UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x        REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended September 30,
2009




 ̈           REPORT
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 x No
 ̈





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




Large
      accelerated filer
             ̈
            Accelerated
      filer
             ̈Non-accelerated
      filer
             ̈
            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  ̈No x





As of
November 1, 2009, there were 7,808,000shares 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
                18Item
      4. Controls and Procedures.
                18PART
      II — OTHER INFORMATION
                18Item
      1. Legal Proceedings.
                18Item
      1A. Risk Factors
                19Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.
                19Item
      3. Defaults Upon Senior Securities.
                19Item
      4. Submission of Matters to a Vote of Security Holders.
                19Item
      5. Other Information.
                19Item
      6. Exhibits.
                19




2





PART
I — FINANCIAL INFORMATION





Item
1. Financial Statements





MAJESTIC
OIL & GAS, INC. (A Development Stage Company)


CONDENSED
CONSOLIDATED BALANCE SHEETS





September 302009
                
                
                December 31UNAUDITED
                
                
                2008ASSETSCash
      and cash equivalents
                
                $
                51,549
                
                
                $
                79,790Trade
      receivables
                
                
                7,046
                
                
                
                24,070Total
      Current Assets
                
                
                58,594
                
                
                
                103,860OIL
      AND GAS PROPERTIESOil
      and gas properties, using the full cost method of
    accounting:Properties
      being amortized
                
                
                455,894
                
                
                
                455,894Properties
      not subject to amortization
                
                
                202,531
                
                
                
                138,383Less
      accumulated depletion, amortization and impairment
                
                
                (159,900
                )
                
                
                (129,400
                )Net
      Oil and Gas Properties
                
                
                498,525
                
                
                
                464,877OTHER
      ASSETSWebsite
      development costs (less accumulated amortization)
                
                
                610
                
                
                
                1,240Total
      Other Assets
                
                
                610
                
                
                
                1,240Total
      Assets
                
                $
                557,729
                
                
                $
                569,977LIABILITIES
      AND STOCKHOLDERS' EQUITYLIABILITIESAccounts
      payable and accrued liabilities
                
                $
                5,708
                
                
                $
                5,708Production
      taxes and royalties payable
                
                
                1,589
                
                
                
                4,409Well
      settlement payable
                
                
                57,130
                
                
                
                -Total
      Current Liabilities
                
                
                64,427
                
                
                
                10,117Asset
      retirement obligation
                
                
                8,879
                
                
                
                8,879Total
      Liabilities
                
                
                73,306
                
                
                
                18,996STOCKHOLDERS'
      EQUITYCommon
      stock, no par value-Authorized
      Shares - 100,000,000Issued
      & Outstanding:  7,808,000 shares at September 30,
      2009;
                
                
                1,155,500
                
                
                
                1,155,5007,808,000
      at December 31, 2008Additional
      paid in capital
                
                
                21,295
                
                
                
                21,295Stock
      subscription receivable
                
                
                (2,000
                )
                
                
                (2,000
                )(Deficit)
      accumulated during the development stage
                
                
                (690,371
                )
                
                
                (623,814
                )Total
      Stockholders' Equity
                
                
                484,424
                
                
                
                550,981Total
      Liabilities & Stockholders' Equity
                
                $
                557,729
                
                
                $
                569,977




3





MAJESTIC
OIL & GAS, INC. (A Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS





InceptionThree Months
                    
                    
                    Three Months
                    
                    
                    Nine Months
                    
                    
                    Nine Months
                    
                    
                    (April 16, 2002)Ended
                    
                    
                    Ended
                    
                    
                    Ended
                    
                    
                    Ended
                    
                    
                    throughSeptember 30,
                    
                    
                    September 30,
                    
                    
                    September 30,
                    
                    
                    September 30,
                    
                    
                    September 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009UNAUDITED
                    
                    
                    UNAUDITED
                    
                    
                    UNAUDITED
                    
                    
                    UNAUDITED
                    
                    
                    UNAUDITEDREVENUE
                    
                    $
                    7,046
                    
                    
                    $
                    38,103
                    
                    
                    $
                    25,294
                    
                    
                    $
                    108,757
                    
                    
                    $
                    452,513PRODUCTION
      (LIFTING) COSTS
                    
                    
                    3,660
                    
                    
                    
