UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 xREPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
quarterly period ended June 30,
2010
  oREPORT UNDER SECTION 13
OR 15(d) OF THE EXCHANGE
ACT
  For
the transition period from _____________________ to ______________
 
 File No.
333-127813
 
 Majestic
Oil & Gas, Inc.
 (Name of
small business issuer in our charter)
 
 Nevada
              4600
              20-1673271(State
      or other jurisdiction of
                incorporation
      or organization)
              (Primary
      Standard Industrial
                Classification
      Code Number)
              (I.R.S.
      Employer
                Identification
      Number)
 
 P.O
      Box 488 Cut Bank, Montana
              59427(Address
      of principal executive offices)
              (Zip
      Code)
 
 Registrant’s
telephone 406-873-5580
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
 Yes xNo o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
              o
              
              Accelerated
      filer
              oNon-accelerated
      filer
              o
              
              Smaller
      Reporting Company
              x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes oNo x
 
 As of
August 12, 2010, there were 9,118,000 shares issued and outstanding of the
registrant’s common stock.
  
  INDEX
  PART I — FINANCIAL
    INFORMATION
                
                
                3Item 1. Financial
Statements
                
                
                3Item 2. Management’s Discussion and Analysis
      or Plan of Operation
                
                
                10Item 3. Quantitative and Qualitative Disclosure
      about Market Risk
                
                
                19Item 4. Controls and
    Procedures
                
                
                19PART II — OTHER INFORMATION
                
                
                20Item 1. Legal Proceedings
                
                
                20Item 1A. Risk Factors
                
                
                20Item 2. Unregistered Sales of Equity Securities
      and Use of Proceeds
                
                
                20Item 3. Defaults Upon Senior
      Securities
                
                
                20Item 4. (Removed and
    Reserved)
                
                
                20Item 5. Other Information
                
                
                20Item 6. Exhibits.
                
                
                20
  2
  PART
I — FINANCIAL INFORMATION
  Item
1. Financial Statements
  MAJESTIC
      OIL & GAS, INC. (A Development Stage Company)CONDENSED
      CONSOLIDATED BALANCE SHEETS
  June
      302010
                
                
                December
      31UNAUDITED
                
                
                2009ASSETSCash
      and cash equivalents
                
                $
                60,052
                
                
                $
                110,701Trade
      receivables
                
                
                4,420
                
                
                
                5,823Total
      Current Assets
                
                
                64,472
                
                
                
                116,524OIL
      AND GAS PROPERTIESOil
      and gas properties, using the fullcost
      method of accounting:Properties
      being amortized
                
                
                455,894
                
                
                
                455,894Properties
      not subject to amortization
                
                
                212,230
                
                
                
                202,531Less
      accumulated depletion, amortization and impairment
                
                
                (176,200
                )
                
                
                (164,000
                )Net
      Oil and Gas Properties
                
                
                491,924
                
                
                
                494,425OTHER
      ASSETSWebsite
      development costs (less accumulated amortization)
                
                
                -
                
                
                
                400Total
      Other Assets
                
                
                -
                
                
                
                400Total
      Assets
                
                $
                556,396
                
                
                $
                611,349LIABILITIES
      AND STOCKHOLDERS' EQUITYLIABILITIESAccounts
      payable and accrued liabilities
                
                $
                10,603
                
                
                $
                5,028Production
      taxes and royalties payable
                
                
                1,057
                
                
                
                1,379Well
      settlement payable
                
                
                22,959
                
                
                
                22,959Total
      Current Liabilities
                
                
                34,619
                
                
                
                29,366Asset
      retirement obligation
                
                
                8,879
                
                
                
                8,879Total
      Liabilities
                
                
                43,498
                
                
                
                38,245STOCKHOLDERS'
      EQUITYCommon
      stock, no par value-Authorized
      Shares - 100,000,000Issued
      & Outstanding: 9,118,000 shares at June 30, 2010;
                
                
                1,314,500
                
                
                
                1,272,5008,918,000
      at December 31, 2009Additional
      paid in capital
                
                
                19,295
                
                
                
                19,295(Deficit)
      accumulated during the development stage
                
                
                (820,897
                )
                
                
                (718,691
                )Total
      Stockholders' Equity
                
                
                512,898
                
                
                
                573,104Total
      Liabilities & Stockholders' Equity
                
                $
                556,396
                
                
                $
                611,349
 3
  MAJESTIC
      OIL & GAS, INC. (A Development Stage Company)CONDENSED
      CONSOLIDATED STATEMENTS OF
OPERATIONS
  InceptionThree
      Months
                
                
                Three
      Months
                
                
                Six
      Months
                
                
                Six
      Months
                
                
                (April
      16, 2002)Ended
                
                
                Ended
                
                
                Ended
                
                
                Ended
                
                
                throughJune
      30,
                
                
                June
      30,
                
                
                June
      30,
                
                
                June
      30,
                
                
                June
      30,2010
                
                
                2009
                
                
                2010
                
                
                2009
                
                
                2010UNAUDITED
                
                
                UNAUDITED
                
                
                UNAUDITED
                
                
                UNAUDITED
                
                
                UNAUDITEDREVENUE
                
                $
                6,959
                
                
                $
                5,750
                
                
                $
                13,780
                
                
                $
                18,248
                
                
                $
                469,457PRODUCTION
      (LIFTING) COSTS
                
                
                5,545
                
                
                
                4,071
                
                
                
                10,879
                
                
                
                9,529
                
                
                
                150,842EXPLORATION
      EXPENSES
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,862DEPLETION,
      DEPRECIATIONAND
      AMORTIZATION
                
                
                5,890
                
                
                
                9,710
                
                
                
                12,600
                
                
                
                22,720
                
                
                
                178,700INCOME
      FROM OIL & GASPRODUCING
      ACTIVITIES
                
                
                (4,476
                )
                
                
                (8,031
                )
                
                
                (9,699
                )
                
                
                (14,001
                )
                
                
                136,053SELLING,
      GENERAL &ADMINISTRATIVE
      EXPENSES
                
                
                78,224
                
                
                
                17,807
                
                
                
                92,507
                
                
                
                38,229
                
                
                
                956,950NET
      (LOSS)
                
                $
                (82,700
                )
                
