UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 20-F



|[  ] | REGISTRATIONSTATEMENTPURSUANTTOSECTION12(b)OR(g)OFTHESECURITIESEXCHANGEACTOF1934                                                              
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------
|OR  
|[X]  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Fiscal Year Ended December 31, 2008                      
|OR  
|[  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
|OR  
|[  ] | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report 



Commission file number 000-27768



Portrush Petroleum Corporation

(Exact name of Registrant as specified in its charter)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



1687 West Broadway #200, Vancouver, British Columbia  V6J 1X2

(Address of principal executive offices)



Neal Iverson:: 604-687-2923;info@portrushpetroleum.com; 595 Howe Street #700,, Vancouver, BC  V6C 2T5

(Name, Telephone, E-mail and/or Facsimile and Address of Company Contact Person)



Securities to be registered pursuant to Section 12(b) of the Act:  None



Securities to be registered pursuant to Section 12(g) of the Act:

Common Shares, without par value

(Title of Class)



|Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:                                                                                                                                                                                                                                                                  | None                     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------
|Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.                                                                                                                                                                                            | 45,614,530               
|Indicate by check mark if the registrant is a well-known, seasoned issuer, as defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                    | Yes [  ]                 
|If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.                                                                                                                                                          | Yes [  ]                 
|Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 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 ninety days | Yes [X]                  
|Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer:                                                                                                                                                                                                                              
|(Check one)                         Large accelerated filer [ ]                                 Accelerated filer [ ]                                                                                                                                                                                                                                       | Non-accelerated filer [X]
|Indicatebycheckmarkwhichbasisofaccountingregistranthasusedtopreparefinancialstatementsincludedinthisfiling:                                                                                                                                                                                                                                                
|U.S.GAAP [ ]    InternationalFinancialReportingStandardsasissuedbyInternationalAccountingStandardsBoard  [ ]                                                                                                                                                                                                                                                | Other [X]                
|If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:                                                                                                                                                                                               | Item 17 [X]              
|If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                               | Yes [  ]                 



Page 1 of 75

Index to Exhibits on Page 52



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PORTRUSH PETROLEUM CORPORATION



FORM 20-F ANNUAL REPORT

FISCAL 2008 ENDED DECEMBER 31, 2008



TABLE OF CONTENTS





|Part I   |                                                                              | Page
|-------- | ---------------------------------------------------------------------------- | ----
|         | Introduction                                                                 | 3   
|Item 1   | Identity of Directors, Senior Management and Advisors                        | 4   
|Item 2   | Offer Statistics and Expected Timetable                                      | 4   
|Item 3   | Key Information                                                              | 4   
|Item 4   | Information on the Company                                                   | 13  
|Item 5   | Operating and Financial Review and Prospects                                 | 25  
|Item 6   | Directors, Senior Management and Employees                                   | 32  
|Item 7   | Major Shareholders and Related Party Transactions                            | 41  
|Item 8   | Financial Information                                                        | 43  
|Item 9   | The Offer and Listing                                                        | 44  
|Item 10  | Additional Information                                                       | 47  
|Item 11  | Quantitative and Qualitative Disclosures About Market Risk                   | 49  
|Item 12  | Description of Securities Other Than Equity Securities                       | 50  
|Part II  |                                                                              |     
|Item 13  | Defaults, Dividend Arrearages and Delinquencies                              | 50  
|Item 14  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 50  
|Item 15  | Controls and Procedures                                                      | 50  
|Item 16  | Reserved                                                                     | 51  
|Item 16A | Audit Committee Financial Expert                                             | 51  
|Item 16B | Code of Ethics                                                               | 51  
|Item 16C | Principal Accountant Fees and Services                                       | 51  
|Item 16D | Exemptions from the Listing Standards for Audit Committee                    | 52  
|Item 16E | Purchases of Equity Securities by the Company and Affiliated Purchasers      | 52  
|Part III |                                                                              |     
|Item 17  | Financial Statements                                                         | 52  
|Item 18  | Financial Statements                                                         | 52  
|Item 19  | Exhibits                                                                     | 52  









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INTRODUCTION





Portrush Petroleum Corporation was organized under the laws of British Columbia, Canada.  In this Annual Report, the Company, we, our and us refer to Portrush Petroleum Corporation (unless the context otherwise requires).  Summary discussions of documents referred to in this Annual Report may not be complete and we refer you to the actual documents for more complete information.  Our principal corporate offices are located at 1687 West Broadway #200, Vancouver, British Columbia, Canada  V6J 1X2.  Our telephone number is 604-696-2555.





BUSINESS OF PORTRUSH PETROLEUM CORPORATION

The Company is in the business of acquiring, exploring, and developing (when appropriate) oil/gas properties.  The Company maintains: a 22.5% working interest in the Lenox Prospects, a producing oil/gas property in Michigan, USA; a 10% working interest (7.5% net revenue interest) in the Mission River Development Project, a producing oil/gas property in Texas, USA; an 65% working interest in the Waubuno Prospect in Ontario, Canada.





FINANCIAL AND OTHER INFORMATION

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$ or $).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).





FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains forward-looking statements principally in ITEM #4, Information on the Company and ITEM #5, Managements Discussion and Analysis of Financial Condition and Results of Operations.  These statements may be identified by the use of words like plan, expect, aim, believe, project, anticipate, intend, estimate, will, should, could and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, events or trends.  In particular, these include statements about the Companys strategy for growth, property exploration, mineral prices, future performance or results of current or anticipated mineral production, interest rates, foreign exchange rates, and the outcome of contingencies, such as acquisitions and/or legal proceedings.



Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties.  Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, among other things, the factors discussed in this Annual Report under ITEM #3, Key Information, Risk Factors and factors described in documents that we may furnish from time to time to the Securities and Exchange Commission.  We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise.









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PART I



ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

--- No Disclosure Necessary ---





ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

--- No Disclosure Necessary ---





ITEM 3.  KEY INFORMATION.



3.A.1.  Selected Financial Data

3.A.2.  Selected Financial Data

The selected financial data of the Company for years ended December 31st 2008/2007/2006 was derived from the financial statements of the Company that have been audited by Davidson & Company LLP, independent Chartered Accountants, as indicated in their audit report which is included elsewhere in this Annual Report.  The selected financial data of the Company for Fiscal 2005/2004 ended December 31st was derived from audited financial statements of the Company, not included herein.



The financial statements are the responsibility of the Companys management. The auditors responsibility is to express an opinion on the financial statements based on their audit.



The auditors conducted their audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  The auditors report states that they believe that their audits provided a reasonable basis for their opinion.



The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.



The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain all available funds for use in its operations and the expansion of its business.



The following table is derived from the financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).  All material numerical differences between Canadian GAAP and United States GAAP (US GAAP), as applicable to the Company, are described in footnotes to the financial statements.







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Table No. 1

Selected Financial Data

(CDN$ in 000, except per share data)



__________________________________________________________________________________

__________________________________________________________________________________

Year        Year        Year        Year        Year

Ended       Ended       Ended       Ended       Ended

12/31/2008  12/31/2007  12/31/2006  12/31/2005  12/31/2004

----------------------------------------------------------------------------------

Canadian GAAP

Net Revenue                  $670        $393        $777        $594        $442

Operating Income (Loss)     ($336)     ($1330)      ($431)      ($153)      ($693)

Net Income (Loss)           ($410)     ($1346)      ($435)      ($160)      ($766)

(Loss) per Share           ($0.01)     ($0.03)     ($0.01)     ($0.01)     ($0.02)



Dividends Per Share         $0.00       $0.00       $0.00       $0.00       $0.00

Wtd. Avg. Shares (000)      45287       44634       43938       41573       33859

Period-end Shares O/S (000) 45615       45262       43759       43434       40342

----------------------------------------------------------------------------------

Working Capital             ($642)       ($91)       $143        $158       ($287)

Oil/Gas Properties           $841        $514        1348        1571        1642

Long-Term Obligations         $59         $36          10          10           6

Capital Stock              $13609      $13590       13508       13399       12854

Shareholders Equity         $140        $387        1542        1718        1349

Total Assets                $1029        $620        1611        1834        1790

----------------------------------------------------------------------------------

US GAAP

Net Loss                   ($ 426)    ($1,346)

Loss Per Share             ($0.01)     ($0.03)

----------------------------------------------------------------------------------

(1)  Cumulative Net Loss since incorporation under US GAAP to 12/31/2008

was ($14,984,156).

(2)  Under US GAAP, the calculation of weighted average number of shares used

in the calculation of Loss Per Share would not have included 103,125

escrowed, contingently cancelable common shares.  The release of such

shares from escrow will result in compensation to be recorded reflecting

the difference between the issue price of the shares ($0.175 per share)

and the market price at the date of release.  On 12/7/2005, the escrowed

shares were cancelled.

_________________________________________________________________________________

_________________________________________________________________________________







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3.A.3.  Exchange Rates

In this Annual Report Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).



The following table sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent fiscal periods ended December 31st, the average rates for the period, and the range of high and low rates for the period.  The data for each month during the previous six months is also provided.



For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.



Table No. 2

U.S. Dollar/Canadian Dollar



______________________________________________________________________________

______________________________________________________________________________

Average     High      Low   Close

May 2009                                                 1.19     1.10    1.11

April 2009                                               1.26     1.20    1.20

March 2009                                               1.29     1.22    1.26

February 2009                                            1.27     1.22    1.27

January 2009                                             1.27     1.18    1.24

December 2008                                            1.30     1.20    1.22

------------------------------------------------------------------------------

Fiscal Year Ended 12/31/2008                    1.07     1.30     1.02    1.22

Fiscal Year Ended 12/31/2007                    1.07     1.19     0.92    0.99

Fiscal Year Ended 12/31/2006                    1.13     1.18     1.11    1.16

Fiscal Year Ended 12/31/2005                    1.21     1.27     1.16    1.17

Fiscal Year Ended 12/31/2004                    1.30     1.40     1.18    1.20

Fiscal Year Ended 12/31/2003                    1.38     1.57     1.29    1.29

______________________________________________________________________________

______________________________________________________________________________





3.B.  Capitalization and Indebtedness              No Disclosure Necessary ---

3.C.  Reasons For The Offer And Use Of Proceeds    No Disclosure Necessary ---





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3.D.  Risk Factors

In addition to the other information presented in this Annual report, the following should be considered carefully in evaluating the Company and its business.  This Annual Report contains forward-looking statements that involve risks and uncertainties.  The Company's actual results may differ materially from the results discussed in the forward-looking statements.  Factors that might cause such a difference include those discussed below and elsewhere in this Annual Report.





Corporate Risks



Investors may be disadvantaged because the Company is incorporated in Canada, which has different laws.

The articles/by-laws and the laws of Canada are different from those typical in the United States.  The typical rights of investors in Canadian companies differ modestly from those in the United States; refer to the relevant sections which are discussed in Section 9.A.5 and Section 10.B of this Annual Report.  Such differences may cause investors legal difficulties.



U.S. investors may not be able to enforce their civil liabilities against the Company or its directors, controlling persons and officers.

It may be difficult to bring and enforce suits against the Company.  The Company is a corporation incorporated under the laws of the British Columbia, Canada.  A majority of the Company's directors are resident outside the United States, and all or substantial portions of their assets are located outside of the United States.  As a result, it may be difficult for U.S. holders of the Companys common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them.  In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.



As a foreign private issuer, the Company is exempt from the Section 14 proxy rules and Section 16 of the 1934 Securities Act.

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data.  The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.



Passive Foreign Investment Company (PFIC) designation could lead to an adverse tax situation for U.S. investors.

U.S. investors in the Company could be subject to U.S. taxation at possibly adverse or higher rates and under a system that might be more complicated and unfamiliar to them.  For example, a U.S investor might be subject to special tax rules with respect to any excess distribution received and any gain realized from a sale or other disposition (including a pledge) of that holder's shares.  Distributions a U.S. investor receives in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or the holder's holding period for the shares will be treated as excess distributions.  For example, under certain circumstances, a U.S. investor who is an individual might be subject to information reporting requirements and backup withholding, currently at a 28% rate, on dividends received on common shares.  If a U.S. Holder holds shares in any year in which the Company is a PFIC, that holder might be required to file Internal Revenue Service Form 8621.  Refer to ITEM #10.E.



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Risks Related to the Companys Oil/Gas Operations



Competition

Oil and gas exploration is intensely competitive and involves a high degree of risk.  There can be no assurance that commercial production of hydrocarbons can be obtained from any of the Companys properties, nor are there any assurances that production, if obtained, will be in sufficient quantities to be profitable.  In its efforts to acquire properties, the Company competes with other companies that have significantly greater resources.  Many of these companies not only explore for and produce oil and gas, but also conduct refining and petroleum marketing operations on a worldwide basis.  Competition for producing properties will be affected by the amount of funds available to the Company, information available to the Company and any standards established by the Company for the minimum projected return on investment.  Competition may also be presented by alternative fuel sources.



Risks Associated with Oil and Gas Exploration

There can be no assurance that the Company will recover commercial quantities of hydrocarbons in the future.  The marketability of any oil and gas acquired or discovered will be affected by numerous factors beyond the control of the Company.  These factors include market fluctuations, proximity and capacity of oil and gas pipelines and processing equipment and government regulations (including regulations relating to royalties, allowable production, importing and exporting of oil and gas, and environmental protection).  In addition, hazards such as unusual or unexpected formations, pressures or other conditions are involved in drilling and operating wells.



Environmental Regulation

Hazards incident to the exploration and development of oil and gas properties such as accidental spills or leakage of petroleum liquids and other unforeseen conditions may be encountered by the Company.  The Company may be subject to liability for pollution and other damages due to hazards that cannot be insured against due to prohibitive premium costs or for other reasons.  Governmental regulations relating to environmental matters could also increase the cost of doing business or require alteration or cessation of operations in certain areas.



Existing and possible future environmental legislation, regulations and actions could give rise to additional expense, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be predicted.  Regulatory requirements and environmental standards are subject to constant evaluation and may be significantly increased, which could materially and adversely affect the business of the Company or its ability to develop its properties on an economically feasible basis.  Before development and production can commence on any properties, the Company must obtain regulatory and environmental approvals.  There is no assurance that such approvals will be obtained on a timely basis or at all.  The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations or preclude entirely the economic development of a property.



Fluctuation in Oil and Gas Prices

As with most other companies involved in resource exploration, the Company may be adversely affected by future increases in the costs of conducting exploration, development and resource extraction that may not be fully offset by increases in the price received on sale of the petroleum or natural gas.





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Volatility of Oil and Gas Prices

The Companys revenues, profitability and future growth and the carrying value of its oil and gas properties are substantially dependent on prevailing prices of oil and gas.  The Companys ability to borrow and to obtain additional capital on attractive terms is also substantially dependent upon oil and gas prices.  Prices for oil and gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors beyond the control of the Company.  These factors include economic conditions in the United States and Canada, the actions of the Organization of Petroleum Exporting Countries, governmental regulation, political stability in the Middle East and elsewhere, the foreign supply of oil and gas, the price of foreign imports and the availability of alternative fuel sources.



Any substantial and extended decline in the price of oil and gas would have an adverse effect on the Companys carrying value of its proved reserves, borrowing capacity, revenues, profitability and cash flows from operations.



Volatile oil and gas prices make it difficult to estimate the value of producing properties for acquisition and often cause disruption in the market for oil and gas producing properties, as buyers and sellers have difficulty agreeing on such value.  Price volatility also makes it difficult to budget for and project the return on acquisitions and development and exploitation projects.





Risks Relating to Financial Condition



Going concern assumption used by management highlights doubts on the Companys ability to successfully continue.

The Companys financial statements include a statement that the financial statements of the Company are prepared on a going concern basis, and therefore that certain reported carrying values are subject to the Company receiving the future continued support of its stockholders, obtaining additional financing and generating revenues to cover its operating costs.  The going concern assumption is only appropriate provided that additional financing continues to become available.



The Companys History of Operating Losses is likely to continue leading to need for additional potentially unavailable financings and related problems.

The Company has a history of losses: ($409,924), ($1,345,604), and ($435,117) in Fiscal Years 2008/2007/2006.  Despite recent capital infusions, the Company will require significant additional funding to meet its business objectives.  Capital may need to be available to help maintain and to expand work on the Companys principal exploration/development property.  The Company may not be able to obtain additional financing on reasonable terms, or at all.  If equity financing is required, then such financings could result in significant dilution to existing shareholders.  If the Company is unable to obtain sufficient financing, the Company might have to dramatically slow exploration/development efforts and/or lose control of its projects.  The Company has historically obtained the preponderance of its financing through the issuance of equity.  There are 100 million common shares authorized; and the Company has no current plans to obtain financing through means other than equity financing and/or loans.  Such losses and the resulting need for external financings could result in losses of investment value.





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The Companys Need for Additional Financing to Finish Property Exploration/Development could lead to the Companys inability to finish proposed property exploitation and/or loss of properties.

The Company is engaged in the business of exploiting oil/gas properties.  The Company believes it may have insufficient funds to undertake its planned operations and exploration projects during Fiscal 2009; additional financing will be required to continue exploration and to develop the oil/gas properties identified and to place new wells into commercial production.  The exploitation of the Companys oil/gas properties is, therefore, dependent upon the Companys ability to obtain financing through the lease of assets, debt financing, equity financing or other means.  Failure to obtain such financing may result in delay or indefinite postponement of work on the Companys oil/gas properties, as well as the possible loss of such properties.  Such delays, and possible inability to proceed with planned operations could cause loss of investment value.