                    9,117
                    
                    
                    
                    13,189
                    
                    
                    
                    25,501
                    
                    
                    
                    137,295EXPLORATION
      EXPENSES
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,862DEPLETION, DEPRECIATION
      AND
      AMORTIZATION
                    
                    
                    8,410
                    
                    
                    
                    19,810
                    
                    
                    
                    31,130
                    
                    
                    
                    45,430
                    
                    
                    
                    161,790INCOME
      FROM OIL & GAS PRODUCING ACTIVITIES
                    
                    
                    (5,024
                    )
                    
                    
                    9,176
                    
                    
                    
                    (19,025
                    )
                    
                    
                    37,826
                    
                    
                    
                    149,566SELLING,
      GENERAL & ADMINISTRATIVE EXPENSES
                    
                    
                    9,303
                    
                    
                    
                    15,175
                    
                    
                    
                    47,532
                    
                    
                    
                    79,912
                    
                    
                    
                    839,937NET
      (LOSS)
                    
                    $
                    (14,327
                    )
                    
                    $
                    (5,999
                    )
                    
                    $
                    (66,557
                    )
                    
                    $
                    (42,086
                    )
                    
                    $
                    (690,371
                    )EARNINGS
      PER SHARENet
      Income, basic and diluted
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )Weighted
      average number of shares outstanding
                    
                    
                    7,808,000
                    
                    
                    
                    7,638,769
                    
                    
                    
                    7,808,000
                    
                    
                    
                    7,638,769Diluted
      potential shares - stock warrants
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Adjusted
      weighted average shares
                    
                    
                    7,808,000
                    
                    
                    
                    7,638,769
                    
                    
                    
                    7,808,000
                    
                    
                    
                    7,638,769




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) TO DECEMBER 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
                          
                          
                          
                          -
                          
                          
                          
                          (2,000
                          )
                          
                          
                          -
                          
                          
                          
                          232,500Common
      stock options issued
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          21,295
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          21,295Net
      (loss)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (255,025
                          )
                          
                          
                          (255,025
                          )BALANCE,
      DECEMBER 31, 2007
                          
                          
                          7,508,000
                          
                          
                          
                          1,005,500
                          
                          
                          
                          21,295
                          
                          
                          
                          (2,000
                          )
                          
                          
                          (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
                          
                          
                          
                          21,295
                          
                          
                          
                          (2,000
                          )
                          
                          
                          (623,814
                          )
                          
                          
                          550,981Net
      (loss) for the nine monthsended
      September 30, 2009 (UNAUDITED)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (66,557
                          )
                          
                          
                          (66,557
                          )BALANCE,
      SEPTEMBER 30, 2009
                          
                          
                          7,808,000
                          
                          
                          $
                          1,155,500
                          
                          
                          $
                          21,295
                          
                          
                          $
                          (2,000
                          )
                          
                          $
                          (690,371
                          )
                          
                          $
                          484,424




5





MAJESTIC
OIL & GAS, INC. (A Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





InceptionNine Months
                
                
                Nine Months
                
                
                (April 16, 2002)Ended
                
                
                Ended
                
                
                ThroughSeptember 30, 2009
                
                
                September 30, 2008
                
                
                September 30, 2009UNAUDITED
                
                
                UNAUDITED
                
                
                UNAUDITEDOPERATING
      ACTIVITIESNet
      (loss)
                
                $
                (66,557
                )
                
                $
                (42,086
                )
                
                $
                (690,371
                )Changes
      and credits to net (loss) not affecting cashDepletion
      and amortization
                