                $
                (25,838
                )
                
                $
                (102,206
                )
                
                $
                (52,230
                )
                
                $
                (820,897
                )EARNINGS
      PER SHARENet
      Income, basic and diluted
                
                $
                (0.01
                )
                
                $
                (0.00
                )
                
                $
                (0.01
                )
                
                $
                (0.01
                )Weighted
      average number ofshares
      outstanding
                
                
                9,118,000
                
                
                
                7,808,000
                
                
                
                9,118,000
                
                
                
                7,808,000Diluted
      potential shares -stock
      warrants
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Adjusted
      weighted average shares
                
                
                9,118,000
                
                
                
                7,808,000
                
                
                
                9,118,000
                
                
                
                7,808,000
 4
 
 MAJESTIC
      OIL & GAS, INC. (A Development Stage Company)CONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
  (Deficit)AccumulatedAdditional
                
                
                Stock
                
                
                DuringCommon
      Stock
                
                
                Paid
      In
                
                
                Subscription
                
                
                DevelopmentShares
                
                
                Amount
                
                
                Capital
                
                
                Receivable
                
                
                Stage
                
                
                TotalBEGINNING
      BALANCE, INCEPTION(APRIL
      16, 2002) TODECEMBER
      31, 2004
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Common
      stock issued
                
                
                6,240,000
                
                
                
                624,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                624,000Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (346,422
                )
                
                
                (346,422
                )BALANCE,
      DECEMBER 31, 2004
                
                
                6,240,000
                
                
                
                624,000
                
                
                
                -
                
                
                
                -
                
                
                
                (346,422
                )
                
                
                277,578Common
      stock issued
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                66,381
                
                
                
                66,381BALANCE,
      DECEMBER 31, 2005
                
                
                6,240,000
                
                
                
                624,000
                
                
                
                -
                
                
                
                -
                
                
                
                (280,041
                )
                
                
                343,959Common
      stock issued
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (20,068
                )
                
                
                (20,068
                )BALANCE,
      DECEMBER 31, 2006
                
                
                6,240,000
                
                
                
                624,000
                
                
                
                -
                
                
                
                -
                
                
                
                (300,109
                )
                
                
                323,891Common
      stock issued for services
                
                
                330,000
                
                
                
                147,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                147,000Common
      stock warrants exercised
                
                
                938,000
                
                
                
                234,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                234,500Common
      stock options issued
                
                
                -
                
                
                
                -
                
                
                
                19,295
                
                
                
                -
                
                
                
                -
                
                
                
                19,295Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (255,025
                )
                
                
                (255,025
                )BALANCE,
      DECEMBER 31, 2007
                
                
                7,508,000
                
                
                
                1,005,500
                
                
                
                19,295
                
                
                
                -
                
                
                
                (555,134
                )
                
                
                469,661Common
      stock issued
                
                
                300,000
                
                
                
                150,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                150,000Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (68,680
                )
                
                
                (68,680
                )BALANCE,
      DECEMBER 31, 2008
                
                
                7,808,000
                
                
                
                1,155,500
                
                
                
                19,295
                
                
                
                -
                
                
                
                (623,814
                )
                
                
                550,981Common
      stock issued for services
                
                
                100,000
                
                
                
                16,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                16,000Common
      stock issued
                
                
                1,010,000
                
                
                
                101,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                101,000Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                (94,877
                )
                
                
                (94,877
                )BALANCE,
      DECEMBER 31, 2009
                
                
                8,918,000
                
                
                
                1,272,500
                
                
                
                19,295
                
                
                
                -
                
                
                
                (718,691
                )
                
                
                573,104Common
      stock issued for services
                
                
                200,000
                
                
                
                42,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                42,000Net
      (loss) for the six monthsended
      June 30, 2010 (UNAUDITED)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (102,206
                )
                
                
                (102,206
                )BALANCE,
      JUNE 30, 2010
                
                
                9,118,000
                
                
                $
                1,314,500
                
                
                $
                19,295
                
                
                $
                -
                
                
                $
                (820,897
                )
                
                $
                512,898
  5
 
  
 MAJESTIC OIL & GAS, INC. (A Development Stage
Company)
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
  InceptionSix
      Months
                
                
                Six
      Months
                
                
                (April
      16, 2002)Ended
                
                
                Ended
                
                
                ThroughJune
      30, 2010
                
                
                June
      30, 2009
                
                
                June
      30, 2010UNAUDITED
                
                
                UNAUDITED
                
                
                UNAUDITEDOPERATING
      ACTIVITIESNet
      (loss)
                
                $
                (102,206
                )
                
                $
                (52,230
                )
                
                $
                (820,897
                )Changes and credits
      to net (loss)not affecting
      cashDepletion
      and amortization
                
                
                12,600
                
                
                
                22,720
                
                
                
                178,700Organizational
      expenses paid withstock
                
                
                42,000
                
                
                
                -
                
                
                
                342,000Legal
      fees paid with stock
                
                
                -
                
                
                
                -
                
                
                
                188,000Stock
      compensation expense
                
                
                -
                
                
                
                -
                
                
                
                21,295Changes
      in assets and liabilitiesTrade
      receivables
                
                
                1,403
                
                
                
                18,321
                
                
                
                (4,420
                )Deposits
                
                
                -
                
                
                
                -
                
                
                
                -Production
      taxes and royalties payable
                
                
                (322
                )
                
                
                (3,124
                )
                
                
                1,057Accounts
      payable
                
                
                5,575
                
                
                
                38
                
                
                
                33,562NET
      CASH FROM (USED FOR)OPERATING
      ACTIVITIES
                
                
                (40,950
                )
                
                
                (14,275
                )
                
                
                (60,703
                )INVESTING
      ACTIVITIESWebsite
      development
                
                
                -
                
                
                
                -
                
                
                
                (2,500
                )Additions
      to oil and gas properties
                
                
                (9,699
                )
                
                
                (7,018
                )
                
                
                (499,245
                )NET
      CASH (USED FOR) INVESTINGACTIVITIES
                
                
                (9,699
                )
                
                
                (7,018
                )
                
                
                (501,745
                )FINANCING
      ACTIVITIESProceeds
      from sale of common stock
                
                
                -
                
                
                
                -
                
                
                