The Company competes with other oil/gas companies which have similar operations, and many such competitor companies have operations and financial resources and industry experience far greater than those of the Company.  Nevertheless, the market for the Companys potential future production of oil/gas tends to be commodity-oriented rather than company-oriented.  If a well successfully reaches commercial production, the Company will still be subject to competition from much larger and financially stronger competitors and such competition may materially adversely affect the Companys financial performance.





Risks Relating to Management and Specific Operations



The Companys Articles of Continuation contain provisions indemnifying its officers and directors against all costs, charges and expenses incurred by them.

The Companys Articles of Continuation contain provisions that state, subject to applicable law, the Company shall indemnify every director or officer of the Company, subject to the limitations of the British Columbia Corporations Act, against all losses or liabilities that the Companys director or officer may sustain or incur in the execution of their duties.  The Companys Articles of Continuation further state that no director of officer shall be liable for any loss, damage or misfortune that may happen to, or be incurred by the Company in the execution of their duties if they acted honestly and in good faith with a view to the best interests of the Company.  Such limitations on liability may reduce the likelihood of litigation against the Companys officers and directors and may discourage or deter its shareholders from suing the Companys officers and directors based upon breaches of their duties to the Company, though such an action, if successful, might otherwise benefit the Company and its shareholders.



Key management employees may fail to properly carry out their duties or may leave which could negatively impact corporate operations and/or stock pricing.

While engaged in the business of exploiting mineral properties, the nature of the Companys business, its ability to continue its exploration of potential exploration/development projects, and to develop a competitive edge in the marketplace, depends, in large part, on its ability to attract and maintain qualified key management personnel.  Competition for such personnel is intense and the Company may not be able to attract and retain such personnel.  The Companys growth will depend on the efforts of its Directors and its Senior Management, including its President/CEO/CFO, Martin Cotter; and its Corporate Secretary, Neal Iverson.  Loss of these individuals could have a material adverse effect on the Company.  The Company has no key-man life insurance and there are no written agreements with them.



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Management and Directors are associated with other resource companies and such conflicts of interest and/or lack of attention to corporate affairs could have a negative impact on corporate operations and/or stock pricing.

Certain of the Directors and Senior Management of the Company (specifically, Martin Cotter and Wes Franklin) are also Directors and/or Senior Management and/or significant shareholders of other companies, including those also involved in the oil/gas industry; refer to ITEM 6.A. for resumes.  As the Company is engaged in the business of exploiting oil/gas properties, such associations may give rise to conflicts of interest from time to time.  Law requires the directors of the Company to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company.  If a conflict of interest arises at a meeting of the Board of Directors, any Director in a conflict must disclose his interest and abstain from voting on such matter.  In determining whether or not the Company will participate in any project or opportunity, the Directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.  If not properly resolved, the Company could be placed at a disadvantage when considering which properties to acquire/explore and if/how to explore/develop existing properties.





Risks Relating to the Companys Common Shares



Principal Stockholders, Officers and Directors have substantial control regarding stock ownership; this concentration could lead to conflicts of interest and difficulties in the public investors effecting corporate changes, and could adversely affect the Companys stock prices.

The Companys Senior Management, Directors and greater-than-five-percent stockholders (and their affiliates), acting together, hold approximately 19% of the shares of the Company, on a diluted basis, have the ability to influence substantially all matters submitted to the Companys stockholders for approval (including the election and removal of directors and any merger, consolidation or sale of all or substantially all of the Companys assets) and to control the Companys management and affairs.  Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control of the Company, impeding a merger, consolidation, takeover or other business combination involving the Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could materially adversely affect the market price of the Companys stock.



Employee/Director/Consultant Stock Options could lead to greater concentration of stock ownership among insiders and could lead to dilution of stock ownership which could lead to depressed stock prices.

Because the success of the Company is highly dependent upon its respective employees, the Company has granted to some or all of its key employees, Directors and consultants options to purchase common shares as non-cash incentives.  To the extent that significant numbers of such options may be granted and exercised, the interests of the other stockholders of the Company may be diluted causing possible loss of investment value.



The Company has never declared or paid cash dividends on its Common Shares and does not anticipate doing so in the foreseeable future.

There can be no assurance that the Companys Board of Directors will ever declare cash dividends, which action is exclusively within its discretion.  Investors cannot expect to receive a dividend on the Companys Common Shares in the foreseeable future, if at all.





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Low Stock Market Prices and Volume Volatility for the Companys common shares create a risk that investors might not be able to effect purchases/sales at prices that accurately reflect corporate value.

The market for the common shares of the Company may be highly volatile for reasons both related to the performance of the Company or events pertaining to the industry (i.e., price fluctuation/high production costs/accidents) as well as factors unrelated to the Company or its industry.  The market price of metals is highly speculative and volatile.  Instability in oil/gas prices may affect the interest in oil/gas properties and the development of production from such properties and may adversely affect the Companys ability to raise capital to explore existing or new oil/gas properties.  The Companys common shares can be expected to be subject to volatility in both price and volume arising from market expectations.  Stockholders of the Company may be unable to sell significant quantities of common shares in the public trading markets without a significant reduction in the price of the common shares.



Broker-Dealers May Be Discouraged From Effecting Transactions In Our Common Shares Because They Are Penny Stocks And Are Subject To The Penny Stock Rules.

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on NASD broker-dealers who make a market in a penny stock.  A penny stock generally includes any non-NASDAQ equity security that has a market price of less than US$5.00 per share.  Our shares are quoted on the TSX Venture Exchange, and the price of our common shares ranged from CDN$0.03 (low) to CDN$0.11 (high) during the period from 1/1/2008 to 12/31/2008, trading at CDN$0.05 on 12/31/2008; the closing price of our shares was CDN$0.03 on 5/31/2009. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.



Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or accredited investor (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.



In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the US Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.







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ITEM 4.  INFORMATION ON THE COMPANY



4.A. History and Development of the Company



Introduction

Portrush Petroleum Corporation (hereinafter, together with its subsidiary, is also referred to as the Company) in engaged in the exploration for and production of oil/gas.  Without any material properties at 12/31/1999, the Company acquired interests in five oil/gas properties during 2000 (including the Lenox Prospects), and two oil/gas properties during 2001.  The less promising properties have been disposed of and during 2002-2003 focused its efforts on the oil/gas producing Lenox Property in Michigan, USA.  The Mission River Development Project was acquired in January 2004.  A 45% working interest in the Chico Martinez Field, a producing oil/gas property in California, was acquired in February 2008 and abandoned later in 2008; a 65% working interest in the Waubuno Prospect, an oil/gas exploration property in Ontario, Canada, was acquired in early 2007.



It is the intention of the Company, either alone or with others, to carry out or participate in exploration and development programs on its properties and on other properties that it may acquire an interest in, to determine the existence, location, extent and quality of the oil and gas resources located on its properties and to drill and complete, where appropriate, oil or gas wells.



The Companys executive office is located at:

1687 West Broadway #200, Vancouver, British Columbia, Canada  V6J 1X2

Telephone: 604-696-2555; and

Facsimile: 604-677-5228.

Website: http://www.portrushpetroleum.com/

e-mail:  info@portrushpetroleum.com



The Companys registered office is located at:

595 Howe Street #700, Vancouver, British Columbia, Canada  V6C 2T5

Telephone: 604-687-2923; and

Facsimile: 604-648-9568.



The contact person is: Neal Iverson, Director



The Company's fiscal year ends December 31st.



The Company has one wholly-owned subsidiary: Portrush Petroleum (US) Corporation, incorporated in Michigan, USA, on 11/17/2003.



The Company's common shares trade on the TSX Venture Exchange in Canada under the symbol PSH, on the OTC Bulletin Board in the USA under the symbol PRRPF; and on the Berlin Stock Exchange in Europe under the symbol PUQ.BE.



The Company has an unlimited number of no-par common shares authorized.  At 12/31/2008, the end of the Company's most recent fiscal year, there were 45,614,530 common shares issued and outstanding.  At 5/31/2009, there were 45,614,530 shares issued and outstanding.







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The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP.  Material variations in the accounting principles, practices and methods used in preparing those financial statements from principles, practices and methods accepted in the United States are disclosed in notes to the financial statements.



Herein, all references to $ and CDN$ refer to Canadian Dollars and all references to US$ refer to United States Dollars.  All references to common shares refer to the Company's Common Shares without Par Value unless otherwise indicated.





History and Development



Incorporation/Name Changes

The Company was incorporated under the laws of Ontario, Canada, on 2/9/1965 under the name Barbi Lake Copper Mines Limited.  The Companys name was changed to Bar Resources Limited on 4/28/1983, to Southern Bar Minerals Corporation on 10/31/1995, to Texas Gulf Petroleum Corporation on 2/12/1996, and to Portrush Petroleum Corporation on 3/15/2000.



Stock Consolidations

The Company consolidated its common shares on a 1-for-3.5 basis effective 12/19/1994 and on a 1-for-5 basis on 3/15/2000.  All references to number of shares and to per share data reflect post-consolidation basis unless otherwise indicated.



Property Acquisitions

Fiscal 2008: Chico Martinez Field, California, USA

Fiscal 2007: Waubuno Prospect, Ontario, Canada

Fiscal 2006: None

Fiscal 2005: None

Fiscal 2004: Mission River Development Project, Texas

Fiscal 2003: Lenox North Prospects, Michigan

Fiscal 2001: Rock Springs Prospects, Wyoming

Fiscal 2000: Lambton/Kent Counties = Michigan Basin Property, Ontario

Cranberry-Botha Prospects, Alberta

Lenox Prospects, Michigan



Property/Asset Dispositions

Fiscal 2008: Chico Martinez Field, California, USA

Fiscal 2007: None

Fiscal 2006: None

Fiscal 2005: None

Fiscal 2004: None

Fiscal 2003: None

Fiscal 2002: Rock Springs Prospects, Wyoming

Fiscal 2001: Lambton/Kent Counties = Michigan Basin Property, Ontario



Capital Expenditures

Fiscal 2008: $  504,290 for oil/gas property acquisition/exploration/advance

Fiscal 2007: $  314,277 for oil/gas property acquisition/exploration/advances

Fiscal 2006: $  239,967 for oil/gas property acquisition/exploration/advances

Fiscal 2005: $   47,096 for oil/gas property acquisition/exploration

Fiscal 2004: $1,590,572 for oil/gas property acquisition/exploration





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Financings

The Company has financed its operations through funds raised in loans, public/private placements of common shares, shares issued for property, shares issued in debt settlements, and shares issued upon exercise of stock options and share purchase warrants.  The following table lists equity offerings:

______________________________________________________________________________

Year   Nature of Share Issuance      Number of Shares           Capital Raised

------------------------------------------------------------------------------

2008:  Private Placement               333,500 Units                  $ 20,010

2007:  Private Placement             1,500,000 Units                  $150,000

2006:  Stock Option Exercises          625,000 Shares                 $ 93,750

2005:  Exercise of Stock Options     1,194,500 Shares                 $179,175

Private Placement             2,000,000 Units                  $300,000

2004:  Private Placement             3,100,000 Units                  $620,000

Private Placement             1,500,000 Shares                 $300,000

Exercise of Warrants          7,680,000 Shares               $1,090,200

Exercise of Stock Options     1,050,000 Shares                 $110,000

______________________________________________________________________________





4.B.  BUSINESS OVERVIEW



Business of the Company  2008/2007/2006/2005/2004/2003/2002/2001/2000

In April/May 2000, the Company acquired the Lambton/Kent Prospects in Ontario, Canada.  In June 2000, the Company acquired the Lenox Prospects in Michigan, USA.  In January 2001, the Company acquired the Cranberry-Botha Property in Alberta, Canada; the Company has written off its investment in the project.  In September 2001, the Company acquired the Rock Springs Property in Wyoming, USA; this project was abandoned in August 2002.  In September 2003, the Company acquired the Lenox North Prospects.  In February 2004, the Company acquired the Mission River Development Project in Texas, USA.  In November 2004, the Company acquired a 5% working interest in a prospect located in Ontario, Canada, in exchange for funding 50% of the project costs by paying US$120,000; the Company will receive a payout of all costs incurred plus a 5% working interest in the project.  In early 2007, the Company acquired a 65% working interest in the Waubuno Prospect, an oil/gas exploration property in Ontario, Canada.  In February 2008, the Company entered into an option agreement whereby it could acquire and develop an 89% interest in the Chico Martinez Oil Field, Kern County, California; the Company completed its review of the development plans for the Chico Martinez project and declined further involvement in the project.







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Lenox Prospects, Michigan, USA

The Michigan Basis contains extensive belts of organic reefs composed of carbonate rocks (limestone and dolomite) formed under shallow seas in the Silurian period.  These oil/gas-filled reefs are the principal targets for exploration companies in the basin.  The Company is now in a position to form relationships with the industry partners to evaluate other Silurian reef projects in the basin.  The Company will avoid exposing itself to unnecessary risks in pursuing these opportunities.



A successful well was brought into production in January 2002 and a second well was completed in January 2003.  The initial producing well, Richards #1-20, was drilled to a total depth of 3,000 feet and intersected the Brown Niagaran reef anomaly at approximately 2,900 feet.  The second producing well, the Martin #1-21, is a 600-foot step-out from the discovery well.  Management anticipates that drilling expenditures on this property will not be significant during 2009.  Production from the two wells is no longer considered material.



Production revenue for 2002 was $302,915, primarily derived from the Richards #1-20 well at the Lenox Prospects that went on stream in January 2002.  Production revenue for 2003 was $415,244, derived from the combined production of the Richards #1-20 and the Martin #1-21 (placed on production in April 2003), both located at the Lenox Prospects.



Production revenue from the Lenox Prospects for 2004 was $349,550, derived from the combined production of the Richards #1-20 and the Martin #1-21.



Production revenue from the Lenox Prospects for 2005 was $330,187, derived from the combined production of the Richards #1-20 and the Martin #1-21.



Production revenue from the Lenox Prospects for 2006 was $204,742, derived from the combined production of the Richards #1-20 and the Martin #1-21.



Production revenue from the Lenox Prospects for 2007 was $115,965, derived from the combined production of the Richards #1-20 and the Martin #1-21.



Production revenue from the Lenox Prospects for 2008 was $110,894, derived from the combined production of the Richards #1-20 and the Martin #1-21.





Lenox North Prospects

In September 2003, the Company acquired a 22.5% working interest in a leasehold immediately north of its Lenox Prospect property in southeast Michigan.  The Company has also agreed an area of mutual interest (AMI) of approximately 2,000 acres comprising of leases in and around the said leasehold.  The Company has the option to participate in the drilling of the initial four wells and any further development wells within the AMI.  The target on the leasehold, which has seismic cover, is an extension of Niagarian reef that was discovered on the Lenox property.  Typical reefs in the area can vary in size from approximately 300,000 barrels and 2BCF to over 1,000,000 barrels and 10 BCF of recoverable reserves and are contained in surface area between 80 to 300 acres.



In October 2003, the LaTorie #1-20 Well was drilled.  This well, located approximately 1,300 north of the Richards #1-20 Well and Martin #1-21 Well, did not encountered the Silarian Reef, as hoped for, and was abandoned.



In April 2004, the Werderman#1-21 Well was drilled.  This well, located approximately 650 feet from the Martin #1-21 Well, was on a seismic line and was testing the southeastern extension of the platform reef from the Richards #1-20 and Martin #1-21 wells.  The reef was not encountered and the well was abandoned.



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Mission River Development Project

In February 2004, the Company entered into an agreement with the McAlester Fuel Company of Houston, Texas to develop the Mission River Project situated in Refugio and Goliad Counties, Gulf Coast, Texas.  The Company paid 10% of the estimated drilling costs for the 12 well development drilling program and acquired a 10% working interest in the project.  he property is subject to a 25% royalty. The property is crossed over by a natural gas pipeline and can be serviced by two natural gas transmission systems.  The initial twelve (12) well program was designed to test bypassed oil and gas payzones in the traditional producing intervals from 5,000 to 6,400 feet.  After the first six shallow wells were drilled the working interest partners agreed to drill two deep wells in exchange for the six remaining shallow wells.  The two deep wells have been drilled to 10,400 feet and 8,600 feet.



In October 2004, the Company did not exercise its right to acquire up to an additional 19% interest in the Mission River Development Project.



Natural gas in the area is typically sold into the local spot market at an estimated discount of US$0.50/mcf, relative to the Henry Hub price.  The Henry Hub price for 2008 was about US$9.32 per Mmbtu.  A compression fee may be applied to the wellhead price.  The operating costs of a typical gas well are estimated to be US$3,500 per month.  Crude oil in the area is trucked to a local refinery and nets an estimated wellhead price of Cushing Spot less a US$1.50/barrel discount.  The Cushing Spot price for 2008 was about US$100 per barrel.



The operator drilled the first well on 5/14/2004.  The Scanio-Sheldon Well #2 was drilled to the Massive Zone at 6,800 feet and was tested: for bypassed oil and gas pay between 5,000 and 6,800 feet; for untested oil zones in the lower 4,000 feet range; and untested gas zones down to 2,300 feet.  A total of 120 sidewall-cores/eight formation- pressure-tests/log analyses identified eight zones as having probable reserves.  The well was completed as a gas well, without yet testing the seven other zones including the main target zone.



During 2004/2005/2006/2007/2008/2009, Company completed the following wells on the project, producing oil, gas, and condensate:

July 2004: Scanio-Sheldon Well  #4;

July 2004: Scanio-Sheldon Well  #5;

August 2004: Scanio-Sheldon Well  #3;

August 2004: Scanio-Sheldon Well  #2;

August 2004: Scanio-Sheldon Well  #1;

February 2005: Scanio-Sheldon Well  #9;

March 2006: Scanio-Sheldon Well  #6;

August 2006: Scanio-Sheldon Well  #7;

March 2007: Scanio-Hawn Well #1;

November 2007: Scanio-Sheldon Well  #8;

June 2008  Scanio-Sheldon Well #10

August 2008: Scanio-Shelton Well #9,#11, #12



Production revenue from the Mission River Development Project for 2005 was $258,706, derived from the combined production of the first five wells noted above.  Production revenue from the Mission River Development Project for 2006 was $334,978, derived from the combined production of the first seven wells noted above.  Production revenue from the Mission River Development Project for 2007 was $278,568, derived from the combined production of the eight wells noted above.  Production revenue from the Mission River Development Project for 2008 was $558,816.