                
                31,130
                
                
                
                45,430
                
                
                
                161,790Organizational
      expenses paid with stock
                
                
                -
                
                
                
                -
                
                
                
                300,000Legal
      fees paid with stock
                
                
                -
                
                
                
                -
                
                
                
                172,000Stock
      compensation expense
                
                
                -
                
                
                
                -
                
                
                
                21,295Changes
      in assets and liabilitiesTrade
      receivables
                
                
                17,024
                
                
                
                (20,462
                )
                
                
                (7,046
                )Deposits
                
                
                -
                
                
                
                (10,000
                )
                
                
                -Production
      taxes and royalties payable
                
                
                (2,821
                )
                
                
                2,978
                
                
                
                1,589Accounts
      payable
                
                
                1
                
                
                
                2,385
                
                
                
                5,708NET CASH FROM (USED FOR)
      OPERATING
      ACTIVITIES
                
                
                (21,223
                )
                
                
                (21,755
                )
                
                
                (35,035
                )INVESTING
      ACTIVITIESWebsite
      development
                
                
                -
                
                
                
                -
                
                
                
                (2,500
                )Additions
      to oil and gas properties
                
                
                (7,018
                )
                
                
                (68,747
                )
                
                
                (432,416
                )NET CASH (USED FOR)
      INVESTING ACTIVITIES
                
                
                (7,018
                )
                
                
                (68,747
                )
                
                
                (434,916
                )FINANCING
      ACTIVITIESProceeds
      from sale of common stock
                
                
                -
                
                
                
                150,000
                
                
                
                150,000Proceeds
      from exercise of warrants
                
                
                -
                
                
                
                -
                
                
                
                371,500NET CASH PROVIDED BY
      FINANCING ACTIVITIES
                
                
                -
                
                
                
                150,000
                
                
                
                521,500NET CHANGE IN CASH AND
      CASH EQUIVALENTS
                
                
                (28,241
                )
                
                
                59,498
                
                
                
                51,549CASH AND CASH EQUIVALENTS
      AT BEGINNING OF
      PERIOD
                
                
                79,790
                
                
                
                77,329
                
                
                
                -CASH AND CASH EQUIVALENTS
      AT END OF
      PERIOD
                
                $
                51,549
                
                
                $
                136,827
                
                
                $
                51,549




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 nine months
ended September 30, 2009 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,
2008.





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
($690,371) through September 30, 2009. 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 obtaining either debt or equity financing that will enable the Company to
continue in existence and establish itself as a going concern.





These
interim financial statements are prepared using the significant accounting
policies disclosed in the Company's December 31, 2008 annual audited financial
statements, except that certain significant accounting policies were adopted
during the nine months ended September 30, 2009:





Adopted
prior to the nine months ended September 30, 2009 -


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 2008 and during the first nine months of
2009, 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 September 30, 2009. 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 nine months ended September 30, 2009 and
2008.





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 September 30, 2009, 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 September 30, 2009, the Company had an outstanding
receivable from Altamont of $7,046 for oil and gas sales, and a payable to
Altamont of $1,589 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 September 30,
2009. The Company paid $5,547 to Altamont for development costs, and has a
payable to Altamont of $57,130 for its remaining share of the AFE.





Note 6 -
Farm Out Agreement





During
2007 the Company entered into a Farm-out Agreement with Altamont and Numbers,
Inc., an entity whose owner is a member of the Board of Directors of the
Company, to drill a 10-well natural gas development program.  This
development program 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. The locations for
the development program were determined from information gathered from a
geological and engineering study.  The surveying of each location and
the permitting of each drill site with the Montana Board of Oil & Gas is
currently being completed.  The Company will receive 100% of the
revenues until the drilling and completion costs have been recovered, at which
time the Company's interest will revert to 50%.