                251,000Proceeds
      from exercise of warrants
                
                
                -
                
                
                
                -
                
                
                
                371,500NET
      CASH PROVIDED BY FINANCINGACTIVITIES
                
                
                -
                
                
                
                -
                
                
                
                622,500NET
      CHANGE IN CASH AND CASHEQUIVALENTS
                
                
                (50,649
                )
                
                
                (21,293
                )
                
                
                60,052CASH
      AND CASH EQUIVALENTS ATBEGINNING
      OF PERIOD
                
                
                110,701
                
                
                
                79,790
                
                
                
                -CASH
      AND CASH EQUIVALENTS ATEND
      OF PERIOD
                
                $
                60,052
                
                
                $
                58,497
                
                
                $
                60,052
  6
 
 MAJESTIC
OIL & GAS, INC. (A Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 -
Business Activity and Basis of Presentation
  Principal
Business Activity
  Majestic
Oil & Gas, Inc. (Company) is a development stage enterprise and its
operations consist of oil and natural gas development and production in the
Rocky Mountain region. The financial statements and notes to the financial
statements are the representation of the Company's management, who is
responsible for their integrity and objectivity. The accounting policies of the
Company are in accordance with generally accepted accounting principles and
conform to the standards applicable to development stage
enterprises.
  Basis
of Presentation
  The
accompanying interim financial statements of the Company are unaudited. In the
opinion of management, the interim data includes all adjustments, consisting
only of normal recurring adjustments necessary for a fair presentation of the
results for the interim period. The results of operations for the six months
ended June 30, 2010 are not necessarily indicative of the operating results for
the entire year. These interim financial statements contain certain
reclassification of prior period amounts to be consistent with the current
period presentation with no effect on net income or loss. We have prepared the
financial statements included herein pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. We believe the disclosures made are
adequate to make the information not misleading and recommend that these
condensed financial statements be read in conjunction with the financial
statements and notes included in our Form 10-KSB for the year ended December 31,
2009.
  Note 2 -
Basis of Accounting
  The
accompanying financial statements have been prepared using accounting principles
applicable to a going concern, which contemplates the realization of assets and
extinguishment of liabilities in the normal course of business. As shown in the
accompanying condensed balance sheet the Company has an accumulated deficit of
($820,897) through June 30, 2010. This and other factors may indicate that the
Company may be unable to continue in existence. The Company's financial
statements do not include any adjustments related to the realization of the
carrying value of assets or the amounts and classification of liabilities that
might be considered necessary should the Company be unable to continue in
existence. The Company's ability to establish itself as a going concern is
dependent upon its ability to obtain additional financing in order to fund
exploration and development activities of oil and gas interests and, ultimately,
to achieve profitable operations. Management believes that it can be successful
in obtain
  These
interim financial statements are prepared using the significant accounting
policies disclosed in the Company's December 31, 2009 annual audited financial
statements, except that certain significant accounting policies were adopted
during the six months ended June 30, 2010:
  Adopted
prior to the six months ended June 30, 2010 -
 Oil
and Gas Interests
  The
Company utilizes the full cost method of accounting for oil and gas activities.
Under this method, subject to a limitation based on estimated value, all costs
associated with property acquisition, exploration and development, including
costs of unsuccessful exploration, are capitalized within a cost center. No gain
or loss is recognized upon the sale or abandonment of undeveloped or producing
oil and gas interests unless the sale represents a significant portion of oil
and gas interests and the gain significantly alters the relationship between
capitalized costs and proved oil and gas reserves of the cost center.
Depreciation, depletion and amortization of oil and gas interests is computed on
the units of production method based on proved reserves, or upon reasonable
estimates where proved reserves have not yet been established due to the recent
commencement of production. Amortizable costs include estimates of future
development costs of proved undeveloped reserves.
  7
 