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The Mission River field has nine wells on production; and at 5/31/2009 was producing approximately 2.5 million cubic feet of gas and 90 barrels of oil a day.



An upgrade of the pipeline gathering system was completed in December 2006, which allowed an increase in production capacity from three million cubic feet a day to eighteen million cubic feet a day.



The operator, McAlester has decided to proceed with a new three-well program.  The Company will not participate in this program.





Waubuno Prospect

In late 2006, the Company began review the Waubuno Prospect, another pinnacle reef project located in Moore Township, Lambton County, south-western Ontario, Canada.  The prospect is located in the heart of a gas storage area on trend and mid point between two pinnacle reef gas storage pools, Kimball Colinville and Waubuno.  The Company has negotiated leases and during 2006, the Company incurred net acquisition costs of $20,009 during Fiscal 2006.  In early 2007, the Company was granted a drill permit for this prospect and during 2007, the Company paid net acquisition costs of $230,480.  The Company holds an 89% working interest in the property.



The Company has an ongoing relationship with Hadley Resources Limited (Canada and USA) in exploring, firstly with success at Lenox in Michigan and more recent ongoing exploration at Waubuno in Southwestern Ontario.



In December 2007, the Company completed drilling the Waubuno Prospect to a total depth of 729 meters without encountering a pinnacle reef.  The well encountered a number of "reef proximity indicators" including two zones of reef derived "Sucrosic Dolomite" in the upper A1 Carbonate formation.  The lower zone with 11.8 feet of thickness gave up good oil showings while drilling.  The Neutron-Density logs indicate porosity in the 6.0% range but with poor permeability and not suitable for completion.  "Fracturing stimulation" is not allowed on wells that are drilled adjacent to gas storage reservoirs so this was not an option for the Company.



The well is considered a near miss of a pinnacle reef. The 2-D Seismic anomaly on which it was drilled is considered sideswipe to a pinnacle. The Company planned a more sophisticated 3-D Seismic survey over the lands to pinpoint a drillable anomaly. This survey was completed in May 2008 and received a favorable geophysical report and interpretation from its consultants in Calgary, Alberta. The Company finished drilling the second well in late December and must now decide to complete or abandon the well.



The prospect is on trend and mid point between two pinnacle reef gas storage pools, Kimball Colinville and Waubuno and it is favourably located with respect to a Union Gas Pipeline tie-in located on the Kimball Side Road approximately 1.55 miles from the prospect.



Portrush commissioned a Calgary based Petrophysical Consulting firm to conduct a review of the Moore 6-12-III #2 well on its Waubuno property in Moore (St. Clair) Township, Lambton County, Southwestern Ontario which was drilled in December 2008. The review focused on log calculations and an oil show observed during drilling at the top of the main potentially productive porosity interval. The results will be considered preliminary until such time as the well is placed on production. The Company holds an 89% WI in the project.





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Chico Martinez Field

In February 2008, the Company entered into an option agreement whereby it could acquire and develop an 89% interest in the Chico Martinez Oil Field, Kern County, California.  The Chico Martinez Field is a 640-acre tract in the San Joaquin Basin, California.  The Company completed its review of the development plans for the Chico Martinez project and declined further involvement in the project.





United States vs. Foreign Sales/Assets

During 2008, 2007 and 2006, respectively, the Company generated $669,710, $392,534, and $777,455 in oil/gas production revenue, from the Lenox Prospects in Michigan, USA and the Mission River Development Project in Texas, USA.



At 12/31/2008 and 12/31/2007, respectively, $563,231 and $335,087 of the Companys capital assets were located in Canada; the remainder were located in the United States, principally the Lenox Prospects, Lenox North Prospects, and the Mission River Development Project.





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Oil/Gas Operations

Summary of the Companys appraised interests in oil and gas reserves after royalties is contained in the following table.  At 12/31/2004, all proved reserves are located at the Lenox Prospects in Michigan, USA; and at 12/31/2006, 12/31/2007, and 12/31/2008, both the Lenox Prospects and the Mission River Development Project contain proven reserves.



Table No. 3

Supplemental Information on Oil and Gas Producing Activities

Schedule of Changes in Reserves

______________________________________________________________________________

______________________________________________________________________________

Oil     Gas

SBL    MMcf

------------------------------------------------------------------------------

Reserves, 12/31/2003                                           15,133     0.0

Discoveries/Extensions:                                        26,700   326.0

Revisions                                                       9,173     0.0

Production                                                     (7,524)  (12.0)

Reserves, 12/31/2004                                           43,482   314.0

Discoveries/Extensions:                                             0       0

Revisions                                                      16,612   169.0

Production                                                     (7,399)  (14.0)

Reserves, 12/31/2005                                           52,695   469.0

Discoveries/Extensions:                                             0       0

Revisions                                                     (20,956) (273.0)

Production                                                     (4,162)  (53.0)

Reserves, 12/31/2006                                           27,577   143.0

Revisions                                                     (20,932)  (93.0)

Production                                                     (3,033)  (31.0)

Reserves, 12/31/2007                                            3,612    19.0

Discoveries/Extensions:                                           386    49.0

Technical Revisions                                             1,379    23.0

Economic Factors                                               (1,459)    0.0

Production                                                     (2,983)  (48.0)

Reserves, 12/31/2008                                              935    43.0

______________________________________________________________________________

______________________________________________________________________________





Average sales price per unit and average production cost for oil and gas produced during the periods are shown in the following table.  Production costs are allocated based on the weighted average of oil and gas sales.



Table No. 4

Product Pricing and Production Costs

______________________________________________________________________________

______________________________________________________________________________

Average Sales Price   Average Production Costs_____

Year    Gas (per mcf)   Liquids (per bbl)   Gas (per mcf)    Liquids (per bbl)

2008            $9.25                $98           $0.80                   $6

2007            $6.93                $64           $0.80                   $6

2006            $6.68                $62           $3.16                   $6

2005           $11.00                $50           $3.16                   $6

2004            $7.50                $43           $0.80                   $6

______________________________________________________________________________

______________________________________________________________________________







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Productive wells as of 5/31/2009 were as follows:



Table No. 5

Productive Wells

______________________________________________________________________________

______________________________________________________________________________

Gross Wells                 Net Wells

Gas     Oil                 Gas       Oil

Lenox Prospects                        0       2                  0.0     0.45

Mission River Development Project      7       2                  0.525   0.15

______________________________________________________________________________

______________________________________________________________________________





Total developed and undeveloped acreage interests owned by the Company is summarized by geographic area in the following table, as of 5/31/2009.



Table No. 6

Productive/Undeveloped Acreage

______________________________________________________________________________

______________________________________________________________________________

Productive Acreage       Undeveloped Acreage__

Gross Acres   Net Acres       Gross Acres   Net Acres

Michigan, USA                  160.0        37.5               200        45.0

Texas, USA                     240.0        24.0               540        54.0

Ontario, Canada                  0.0         0.0               150       133.5

______________________________________________________________________________

______________________________________________________________________________





Productive and dry wells drilled during the following fiscal periods:



Table No. 7

Drilling Activity

______________________________________________________________________________

______________________________________________________________________________

Gross                Net

Year                         Productive   Dry                Productive   Dry

2009-to-date                          0      1                     0.00   0.89

2008                                  4      1                     0.40   0.89

2007                                  2      1                     0.20      1

2006                                  2      0                     0.20      0

2005                                  1      0                     0.10      0

2004                                  5      1                     0.50   0.45

2003                                  1      1                     0.225  0.45

2002                                  1      0                     0.225     0

______________________________________________________________________________

______________________________________________________________________________





Present Activities

There is one well yet to be drilled in Calendar 2009.



Delivery Commitments

There are no delivery commitments as of 5/31/2009.





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Plan Of Operations



Source of Funds for Fiscal 2009

The Company generated $669,710 in oil/gas revenue in Fiscal 2008 and anticipates a decrease during Fiscal 2009.



The Company had a negative working capital balance of ($641,745) at 12/31/2008.



At 5/31/2009, the Company had 2,600,000 outstanding stock options with exercise prices ranging from $0.10 to $0.15.  At 5/31/2009 the Company had 6,233,500 outstanding share purchase warrants with an exercise prices ranging from $0.05 to $0.12.



During Fiscal 2007, the Company established a $300,000 credit facility with a bank in Texas, USA.  During Fiscal 2008, the Company transferred the loan to the Texas Community Bank under the same terms with an increased credit facility of US$450,000.  The loan payable is secured by the Companys interests in the Mission River property in Texas, USA.  At 3/31/2009, the Company had taken advances on the loan payable of $550,260 (US$450,000) bearing interest rates at prime plus one-half percent per annum.



The Company has had discussions with third parties about additional equity offerings; but, the talks as of 5/31/2009 were preliminary.





Use of Funds for Fiscal 2009

During Fiscal 2009, the Company estimates that total general/administrative costs will be approximately $450,000.  During Fiscal 2009, the Company estimates that it will expend $500,000 on property acquisition/exploration/development.





Anticipated Changes to Facilities/Employees

Since the signing of the property acquisition agreements, the Company added no additional personnel to assist property acquisition/exploration/development programs or for administrative/general activities.  There are no plans to add additional in-house personnel; rather, the Company is relying on the property operators to provide all technical staff.





4.C. Organization Structure

The Company has one wholly-owned subsidiary: Portrush Petroleum (US) Corporation, incorporated in Michigan, USA, on 11/17/2003.





4.D.  Property, Plant and Equipment



Executive Offices

The Company's executive offices are located in shared, rented premises of approximately 250 square feet at 1687 West Broadway #200, Vancouver, British Columbia  V6J 1X2.  The Company began occupying this facility in May 2000 and considers the facility adequate for current needs.



The Company has three principal projects: the Lenox Prospects, the Mission River Prospects, and the Waubuno Prospect (discussed in ITEM #4B).





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Lenox Prospects, Michigan, USA



[portrush20fjun2309001.jpg]



In June 2000, the Company acquired a 22.5% working interest in two Silurian-Ordovician prospects, and associated leased lands (approximately 2,560 acres) located in St. Clair County, Cottrellville Township and Macomb County, Lenox Township, Southeast Michigan in consideration of cash payments to Range of $150,000 for each of the two areas.  The Company holds a 22.5% working interest in the property.  A successful well (Richards #1-20) was drilled and completed; the well commenced production in January 2002 and remains on production.  A second well (Martin #1-21) was drilled and completed in January 2003 and began producing in April 2003.





Lenox North Prospects

In September 2003, the Company acquired a 22.5% working interest in a leasehold immediately north of the Lenox Prospect property in southeast Michigan.  The Company has also agreed an area of mutual interest (AMI) of approximately 2,000 acres comprising of leases in and around the said leasehold.  The operator plans to drill four wells on the property.  The Company has the option to participate in the drilling of the initial four wells and any further development wells within the AMI.  The target on the leasehold, which has seismic cover, is an extension of Niagarian reef that was discovered on the Lenox property.  Typical reefs in the area can vary in size from approximately 300,000 barrels and 2BCF to over 1,000,000 barrels and 10 BCF of recoverable reserves and are contained in surface area between 80 to 300 acres.



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Mission River Development Project



[portrush20fjun2309003.gif]





In February 2004, the Company entered into an agreement with the McAlester Fuel Company of Houston, Texas to develop the Mission River Project situated in Refugio and Goliad Counties, Gulf Coast, Texas.  The Company paid 10% of the estimated drilling costs for the 12 well development drilling program and acquired a 10% working interest in the project.  The property is subject to a 25% royalty. The property is crossed over by a natural gas pipeline and can be serviced by two natural gas transmission systems.  The initial twelve (12) well program was designed to test bypassed oil and gas payzones in the traditional producing intervals from 5,000 to 6,400 feet.  After the first six shallow wells were drilled the working interest partners agreed to drill two deep wells in exchange for the six remaining shallow wells.  The two deep wells have been drilled to 10,400 feet and 8,600 feet.





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ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion for the fiscal years ended 12/31/2008, 12/31/2007, and 12/31/2006 should be read in conjunction with the Companys consolidated financial statements and notes thereto.



Overview

Without any material properties at 12/31/1999, the Company acquired interests in five oil/gas properties during 2000 (including the Lenox Prospects) and two oil/gas properties during 2001.  The less promising properties have been disposed of and during 2002-2003 focused its efforts on the oil/gas producing Lenox Property in Michigan, USA.  The Lenox North Property was acquired in September 2003; the Mission River Development Project was acquired in January 2004; the Waubuno Prospect was acquired in June 2006; and the Chico Martinez Field was optioned in February 2008 (abandoned later in 2008).



The funds raised in the equity financings discussed below have been used for the aforementioned property acquisitions and the funding of the Companys share of oil/gas well exploration/development.  This has led to nine producing oil/gas wells: $777,455 in oil/gas revenue in Fiscal 2006, production of 5,066 barrels of oil and 53,000 MCF of gas in Fiscal 2006; $392,534 in oil/gas revenue in Fiscal 2007, production of 3,033 barrels of oil and 31,000 MCF of gas in Fiscal 2008; and $669,710 in oil/gas revenue in Fiscal 2008, production of 2,983 barrels of oil and 48,000 MCF of gas in Fiscal 2008.



Financings

In September 2005, the Company issued 2,000,000 units at $0.15 per unit for gross proceeds of $300,000.  Each unit consisted of one common share and one share purchase warrant exercisable at $0.15 per share expiring 9/14/2007.  The Company paid a finders fee and other issuance costs of $24,942.



During Fiscal 2005, the Company raised: $179,175 through the issuance of 1,194,500 common shares pursuant to the exercise of stock options.



During Fiscal 2006, the Company raised $93,750 through the issuance common shares pursuant to the exercise of 625,000 stock options.  Also, the Company expended $40,000 purchasing and retiring 300,000 common shares in the open market.



In July 2007, the Company completed a private placement of 1,500,000 Units at a price of $0.10.  Each unit consisted of one common share and one warrant entitling the holder to purchase one common share at $0.12 for a period of twenty-four months.  A $5,357 finders fee was paid through the issuance of 53,571 common shares.  All shares and warrants issued from this offering were subject to a four-month hold period.



In November 2008, the Company completed a non-brokered private placement of 333,500 units at $0.06 per unit consisting of one common share and one share purchase warrant with each warrant exercisable at $0.10 per share until 11/17/2010.  Finders fee of 18,667 common shares are payable to MHT Corporate Services Ltd.





Critical Accounting Policies

Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  On a regular basis, we evaluate our estimates and assumptions.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.



25



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US GAAP RECONCILIATION



Oil and gas properties

Under both United States and Canadian GAAP, property, plant and equipment must be assessed for potential impairment.



Under Canadian GAAP, a ceiling test is applied to ensure that capitalized costs for oil and gas properties and equipment do not exceed the sum of estimated undiscounted, future net revenues from proven reserves less the cost incurred or estimated to develop those reserves, interest and general and administration costs, and an estimate for restoration costs and applicable taxes. Any impairment loss as a result of the ceiling test is to be measured as the amount by which the carrying amount of the asset exceeds the expected future cash flows discounted using a risk free interest rate.



Under United States GAAP, costs accumulated in each cost center are limited to an amount equal to the present value, discounted at 10%, of the estimated future net operating revenues from proved reserves, net of restoration costs and income taxes. Under United States GAAP an additional ceiling test write-down was not required as at December 31, 2007 and 2006.



Stock-based compensation

There is no difference between Canadian GAAP and United States GAAP on the accounting for stock-based compensation for the years ended December 31, 2008, 2007 and 2006.









26



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Recent accounting pronouncements

In December 2007, the Emerging Issues Task Force (EITF) met and ratified EITF No.07-01, Accounting for Collaborative Arrangements, in order to define collaborative arrangements and to establish reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. This EITF is effective for financial statements issued for fiscal years beginning after December15, 2008, and interim periods within those fiscal years. This EITF is to be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. We are currently assessing the impact of this EITF to our consolidated financial statements.



In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities by requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and how derivative instruments and related hedged items affect an entitys operating results, financial position, and cash flows.



SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. Early adoption is permitted. We are currently reviewing the provisions of SFAS No. 161 and have not yet adopted the statement. However, as the provisions of SFAS No. 161 are only related to disclosure of derivative and hedging activities, we do not believe the adoption of SFAS No. 161 will have a material impact on our consolidated operating results, financial position, or cash flows.



In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets or FSP FAS 142-3. FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of the position is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the intangible asset. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. We do not believe that implementation of this standard will have a material impact on our consolidated financial position, results of operations or cash flows.



In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles or SFAS No. 162. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. This statement shall be effective 60 days following the Securities and Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not believe that implementation of this standard will have a material impact on our consolidated financial position, results of operations or cash flows.



In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (FSP EITF 03-6-1). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP EITF 03-6-1 will not have an impact on the Financial Statements.



27



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Results Of Operations



Fiscal 2008 Ended December 31, 2008 versus Fiscal 2007

The Company generated $669,710 during 2008 (versus $392,534) in oil/gas revenue from the Lenox Prospects and Mission River project.  Revenue increased due to increased production from the Lenox and Mission River projects; and higher product prices during the first part of 2008.  Offsetting this revenue was $250,148 (versus $1,233,325) in depletion costs; the ceiling test calculation determined that the net book value of the Companys assets in the USA exceeded net future cash flows from proven reserves and, accordingly, the Company recorded extra depletion of $1,049,683 during 2007.  Oil/gas operating expenses were $169,080 (versus $94,912), reflecting increased production activity.  Gross Profit (loss) was (250,482) versus ($935,703).