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 may
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 safe
harbors of forward-looking statements provided by Section 21E of the Exchange
Act are unavailable to issuers of penny stock. As we issued securities at a
price below $5.00 per share, our shares are considered penny stock and such safe
harbors set forth under the Reform Act are unavailable to us.





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 future
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 a drilling program in the Lake Frances Field
during the Fourth Quarter 2007. Two successful gas wells were drilled; the B Ag,
Inc #25-1 and the Vandenbos #19-1. Majestic Oil & Gas, Inc holds a 25%
Working Interest in these two wells and the Company has seen an increase in
production volumes as a result of these two wells. In addition, Majestic Oil
& Gas, Inc participated in the drilling of the Vandenbos #19-2 and the Jody
Fields #4-1 wells. The Vandenbos #19-2 well was subsequently plugged and
abandoned, as was the Jody Fields #4-1 well, a wildcat oil well.





During
the Third Quarter 2008, Majestic Oil & Gas, Inc participated in the drilling
of the Boucher #18-1 and the Stoltz #18-1 wells. The Boucher #18-1 well was
completed as a 4th Bow
Island Gas well with initial production of 270 MCF per day. The Stoltz #18-1 was
also completed as a 4thBow
Island Gas well with initial production of 75 MCF per day. These natural gas
wells are located in Section 18-T29N-R5W, Pondera County, Montana and together
provide 345 MCF per day of new natural gas production. Majestic Oil & Gas,
Inc holds a 25% working interest in these two wells and the Company has seen an
increase in production volumes as a result of these two wells.





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, and we expect our revenues and expenses to
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 2008, Majestic Oil & Gas, Inc
saw a significant increase in the price received per MCF (MCF stands for the
price per thousand cubic feet of natural gas) at a high of $7.71 and a dramatic
decrease to a low of $3.36, as detailed under “Results of
Operation.”  In comparison, the high, to-date, in 2009 was $3.09 and a
low of $1.19.  The current trend shows a continued decline in
pricing.  The price we received for our production directly affects
the amount of revenues we generate, which in turn affects the Company’s
liquidity and overall financial position.




RESULTS OF
OPERATIONS





Three Months Ended September
30, 2009 vs. Three Months Ended September 30, 2008:





Three Months
                  Ended
                  September
      30, 2009
                
                
                Three Months
                  Ended
                  September
      30, 2008Revenue
                
                $
                7,046
                
                
                $
                38,103Expenses
                
                $
                21,373
                
                
                $
                44,102Net
      Income (Loss)
                
                $
                (14,327
                )
                
                $
                (5,999
                )





Revenues
for the period ended September 30, 2009 were $7,046 compared to $38,103 for the
period ended September 30, 2008. There was a significant decrease in the
revenues between these two periods as a result of the decrease in natural gas
production and the price received per MCF.




Ludwig State 36-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008July
                
                
                211.41
                
                
                
                1.39
                
                
                
                243.17
                
                
                
                7.71August
                
                
                201.92
                
                
                
                1.40
                
                
                
                240.69
                
                
                
                5.90September
                
                
                190.58
                
                
                
                1.19
                
                
                
                225.84
                
                
                
                4.52




11





Boucher
      27-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008July
                
                
                49.50
                
                
                
                1.39
                
                
                
                64.76
                
                
                
                7.71August
                
                
                47.85
                
                
                
                1.40
                
                
                
                70.33
                
                
                
                5.90September
                
                
                44.76
                
                
                
                1.19
                
                
                
                81.26
                
                
                
                4.52





B. Ag #25-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008July
                
                
                38.80
                
                
                
                1.39
                
                
                
                41.00
                
                
                
                7.71August
                
                
                35.20
                
                
                
                1.40
                
                
                
                39.40
                
                
                
                5.90September
                
                
                33.60
                
                
                
                1.19
                
                
                
                37.80
                
                
                
                4.52




Vandenbos
      #19-1
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF
                  
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF2009
                  
                  
                  2008July
                  
                  
                  449.21
                  
                  
                  