 MAJESTIC
OIL & GAS, INC. (A Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Capitalized
costs of oil and gas interests may not exceed an amount equal to the present
value, discounted at 10%, of the estimated future net cash flows from proved
reserves plus the cost, or estimated fair market value if lower, of unproved
interests. Should capitalized costs exceed this ceiling, an impairment is
recognized. The present value of estimated future net cash flows is computed by
applying year end prices of oil and gas to estimated future production of proved
oil and gas reserves as of year end, less estimated future expenditures to be
incurred in developing and producing the proved reserves and assuming
continuation of existing economic conditions.
  Revenue
Recognition
  The
Company recognizes oil and gas revenues from its interests in producing wells as
oil and gas is produced and sold from the wells and when ultimate collection is
reasonably assured.
  Website
Development Costs
  The
Company has capitalized the costs associated with development of its website,
and is amortizing the cost over a three year period.
  Stock
Based Compensation
  The
Company accounts for stock based compensation in accordance with current
accounting standards which specify the revised accounting alternative
requirements for pre-2006 stock based compensation grants existing at January 1,
2006 and the required accounting for new grants starting January 1, 2006. The
Company had no stock based compensation grants made before year
2007.
  Accordingly,
the provisions pertaining to pre-2006 grants do not apply. The Company values
its stock options awarded on or after January 1, 2006 at the fair value at grant
date using the Black-Scholes option pricing model. Compensation expense for
stock options is recorded over the vesting period on a straight line basis.
Compensation paid in vested stock is valued at the fair value at the applicable
measurement date and charged to expense at that date.
  Income
Taxes
  Effective
January 1, 2007, the Company adopted the provisions current accounting standards
related to accounting for uncertainty in income taxes. These standards provide
detailed guidance for the financial statement recognition, measurement and
disclosure of uncertain tax positions recognized in the financial statements.
Tax positions must meet a “more-likely-than-not” recognition threshold at the
effective date to be recognized upon the adoption of the standards and in
subsequent periods. Upon the adoption of the standards, the Company had no
unrecognized tax benefits. During 2009 and during the first six months of 2010,
the Company recognized no adjustments for uncertain tax benefits.
  Deferred
income tax assets, if any, are adjusted by a valuation allowance, if necessary,
to recognize future tax benefits only to the extent, based on available
evidence, it is more likely than not such benefits will be realized. The Company
would recognize interest and penalties, if any, related to uncertain tax
positions in general and administrative expenses. No interest and penalties
related to uncertain tax positions were accrued at June 30, 2010. The Company
expects no material changes to unrecognized tax positions within the next twelve
months.
  Earnings
per Share of Common Stock
  Basic
earnings per share is determined in accordance with current accounting standards
using net income divided by the weighted average shares outstanding during the
period. Diluted earnings per share is computed by dividing net income by the
weighted average shares outstanding, assuming all dilutive potential common
shares were issued. The effect of outstanding common stock warrants was
anti-dilutive for the six months ended June 30, 2010 and 2009.
  Fair
Value Measurement
  Effective
January 1, 2008, the Company adopted accounting standards related to measurement
of fair value in its financial statements. These standards provide a framework
for measuring fair value under generally accepted accounting principles. These
standards would apply to all financial instruments that are being measured and
reported on a fair value basis. Currently, the Company has no financial
instruments to which this statement would apply.
  8
  MAJESTIC
OIL & GAS, INC. (A Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Recent
Accounting Pronouncements
  In June
2009, accounting standards were issued related to the FASB's codification of
accounting standards and the hierarchy of generally accepted accounting
principles. The objective of these standards was to become the source of
authoritative U.S. generally accepted accounting principles to be applied by
nongovernmental entities. The standards became effective for financial statement
issued for interim and annual periods ending after September 15,
2009.
 Management
has adopted these standards.
  In May
2009, accounting standards were issued related to events occuring subsequent to
the balance sheet date, but prior to issuance of the financial statements. The
objective of these standards is to establish general standards of accounting for
and disclosure of events that occur after the balance sheet date but before the
financial statements are issued or available to be issued. Management has
adopted these standards.
  In
December 2008 the SEC unanimously approved amendments to revise its oil and gas
reserves estimation and disclosure requirements. The amendments, among other
things, allows the use of new technologies to determine proved reserves; permits
the optional disclosure of probable and possible reserves; modifies the prices
used to estimate reserves for SEC disclosure purposes to a 12-month average
instead of a period end price; and requires that if a third party is primarily
responsible for preparing or auditing reserve estimates, the Company make
disclosures relating to the independence and qualifications of the third party,
including filing as an exhibit any report received from the third party. The
revised rules are effective January 1, 2010. The new requirements do not have an
impact on the Company’s 2009 financial statements.
  Note 3 -
Organization and Development of the Company
  The
Company was formed on April 16, 2002 as a corporation. The Company is considered
a development stage enterprise. The accompanying interim financial statements
reflect limited oil and gas development and production activities and they are
not necessarily indicative of what the financial statements will reflect once
the intended operations of the Company are fully underway.
  Note 4 -
Asset Retirement Obligations
  The
Company follows current accounting standards in accounting for its asset
retirement obligations. These standards address financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. These accounting standards
require recognition of the present value of obligations associated with the
retirement of tangible long-lived assets in the period in which it is incurred.
As of June 30, 2010, the estimated future cost to plug and abandon the Company's
gas wells was estimated to be $8,879. The estimated liability is based on
historical experience in plugging and abandoning wells, estimated cost to plug
and abandon wells in the future and federal and state regulatory
requirements.
  Note 5 -
Related Party Transactions
  Altamont
Oil & Gas, Inc. (Altamont), an entity related through common ownership and
management, is the operator of the wells in which the Company owns its working
interests. As the operator of the wells, Altamont is responsible for remitting
production taxes to the taxing authorities and royalty payments to the royalty
interest owners. As of June 30, 2010, the Company had an outstanding receivable
from Altamont of $4,420 for gas sales, and a payable to Altamont of $1,057 for
production taxes and royalties. The Company also received an Authorization for
Expenditure (AFE) for its share of costs associated with the Jody Fields #4-1
well, which remains under development as of June 30, 2010. The Company paid
$5,547 to Altamont for development costs, and has a payable to Altamont of
$22,959 for its remaining share of the AFE.
  Note 6 -
Farm Out Agreement
  During
2007, the Company entered into a Farm-out Agreement with Altamont Oil & Gas,
Inc and Numbers, Inc., an entity related through common ownership and
management, to conduct a 10-well natural gas development program. This
development program is still pending and will involve the drilling of 5 wells in
the Lake Frances Gas Field and 5 wells in the Williams Gas Field, located in
Pondera County, Montana. The Lake Frances Field is located south of Valier,
Montana just offsetting the Lake Frances reservoir. The Williams Field is
located 7 miles east of the town of Valier, Montana.
  9
  Item
2. Management’s Discussion and Analysis or Plan of Operation.
  
 FORWARD LOOKING
STATEMENTS
 
 The
following discussion and analysis is provided to increase the understanding of,
and should be read in conjunction with, the Financial Statements of the Company
and Notes thereto included elsewhere in this Report. Historical results and
percentage relationships among any amounts in these financial statements are not
necessarily indicative of trends in operating results for any future period. The
statements, which are not historical facts contained in this Report, including
this Plan of Operations, and Notes to the Financial Statements, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are based on currently available
operating, financial and competitive information, and are subject to various
risks and uncertainties. Future events and the Company's actual results August
differ materially from the results reflected in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, dependence on existing and future key strategic and strategic
end-user customers, limited ability to establish new strategic relationships,
ability to sustain and manage growth, variability of operating results, the
Company's expansion and development of new service lines, marketing and other
business development initiatives, the commencement of new engagements,
competition in the industry, general economic conditions, dependence on key
personnel, the ability to attract, hire and retain personnel who possess the
technical skills and experience necessary to meet the service requirements of
its clients, the potential liability with respect to actions taken by its
existing and past employees, risks associated with international sales, and
other risks described herein and in the Company's other SEC
filings.
 
 The
following discussion of our financial condition and results of operations should
be read in conjunction with the Financial Statements and Notes to the Condensed
Consolidated Financial Statements appearing elsewhere in this
report.
 
 OVERVIEW
 
 Majestic
Oil & Gas, Inc. is engaged in the exploration, development, acquisition and
operation of oil and natural gas properties. Because oil and natural gas
exploration and development requires significant capital and because our assets
and resources are limited, we participate in the gas industry through the
purchase of interests in either producing wells or oil and natural gas
exploration, development and production projects.
 