General/Administrative (excluding stock-based compensation) expenses increased 58% to $548,383 during 2008 (versus $347,180), as expected, due to the Companys increased exploration and development activity.  Tight control over costs resulted in: Management Fees To Related Party falling 4% to $76,280; Professional Fees fell 3% to $88,230; and the Company expended $100,000 optioning a property in California where the option was not exercised and the costs were charged to operations.



Non-Cash stock-based compensation relating to the granting of stock options fell slightly to $38,249.



Interest Expense rose tenfold to $29,739 reflecting increased use of the bank line of credit established July 2007 and increases to US$450,000 during 2008.



Net Loss for Fiscal 2008 was ($409,924) versus ($1,345,604).  Basic and Diluted Loss Per Share was ($0.01) versus ($0.03).





28



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Fiscal 2007 Ended December 31, 2007 versus Fiscal 2006

The Company generated $392,534 during 2007 (versus $777,455) in oil/gas revenue from the Lenox Prospects and Mission River project.  Revenue decreased due to decreased production from the Lenox and Mission River projects.  Offsetting this revenue was $1,233,325  (versus $399,036) in depletion costs; the ceiling test calculation determined that the net book value of the Companys assets in the USA exceeded net future cash flows from proven reserves and, accordingly, the Company recorded extra depletion of $1,049,683 during 2007.  Oil/gas operating expenses were $94,912 (versus $195,070), reflecting reduced production activity.  Gross Profit (loss) was ($935,703) versus $183,349.



General/Administrative (excluding stock-based compensation) expenses fell 15% to $347,180 during 2007 (versus $409,264), as expected, due to the Companys decreased exploration and development activity, fund raising, and investor relations effort.  Professional Fees fell 41% to $91,377 from $154,858 and investor Relations expenses fell 41% to $44,355 from $75,208.



Office/Miscellaneous expenses doubled to $53,657 from $27,161 due to increased rent expense.



Non-Cash stock-based compensation relating to the granting of stock options fell to $46,671 from $205,385, reflecting decreased granting of options.



Net Loss for Fiscal 2007 was ($1,345,604) versus ($435,117).  Basic and Diluted Loss Per Share was ($0.03) versus ($0.01).





Fiscal 2006 Ended December 31, 2006 versus Fiscal 2005

The Company acquired interests in five oil/gas properties during 2000 (including the Lenox Prospects) and two oil/gas properties during 2001.  The less promising properties have been disposed of.  During 2002-2003, the Company has focused its efforts on the oil/gas producing Lenox Property in Michigan, USA.  The Lenox North Property was acquired in September 2003 and the Mission River Development Project was acquired in January 2004.



The Company generated $777,455 during 2006 (versus $593,598) in oil/gas revenue from the Lenox Prospects and Mission River project.  Offsetting this revenue was $399,036 (versus $122,269) in depletion costs.  Oil/gas operating expenses were $195,070 (versus $221,664), reflecting increased production activity.  Gross Profit was $183,349 (versus $249,665).



General/Administrative (excluding stock-based compensation) expenses rose 25% to $409,264 during 2006 (versus $327,506), as expected, due to the Companys increased investor relations costs as well as more modestly increased other costs.



Non-Cash stock-based compensation relating to the granting of stock options rose to $205,385 from $75,193, reflecting increased granting of options.



Net Loss for Fiscal 2006 was ($435,117) versus ($160,248).  Basis and Diluted Loss Per Share was ($0.01) versus ($0.01).









29



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Liquidity and Capital Resources



Fiscal 2008 Ended December 31, 2008

Working Capital was a negative ($641,725) at 12/31/2008

Working Capital was a negative ($ 91,000) at 12/31/2007



The Company generated $669,710 in revenue from oil/gas production during Fiscal 2008.  While the Company anticipates decreased revenue during Fiscal 2009, cash flow from its oil/gas operations is not expected to be sufficient to fund all corporate operations and growth during the next fiscal year.  Thus, the Company expects to rely upon equity financing as its primary source of funding.



The Company has insufficient financial resources to undertake by itself the exploration and development of its planned exploration and development programs during Fiscal 2009.  Long-term, the payment of property payments and the development of its property interests will depend upon the Company's ability to obtain financing through the joint venturing of projects, private placement financing, public financing or other means.  There is no assurance that the Company will be successful in obtaining the required financing or that financing will be available on terms and conditions acceptable to the Company or that will not cause significant dilution to shareholders.



Cash Provided by Fiscal 2008 Operating Activities totaled $187,071, including the ($409,924) Net Loss.  Material adjustments included depletion of $250,148, financing fee of $106,000, foreign exchange loss of $99,934,  non-cash stock-based compensation of $38,249, and the $102,664 net change in non-cash working capital items.  Cash Used in Fiscal 2008 Investing Activities totaled ($504,290), for oil/gas property expenditures.  Cash Provided by Fiscal 2008 Financing Activities totaled $378,250, the inflows from the aforementioned private placement and a $359,190 increased loan payable from its bank credit facility.





30



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Fiscal 2007 Ended December 31, 2007

Working Capital was a negative ($91,000) at 12/31/2007

Working Capital was $142,507 at 12/31/2006.



The Company generated $392,534 in revenue from oil/gas production during Fiscal 2007.  While the Company anticipates increased revenue during Fiscal 2008 and beyond, profitability from its oil/gas operations is not expected to be sufficient to fund all corporate operations and growth during the next fiscal year.  Thus, the Company expects to rely upon equity financing as its primary source of funding.



The Company has insufficient financial resources to undertake by itself the exploration and development of its planned exploration and development programs during Fiscal 2008.  Long-term, the payment of property payments and the development of its property interests will depend upon the Company's ability to obtain financing through the joint venturing of projects, private placement financing, public financing or other means.  There is no assurance that the Company will be successful in obtaining the required financing or that financing will be available on terms and conditions acceptable to the Company or that will not cause significant dilution to shareholders.



During Fiscal 2007: the Company completed a private placement of 1,500,000 units, raising $150,000.



Cash Provided by Fiscal 2007 Operating Activities totaled $51,406, including the ($1,345,604) Net Loss.  Material adjustments included depletion of $1,233,326, non-cash stock-based compensation of $46,671, and the $117,013 net change in non-cash working capital items.  Cash Used in Fiscal 2007 Investing Activities totaled ($314,277), for oil/gas property expenditures.  Cash Provided by Fiscal 2007 Financing Activities totaled $246,797, the inflows from the aforementioned private placement and a $103,047 loan payable from its bank credit facility; offset by $6,250 used to acquire and cancel 500,000 common shares.





5.C.  Research and development, patents and licenses, etc.

5.D.  Trend information

5.G.  Safe harbor.

--- No Disclosure Necessary ---



5.E.  Off-Balance Sheet Arrangements.

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resource that is material to investors.



5.F.  Tabular disclosure of contractual obligations.

The Company does not have any contractual obligations as of 5/31/2009 that will require significant cash outlays in the future.







31



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ITEM 6.  DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES



6.A.  Directors and Senior Management



Table No. 8

Directors and Senior Management

May 31, 2009

______________________________________________________________________________

______________________________________________________________________________

Date of First

Election or

Name                             Position                Age       Appointment

------------------------------------------------------------------------------

Martin P. Cotter (1)(2)          President/CEO/Director   57      January 1996

Neal Iverson (1)(3)              Director                 58        March 2000

Wes Franklin (4)(1)              Director                 62          May 2005

------------------------------------------------------------------------------

(1)  Member of Audit Committee.

(2)  He spends over half of his time on the affairs of the Company.

Resident/Citizen of Ireland

Business address: 65 Main Street, Blackrock, Dublin, Ireland.

(3)  Resident/Citizen of British Columbia, Canada

Business address: c/o Portrush Petroleum Corp.

1687 West Broadway #200, Vancouver, BC  V6J 1X2

(4)  Resident/Citizen of Washington, USA

Business address: 900 West Parkwood, Friendswood, Texas  77546

______________________________________________________________________________

______________________________________________________________________________



Martin P. Cotter, President/CEO/Director of the Company is a professional engineer resident in Dublin, Ireland.  He also manages Ashcliff Holdings, a private property and investment company.



Neal Iverson, Director of the Company, is a commercial realtor who has been associated with Western Mortgage Realty Corporation in Vancouver, British Columbia for over fifteen years.



Wes Franklin, Director of the Company, is a registered geologist with both the State of Washington and the American Association of Petroleum Geologists, and he is a member of SPE and SE.G. He has been in the exploration and production segment of the petroleum industry for 34 years and spent over 16 years in senior management positions for Tenneco Oil Company and Fina Oil and Chemical Company.  Since his retirement from Fina in 1997, he has been an active consultant in both domestic and international exploration plays.



The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.



The Senior Management serves at the pleasure of the Board of Directors with management service contracts but without term of office, except as disclosed in ITEM #6B below.



Despite the Companys Executive Officers spending material portions of their time on businesses other than the Company, the Company believes that they devote sufficient time to the Company to properly carry out their duties.





32



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No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.



There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he was selected as a Director or Executive Officer.  There are no family relationships between any two or more Directors or Executive Officers.



6.B.  Compensation



Director Compensation.  The Company has no formal plan for compensating its Directors for their service in their capacity as Directors.  Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director.  Other than indicated below no Director received any compensation for his services as a Director, including committee participation and/or special assignments.



Senior Management Cash Compensation.  During Fiscal 2008 Ended 12/31/2008, the Company paid/accrued cash compensation/salary (directly and indirectly) to one Senior Management/Director totaling $76,280 to Martin Cotter.



The following table details compensation paid/accrued for Fiscal 2008/2007/2006 ended December 31st for the Senior Management and Directors.



Table No. 9

Summary Compensation Table

Senior Management and Directors

_________________________________________________________________________________

_________________________________________________________________________________

Long-Term Compensation_

Annual Compensation   Awards______

Name and                                 Other         Restricted             All

Principal      Fiscal                   Annual   Stock   Options/    LTIP   Other

Position         Year   Salary  Bonus     Comp.  Award(s) SARS(#) Payouts   Comp.

Martin Cotter: President/CEO/Director (1)

2008  $76,280    nil      nil      nil   500,000     nil     nil

2007  $79,900    nil      nil        0   500,000     nil     nil

2006  $80,875    nil      nil        0      nil      nil     nil

_________________________________________________________________________________

_________________________________________________________________________________





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Options/SARs Granted During The Most Recently Completed Fiscal Year

During the most recently completed fiscal year, the following incentive stock options were granted to Senior Management, Directors and employees/consultants.  No SARs (stock appreciation rights) were granted during this period.



Table No. 10

Stock Option Grants in Fiscal 2008 Ended 12/31/2008

____________________________________________________________________________________

____________________________________________________________________________________

Percentage                 Market Value of Securities

Number       of    Exer.                Underlying Options

of    Total   Price                            on Date

Options  Options     Per       Grant  Expiration   of Grant

Name                     Granted  Granted   Share        Date        Date  Per Share

------------------------------------------------------------------------------------

Martin Cotter            500,000      44%   $0.10   6/10/2008   6/10/2011      $0.09

------------------------------------------------------------------------------------

Employees/Consultants    650,000     56%

------------------------------------------------------------------------------------

TOTAL                   1,150,000   100.0%

____________________________________________________________________________________

____________________________________________________________________________________





Options/SARs Exercised During The Most Recently Completed Fiscal Year

During the most recently completed fiscal year, no stock options were exercised by Senior Management, Directors and/or employees/consultants; 300,000 stock options expired unexercised or were cancelled.  No SARs (stock appreciation rights) were granted/exercised during this period.



The following table gives certain information concerning stock option exercises during Fiscal 2008 (nil) by the Companys Senior Management and Directors.  It also gives information concerning stock option values at 12/31/2008.



Table No. 11

Aggregated Stock Options Exercises in Fiscal 2008

Fiscal Yearend Unexercised Stock Options

Fiscal Yearend Stock Option Values

Senior Management/Directors

____________________________________________________________________________

____________________________________________________________________________

Number                               Value of Unexercised

of                     Number of         In-the Money

Shares           Unexercised Options           Options at

Acquired  Aggregate  at Fiscal Yearend       Fiscal Yearend

on      Value       Exercisable/         Exercisable/

Name             Exercise   Realized      Unexercisable        Unexercisable

----------------------------------------------------------------------------

Martin Cotter           0         $0  2,000,000/    nil        $nil/    $nil

Wes Franklin            0         $0    300,000/    nil        $nil/    $nil

Neal Iverson            0         $0    200,000/    nil        $nil/    $nil

Subtotal                0         $0  2,500,000/    nil        $nil/    $nil

----------------------------------------------------------------------------

Others                  0         $0  2,150,000/    nil        $nil/    $nil

----------------------------------------------------------------------------

TOTAL                 NIL       $nil  4,650,000/    nil        $nil/    $nil

____________________________________________________________________________





34



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Stock Options.  The Company may grant stock options to Directors, Senior Management and employees.  Refer to ITEM #6.E., Share Ownership and Table No. 9, No. 10, No. 11, and No. 12 for information about stock options.



Change of Control Remuneration.  The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in Fiscal 2009 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$100,000 per Senior Management.



Other Compensation.  No Senior Management/Director received other compensation in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Senior Management/Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation, other than disclosed in Table No. 11 and ITEM #7.B.



Bonus/Profit Sharing/Non-Cash Compensation.  Except for the stock option program discussed in ITEM #6.E., the Company has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Senior Management.



Pension/Retirement Benefits.  No funds have been set aside or accrued by the Company since incorporation to provide pension, retirement or similar benefits for Directors or Senior Management.



Written Management Agreements

--- No Disclosure Necessary ---





6.C.  Board Practices

All directors hold office until the next meeting of the shareholders of the Company unless they resign or are removed in accordance with the Companys Articles.  Senior Management are appointed to serve at the discretion of the Board of Directors.  The Board of Directors and the Audit Committee of the Board schedule regular meetings over the course of the year.



The fundamental objective of the Board is to ensure that it operates in a fashion that maximizes shareholder value over the long term.  The Boards duties and responsibilities are all carried out in a manner consistent with that fundamental objective.   The principal duty and responsibility of the Board is to oversee the management and operations of the Company, with the day-to-day management of the business and affairs of the Company delegated by the Board to the President/CEO and other Senior Management.



The Boards responsibilities include overseeing the conduct of the Companys business, providing leadership and direction to its management, and setting policies.  Strategic direction for the Company is developed through the Boards annual planning process.  Through this process, the Board adopts the operating plan for the coming year, and monitors managements progress relative to that plan through a regular reporting and review process.



The Board has delegated to the President/CEO and other Senior Management responsibility for the day-to-day management of the business of the Company.  Matters of policy and issues outside the normal course of business are brought before the Board for its review and approval, along with all matters dictated by statute and legislation requiring Board review and approval.  The President/CEO and Senior Management review the Companys progress in relation to the current operating plan at in-person and telephone-conference Board meetings.  The Board meets on a regular basis with and without management present.  Financial, operational and strategic issues facing the Company are reviewed, monitored and approved at the Board meetings.





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6.C.1.  Terms of Office.  Refer to ITEM 6.A.1.

6.C.2.  Directors Service Contracts. - No Disclosure Necessary -



6.C.3.  Board of Director Committees.

The Company only has an Audit Committee, which recommends to the Board of Directors the engagement of the independent auditors of the Company and reviews with the independent auditors the scope and results of the Companys audits, the Companys internal accounting controls, and the professional services furnished by the independent auditors to the Company.  The Audit Committee met five times in Fiscal 2008 and has met twice during Fiscal 2009-to-date.



Multilateral Instrument 52-110 of the Canadian Securities Administrators (MI 52-110) requires the Company, as a venture issuer to disclose annually in its Information Circular certain information concerning the constitution of its audit committee and its relationship with its independent auditor, as set forth in the following:



The audit committee is chartered as a committee of the Board of Directors of the Company that is independent of the Companys management and represents the interests of the Companys shareholders.



The audit committee is authorized by the board of directors to:

a.

oversee the process of selecting/appointing the Companys external auditor,

b.

oversee the conduct of the audit, and

c.

have primary responsibility for the relationship between the Company and its external auditor.



The audit committee's responsibilities include:

a.

take reasonable steps, at the time the auditors appointment is under consideration, to ensure that the auditor is independent of management of the Company in accordance with applicable standards,

b.

determine whether the audit fees charged by the auditor appear adequate in relation to the work required to support an audit opinion, without regard to fees that might be paid to the auditor for other services,

c.

meet with the auditor, regularly and when otherwise appropriate, without management present to determine whether there are any contentious issues between the auditor and management relating to the Companys financial disclosure and, if so, whether those issues have been resolved to the auditors satisfaction,

d.

establish, and monitor compliance with, the Companys policies regarding:

i.

the auditors providing services beyond scope of the Companys audit,

ii.

the Companys hiring individuals formerly employed by the auditor to fill senior officer positions of the Company, and

e.

prepare annually a report describing the steps it has taken to ensure that the auditor is independent of management of the Company, including:

i.

the policies and procedures followed so that any contracts for non-audit services to be provided by the auditor do not compromise the auditors independence, and

ii.

the nature of any non-audit service contracts entered into and the amount of the related fees.





36



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The Companys audit committee is comprised of three directors: Martin Cotter, Wes Franklin, and Neal Iverson.  All audit committee members are financially literate (as defined in MI 52-110) and only Martin Cotter, the President, is not independent.