                  1.39
                  
                  
                  
                  1,144.48
                  
                  
                  
                  7.71August
                  
                  
                  434.36
                  
                  
                  
                  1.40
                  
                  
                  
                  1,047.34
                  
                  
                  
                  5.90September
                  
                  
                  388.58
                  
                  
                  
                  1.19
                  
                  
                  
                  958.44
                  
                  
                  
                  4.52




Boucher
      #18-1
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF
                  
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF2009
                  
                  
                  2008July
                  
                  
                  187.69
                  
                  
                  
                  1.39
                  
                  
                  
                  0
                  
                  
                  
                  7.71August
                  
                  
                  194.49
                  
                  
                  
                  1.40
                  
                  
                  
                  471.49
                  
                  
                  
                  5.90September
                  
                  
                  189.75
                  
                  
                  
                  1.19
                  
                  
                  
                  546.77
                  
                  
                  
                  4.52




Stoltz
      #18-1
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF
                  
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF2009
                  
                  
                  2008July
                  
                  
                  12.80
                  
                  
                  
                  1.39
                  
                  
                  
                  0
                  
                  
                  
                  7.71August
                  
                  
                  5.28
                  
                  
                  
                  1.40
                  
                  
                  
                  43.27
                  
                  
                  
                  5.90September
                  
                  
                  0.41
                  
                  
                  
                  1.19
                  
                  
                  
                  54.03
                  
                  
                  
                  4.52




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 September 30, 2009 were
2,716.17 MCF compared to 5,310.08 MCF for three month period ended September 30,
2008. The production decrease is a result of natural decline in production over
time.   The Company expects to see an increase in production
volumes due to new wells planned in its development of oil and natural gas
prospects in the Lake Frances area.  The Company re-entered the Jody
Field #14-34 oil well during the 3rd Quarter
2009 and it produced for a less than a month and was then shut-in. The Company
has a 25% working interest and a 20% net royalty interest in this well as the
result of a farmout arrangement. Future oil prices will dictate at what point
this well is brought back into production.


12





Our total
expenses decreased by $22,279 from the $44,102 reported for the three months
ended September 30, 2008 to the $21,373 in total expenses reported for the three
months ended September 30, 2009. Of those expenses, Production (Lifting) Costs
decreased by $5,457 from $9,117 for the three months ended September 30, 2008 to
$3,660 for the three months ended September 30, 2009. This decrease is directly
attributable to the decrease in production volumes between the two periods.
There was a decrease in the Selling, General & Administrative Expenses of
$5,872 from the $9,303 reported for the three month period ended September 30,
2009 compared to the $15,175 reported for the same three month period in 2008.
The primary reason for the decrease was a decrease of approximately $20,000 in
engineering and professional fees incurred. As mentioned above, revenues for the
three month period decreased significantly as a result of the combination of
lower production volumes and the price per MCF.





The
Company showed a Net Loss of ($14,327) for the three months ended September 30,
2009. This compares to the Net Loss of ($5,999) for the three months ended
September 30, 2008. The variance between these three month periods is directly
related to the decrease in revenues and volumes during the third Quarter 2009.
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 natural gas has significantly decreased from the prior year, while
the price oil has remained steady.  In spite of the drop in the price
of 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
three months ended September 30, 2009 and 2008:





Drilling
      ActivityGross
      Wells
                    
                    
                    Net
      WellsThree
      Months ended
                      September
      30,
                    
                    Total
                    
                    
                    Producing
                    
                    
                    Dry
                    
                    
                    Total
                    
                    
                    Producing
                    
                    
                    Dry2009
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    02008
                    
                    
                    2
                    
                    
                    
                    2
                    
                    
                    
                    2
                    
                    
                    
                    0.5
                    
                    
                    
                    0.5
                    
                    
                    
                    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 September 30, 2009 and 2008, 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 September 30,
                