 Majestic
Oil & Gas, Inc. is a development stage company, and as such it is difficult
for us to forecast our revenues or earnings accurately. We believe that
period-to-period comparisons of our operating results may not be meaningful and
should not be relied upon as an indication of future performance as we have and
will have no backlog of orders. Our operating results in one or more future
quarters may fall below investor expectations which, assuming our common stock
trades on a recognized market, would almost certainly cause the future trading
price of our common stock to decline. You should read the following discussion
together with the condensed consolidated financial statements and their
accompanying notes, included elsewhere in the report.
  10
  Majestic
Oil & Gas, Inc. participated in drilling programs in the Lake Frances Field
during 2007 and 2008.  Four successful gas wells have been drilled
to-date; the B Ag #25-1, Vandenbos #19-1, Boucher #18-1 and Stoltz
#18-1.  Majestic Oil & Gas, Inc. holds a 25% Working Interest in
these four wells and the Company expects to see an increase in production
volumes, as a result of these wells. In addition, Majestic Oil & Gas, Inc.
participated in the drilling of the Vandenbos #19-2 and the Jody Fields #4-1.
The Vandenbos #19-2 well was subsequently plugged and abandoned, as was the Jody
Fields #4-1 well, which was a wildcat oil well.
 
 Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in the NWSE-Section 33-T27N-R4W, Teton County, MT at its
sole cost, risk and expense.    In doing so, Mountain View
Energy, Inc., would acquire 75% of the Working Interest, while Majestic Oil
& Gas, Inc. would retain a 25% Working Interest in any well drilled in the
40-acre tract.
 
 Accordingly,
on September 9, 2009, drilling commenced drilling on the Donovan #33-3 well
located in the West Pondera Field, SWNWSE – Section 33-T27N-R4W, Teton County,
Montana.  The well was successfully drilled and completed with an
initial production of 15 barrels of oil per day with no
water.   The producing interval is the Madison/Sun River Dolomite
with 20 feet of pay from 2,125’ to 2,145’.
 
 Due to
the success of the Donovan #33-3, a second oil well was drilled in the West
Pondera Field.  The Donovan #33-2 is located in the SENWSE - Section
33-T27N-R4W, Teton County, Montana.  This oil well was successfully
drilled and completed with initial production of 2 to 4 barrels of oil per
day.
 
 Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Altamont Oil &
Gas, Inc., and subsequently with Hartford Energy, Inc., to conduct the re-entry
of the Fields #14-34.  As per the farm-out agreement with Hartford
Energy, Inc., the Company retained a 25% Working Interest in this
well.  The Fields #14-34 is located in the Loneman Coulee Field,
Pondera County, Montana and was completed as a Madison/Sun River oil well with
initial production of 5 barrels of oil per day.
 
 Based
upon our Management's experience in the oil and natural gas industry and on
recent events, including increasing global demand for energy and energy
disruptions caused by natural disasters, we believe the trend in oil and gas
prices will remain relatively stable or decrease slightly, but over the
long-term are more likely to increase. We expect to generate positive net income
from operations in the future, although our revenue and expenses will increase
as we expand our drilling and ownership activities. However, the current
economic crisis could have a negative impact on the Company’s revenues due to
the recent decrease in oil and natural gas prices.   During the
course of 2009, Majestic Oil & Gas, Inc. saw a significant decrease in the
price received per MCF at a high of $3.09 and a low of $1.19, as detailed under
“Results of Operation.”  To-date in 2010, the Company received a high
of $2.80 per MCF and a low of $1.81 per MCF.  The current trend shows
a continued decline in pricing.  The price we receive for our
production directly affects the amount of revenues we generate, which in turn
affects the Company’s liquidity and overall financial position.
  11
  RESULTS OF
OPERATIONS
 
 Three Months Ended June 30,
2010 vs.Three Months Ended June 30, 2009:
 
 Three Months
                Ended
                June
      30, 2010
              
              
              Three Months
                Ended
                June
      30, 2009Revenue
              
              $
              6,959
              
              
              $
              5,750Expenses
              
              $
              (89,659)
              
              
              $
              (31,588)Net
      Income (Loss)
              
              $
              (82,700)
              
              
              $
              (25,838)
 
 Revenues
for the three-month period ended June 30, 2010 were $6,959 compared to $5,750
for the period ended June 30, 2009. There was a decrease in the gas revenues
between these two periods as a result of the lower natural gas production
slightly offset by a higher price received per MCF and oil
production.
 
 
 Ludwig State 36-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              168.92
              
              
              
              2.01
              
              
              
              194.49
              
              
              
              1.56May
              
              
              150.56
              
              
              
              1.81
              
              
              
              207.28
              
              
              
              1.41June
              
              
              169.13
              
              
              
              1.94
              
              
              
              198.83
              
              
              
              1.59
  Boucher
      27-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              43.31
              
              
              
              2.01
              
              
              
              44.76
              
              
              
              1.56May
              
              
              40.01
              
              
              
              1.81
              
              
              
              47.23
              
              
              
              1.41June
              
              
              38.57
              
              
              
              1.94
              
              
              
              47.64
              
              
              
              1.59
 
 B. Ag #25-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              32.40
              
              
              
              2.01
              
              
              
              35.60
              
              
              
              1.56May
              
              
              27.80
              
              
              
              1.81
              
              
              
              37.80
              
              
              
              1.41June
              
              
              34.60
              
              
              
              1.94
              
              
              
              38.60
              
              
              
              1.59
  
 Vandenbos
      #19-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              298.24
              
              
              
              2.01
              
              
              
              551.10
              
              
              
              1.56May
              
              
              247.91
              
              
              
              1.81
              
              
              
              494.59
              
              
              
              1.41June
              
              
              278.03
              
              
              
              1.94
              
              
              
              451.69
              
              
              
              1.59
  12
  Boucher
      #18-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              149.75
              
              
              
              2.01
              
              
              
              299.89
              
              
              
              1.56May
              
              
              130.25
              
              
              
              1.81
              
              
              
              237.81
              
              
              
              1.41June
              
              
              147.75
              
              
              
              1.94
              
              
              
              196.76
              
              
              
              1.59
 
 Stoltz
      #18-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009April
              
              
              0.41
              
              
              
              2.01
              
              
              
              8.13
              
              
              
              1.56May
              
              
              2.64
              
              
              
              1.81
              
              
              
              10.77
              
              
              
              1.41June
              
              
              5.48
              
              
              
              1.94
              
              
              
              15.03
              
              
              
              1.59
 
 Majestic
Oil & Gas Operations, Inc’s Net Share of the production volumes from the
Ludwig State #36-1, Boucher #27-1, B. Ag #25-1, Vandenbos #19-1, Boucher #18-1
and Stoltz #18-1 wells for three month period ended June 30, 2010 were 1,966 MCF
compared to 3,118 MCF for three month period ended June 30, 2009. The production
decrease is a result of natural decline in production over
time.
 