Since the commencement of the Companys most recently completed financial year, the Companys Board of Directors has not failed to adopt a recommendation of the audit committee to nominate or compensate an external auditor.



Since the effective date of MI 52-110, the Company has not relied on the exemptions contained in sections 2.4 or 8 of MI 52-110.  Section 2.4 provides an exemption from the requirements that the audit committee must pre-approve all non-audit services to be provided by the auditor, where the total amount of fees related to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the fiscal year in which the non-audit services were provided.



Section 8 permits a company to apply to a securities regulatory authority for an exemption from the requirements of MI 52-110, in whole or in part.



The audit committee has not adopted specific policies and procedures for the engagement of non-audit services.  Subject to the requirements of MI 52-110, the engagement of non-audit services is considered by the Companys Board of Directors, and where applicable the audit committee, on a case-by-case basis.



The Company is relying on the exemption provided by section 6.1 of MI 52-110 that provides that the Company, as a venture issuer, is not required to comply with Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations) of MI 52-110.





6.D.  Employees

As of 5/31/2009, the Company had two employees, including two Senior Management.  As of 12/31/2008 and 12/31/2007, there were two and two employees (including the two Senior Management), respectively.  None of the Company's employees are covered by collective bargaining agreements.





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6.E.  Share Ownership

The following table lists as of 5/31/2009, Directors/Senior Management who beneficially own the Company's voting securities and the amount of Company's voting securities owned by the Directors and Executive Officers as a group.  The following table also includes all persons/companies (none) where the Company is aware that they have 5% or greater beneficial interest in the Companys securities.



Table No. 12

Shareholdings of Directors and Executive Officers

Shareholdings of 5% Shareholders

______________________________________________________________________________

______________________________________________________________________________

Title                                              Amount and Nature   Percent

of                                                  of Beneficial        of

Class    Name of Beneficial Owner                          Ownership   Class #

------------------------------------------------------------------------------

Common   Martin P. Cotter (1)                              4,896,666     10.8%

Common   Neal Iverson (2)                                    100,000     <0.1%

Common   Wes Franklin (3)                                  1,300,000     2.9%

Total Directors/Officers/5% Shareholders                   6,296,666     13.8%

------------------------------------------------------------------------------

(1)  2,000,000 represent currently exercisable stock options.

(2)    100,000 represent currently exercisable stock options.

(3)    300,000 represent currently exercisable stock options.

------------------------------------------------------------------------------

#  Based on 45,614,530 shares outstanding as of 5/31/2009 and share purchase

warrants and stock options held by each beneficial holder exercisable

within sixty days.

______________________________________________________________________________

______________________________________________________________________________







38



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Stock Options.  The terms of incentive options grantable by the Company are done in accordance with the rules and policies of the TSX Venture Exchange and the British Columbia Securities Commission, including the number of common shares under option, the exercise price and expiry date of such options, and any amendments thereto.  The Company adopted a formal written stock option plan (the "Stock Option Plan") on 6/15/2004.



The principal purposes of the Companys stock option program are to (a) promote a proprietary interest in the Company among the officers, directors and employees of the Company and its affiliates, (b) retain and attract the qualified officers, directors and employees the Company requires, (c) provide a long-term incentive element in overall compensation, and (d) promote the long-term profitability of the Company.



The Stock Option Plan provides that stock options may be granted to directors, senior officers, employees and consultants of the Company and management company employees.  For the purposes of the Stock Option Plan, the terms employees, consultants and management company employees have the meanings set out in TSX Venture Exchange Policy 4.4.  In addition, the term director is defined in TSX Venture Exchange Policy 4.4 to include directors, senior officers and management company employees.



Under the Stock Option Plan, the Companys board of directors (the Board) may, from time to time, designate a director or other senior officer or employee of the Company as administrator (the Administrator) for the purposes of administering the Plan.  Currently, the Administrator is the Corporate Secretary of the Company.



The Plan provides for the issuance of stock options to acquire at any time up to a maximum of a "rolling" 10% of the issued and outstanding common shares of the Company (subject to standard anti-dilution adjustments).  If a stock option expires or otherwise terminates for any reason without having been exercised in full, the number of common shares reserved for issuance under that expired or terminated stock option shall again be available for the purposes of the Plan.  Any stock option outstanding when the Plan is terminated will remain in effect until it is exercised or it expires.  The Plan provides that it is solely within the discretion of the Board to determine who should receive stock options and in what amounts, subject to the following conditions:

a.

options will be non-assignable and non-transferable except that they will be exercisable by the personal representative of the option holder in the event of the option holders death;

b.

options may be exercisable for a maximum of five years from grant date;

c.

options to acquire no more than 5% of the issued shares of the Company may be granted to any one individual in any 12 month period;

d.

options to acquire no more than 2% of the issued shares of the Company may be granted to any one consultant in any 12 month period;

e.

options to acquire no more than an aggregate of 2% of the issued shares of the Company may be granted to an employee conducting investor relations activities (as defined in TSX Venture Exchange Policy 1.1), in any twelve-month period;

f.

options held by an option holder who is a director, employee, consultant or management company employee must expire within 90 days after the option holder ceases to be a director, employee, consultant or management company employee;

g.

options held by an option holder who is engaged in investor relations activities must expire within 30 days after the option holder ceases to be employed by the Company to provide investor relations activities; and

h.

in the event of an option holders death, the option holders personal representative may exercise any portion of the option holders vested outstanding options for one year following the option holders death.



39



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The Stock Option Plan provides that other terms and conditions may be attached to a particular stock option, such terms and conditions to be referred to in a schedule attached to the option certificate.  Stock options granted to directors, senior officers, employees or consultants will vest when granted unless otherwise determined by the Board on a case by case basis, other than stock options granted to consultants performing investor relations activities, which will vest in stages over 12 months with no more than one-fourth of the options vesting in any three month period.



In addition, under the Stock Option Plan a stock option will expire immediately in the event a director or senior officer ceases to be a director or senior officer of the Company as a result of (i) ceasing to meet the qualifications under the Company Act(British Columbia), (ii) the passing of a special resolution by the shareholders or (iii) an order made by a regulatory authority.  A stock option will also expire immediately in the event an employee ceases to be an employee as a result of termination for cause or an employee or consultant ceases to be an employee or consultant as a result of an order made by a regulatory authority.



The price at which an option holder may purchase a common share upon the exercise of a stock option will be as set forth in the option certificate issued in respect of such option and in any event will not be less than the discounted market price of the Companys common shares as of the date of the grant of the stock option (the Award Date).  The market price of the Companys common shares for a particular Award Date will typically be the closing trading price of the Companys common shares on the day immediately preceding the Award Date, or otherwise in accordance with the terms of the Stock Option Plan.  Discounted market price means the market price less a discount of up to 25% if the market price is $0.50 or less; up to 20% if the market price is between $2.00 and $0.51; and up to 15% if the market price is greater than $2.00.



In no case will a stock option be exercisable at a price less than the minimum prescribed by each of the organized trading facilities or the applicable regulatory authorities that would apply to the award of the stock option in question.



The Stock Option Plan also provides that (a) disinterested shareholder approval will be obtained for any reduction in the exercise price of an option held by an insider of the Company and (b) options cannot be granted to employees, consultants or management company employees that are not bona fide employees, consultants or management company employees, as the case may be.



Common shares will not be issued pursuant to stock options granted under the Stock Option Plan until they have been fully paid for by the option holder.  The Company will not provide financial assistance to option holders to assist them in exercising their stock options.









40



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The names and titles of the Directors/Executive Officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options are set forth in the following table as of 5/31/2009, as well as the number of options granted to Directors and all employees as a group.

Table No. 13

Stock Options Outstanding

______________________________________________________________________________

______________________________________________________________________________

Number of Shares of   CDN$

Common   Exer.      Grant   Expirn

Name                                        Stock   Price       Date      Date

Martin P. Cotter                          500,000   $0.10    6/10/08   6/10/11

Martin P. Cotter                          500,000   $0.10    8/09/07   8/09/10

Neal Iverson                               50,000   $0.10    8/09/07   8/09/10

Neal Iverson                               50,000   $0.10   10/04/07  10/04/10

Wes Franklin                            300,000   $0.10   10/04/07  10/04/10

Total Officers/Directors                1,400,000

------------------------------------------------------------------------------

Employees/Consultants                   1,200,000

Total Officers/Directors/Etc.           2,600,000

______________________________________________________________________________

______________________________________________________________________________





ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



7.A.  Major Shareholders



7.A.1.a.  Holdings By Major Shareholders

Refer to ITEM #6.E. and Table No. 12 and Table No. 13.



7.A.1.b.  Significant Changes in Major Shareholders Holdings

The participation in private placements of equity by the Company and exercise of stock options/share purchase warrants has lead over the last several year to some significant changes in the holdings of major shareholders; table reflects direct/indirect holdings of common shares (excluding stock options and warrants), refer to Table No. 11 for additional information.

______________________________________________________________________________

______________________________________________________________________________

Shares      Shares      Shares

Owned       Owned       Owned

12/31/2008  12/31/2007  12/31/2006

Martin P. Cotter                             4,896,666   4,896,666   4,296,666

______________________________________________________________________________

______________________________________________________________________________



7.A.1.c.  Different Voting Rights.  The Companys major shareholders do not have different voting rights.





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7.A.2.  Canadian Share Ownership.  On 5/30/2009, the Companys shareholders list showed 45,614,530 common shares outstanding, with 63 registered shareholders.  31 of these shareholders were U.S. residents, holding 8,626,171 common shares (representing about 19% of the issued/outstanding shares); 28 registered shareholders were resident in Canada, holding 36,737,692 common shares (81%), and four registered shareholders were resident in other countries, holding 250,667 common shares (<1%).



The Company has researched the indirect holding by depository institutions and other financial institutions; based on this research and other research into the indirect holdings of other institutions, the Company believes that it has approximately 1385 beneficial owners of its common shares.





7.A.3.  Control of Company.  The Company is a publicly-owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Company is not controlled by any foreign government or other person(s) except as described in ITEM #4.A., History and Development of the Company, and ITEM #6.E., Share Ownership.





7.A.4.  Change of Control of Company Arrangements.

-- No Disclosure Necessary  --





7.B.  Related Party Transactions



Martin Cotter, President/Director

During Fiscal 2008/2007/2006, the Company paid/accrued to Martin Cotter fees totalling $76,280, $79,000, and $80,875, respectively.



Other than as disclosed above and in prior Annual Reports on Form 20-F, there have been no transactions since 12/31/2007, or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.  Management believes the transactions referenced above were on terms at least as favorable to the Company as the Company could have obtained from unaffiliated parties.



7.C.  Interests of Experts and Counsel

None of the named experts or counselors employed on a contingent basis owns shares in the company or its subsidiaries or has a material, direct or indirect economic interest in the Company.







42



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ITEM 8.  FINANCIAL INFORMATION



8.A.  Consolidated Statements and Other Financial Information

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.



The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit reports of Davidson & Company LLP, Chartered Accountants, are included herein immediately preceding the financial statements and schedules.



Audited Financial Statements

Fiscal 2008, Fiscal 2007, and Fiscal 2006, Ended December 31st





8.A.7.  Legal/Arbitration Proceedings

The Directors and the management of the Company know of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.



The Directors and the management of the Company know of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.





8.B.  Significant Changes

No undisclosed significant change has occurred since the date of the annual financial statements, and/or since the date of the most recent interim financial statement.





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ITEM 9.  THE OFFER AND LISTING



9.A.4.  Common Share Trading Information



The Companys common shares began trading on the OTC Bulletin Board on 3/19/2002 under the symbol PRRPF.OB.  The following table lists the volume of trading and high, low and closing sales prices on the OTC Bulletin Board for the Company's common shares for: the last six months, the last nine fiscal quarters, and the last five fiscal years.



Table No. 14

OTC Bulletin Board

Common Shares Trading Activity

______________________________________________________________________________

______________________________________________________________________________

- Sales -

Period                                                            US Dollars

Ended                               Volume           High     Low   Closing

Monthly

5/31/2009                            901,700         US$0.04 US$0.02  US$0.04

4/30/2009                            223,300            0.05    0.03     0.03

3/31/2009                            591,600            0.05    0.03     0.03

2/28/2009                            511,900            0.06    0.03     0.04

1/31/2009                            200,800            0.06    0.03     0.04

12/31/2008                            881,900            0.06    0.02     0.03

------------------------------------------------------------------------------

Quarterly

3/31/2009                          1,304,300           $0.06   $0.03    $0.03

12/31/2008                          3,622,700            0.10    0.02     0.03

9/30/2008                          2,211,200            0.10    0.05     0.07

6/30/2008                          1,236,800            0.11    0.07     0.07

3/31/2008                          4,554,100            0.15    0.06     0.07

12/31/2007                          3,410,561            0.14    0.05     0.12

9/30/2007                          1,569,582            0.11    0.05     0.08

6/30/2007                            809,160            0.13    0.08     0.10

3/31/2007                          2,176,307            0.14    0.08     0.12

------------------------------------------------------------------------------

Yearly

12/31/2008                         11,624,800           $0.15   $0.02    $0.03

12/31/2007                          7,965,610            0.14    0.05     0.12

12/31/2006                         14,789,772            0.24    0.10     0.13

12/31/2005                         12,397,371            0.22    0.07     0.14

12/31/2004                         16,028,281            0.40    0.10     0.21

______________________________________________________________________________

______________________________________________________________________________









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The Company's common shares trade on the TSX Venture Exchange in Toronto, Ontario, under the symbol "PSH.V".  The initial public offering was effective on the Vancouver Stock Exchange under the auspices of the British Columbia Securities Commission in August 1980 under a former name, "Barbi Lake Copper Mines Limited".



The following table lists the volume of trading and high, low and closing sales prices on the TSX Venture Exchange (Canadian Venture Exchange prior to 8/2/1002 and the Vancouver Stock Exchange prior to November 1999) for actual trades of common shares of the Company for the last six months, last nine fiscal quarters, and last five fiscal years.



Table No. 15

TSX Venture Exchange

Common Shares Trading Activity

______________________________________________________________________________

______________________________________________________________________________

- Sales -

Period                                                      Canadian Dollars

Ended                          Volume            High        Low    Closing

------------------------------------------------------------------------------

Monthly

5/31/2009                     1,217,000        CDN$0.04   CDN$0.04   CDN$0.03

4/30/2009                       240,800            0.05       0.03       0.04

3/31/2009                       565,600            0.06       0.04       0.05

2/28/2009                       468,500            0.07       0.04       0.04

1/31/2009                       423,400            0.07       0.04       0.04

12/31/2008                       820,600            0.08       0.04       0.05

------------------------------------------------------------------------------

Quarterly

3/31/2009                     1,457,500           $0.07      $0.04      $0.05

12/31/2008                     3,330,660            0.10       0.04       0.05

9/30/2008                     3,686,800            0.10       0.07       0.09

6/30/2008                     3,114,200            0.11       0.08       0.08

3/31/2008                     7,578,000            0.14       0.07       0.08

12/31/2007                     4,858,500            0.12       0.12       0.09

9/30/2007                     2,333,800            0.12       0.07       0.07

6/30/2007                     1,499,600            0.13       0.10       0.12

3/31/2007                     3,422,600            0.16       0.11       0.13

------------------------------------------------------------------------------

Yearly

12/31/2008                    17,709,660           $0.14      $0.04      $0.05

12/31/2007                    12,114,500            0.16       0.07       0.09

12/31/2006                    12,041,500            0.16       0.07       0.09

12/31/2005                    22,768,200            0.26       0.09       0.18

12/31/2004                    40,933,200            0.50       0.15       0.28

______________________________________________________________________________

______________________________________________________________________________





The Companys common shares began trading on the Berlin Stock Exchange on 4/30/2004, with the trading symbol of PUQ.BE. Total volume through 5/31/2009 was 19,500 (last traded 12/28/2007).  Prices ranged from euro$0.01 to euro$0.25; the closing price on 5/31/2009 was euro$0.02.







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The TSX Venture Exchange

The TSX Venture Exchange is a result of the acquisition by the Toronto Stock Exchange of the Canadian Venture Exchange (CDNX) from its member firms on 8/1/2001.  The CDNX resulted from the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange that took place on 11/29/1999, to form the CDNX.  The TSX Venture Exchange currently operates as a complementary but independent exchange from its parent, the Toronto Stock Exchange.



The initial roster of the CDNX was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Montreal Stock Exchange, the Winnipeg Stock Exchange, and the CDN Over-The-Counter Market.  The TSX Venture Exchange is a venture market as compared to the Toronto Stock Exchange that is Canadas senior market and the Montreal Exchange that is Canadas market for derivatives products.



The TSX Venture Exchange currently has five service centers: Calgary, Toronto, Vancouver, Winnipeg and Montreal.  These service centers provide corporate finance, surveillance and marketing expertise.  The corporate office for the TSX Venture Exchange is located in Calgary and the operations office is located in Vancouver.



The TSX Venture Exchange is a self-regulating organization owned and operated by the Toronto Stock Exchange, which in turn is owned by its member brokerage firms.  It is governed by representatives of member firms and the public.



Organizationally, the TSX Venture Exchange is comprised of seven business areas: Corporate Finance Services, Trading Services and Market Information Services, Compliance, Marketing, Technology, Corporate Affairs and Human Resources.



The TSX Venture Exchange acts as a business link between TSX members, listed companies and investors.  TSX Venture Exchange policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established.  Listings are predominately small and medium sized companies.



Investors in Canada are protected by the Canadian Investor Protection Fund (CIPF). The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following self-regulatory organizations: the TSX Venture Exchange; the Montreal Exchange; the Toronto Stock Exchange; the Toronto Futures Exchange; and the Investment Dealers Association of Canada.



