might result in a
change in control.

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;

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|(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.

Acquisition of Hanson Project Properties

On July 29, 2008, we completed our acquisition of the Hanson
Project Properties pursuant to the terms and conditions of the Hanson Energy
Agreement. As consideration for the Hanson Project Properties, we paid and
issued to J. Warren Hanson, doing business as Hanson Energy, and his wife Kathie
Hanson the following consideration:

| | (i)   | An aggregate of $5,000,000 in cash;                                                                                                                           
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                               
| | (ii)  | An aggregate of 5,600,000 post 2009 Reverse Split and
      2009 Forward Split shares of our common stock, issued to Hanson Energy and
      its nominees; and
| |       |                                                                                                                                                               
| | (iii) | An overriding royalty interest of 2.5% of 8/8 on the oil
      and gas produced from the Hanson Project
Properties.                                           

Mr. and Mrs. Hanson are the joint owners of more than 5% of our
outstanding common stock.

Diamond Spring Prospect

On April 10, 2008, we entered into the Diamond Springs Letter
Agreement with G2 Petroleum, LLC (G2), a company which E. Willard Gray (a
holder of more than five percent of our common stock and our Vice Chairman and
Chief Executive Officer) is the managing director, to purchase an interest in an
oil and gas prospect covering approximately 3,300 acres located in Fremont
County, Wyoming, known as the Diamond Springs Prospect. We did not proceed with
the acquisition of the Diamond Springs Prospect.

Gary McCright

On January 9, 2009, we hired G&L Mac Services LLC and its
principal Gary McCright to act as a drilling superintendent at our Hanson
Project. We paid to Mr. McCright consulting fees in the amount of $60,000 and
issued to Mr. McCright 300,000 post-2009 Forward Split shares of our common
stock under our 2009 Stock Incentive Plan. At the time of grant, the approximate
value of the shares granted to Mr. McCright was $174,600. Mr. McCright is the
uncle of the wife of Everett Willard Gray, II, our Vice Chairman and Chief
Executive Officer.

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:

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

In the event that we default under the terms of the Note, W.S.
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. A default under the
Note includes a default by us under any instrument for borrowed money in excess
of $50,000, provided that any default existing as of the date the Note was
issued is not considered an event of default under the Note unless such default
persists for a period of 6 months after the date the Note was issued.

Page 39 of 44

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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. There is no member of our Board who is not an executive officer or
employee. As a result, we have no independent directors.

As a result of our limited operating history and minimal
resources, our management believes that it will have difficulty in attracting
independent directors. In addition, we would likely be required to obtain
directors and officers insurance coverage in order to attract and retain
independent directors. Our management believes that the costs associated with
maintaining such insurance is prohibitive at this time.

ITEM
14.             
PRINCIPAL ACCOUNTING FEES AND SERVICES

The aggregate fees billed for the fiscal years ended July 31,
2009 and 2008 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-QSB or 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, 2009 | Year Ended July 31, 2008
|------------------ | ------------------------ | ------------------------
|Audit Fees         | $67,500                  | $46,000(1)              
|Audit-Related Fees | $0                       | $0                      
|Tax Fees           | $0                       | $0                      
|All Other Fees     | $0                       | $0                      
|Total              | $67,500                  | $46,000(1)              

| | (1) | An additional $2,438 CDN was billed by our former
      auditors Morgan & Company, Chartered Accounts during the year ended
      July 31, 2008 for work related to the review of our financial
      statements.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 40 of 44

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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 Company.(17)                                                                                                                                          

Page 41 of 44

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|Exhibit |                                                                                                                                                                               
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                       
|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.                                                                                                               
|10.38   | Amendment
        Agreement to Convertible Promissory Note between W.S. Oil and Gas Limited
        and Doral Energy Corp.                                                    
|14.1    | Code of Ethics.(2)                                                                                                                                                            
|21.1    | List
        of Subsidiaries.                                                                                                                                                 
|23.1    | Consent
        of Malone & Bailey PC, Certified Public Accountants and Business Consultants.                                                                                 
|31.1    | Certification
        of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                       
|31.2    | Certification
        of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                       
|32.1    | Certification
        of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.        
|32.2    | Certification
        of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.        

|(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.                                       

Page 42 of 44

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|(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.

Page 43 of 44

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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 13, 2009 |  | By: | /s/
      Everett Willard Gray, II                  
|      |                   |  |     | EVERETT WILLARD GRAY, II                            
|      |                   |  |     | Vice-Chairman & Chief Executive Officer             
|      |                   |  |     | (Principal Executive Officer)                       
|      |                   |  |     |                                                     
|      |                   |  |     |                                                     
|      |                   |  |     |                                                     
|      |                   |  |     |                                                     
|Date: | November 13, 2009 |  | By: | /s/
      Paul C. Kirkitelos                        
|      |                   |  |     | PAUL C. KIRKITELOS                                  
|      |                   |  |     | Chairman, Chief Financial Officer, Secretary
      &
|      |                   |  |     | Treasurer                                           
|      |                   |  |     | (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 13, 2009 |  | By: | /s/
      Everett Willard Gray, II                 
|----- | ----------------- |  | --- | ---------------------------------------------------
|      |                   |  |     | EVERETT WILLARD GRAY, II                           
|      |                   |  |     | Vice-Chairman, Chief Executive Officer and Director
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|Date: | November 13, 2009 |  | By: | /s/
      Paul C. Kirkitelos                       
|      |                   |  |     | PAUL C. KIRKITELOS                                 
|      |                   |  |     | Chairman, Chief Financial Officer, Secretary,      
|      |                   |  |     | Treasurer and Director                             
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|Date: | November 13, 2009 |  | By: | /s/
      H. Patrick Seale                         
|      |                   |  |     | H. PATRICK SEALE                                   
|      |                   |  |     | Chief Operating Officer, President and Director    

Page 44 of 44

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