 Our total
expenses increase by $58,071 from the $31,588 reported for the three months
ended June 30, 2009 compared to the $89,659 reported for the three months ended
June 30, 2010. Of those expenses, there was an increase in the Selling, General
& Administrative Expenses of $60,417 from the $78,224 reported for the three
month period ended June 30, 2010 compared to the $17,807 reported for the same
three month period in 2009. The primary reason for the increase was an increase
of approximately $48,900 in engineering and professional fees incurred, which
are comprised mainly of legal, accounting, and auditing
fees.  Professional fees included the issuance of $42,000 in Company
stock for services provided.  In addition, the Company saw an increase
in Consulting Fees of $4,691 and $4,060 in Public Relations costs associated
with the design and maintenance of the Company’s new website. As mentioned
above, revenues for the three month period decreased as a result of lower
production volumes offset by a slightly higher price per MCF.
 
 The
Company showed a Net Loss of ($82,700) for the three months ended June 30, 2010.
This compares to the Net Loss of ($25,838) for the three months ended June 30,
2009. The variance between these three month periods is directly related to the
decrease in revenues and volumes during the Second Quarter 2010 and increase in
selling, general, & administrative expense as discussed above. While it is
the Company’s hope that production volumes increase as a result of its planned
development and drilling program, the Company’s revenues are subject to the
volatility of natural gas prices, which continue to fluctuate
dramatically.
 
 The
Company also plans to continue its pursuit of oil prospects in the Lake Frances
Area, which if successful, could contribute to an increase in future
revenues.  The price of crude oil also continues to fluctuate but not
to the same extreme as the price of natural gas.  In spite of the
fluctuations in the price of oil and natural gas, Management is still confident
that we will build the Company through continued drilling of oil and natural gas
prospects.
  13
  Drilling
Activity
 
 The
following table sets forth the results of our drilling activities during the
three months ended June 30, 2010 and 2009:
 
 Drilling
      ActivityGross
      Wells
              
              
              Net
      WellsThree
      Months ended June 30,
              
              Total
              
              
              Producing
              
              
              Dry
              
              
              Total
              
              
              Producing
              
              
              Dry2010
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              02009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
 
 Net
Production, Average Sales Price and Average Production Costs
(Lifting)
  The table
below sets forth the net quantities of oil and gas production (net of all
royalties, overriding royalties and production due to others) attributable to
the Company for the three month periods ended June 30, 2010 and 2009, and the
average sales price, and average production costs (including depreciation,
depletion and amortization, lease operating costs and all associated taxes) on a
per unit of production basis:
 
 Three
      Months ended June 30,
              
              2010
              
              
              2009Net
      ProductionOil
      (Bbls)
              
              
              39
              
              
              
              0Gas
      (Mcf)
              
              
              1,966
              
              
              
              3,118Average
      Sales PricesOil
      (per Bbl)
              
              $
              64.98
              
              
              $
              0Gas
      (per Mcf)
              
              $
              1.85
              
              
              $
              1.52Average
      Production Cost Per MCF
              
              $
              5.20
              
              
              $
              4.42
  Six Months Ended June 30,
2010 vs. Six Months Ended June 30, 2009:
 
 Six Months
                Ended
                June
      30, 2010
              
              
              Six Months
                Ended
                June
      30, 2009Revenue
              
              $
              13,780
              
              
              $
              18,248Expenses
              
              $
              (115,986)
              
              
              $
              (70,478)Net
      Income (Loss)
              
              $
              (102,206)
              
              
              $
              (52,230)
 
 Revenues
for the six-month period ended June 30, 2010 were $13,780 compared to $18,248
for the period ended June 30, 2009. There was a decrease in the revenues between
these two periods as a result of lower natural gas production slightly offset by
a slightly higher price received per MCF.
  14
  Ludwig State 36-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              175.93
              
              
              
              2.35
              
              
              
              231.21
              
              
              
              3.09February
              
              
              192.02
              
              
              
              2.26
              
              
              
              211.20
              
              
              
              2.34March
              
              
              175.93
              
              
              
              2.80
              
              
              
              218.83
              
              
              
              1.80April
              
              
              168.92
              
              
              
              2.01
              
              
              
              194.49
              
              
              
              1.56May
              
              
              150.56
              
              
              
              1.81
              
              
              
              207.28
              
              
              
              1.41June
              
              
              169.13
              
              
              
              1.94
              
              
              
              198.83
              
              
              
              1.59
  Boucher
      27-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              47.64
              
              
              
              2.35
              
              
              
              110.14
              
              
              
              3.09February
              
              
              47.64
              
              
              
              2.26
              
              
              
              71.16
              
              
              
              2.34March
              
              
              43.11
              
              
              
              2.80
              
              
              
              56.72
              
              
              
              1.80April
              
              
              43.31
              
              
              
              2.01
              
              
              
              44.76
              
              
              
              1.56May
              
              
              40.01
              
              
              
              1.81
              
              
              
              47.23
              
              
              
              1.41June
              
              
              38.57
              
              
              
              1.94
              
              
              
              47.64
              
              
              
              1.59
 
 B. Ag #25-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              33.80
              
              
              
              2.35
              
              
              
              38.80
              
              
              
              3.09February
              
              
              31.00
              
              
              
              2.26
              
              
              
              33.80
              
              
              
              2.34March
              
              
              32.80
              
              
              
              2.80
              
              
              
              36.80
              
              
              
              1.80April
              
              
              32.40
              
              
              
              2.01
              
              
              
              35.60
              
              
              
              1.56May
              
              
              27.80
              
              
              