Post-trade monitoring of market activity occurs in the market surveillance department.  Sophisticated software analyses trade data from TRADETSX to detect possible market improprieties.  A variety of surveillance and investigative tools allow the TSX Venture Exchange to perform electronic market monitoring and trade reviews.



The surveillance department is also responsible for monitoring and reviewing listed company activities and detecting breaches of the listing policies or the listing agreement.  Market surveillance and listed company surveillance activities are closely coordinated.





9.C.  Markets Identified

The common shares trade on the TSX Venture Stock Exchange in Canada, on the OTC Bulletin Board in the United States, and on the Berlin Stock Exchange in Europe.  Refer to ITEM #9.A.4.





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ITEM 10.  ADDITIONAL INFORMATION



10.B.  Memorandum and Articles of Association

Following shareholder approval of a special resolution at the 5/31/2005 Special and Annual Meeting of shareholders, the Company adopted a new set of Articles.  The Company undertook this action to bring the Company into compliance with the new, updated British Columbia Corporations Act.  The principle changes include: the reduction of the required vote for a special resolution from three-quarters to two-thirds; Directors are able to approve a name change for the Company without a shareholder vote; Directors can set the location of the Annual General Meeting outside British Columbia, Canada; and deleted the requirement for a pro rate purchase of the shares of the Company.



In addition, the new British Columbia Corporations Act removed the requirement that a majority of Company directors be resident in British Columbia.



Refer to discussion in Fiscal 2001 Annual Report on Form 20-F, for more information about the Companys articles.



10.C.  Material Contracts: --- No Disclosure Necessary ---



10.D.  Exchange Controls

Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Company's securities, except as discussed in ITEM 10, Taxation below.



Restrictions on Share Ownership by Non-Canadians

There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of control of the Company by a non-Canadian.  The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company.  Non-Canadian generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.



10.E  Taxation

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of common shares of the Company (a "U.S. Holder") who deals at arm's length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the "Act") and the Canada  United States Income Tax Convention (the "Treaty"), is at all relevant times resident in the United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on business in Canada and elsewhere.



This summary is of a general nature only and is not, and should not be interpreted as, legal or tax advice to any particular U.S. Holder and no representation is made with respect to the Canadian income tax consequences to any particular person.  Accordingly, U.S. Holders are urged to consult their own tax advisors with respect to their particular circumstances.





47



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Under the Act and the Treaty, a U.S. Holder of common shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares.  The withholding tax rate is 5% where the U.S. Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some U.S. Holders such as qualifying pension funds and charities.



In general, a U.S. Holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Company unless (i) at any time in the five-year period immediately preceding the disposition, 25% or more of the shares of any class or series of the capital stock of the Company was owned by (or was under option of or subject to an interest of) the U.S. holder or persons with whom the U.S. holder did not deal at arm's length, and (ii) the value of the common shares of the Company at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada.  For this purpose, the Treaty defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally from real property situated in Canada.



The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company.  A foreign corporation, such as the Company, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year.  The Company believes that it was not a passive foreign investment company for the taxable year ended 12/31/2008 and, furthermore, expects to conduct its affairs in such a manner so that it will not meet the criteria to be considered passive foreign investment company in the foreseeable future.





10.H.  Document on Display

The Companys documents can be viewed at its North American office, located at: 1687 West Broadway, #200, Vancouver, British Columbia, Canada  V6J 1X2.  The Company files reports, registration statements and other information with the Securities and Exchange Commission (the SEC).  The Companys reports, registration statements and other information can be inspected on the SECs website at www.sec.gov and such information can also be inspected and copies ordered at the public reference facilities maintained by the SEC at the following location:  100 F Street, N.E., Washington, D.C.  20549.





10.I.  Subsidiary Information

The Company has one wholly-owned subsidiary, Texas Gulf Petroleum Corp., incorporated in Nevada on 7/20/1981, acquired on 8/31/1995.  This subsidiary is inactive.





48



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ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has not entered into any activities in derivative financial instruments, other financial instruments, or derivative commodity instruments.  The Companys financial assets in the form of cash and cash equivalents are held in short term interest-bearing deposits at institutions with high credit quality ratings.



The reporting currency of our consolidated financial statements is the Canadian Dollar.  Revenues from our operations outside of Canada represented 100% of our revenues in Fiscal 2008/2007/2006, all located in the United States and recorded in U.S. Dollars.  As a result, we enter into transactions with customers and suppliers in U.S. Dollars.  We are exposed to market risks from changes in foreign currency exchange rates that may affect our results of operations and financial condition and, consequently, our fair value. We do not enter into forward exchange contracts.  We manage these risks through internal risk management policies.  Many of our strategies are based on historical trading patterns and correlations and our management's expectations of future events.  However, these strategies may not be fully effective in all market environments or against all types of risks.  Unexpected market developments may affect our risk management strategies during this time, and unanticipated developments could impact our risk management strategies in the future.  If any of the variety of instruments and strategies we utilize are not effective, we may incur losses.



The oil and gas industry is exposed to a variety of risks including the uncertainty of finding and recovering new economic reserves, the performance of hydrocarbon reservoirs, securing markets for production, commodity prices, interest rate fluctuations, potential damage to or malfunction of equipment and changes to income tax, royalty, environmental or other governmental regulations.  We mitigate these risks to the extent we are able by:

a.

employing highly-skilled staff and focusing them in areas where they have a strong knowledge base in order to maximize value;

b.

utilizing competent, professional consultants as support teams to Company staff;

c.

performing careful and thorough geophysical, geological and engineering analyses of each prospect;

d.

using current, cost-effective and where feasible, leading-edge technology;

e.

focusing on a limited number of core properties;

f.

striving to be a low-cost producer to maximize field netbacks;

g.

maintaining a balanced portfolio of sales contracts;

h.

staying informed about industry changes and trends through appropriate association memberships, publications, subscriptions and conferences.



Our future financial performance remains closely linked to hydrocarbon commodity prices, which can be influenced by many factors including global and regional supply and demand, worldwide political events and weather.  These factors, among others, can result in a high degree of price volatility.



We currently have no hedge positions, however, we manage our potential exposure to commodity price volatilities through diversification as follows:

a.

Our oil/gas portfolio is split between two primary markets: southern Michigan and southeast Texas; and

b.

Commodity mix: our sales portfolio is comprised of natural gas, crude oil and natural gas liquids.  Crude oil and natural gas liquids are sold at prices with volatilities that differ from those of natural gas.





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ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A.  Debt Securities             --- No Disclosure Necessary --

12.B.  Warrants and Rights         --- No Disclosure Necessary --

12.C.  Other Securities            --- No Disclosure Necessary --

12.D.  American Depository Shares  --- No Disclosure Necessary --





PART II



ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

--- No Disclosure Necessary ---





ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS - No Disclosure Necessary 





ITEM 15.  CONTROLS AND PROCEDURES

As of the end of the period covered by this annual report, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures.  Based upon that evaluation, the CEO/CFO have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



The Company's disclosure controls and procedures operated such that important information flowed to appropriate collection and disclosure points in a timely manner and were effective so as to allow the Exchange Act reporting information to flow to the Company's CEO/CFO, including the period when this Annual Report on Form 20-F was prepared, as appropriate to allow timely decision regarding the required disclosure.  In addition, the CEO/CFO have certified that the disclosure and procedures were effective so that the information in our Exchange Act reports was communicated to our management.



There have been no changes in the Company's internal controls over financial reporting during the period covered by this annual report that have materially affected or are reasonably likely to materially affect the Companys internal control over financial reporting.  Nor have there been any corrective actions with regard to deficiencies or material weaknesses.



This annual report does not include an attestation of the Companys registered public accounting firm regarding internal control over financial reporting.  Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.









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ITEM 16.  RESERVED



ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

The Company does not have an audit committee financial expert serving on its audit committee.  The Companys Audit Committee consists of an unrelated director, the President/CEO/CFO of the Company, and the Corporate Secretary of the Company, all of whom are both financially literate and very knowledgeable about the Companys affairs.  Because the Companys structure and operations are straightforward, the Company does not find it necessary to augment its Board with a financial expert.



ITEM 16B.  CODE OF ETHICS

The Company has not adopted a written code of ethics that meets the new United States' Sarbanes-Oxley standards; the Board of Directors believes that existing Canadian standards and procedures is adequate for its purposes.  The Company has not seen any need to adopt a written code of ethics on the basis that its corporate culture effectively deters wrongdoing and promotes honest and ethical conduct, full, fair and accurate, timely, and understandable disclosure in reports and documents, the compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the code; and accountability for adherence to the code.



Item 16C. PRINCIPAL ACCOUNTIING FEES AND SERVICES

The audit committee is directly responsible for the appointment, compensation and oversight of auditors; the audit committee has in place procedures for receiving complaints and concerns about accounting and auditing matters; and has the authority and the funding to engage independent counsel and other outside advisors.



The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by this policy / procedure.  The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service shall be presented to the full Audit Committee at its next scheduled meeting.



In accordance with the requirements of the US Sarbanes-Oxley Act of 2002 and rules issued by the Securities and Exchange Commission, we introduced a procedure for the review and pre-approval of any services performed by Davidson & Company LLP, including audit services, audit related services, tax services and other services.  The procedure requires that all proposed engagements of Davidson & Company LLP for audit and permitted non-audit services are submitted to the finance and audit committee for approval prior to the beginning of any such services.



Fees, including reimbursements for expenses, for professional services rendered by Davidson & Company LLP to the Company are detailed below.



|Principal Accountant Fees and Services | Fiscal 2008
Ended
12/31/2008 | Fiscal 2007
Ended
12/31/2007
|-------------------------------------- | ---------------------------- | ----------------------------
|Audit Fees                             | $30,000                      | $24,500                     
|Audit-Related Fees                     | $nil                         | $nil                        
|Tax Fees                               | $7,450                       | $2,550                      
|All Other Fees                         | $nil                         | $nil                        
|TOTAL                                  | $37,450                      | $27,050                     







51



---

ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

--- No Disclosure Necessary ---



ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

--- No Disclosure Necessary ---



PART III



ITEM 17.  FINANCIAL STATEMENTS

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.  The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of Davidson & Company LLP, Chartered Accountants, are included herein immediately preceding the financial statements.



Audited Financial Statements

Report of Independent Registered Public Accounting Firm, dated 4/22/2009

Consolidated Balance Sheets at 12/31/2008 and 12/31/2007

Consolidated Statements of Operations and Deficit

for the years ended 12/31/2008, 12/31/2007 and 12/31/2006

Consolidated Statements of Cash Flows

for the years ended 12/31/2008, 12/31/2007 and 12/31/2006

Notes to Consolidated Financial Statements





ITEM 18.  FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant to ITEM #17.



ITEM 19.  EXHIBITS

1.  Certificates of Incorporation and Name Changes, By-Laws/Articles

--- Incorporated by reference to the Registration Statement as amended;

Annual Reports on Form 20-F, and Form 6-Ks ---



2.  Instruments defining the rights of holders of equity or debt securities

being registered.   --- Refer to Exhibit No. 1 ---



3.  Voting Trust Agreements:  No Disclosure Necessary



4.  Material Contracts:

--- Incorporated by reference to the Registration Statement as amended;

Annual Reports on Form 20-F, and Form 6-Ks ---



5.  Foreign Patents:                                   No Disclosure Necessary

6.  Earnings Per Share Calculation:                    No Disclosure Necessary

7.  Ratio of Earnings To Fixed Charges:                No Disclosure Necessary

8.  List of Subsidiaries:                              No Disclosure Necessary

9.  Statement Regarding Date of Financial Statements:  No Disclosure Necessary

10.  Notice Required by Rul3e 104 of Regulation BTR:   No Disclosure Necessary

11.  Code of Ethics as required by ITEM No. 16:        No Disclosure Necessary



12:  The certifications required by Rule 13a-14(a) or Rule 15d-14(a)..(attached)



13.  The certifications required by Rule 13a-14(b) or Rule 15d-14(b) and

Section 1350 of Chapter 63 of Title 18 of the United States Code (attached)



14.  Legal Opinion required by Instruction 3 of ITEM 7B: No Disclosure Necessary



15.  Additional Exhibits:

--- Incorporated by reference to the Registration Statement as amended;

Annual Reports on Form 20-F, and Form 6-Ks ---



52



---

























PORTRUSH PETROLEUM CORPORATION





CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)





DECEMBER 31, 2008





53



---

[portrush20fjun2309005.gif]





REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM



To the Shareholders of

Portrush Petroleum Corporation



We have audited the consolidated balance sheets of Portrush Petroleum Corporation as at December 31, 2008 and 2007 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years ended December 31, 2008, 2007 and 2006.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with Canadian generally accepted auditing standards and 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 whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.



In our opinion, these consolidated  financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended December 31, 2008, 2007 and 2006 in accordance with Canadian generally accepted accounting principles.





|                  | "DAVIDSON & COMPANY LLP"
|----------------- | ------------------------
|                  |                         
|Vancouver, Canada | Chartered Accountants   
|                  |                         
|April 22, 2009    |                         





COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA 

U.S. REPORTING DIFFERENCE



In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Our report to the shareholders dated April 22, 2009 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.





|                  | "DAVIDSON & COMPANY LLP"
|----------------- | ------------------------
|                  |                         
|Vancouver, Canada | Chartered Accountants   
|                  |                         
|April 22, 2009    |                         





[portrush20fjun2309007.gif]



54



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PORTRUSH PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS

(Expressed in Canadian Dollars)

AS AT DECEMBER 31



|                                         | 2008         | 2007        
|---------------------------------------- | ------------ | ------------
|                                         |              |             
|ASSETS                                   |              |             
|                                         |              |             
|Current                                  |              |             
|Cash                                     | $
95,648     | $
34,617    
|Receivables                              | 92,366       | 46,949      
|Prepaids                                 | -            | 24,183      
|                                         |              |             
|                                         | 188,014      | 105,749     
|                                         |              |             
|Oil and gas properties (Note 4)          | 840,790      | 514,105     
|                                         |              |             
|                                         | $
1,028,804  | $
619,854   
|                                         |              |             
|LIABILITIES AND SHAREHOLDERS' EQUITY     |              |             
|                                         |              |             
|Current                                  |              |             
|Accounts payable and accrued liabilities | $
279,499    | $
93,702    
|Loan payable (Note 5)                    | 550,260      | 103,047     
|                                         |              |             
|                                         | 829,759      | 196,749     
|                                         |              |             
|Future site restoration(Note 6)          | 58,577       | 36,022      
|                                         |              |             
|                                         | 888,336      | 232,771     
|                                         |              |             
|Shareholders' equity                     |              |             
|                                         |              |             
|Capital stock (Note 7)                   | 13,609,131   | 13,590,071  
|Contributed surplus (Note 7)             | 740,004      | 595,755     
|Deficit                                  | (14,208,667) | (13,798,743)
|                                         |              |             
|                                         | 140,468      | 387,083     
|                                         |              |             
|                                         | $
1,028,804  | $
619,854   

Nature and continuance of operations (Note 1)



Subsequent event (Note 14)



|On behalf of the Board: |          |                |         
|----------------------- | -------- | -------------- | --------
|                        |          |                |         
|Martin Cotter         | Director | Neal Iverson | Director
|                        |          |                |         



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



55



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PORTRUSH PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT

(Expressed in Canadian Dollars)

YEAR ENDED DECEMBER 31



|                                              | 2008           | 2007           | 2006          
|--------------------------------------------- | -------------- | -------------- | --------------
|                                              |                |                |               
|REVENUE                                       |                |                |               
|Oil and gas revenue, net of royalties         | $
669,710      | $
392,534      | $
777,455     
|                                              |                |                |               
|DIRECT COSTS                                  |                |                |               
|Depletion                                     | 250,148        | 1,233,325      | 399,036       
|Operating expenses                            | 169,080        | 94,912         | 195,070       
|Total direct costs                            | (419,228)      | (1,328,237)    | (594,106)     
|                                              |                |                |               
|                                              |                |                |               
|EXPENSES                                      |                |                |               
|Consulting and administration fees            | 35,196         | 29,419         | 22,882        
|Interest expense                              | 29,739         | 2,337          | -             
|Investor relations                            | 28,750         | 44,355         | 75,208        
|Financing fee (Note 5)                        | 106,000        | -              | -             
|Management fees  related party               | 76,280         | 79,900         | 80,875        
|Office and miscellaneous                      | 45,797         | 53,657         | 27,161        
|Professional fees                             | 88,230         | 91,377         | 154,858       
|Property investigation (Note 4)               | 100,000        | -              | -             
|Shareholder costs                             | 8,898          | 13,272         | 16,508        
|Stock-based compensation                      | 38,249         | 46,671         | 205,385       
|Transfer agent and regulatory fees            | 21,630         | 22,219         | 19,795        
|Travel and promotion                          | 7,863          | 10,644         | 11,977        
|                                              |                |                |               
|Total expenses                                | (586,632)      | (393,851)      | (614,649)     
|                                              |                |                |               
|Loss before other item                        | (336,150)      | (1,329,554)    | (431,300)     
|                                              |                |                |               
|                                              |                |                |               
|OTHER ITEM                                    |                |                |               
|Foreign exchange loss                         | (73,774)       | (16,050)       | (3,817)       
|                                              |                |                |               
|                                              |                |                |               
|Loss and comprehensive loss for the year      | (409,924)      | (1,345,604)    | (435,117)     
|                                              |                |                |               
|Deficit, beginning of year                    | (13,798,743)   | (12,453,139)   | (12,018,022)  
|                                              |                |                |               
|Deficit, end of year                          | $
(14,208,667) | $
(13,798,743) | $
(12,453,139)
|                                              |                |                |               
|Basic and diluted loss per share              | $
(0.01)       | $
(0.03)       | $
(0.01)      
|                                              |                |                |               
|Weighted average number of shares outstanding | 45,287,449     | 44,633,841     | 43,938,176    



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



56



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PORTRUSH PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

YEAR ENDED DECEMBER 31



|                                                                | 2008        | 2007          | 2006       
|--------------------------------------------------------------- | ----------- | ------------- | -----------
|                                                                |             |               |            
|CASH FLOWS FROM OPERATING ACTIVITIES                            |             |               |            
|Loss for the year                                               | $
(409,924) | $
(1,345,604) | $
(435,117)
|Items not affecting cash:                                       |             |               |            
|Depletion                                                       | 250,148     | 1,233,326     | 399,036    
|Financing fee                                                   | 106,000     | -             | -          
|Foreign exchange loss                                           | 99,934      | -             | -          
|Stock-based compensation expense                                | 38,249      | 46,671        | 205,385    
|                                                                |             |               |            
|Changes in non-cash working capital items:                      |             |               |            
|(Increase) decrease in receivables                              | (32,920)    | 83,551        | (52,305)   
|(Increase) decrease in prepaids                                 | 24,183      | (1,624)       | (22,559)   
|Increase (decrease) in accounts payable and accrued liabilities | 111,401     | 35,086        | (30,507)   
|                                                                |             |               |            
|Cash provided by operating activities                           | 187,071     | 51,406        | 63,933     
|                                                                |             |               |            
|                                                                |             |               |            
|CASH FLOWS FROM FINANCING ACTIVITIES                            |             |               |            
|Repaid to related parties                                       | -           | -             | (16,571)   
|Loan payable                                                    | 359,190     | 103,047       | -          
|Proceeds from issuance of capital stock                         | 20,010      | 150,000       | 93,750     
|Share issuance costs                                            | (950)       | -             | -          
|Capital stock purchased for cancellation                        | -           | (6,250)       | (40,000)   
|                                                                |             |               |            
|Cash provided by financing activities                           | 378,250     | 246,797       | 37,179     
|                                                                |             |               |            
|                                                                |             |               |            
|CASH FLOWS FROM INVESTING ACTIVITIES                            |             |               |            
|Advances on oil and gas properties                              | -           | -             | (62,599)   
|Oil and gas property recoveries                                 | 61,891      | 61,355        | -          
|Oil and gas property expenditures                               | (566,181)   | (375,632)     | (177,368)  
|                                                                |             |               |            
|Cash used in investing activities                               | (504,290)   | (314,277)     | (239,967)  
|                                                                |             |               |            
|Change in cash during the year                                  | 61,031      | (16,074)      | (138,855)  
|                                                                |             |               |            
|Cash, beginning of year                                         | 34,617      | 50,691        | 189,546    
|                                                                |             |               |            
|Cash, end of year                                               | $
95,648    | $
34,617      | $
50,691   



Supplemental disclosure with respect to cash flows (Note 8)







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



57



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008



1.

NATURE AND CONTINUANCE OF OPERATIONS



The Company is incorporated under the laws of British Columbia and its principal business activity is the acquiring and developing of oil and gas properties.



These financial statements have been prepared in accordance with Canadian generally accepted accounting principles with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.  Continued operations of the Company are dependent on the Company's ability to receive continued financial support, complete public equity financing, or generate profitable operations in the future. These consolidated financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern.



Current market conditions make the present environment for raising additional equity financing less favorable.  The inability to raise additional financing may impact the future assessment of the Company as a going concern under CICA 1400 General Standards of Financial Statement Presentation.  See Note 12 for further disclosure regarding liquidity risk.



|                             |  | 2008         | 2007        
|---------------------------- |  | ------------ | ------------
|                             |  |              |             
|Working capital (deficiency) |  | $
(641,745)  | $
(91,000)  
|Deficit                      |  | (14,208,667) | (13,798,743)





2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Principles of consolidation



These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary. Significant inter-company transactions have been eliminated on consolidation.



Use of estimates



The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the year.  Actual results could differ from these estimates. Significant accounts that require estimates relate to the impairment and depletion of oil and gas property interests, valuation allowances for future income tax assets, stock-based compensation and the valuation of warrants in private placements.



Oil and gas properties



The Company follows the full cost method of accounting for oil and natural gas operations, whereby all costs of exploring for and developing oil and natural gas reserves are capitalized and accumulated in cost centres on a country-by-country basis. Costs include land acquisition costs, geological and geophysical charges, carrying charges on non-productive properties and costs of drilling both productive and non-productive wells. General and administrative costs are not capitalized other than to the extent of the Company's working interest in operated capital expenditure programs on which operator's fees have been charged equivalent to standard industry operating agreements. At December 31, 2008, the Company has not capitalized any interest, general or administrative costs.



58



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008







2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)



Oil and gas properties(cont'd)



The costs in each cost centre, including the costs of well equipment, are depleted and depreciated using the unit-of-production method based on the estimated proved reserves before royalties.  Natural gas reserves and production are converted to equivalent barrels of crude oil based on relative energy content.  The costs of acquiring and evaluating significant unproved properties are initially excluded from depletion calculations.  These unevaluated properties are assessed periodically to ascertain whether impairment has occurred.  When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.



The capitalized costs less accumulated depletion and depreciation in each cost centre are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet date) plus the cost (net of impairments) of unproved properties.  The total capitalized costs less accumulated depletion and depreciation, site restoration provision and future income taxes of all cost centres is further limited to an amount equal to the future net revenue from proved reserves plus the cost (net of impairments) of unproved properties of all cost centres less estimated future site restoration costs, general and administrative expenses, financing costs and income taxes.



Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly alter the rate of depletion and depreciation.



Site restoration



The Company has adopted CICA Handbook Section 3110 Asset Retirement Obligations.  This standard focuses on the recognition and measurement of liabilities related to legal obligations associated with the retirement of property, plant and equipment. Under this standard, these obligations are initially measured at fair value and subsequently adjusted for any changes resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. The asset retirement cost is to be capitalized to the related asset and amortized into earnings over time. Under this section, the Company has recognized estimated future net costs of well abandonment and site restoration, including removal of production facilities at the end of their useful life of $58,577 (2007 - $36,022).



Revenue recognition



Revenue from oil and gas operations is recognized in the accounts when oil and natural gas are shipped, title passes and collection of the sale is reasonably assured.



Foreign currency translation



The Companys subsidiary is an integrated foreign operation and is translated into Canadian dollars using the temporal method. Monetary items are translated at the exchange rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates. Revenue and expense items are translated at the average exchange rate for the period.  Translation gains and losses are reflected in the loss for the year.



59



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008







2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)



Stock-based compensation



The Company uses the fair value-based method for stock-based compensation and therefore all awards to employees and non-employees will be recorded at fair value on the date of the grant and expensed over the period of vesting. The Company uses the Black-Scholes option pricing model to estimate the fair value of each stock option at the date of grant. Any consideration paid by the option holders to purchase shares is credited to capital stock.



Income taxes



The Company follows the asset/liability method of accounting for income taxes.  Future income tax assets and liabilities are determined based on the differences between the tax basis of assets and liabilities and those reported in the financial statements.  The future tax assets or liabilities are calculated using the tax rates for the periods in which the differences are expected to be settled.  Future tax assets are recognized to the extent that they are considered more likely than not to be realized.



Loss per share



The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments.  Under this method the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments.  It assumes that the proceeds would be used to purchase common shares at the average market price during the year. For loss per share the dilutive effect has not been computed as it proved to be anti-dilutive. At December 31, 2008, 2007 and 2006, the total number of potentially dilutive shares excluded from loss per share is 6,483,500, 5,600,000, 5,880,000 respectively.



Basic loss per share is calculated using the weighted-average number of shares outstanding during the year.



Financial instruments  recognition and measurement



The Company classifies all financial instruments as either held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities. Financial instruments are required to be measured at fair value on initial recognition. Measurement in subsequent periods depends on the financial instruments classification. Held-for-trading instruments are measured at the fair value with unrealized gains and losses recognized in results of operations. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income. Instruments held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost.



Comprehensive income



Comprehensive income is defined as the change in equity (net assets) from transactions and other events from non-owner sources. Other comprehensive income is defined as revenues, expenses, gains and losses that, in accordance with primary sources of GAAP, are recognized in comprehensive income, but excluded from net income. This would include holding gains and losses from financial instruments classified as available-for-sale.







60



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008







2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)



Recent accounting pronouncements



Goodwill and Intangible Assets



The CICA issued a new accounting standard, Section 3064 Goodwill and Intangible Assets which will replace the existing Section 3062 Goodwill and Other Intangible Assets and Section 3450 Research and Development Costs. The new pronouncement establishes standards for the recognition, measurement, presentation, and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. This standard is effective for the Companys interim and annual consolidated financial statements commencing January 1, 2009. The adoption of this standard is not expected to have a material impact on the Companys consolidated financial statements.



Business Combinations, Non-controlling Interest and Consolidated Financial Statements



In January 2009, the CICA issued Handbook Sections 1582 Business Combinations, 1601 Consolidated Financial Statements and 1602 Non-controlling Interests which replace CICA Handbook Sections 1581 Business Combinations and 1600 Consolidated Financial Statements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under IFRS. Section 1582 is applicable for the Companys business combinations with acquisition dates on or after January 1, 2011. Early adoption of this Section is permitted. Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements. Section 1601 is applicable for the Companys interim and annual consolidated financial statements for its fiscal year beginning January 1, 2011. Early adoption of this Section is permitted and all three Sections must be adopted concurrently.



Credit Risk and the Fair Value of Financial Assets and Liabilities



In January 2009 the Emerging Issues Committee (EIC) issued EIC-173Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. This abstract requires companies to take counterparty credit risk into account when measuring the fair value of financial assets and liabilities, including derivatives. This new standard is effective for the Companys interim and annual consolidated financial statements commencing January 1, 2009. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.



International Financial Reporting Standards (IFRS)



In 2006, AcSB published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The ASB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008 the ACSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadas own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.







61



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





3.

CHANGE IN ACCOUNTING POLICY



Effective January 1, 2008, the Company adopted the following new accounting standards issued by the CICA. As required by the transitional provisions of these new standards, these new standards have been adopted on a prospective basis with no restatement to prior period financial statements.



Assessing Going Concern



The Canadian Accounting Standards Board (AcSB) amended CICA Handbook Section 1400, to include requirements for management to assess and disclose an entitys ability to continue as a going concern (Note 1).



Financial Instruments



The AcSB issued CICA Handbook Section 3862, Financial Instruments  Disclosures,which requires entities to provide disclosures in their financial statements that enable users to evaluate (a) the significance of financial instruments for the entity's financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and how the entity manages those risks. The principles in this section complement the principles for recognizing, measuring and presenting financial assets and financial liabilities in Section 3855, Financial Instruments  Recognition and Measurement, Section 3863, Financial Instruments  Presentation,and Section 3865, Hedges(Note 12).



The AcSB issued CICA Handbook Section 3863, Financial Instruments  Presentation,which is to enhance financial statement users' understanding of the significance of financial instruments to an entity's financial position, performance and cash flows. This section establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset (Note 12).



Capital Disclosures



The AcSB issued CICA Handbook Section 1535, which establishes standards for disclosing information about an entity's capital and how it is managed (Note 13).



































62



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PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





4.

OIL AND GAS PROPERTIES



The Company entered into agreements to acquire interests in various oil and gas properties as follows:



|                             | 2008        | 2007       
|---------------------------- | ----------- | -----------
|Oil and gas properties:      |             |            
|U.S.A., proved               | $
3,401,999 | $
3,053,310
|Canada, unproved             | 563,231     | 335,087    
|                             |             |            
|                             | 3,965,230   | 3,388,397  
|                             |             |            
|Less:  Accumulated depletion | (3,124,440) | (2,874,292)
|                             |             |            
|                             | $
840,790   | $
514,105  



At December 31, 2008, the oil and gas properties include $563,231 (2007 - $335,087) relating to unproved properties that have been excluded from the depletion calculation.



Ontario prospects, Canada



The Company holds a 5% working interest in a prospect located in Ontario, Canada and is receiving a payout of all costs incurred.



The Company has also incurred exploration costs of $430,962 on an additional prospect located in Ontario, Canada. The Company has an 89% interest in this prospect.



Michigan, U.S.A.



The Company has a 22.5% working interest in a prospect located in Michigan, U.S.A.



Texas, U.S.A.



The Company acquired a 10% working interest in certain oil and gas leases located in the Refugio and Goliad Counties, Texas, U.S.A. As consideration for its interest, the Company made staged payments totaling US$1,044,000.  During fiscal 2008, the ceiling test calculation determined that the net book value of the Companys assets in the U.S.A. exceeded net future cash flows from proven reserves and accordingly, the Company recorded a ceiling test write-down of $72,427 (2007 - $1,049,683) included in accumulated depletion.



California, U.S.A.



During fiscal 2008, the Company paid $100,000 pursuant to an option to acquire an interest in certain oil and gas leases in Kern County, California. The option was not exercised so the costs were charged to property investigation costs for fiscal 2008.















63



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





4.

OIL AND GAS PROPERTIES(contd)



The full cost ceiling test results as of December 31, 2008 resulted in impairment of evaluated oil and gas properties. The future prices used in the December 31, 2008 ceiling test are as follows:



|     | Natural Gas
(Cdn $/Mmbtu) | Oil
(Cdn $/Bbl)       
|---- | ------------------------- | ----------------------
|     |                           |                       
|2009 | $              7.94       | $                66.69
|2010 | 8.85                      | 81.35                 
|2011 | 9.43                      | 89.37                 
|2012 | 9.88                      | 101.79                
|2013 | 10.10                     | 110.86                
|2014 | 10.21                     | 113.62                
|2015 | -                         | 116.47                





5.

LOAN PAYABLE



On July 25, 2007, the Company established a US$300,000 credit facility with the Regions Bank in Texas, USA maturing on July 25, 2008.  During fiscal 2008, the Company transferred the loan to the Texas Community Bank with an increased credit facility of $550,260 (US$450,000).  The loan bears interest at the Lenders Commercial Prime Floating Rate plus one-half percent, matures on August 15, 2009, and is secured by the Companys interests in the Mission River property in Texas, USA.



Subsequent to December 31, 2008, the Company also granted 4,400,000 warrants as fees in connection with the increased credit facility (Note 14). The warrants are valued at $106,000 using the Black-Scholes option pricing model with an expected volatility of 128%, a risk free interest rate of 1.37 %, an expected life of 2 years and an expected dividend yield of 0%.



6.

FUTURE SITE RESTORATION



The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the obligation associated with the retirement of oil and gas properties.



|                                               | 2008     | 2007    
|---------------------------------------------- | -------- | --------
|                                               |          |         
|Asset retirement obligation, beginning of year | $
36,022 | $
10,494
|Liabilities incurred                           | 22,555   | 25,528  
|                                               |          |         
|Asset retirement obligation, end of year       | $
58,577 | $
36,022



The undiscounted amount of cash flows, required over the estimated reserve life of the underlying assets, to settle the obligation, adjusted for inflation, is estimated at $94,339 (2007 - $52,739). The obligation was calculated using a credit-adjusted risk free discount rate of 10% and an inflation rate of 5%. It is expected that this obligation will be funded from general Company resources at the time the costs are incurred with the majority of costs expected to occur between 2009 and 2013.



64



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





7.

CAPITAL STOCK AND CONTRIBUTED SURPLUS



|                                                 | Number
of Shares | Capital
Stock | Contributed
Surplus
|------------------------------------------------ | ---------------- | ------------- | -------------------
|                                                 |                  |               |                    
|Authorized                                       |                  |               |                    
|Unlimited common voting shares, no par value     |                  |               |                    
|                                                 |                  |               |                    
|Issued and outstanding:                          |                  |               |                    
|Balance, December 31, 2005                       | 43,433,792       | $
13,398,523  | $
337,747          
|Exercise of options                              | 625,000          | 93,750        | -                  
|Stock-based compensation                         | -                | -             | 205,385            
|Contributed surplus on exercise of stock options | -                | 56,164        | (56,164)           
|                                                 |                  |               |                    
|                                                 | 44,058,792       | 13,548,437    | 486,968            
|                                                 |                  |               |                    
|Purchased for cancellation                       | (300,000)        | (40,000)      | -                  
|                                                 |                  |               |                    
|Balance, December 31, 2006                       | 43,758,792       | 13,508,437    | 486,968            
|                                                 |                  |               |                    
|Private placement                                | 1,500,000        | 150,000       | -                  
|Finders fee                                     | 53,571           | 5,357         | -                  
|Stock-based compensation                         | -                | -             | 46,671             
|Purchased for cancellation                       | (50,000)         | (6,250)       | -                  
|Reclassification on cancellation                 | -                | (62,116)      | 62,116             
|Share issuance costs                             | -                | (5,357)       | -                  
|                                                 |                  |               |                    
|Balance, December 31, 2007                       | 45,262,363       | 13,590,071    | 595,755            
|Private placement                                | 333,500          | 20,010        | -                  
|Finders fee                                     | 18,667           | 1,120         | -                  
|Finance fee                                      | -                | -             | 106,000            
|Stock-based compensation                         | -                | -             | 38,249             
|Share issuance costs                             | -                | (2,070)       | -                  
|                                                 |                  |               |                    
|Balance, December 31, 2008                       | 45,614,530       | $
13,609,131  | $
740,004          



Common shares returned to treasury



On November 14, 2006, the Company filed a notice of intention to undertake a normal course issuer bid with the British Columbia Securities Commission for up to 5% of the Companys issued share capital (2,200,000 common shares) over a 12 month period. The issuer bid was approved by the TSX Venture Exchange. During fiscal 2007, the Company purchased 50,000 (2006  300,000) common shares for $6,250 (2006 - $40,000) to return to treasury.  These 350,000 common shares were cancelled during fiscal 2007 resulting in a reclassification of $62,116 from capital stock to contributed surplus.