              1.81
              
              
              
              37.80
              
              
              
              1.41June
              
              
              34.60
              
              
              
              1.94
              
              
              
              38.60
              
              
              
              1.59
  Vandenbos
      #19-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              361.56
              
              
              
              2.35
              
              
              
              708.06
              
              
              
              3.09February
              
              
              352.48
              
              
              
              2.26
              
              
              
              632.57
              
              
              
              2.34March
              
              
              305.66
              
              
              
              2.80
              
              
              
              683.72
              
              
              
              1.80April
              
              
              298.24
              
              
              
              2.01
              
              
              
              551.10
              
              
              
              1.56May
              
              
              247.91
              
              
              
              1.81
              
              
              
              494.59
              
              
              
              1.41June
              
              
              278.03
              
              
              
              1.94
              
              
              
              451.69
              
              
              
              1.59
 
 Boucher
      #18-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              211.00
              
              
              
              2.35
              
              
              
              413.33
              
              
              
              3.09February
              
              
              212.25
              
              
              
              2.26
              
              
              
              356.40
              
              
              
              2.34March
              
              
              168.00
              
              
              
              2.80
              
              
              
              365.48
              
              
              
              1.80April
              
              
              149.75
              
              
              
              2.01
              
              
              
              299.89
              
              
              
              1.56May
              
              
              130.25
              
              
              
              1.81
              
              
              
              237.81
              
              
              
              1.41June
              
              
              147.75
              
              
              
              1.94
              
              
              
              196.76
              
              
              
              1.59
  15
  Stoltz
      #18-1
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                MCF2010
              
              
              2009January
              
              
              0.20
              
              
              
              2.35
              
              
              
              27.83
              
              
              
              3.09February
              
              
              0.41
              
              
              
              2.26
              
              
              
              19.50
              
              
              
              2.34March
              
              
              0.61
              
              
              
              2.80
              
              
              
              13.41
              
              
              
              1.80April
              
              
              0.41
              
              
              
              2.01
              
              
              
              8.13
              
              
              
              1.56May
              
              
              2.64
              
              
              
              1.81
              
              
              
              10.77
              
              
              
              1.41June
              
              
              5.48
              
              
              
              1.94
              
              
              
              15.03
              
              
              
              1.59
 
 Donovan
      #33-3
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                BBL
              
              
              Share of
                Production
                Volumes
              
              
              Price
                Per
                BBL2010
              
              
              2009JanuaryFebruary
              
              
              39.38
              
              
              
              64.98
              
              
              
              0
              
              
              
              0MarchAprilMayJune
 
 Majestic
Oil & Gas Operations, Inc’s Net Share of the production volumes from the
Ludwig State #36-1, Boucher #27-1, B. Ag #25-1, Vandenbos #19-1, Boucher #18-1
and Stoltz #18-1 wells for the six month period ended June 30, 2010 were 4,358
MCF compared to 7,347 MCF for the six month period ended June 30, 2009. The
production decrease is a result of natural decline in production over
time.
 
 Our total
expenses increased by $45,508 from the $70,478 reported for the six months ended
June 30, 2009 compared to the $115,986 reported for the six months ended June
30, 2010. Of those expenses, Production (Lifting) Costs increased by $1,351 from
$9,529 for the six months ended June 30, 2009 to $10,879 for the six months
ended June 30, 2010. This increase is directly attributable to the Company’s
share of the costs associated with the new Donovan wells.  There was
an increase in the Selling, General & Administrative Expenses of $54,278
from the $38,229 reported for the six month period ended June 30, 2009 compared
to the $92,507 reported for the same six month period in 2010. The primary
reason for the increase was an increase of approximately $46,700 in engineering,
professional, and consulting fees incurred, which are comprised mainly of legal,
accounting, and auditing fees.  Professional fees included the
issuance of $42,000 in Company stock for services provided.  In
addition, the Company saw a $4,060 in Public Relations costs associated with the
design and maintenance of the Company’s new website.  Depletion,
Depreciation and Amortization decreased $10,120 from $22,720 reported for the
six month period ended June 30, 2009 compared to the $12,600 reported for the
same six month period in 2010.  This decrease is directly attributable
to the decrease in production volumes between the two
periods.   As mentioned above, revenues for the six month period
decreased as a result of lower production volumes offset by a slightly higher
price per MCF.
  16
  The
Company showed a Net Loss of ($102,206) for the six months ended June 30, 2010.
This compares to the Net Loss of ($52,230) for the six months ended June 30,
2009. The variance between these six month periods is directly related to the
decrease in revenues and volumes during the first two quarter of 2010 and
increase in selling, general, & administrative expense as discussed above.
While it is the Company’s hope that production volumes increase as a result of
its planned development and drilling program, the Company’s revenues are subject
to the volatility of natural gas prices, which continue to fluctuate
dramatically.
 
 The
Company also plans to continue its pursuit of oil prospects in the Lake Frances
Area, which if successful, could contribute to an increase in future
revenues.  The price of crude oil also continues to fluctuate but not
to the same extreme as the price of natural gas.  In spite of the
fluctuations in the price of oil and natural gas, Management is still confident
that we will build the Company through continued drilling of oil and natural gas
prospects.
 
 Drilling
Activity
 
 The
following table sets forth the results of our drilling activities during the six
months ended June 30, 2010 and 2009:
 
 Drilling
      ActivityGross
      Wells
              
              
              Net
      WellsSix
      Months ended June 30,
              
              Total
              
              
              Producing
              
              
              Dry
              
              
              Total
              
              
              Producing
              
              
              Dry2010
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              02009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
 
 Net
Production, Average Sales Price and Average Production Costs
(Lifting)
  The table
below sets forth the net quantities of oil and gas production (net of all
royalties, overriding royalties and production due to others) attributable to
the Company for the three and six month periods ended June 30, 2010 and 2009,
and the average sales price, and average production costs (including
depreciation, depletion and amortization, lease operating costs and all
associated taxes) on a per unit of production basis:
  Six
      Months ended June 30,
              
              2010
              
              
              
              2009Net
      ProductionOil
      (Bbls)
              
              
              39
              
              
              
              0Gas
      (Mcf)
              
              
              4,358
              
              
              
              7,347Average
      Sales PricesOil
      (per Bbl)
              
              $
              64.98
              
              
              $
              0Gas
      (per Mcf)
              
              $
              2.12
              
              
              $
              2.05Average
      Production Cost Per MCF
              
              $
              5.11
              
              
              $
              4.39
  17




LIQUIDITY AND RESOURCE
CAPITAL




We are
still a development stage company. From our inception to June 30, 2010, we
incurred an accumulated deficit of ($820,897). This deficit is primarily the
result of approximately $300,000 in expenses associated with stock issuances
during fiscal Year Ended December 31, 2002, and $322,000 in legal, accounting
and filing fees incurred since inception associated with being a publicly traded
company. As of June 30, 2010, we had $60,052 of current cash available. Our cash
resources of $60,052 are not sufficient to satisfy our cash requirements over
the next 12 months.