65



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





7.

CAPITAL STOCK AND CONTRIBUTED SURPLUS (contd)



Private placements



During fiscal 2008, the Company issued 333,500 units at $0.06 per unit for gross proceeds of $20,010. Each unit consists of one common share and one share purchase warrant expiring November 17, 2010. Finders fees of 18,667 common shares valued at $1,120 were issued to MHT Corporate Services Ltd. The market price of the Companys common stock was equivalent to the unit price on issuance, consequently, all the proceeds on the private placement were allocated to the common shares.



During the year ended December 31, 2007, the Company issued 1,500,000 units at $0.10 per unit for gross proceeds of $150,000. Each unit consists of one common share and one share purchase warrant exercisable at $0.12 per share expiring July 6, 2009. The Company issued 53,571 common shares valued at $5,357 as Finders Fees.



During the year ended December 31, 2006, the Company issued 625,000 common shares pursuant to the exercise of stock options for gross proceeds of $93,750.



Stock options and warrants



The Company has a stock option plan whereby, from time to time, at the discretion of the Board of Directors, stock options are granted to directors, officers and certain consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. The exercise price of each option is based on the market price of the Companys common stock at the date of the grant less an applicable discount. The options can be granted for a maximum term of 5 years and vest at the discretion of the Board of Directors.



The following incentive stock options and share purchase warrants were outstanding at December 31, 2008:



|         | Number
of Shares |  | Exercise
Price |  | Expiry Date                                                
|-------- | ---------------- |  | -------------- |  | -----------------------------------------------------------
|         |                  |  |                |  |                                                            
|Options  | 1,600,000        |  | $    0.15      |  | April 10, 2009 (expired unexercised subsequent to year end)
|         | 300,000          |  | 0.15           |  | April 25, 2009                                             
|         | 350,000          |  | 0.10           |  | September 25, 2009                                         
|         | 175,000          |  | 0.15           |  | October 31, 2009                                           
|         | 100,000          |  | 0.15           |  | November 30, 2009                                          
|         | 325,000          |  | 0.10           |  | May 31, 2010                                               
|         | 950,000          |  | 0.10           |  | August 9, 2010                                             
|         | 350,000          |  | 0.10           |  | October 4, 2010                                            
|         | 500,000          |  | 0.10           |  | June 10, 2011                                              
|         |                  |  |                |  |                                                            
|Warrants | 1,500,000        |  | 0.12           |  | July 6, 2009                                               
|         | 333,500          |  | 0.10           |  | November 17, 2010                                          
|         |                  |  |                |  |                                                            





66



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





7.

CAPITAL STOCK AND CONTRIBUTED SURPLUS(contd)



Stock options and warrants(contd)



Warrants and stock option transactions are summarized as follows:



|                               | Warrants    |                                 | Stock Options
|------------------------------ | ----------- | ------------------------------- | -------------
|                               | Number      | Weighted
Average
Exercise
Price |              
|Outstanding, December 31, 2005 | 2,387,500   | $
0.16                          |              
|Granted                        | -           | -                               |              
|Exercised                      | -           | -                               |              
|Expired/cancelled              | (387,500)   | 0.20                            |              
|Outstanding, December 31, 2006 | 2,000,000   | 0.15                            |              
|Granted                        | 1,500,000   | 0.12                            |              
|Expired/cancelled              | (2,000,000) | 0.15                            |              
|Outstanding, December 31, 2007 | 1,500,000   | 0.12                            |              
|Granted                        | 333,500     | 0.10                            |              
|Expired/cancelled              | -           | -                               |              
|                               |             |                                 |              
|Outstanding, December 31, 2008 | 1,833,500   | $
0.12                          |              
|Number currently exercisable   | 1,833,500   | $
0.12                          |              



Stock-based compensation



During the year ended December 31, 2008, the Company granted 1,150,000 (2007  1,625,000; 2006  2,725,000) stock options to directors and consultants at a weighted average fair value of $0.05 (2007 - $0.03; 2006 - $0.08) per option. As at December 31, 2008, all of these options had vested with an attributed stock-based compensation expense of $38,249 (2007 - $46,671; 2006 - $205,385) credited to contributed surplus. The compensation recognized was calculated using the Black-Scholes option pricing model.



The following weighted average assumptions were used in the valuation of stock options granted:



|                         | 2008       | 2007    | 2006     
|------------------------ | ---------- | ------- | ---------
|                         |            |         |          
|Risk-free interest rate  | 3.04%      | 4.5%    | 4.1%     
|Expected life of options | 2.12 years | 3 years | 1.4 years
|Annualized volatility    | 100%       | 52%     | 93%      
|Dividend rate            | 0.00%      | 0.00%   | 0.00%    



















67



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008



8.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS



|                                           | 2008               | 2007               | 2006              
|------------------------------------------ | ------------------ | ------------------ | ------------------
|                                           |                    |                    |                   
|Cash paid during the year for interest     | $      28,921      | $        2,337     | $                -
|                                           |                    |                    |                   
|Cash paid during the year for income taxes | $                - | $                - | $                -



Significant non-cash transactions during the year ended December 31, 2008 included:



a)

Recognizing $1,019 in oil and gas recoveries through receivables.



b)

Issuing 18,667 common shares at a value of $0.06 to pay $1,120 as finders fees for a private placement.



c)

Re-classfying $14,105 from oil and gas properties to receivables.



d)

Accruing future site restoration costs of $22,555.



e)

Accruing oil and gas property expenditures in accounts payable and accrued liabilities of $62,485 at December 31,2008



Significant non-cash transactions during the year ended December 31, 2007 included:



a)

Recognizing $2,627 in oil and gas recoveries through receivables.



b)

Issuing 53,571 common shares at a value of $0.10 to pay $5,357 as finders fees for a private placement.



c)

Incurring oil and gas property expenditures through advances paid previously of $62,599.



d)

Reclassifying $62,116 from capital stock to contributed surplus on the purchase and cancellation of 350,000 common shares



e)

Accruing future site restoration costs of $34,550



During the year ended December 31, 2006 the Company recognized $1,919 in oil and gas recoveries through receivables.



9.

RELATED PARTY TRANSACTIONS



The Company paid management fees of $76,280 (2007 - $79,900; 2006 - $80,875) to a director.  Included in prepaid expenses as at December 31, 2008 is management fees of $Nil (December 31, 2007  $21,533). Included in accounts payable and accrued liabilities is $65,374 (2007 - $Nil) due to a director.



Amounts due to related parties are non-interest bearing, unsecured and have no specific terms of repayment.



Related party transactions are in the normal course of operations, occurring on terms and conditions that are similar to those of transactions with unrelated parties and, therefore, are measured at the exchange amount.



68



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008







10.

INCOME TAXES



A reconciliation of current income taxes at statutory rates with the reported taxes is as follows:



|                                               | 2008        | 2007          | 2006       
|---------------------------------------------- | ----------- | ------------- | -----------
|                                               |             |               |            
|Loss for the year                              | $
(409,924) | $
(1,345,604) | $
(435,117)
|                                               |             |               |            
|Expected income tax recovery                   | $
(122,850) | $
(457,854)   | $
(157,870)
|Non-deductible items for income tax purposes   | 119,762     | 435,255       | 209,857    
|Other items deductible for income tax purposes | (116,988)   | (68,352)      | (224,401)  
|Unrecognized benefits of non-capital losses    | 120,076     | 90,951        | 172,414    
|                                               |             |               |            
|Actual income tax recovery                     | $
-         | $
-           | $
-        



The tax effects of temporary differences that give rise to significant components of future income tax assets and liabilities are as follows:



|                                                      | 2008        | 2007       
|----------------------------------------------------- | ----------- | -----------
|                                                      |             |            
|Future income tax assets:                             |             |            
|Oil and gas properties                                | $
913,832   | $
450,114  
|Mineral property and related exploration expenditures | 206,657     | 214,605    
|Financing fees                                        | 2,000       | 7,035      
|Operating losses available for future periods         | 655,672     | 645,483    
|                                                      |             |            
|                                                      | 1,778,161   | 1,317,237  
|Valuation allowance                                   | (1,778,161) | (1,317,237)
|                                                      |             |            
|Net future income tax asset                           | $
-         | $
-        



The Company has incurred operating losses of approximately $1,950,000 in Canada which, if unutilized, will expire through 2028. Subject to certain restrictions, the Company also has capital losses and resource exploration expenditures available to reduce taxable income of future years. Future tax benefits which may arise as a result of these losses and resource deductions have not been recognized in these financial statements, as their realization is not judged likely to occur.







69



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





11.

SEGMENT INFORMATION



All of the Company's operations are in the oil and gas industry and 100% of the revenues have been generated in the U.S.A.



The total amount of capital assets attributable to Canada is $563,231 (2007 - $335,087) and the total amount of capital assets attributable to the U.S.A. is $277,559 (2007 - $179,388).





12.

FINANCIAL INSTRUMENTS



The Company's financial instruments consist of cash, receivables, accounts payable and accrued liabilities and loan payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying value, unless otherwise noted.



Credit risk



Credit risk is the risk of a financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations.



The Companys cash is primarily held in large Canadian financial institutions.  The Company does not have any asset-backed commercial paper.  The Companys receivables consist mainly of GST receivable due from the Federal Government of Canada and balances due from the sale of its share of oil and gas relating to its oil and gas properties.  Management believes that the credit risk concentration with respect to financial instruments included in receivables is minimal.



Currency risk



Cash held in foreign currencies other than the Canadian dollar is subject to currency risk.  The Company is exposed to currency risk by incurring certain expenditures in currencies other than the Canadian dollar.



The Company does not use derivative instruments or foreign exchange contracts to hedge against gains or losses arising from foreign exchange fluctuations.



Interest rate risk



Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.  There is a very limited interest rate risk as the Company holds no interest bearing financial obligations or assets.



Liquidity risk



Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due.  The Companys approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due.  The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities.  Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.











70



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





12.

FINANCIAL INSTRUMENTS(contd)



Liquidity risk (contd)



The Company is negotiating to extend its current credit facility for another year when it comes due (Note 5). Cash flow from operations will be used to reduce the amount of the loan over the next twelve months. The Company cannot undertake any additional projects without additional financing or joint ventures.



The Company is currently reviewing all of its holdings with a view to selling or farming out current projects. In the event that the credit facility is not extended, it will be necessary for the Company to sell one or more of its projects and the Company will not be able to undertake by itself the exploration and development of any additional projects. The payment of property payments and the development of the property interests will therefore depend upon the Company's ability to obtain financing through the joint venturing of projects, private placement financing and public financing. There is no assurance that the Company will be successful in obtaining the required financing or that financing will be available on terms and conditions acceptable to the Company or that will not cause significant dilution to shareholders.





Price risk



The Company is exposed to price risk with respect to commodity and equity prices.  The ability of the Company to explore its oil and properties and the future profitability of the Company are directly related to the market price of oil and gas.  The Company monitors oil and gas prices to determine the appropriate course of action to be taken by the Company.





13.

CAPITAL MANAGEMENT



The Company's objectives when managing capital are:





to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and





to provide an adequate return to shareholders by pricing products commensurately with the level of risk.



The Company considers the items included in shareholders equity as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through public and/or private placements, sell assets to reduce debt or return capital to shareholders. The Company is not subject to externally imposed capital requirements.





14.

SUBSEQUENT EVENTS



Subsequent to December 31, 2008, the Company granted 4,400,000 bonus warrants to Mantle Resources LLC as fees in connection with a credit facility (Note 5). Each warrant is exercisable for one common share at a price of $0.05 per share expiring January 28, 2011. The expiry date can be reduced to January 28, 2010 upon the occurrence of certain events. The proceeds from the warrants will be used solely for either the payment of accrued interest and principal of the loan and, if the loan is in good standing, for any costs or expenses of certain new wells in Texas.





71



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





15.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY

ACCEPTED ACCOUNTING PRINCIPLES



These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). Material variations in the accounting principles, practices and methods used in preparing these consolidated financial statements from principles, practices and methods accepted in the United States (United States GAAP) are described and quantified below.



Consolidated financial statement balances under United States GAAP



|                                                                          | 2008         | 2007         
|------------------------------------------------------------------------- | ------------ | -------------
|                                                                          |              |              
|Consolidated balance sheets                                               |              |              
|                                                                          |              |              
|Total assets under Canadian GAAP and United States GAAP                   | $
1,028,804  | $
619,854    
|Additional depletion through ceiling test write-down                      | (16,193)     | -            
|                                                                          | 1,012,611    | 619,854      
|                                                                          |              |              
|Total liabilities under Canadian GAAP and United States GAAP              | $
888,336    | $
232,771    
|                                                                          |              |              
|Capital stock, common shares returned to treasury and contributed surplus | 14,349,135   | 14,185,826   
|under Canadian GAAP                                                       |              |              
|Cumulative compensation expense on granting of stock options              | 759,296      | 759,296      
|                                                                          |              |              
|Capital stock, common shares returned to treasury and contributed surplus |              |              
|under United States GAAP                                                  | 15,108,431   | 14,945,122   
|                                                                          |              |              
|Deficit under Canadian GAAP                                               | (14,208,667) | (13,798,743) 
|Cumulative compensation expense on granting of stock options              | (759,296)    | (759,296)    
|Additional depletion through ceiling test write-down                      | (16,193)     | -            
|Deficit under United States GAAP                                          | (14,984,156) | (14,558,039) 
|                                                                          |              |              
|Total shareholders' equity under United States GAAP                       | 124,275      | 387,083      
|                                                                          |              |              
|Total liabilities and shareholders' equity under United States GAAP       | $
1,012,611  | $
619,854    
|                                                                          |              |              
|Consolidated statements of operations, comprehensive loss and deficit     | 2008         | 2007         
|Total net loss under Canadian GAAP                                        | $
(409,924)  | $
(1,345,604)
|Additional depletion through ceiling test write-down                      | (16,193)     | -            
|                                                                          |              |              
|Total net loss under United States GAAP                                   | $
(426,117)  | $
(1,345,604)



The impact of the differences between Canadian GAAP and United States GAAP do not materially affect the consolidated statement of cash flows.



72



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008







15.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY

ACCEPTED ACCOUNTING PRINCIPLES(contd)



Oil and gas properties



Under both United States and Canadian GAAP, property, plant and equipment must be assessed for potential impairment.



Under Canadian GAAP, a ceiling test is applied to ensure that capitalized costs for oil and gas properties and equipment do not exceed the sum of estimated undiscounted, future net revenues from proven reserves less the cost incurred or estimated to develop those reserves, interest and general and administration costs, and an estimate for restoration costs and applicable taxes. Any impairment loss as a result of the ceiling test is to be measured as the amount by which the carrying amount of the asset exceeds the expected future cash flows discounted using a risk free interest rate.



Under United States GAAP, costs accumulated in each cost center are limited to an amount equal to the present value, discounted at 10%, of the estimated future net operating revenues from proved reserves, net of restoration costs and income taxes. Under United States GAAP an additional ceiling test write-down was not required as at December 31, 2007 and 2006.



Stock-based compensation



Under both United States and Canadian GAAP, the Company accounts for stock based compensation as disclosed in Note 2. Accordingly, there is no difference between Canadian GAAP and United States GAAP on the accounting for stock-based compensation for the years ended December 31, 2008, 2007 and 2006.



For the year ended December 31, 2002 and prior, for United States GAAP purposes, the Company elected to account for stock-based compensation using Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees. Accordingly, compensation cost for stock options was measured as the excess, if any, of the quoted market price of the Companys stock at the date of grant over the option price.







73



---

PORTRUSH PETROLEUM CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

DECEMBER 31, 2008





15.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY

ACCEPTED ACCOUNTING PRINCIPLES (cont'd)



Recent accounting pronouncements



In December 2007, the Emerging Issues Task Force (EITF) met and ratified EITF No.07-01, Accounting for Collaborative Arrangements, in order to define collaborative arrangements and to establish reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. This EITF is effective for financial statements issued for fiscal years beginning after December15, 2008, and interim periods within those fiscal years. This EITF is to be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. We are currently assessing the impact of this EITF to our consolidated financial statements.



In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities by requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and how derivative instruments and related hedged items affect an entitys operating results, financial position, and cash flows.



SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. Early adoption is permitted. We are currently reviewing the provisions of SFAS No. 161 and have not yet adopted the statement. However, as the provisions of SFAS No. 161 are only related to disclosure of derivative and hedging activities, we do not believe the adoption of SFAS No. 161 will have a material impact on our consolidated operating results, financial position, or cash flows.



In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets or FSP FAS 142-3. FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of the position is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the intangible asset. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. We do not believe that implementation of this standard will have a material impact on our consolidated financial position, results of operations or cash flows.



In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles or SFAS No. 162. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. This statement shall be effective 60 days following the Securities and Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not believe that implementation of this standard will have a material impact on our consolidated financial position, results of operations or cash flows.



In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (FSP EITF 03-6-1). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP EITF 03-6-1 will not have an impact on the Financial Statements.





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SIGNATURE PAGE



Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





Portrush Petroleum Corporation;    SEC #000-27768

Registrant









June 23, 2009      By  /s/ Martin Cotter

Date                       Martin Cotter, President/CEO/CFO/Director





June 23, 2009       By /s/ Neal Iverson

Date                       Neal Iverson, Director













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