We hope
to be able to raise additional funds from an offering of our stock in the
future. We are currently offering or contemplating the offering of a limited
number of subscriptions for up to 10,000,000 shares of common stock at a price
of $0.25 per share.  The cash proceeds of this offering will be used
to close the following Acquisitions:





·
            Acquiring
      all right, title and interest from Altamont Oil & Gas & Numbers,
      Inc., both Affiliates, in the Williams and Lake Frances Gas
      Field





·
            Acquiring
      all right, title and interest from Genesis Energy Inc. and Immgen in the
      Williams and Lake Frances Gathering
System





The
Company is currently contemplating the following additional
offerings:





°
              Share
      offering for an additional $10,000,000 or 40,000,000 shares at $0.25/share
      in order to finance the acquisition of the Montana/North Dakota
      acreage.


°
              Share
      offering of $50,000,000 by way of a offering of 20,000,000 shares at $2.50
      per share.  Such funding to be used for development
      drilling.





However,
these offerings may not occur, or if they occur, may not raise the required
funding. We may also consider securing debt financing. We may not raise other
equity or debt financing sufficient to fund these plans. If we don't raise or
generate these funds, the implementation of our business plan will be delayed or
eliminated.





Our
ability to continue as a going concern is dependent on our ability to raise
funds to implement our planned development; however we August not be able to
raise sufficient funds to do so. Our independent auditors have indicated that
there is substantial doubt about our ability to continue as a going concern over
the next twelve months. Our poor financial condition could inhibit our ability
to achieve our business plan.





COMMITMENTS AND
CONTINGENCIES





On July
1, 2004, the Company entered into an operating agreement with Altamont Oil &
Gas, Inc., through which Altamont Oil & Gas, Inc. will operate the wells in
which we have acquired a working interest. Our share of monthly operating costs
will be deducted from our monthly share of production revenue.





Beginning
in 2007, the Company has acquired leases covering approximately 3,963 net acres
of undeveloped land for the purpose of future oil and gas development. This
acreage is located in Pondera County, Montana in the vicinity of the Williams
and Lake Frances Gas Fields. These leases remain in good standing with the term
of the leases being for periods of 3 or 5 years. Management considers the value
of the properties to be as much or more than for what they were
acquired.




18





Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in the NWSE-Section 33-T27N-R4W, Teton County, MT at its
sole cost, risk and expense.    In doing so, Mountain View
Energy, Inc. would acquire 75% of the Working Interest, while Majestic Oil &
Gas, Inc. would retain a 25% Working Interest in any well drilled in the 40-acre
tract.





On June
17, 2010, the Company entered into a lease purchase agreement to acquire leases
covering approximately 11,106 net acres of undeveloped land for the purpose of
future oil and gas development.  These acreages are located in Montana
and North Dakota.  The purchase is expected to close on August 30,
2010.




Item
3. Quantitative and Qualitative Disclosure about Market Risk







Not
applicable




Item
4. Controls and Procedures.





Evaluation of Disclosure
Controls and Procedures





We
carried out an evaluation, under the supervision and with the
participation   of  our  management,  including   our   Principal
Executive  Officer/Principal
Financial  Officer,  of   the
effectiveness  of  our  disclosure
controls  and  procedures  (as
defined  in  Rules  13a-15(e) and 15d-15(e) of
the  Exchange  Act
(defined  below).  Based upon that evaluation, our principal
executive officer/principal financial officer concluded that, as of the end of
the period covered in this report, our disclosure controls and procedures were
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is
recorded, processed, summarized and reported within the required time periods
and is accumulated and communicated to our management,
including  our  Principal  Executive  Officer/Principal  Financial  Officer,
as  appropriate  to  allow  timely
decisions regarding required disclosure.





Our
management, including our Principal Executive Officer/Principal Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and   operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints and the benefits of controls must be considered
relative to their costs.  Due to the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected.
Accordingly, management believes that the financial statements included in this
report fairly present in all material respects our financial condition, results
of operations and cash flows for the periods presented.





Changes in Internal Control
Over Financial Reporting





In
addition, our management with the participation of our Principal Executive
Officer/Principal Financial Officer have determined that no change in our
internal control over financial reporting occurred during or subsequent to the
quarter ended June 30, 2010 that has materially affected, or is (as that term is
defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of
1934) reasonably likely to materially affect, our internal control over
financial reporting.




19





PART
II — OTHER INFORMATION




Item
1. Legal Proceedings.





None.




Item
1A. Risk Factors





Not
applicable.




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





(a)           Unregistered Sales of Equity
Securities.





None.




Item
3. Defaults Upon Senior Securities.





None.




Item
4. (Removed and Reserved).




Item
5. Other Information.





Not
applicable.




Item
6. Exhibits.





(a)
            Exhibits.




Exhibit
            
            Item31.1
            
            Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of 200232.1*
            
            Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of
2002




* This
exhibit shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made
before or after the date hereof and irrespective of any general incorporation
language in any filings.
  20





SIGNATURES





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




MAJESTIC
      OIL & GAS, INC.Date:
      August 16, 2010
            By:
            /s/ Patrick
      Montalban(Authorized
      Officer/principal Executive Officer, Principal Financial Officer/principal
      Financial Officer}





21





EXHIBIT
INDEX




Exhibit
            
            Item31.1
            
            Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of 200232.1*
            
            Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002




*
This exhibit shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made
before or after the date hereof and irrespective of any
general




22