                2009
                
                
                2008Net
      ProductionOil
      (Bbls)
                
                
                40.06
                
                
                
                0.00Gas
      (Mcf)
                
                
                2,716.17
                
                
                
                5,310.08Average
      Sales PricesOil
      (per Bbl)
                
                $
                53.08
                
                
                $
                0.00Gas
      (per Mcf)
                
                $
                1.33
                
                
                $
                6.04Average
      Production Cost Per MCF
                
                $
                
                
                
                $




13





Nine months Ended September
30, 2009 vs. Nine months Ended September 30, 2008:





Nine
      months
                  Ended
                  September
      30, 2009
                
                
                Nine
      months
                  Ended
                  September
      30, 2008Revenue
                
                $
                25,294
                
                
                $
                108,757Expenses
                
                $
                91,851
                
                
                $
                150,843Net
      Income (Loss)
                
                $
                (66,557)
                
                
                $
                (42,086)





Revenues
for the nine month period ended September 30, 2009 were $25,294 compared to
$108,757 for the nine month period ended September 30, 2008. There was a
significant decrease in the revenues between these two nine month periods as a
result of the decrease in natural gas production and the price received per
MCF.





Ludwig State 36-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008January
                
                
                231.21
                
                
                
                3.09
                
                
                
                284.63
                
                
                
                3.91February
                
                
                211.20
                
                
                
                2.34
                
                
                
                265.65
                
                
                
                4.45March
                
                
                218.83
                
                
                
                1.80
                
                
                
                261.73
                
                
                
                4.98April
                
                
                194.49
                
                
                
                1.56
                
                
                
                255.96
                
                
                
                5.36May
                
                
                207.28
                
                
                
                1.41
                
                
                
                255.54
                
                
                
                6.33June
                
                
                198.83
                
                
                
                1.59
                
                
                
                246.09
                
                
                
                6.75July
                
                
                211.41
                
                
                
                1.39
                
                
                
                243.17
                
                
                
                7.71August
                
                
                201.92
                
                
                
                1.40
                
                
                
                240.69
                
                
                
                5.90September
                
                
                190.58
                
                
                
                1.19
                
                
                
                225.84
                
                
                
                4.52




Boucher
      27-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008January
                
                
                110.14
                
                
                
                3.09
                
                
                
                89.10
                
                
                
                3.91February
                
                
                71.16
                
                
                
                2.34
                
                
                
                85.39
                
                
                
                4.45March
                
                
                56.72
                
                
                
                1.80
                
                
                
                73.22
                
                
                
                4.98April
                
                
                44.76
                
                
                
                1.56
                
                
                
                67.44
                
                
                
                5.36May
                
                
                47.23
                
                
                
                1.41
                
                
                
                67.03
                
                
                
                6.33June
                
                
                47.64
                
                
                
                1.59
                
                
                
                68.06
                
                
                
                6.75July
                
                
                49.50
                
                
                
                1.39
                
                
                
                64.76
                
                
                
                7.71August
                
                
                47.85
                
                
                
                1.40
                
                
                
                70.33
                
                
                
                5.90September
                
                
                44.76
                
                
                
                1.19
                
                
                
                81.26
                
                
                
                4.52




14





B. Ag #25-1
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF
                
                
                Share of
                  Production
                  Volumes
                
                
                Price
                  Per
                  MCF2009
                
                
                2008January
                
                
                38.80
                
                
                
                3.09
                
                
                
                40.80
                
                
                
                3.91February
                
                
                33.80
                
                
                
                2.34
                
                
                
                41.80
                
                
                
                4.45March
                
                
                36.80
                
                
                
                1.80
                
                
                
                42.20
                
                
                
                4.98April
                
                
                35.60
                
                
                
                1.56
                
                
                
                42.40
                
                
                
                5.36May
                
                
                37.80
                
                
                
                1.41
                
                
                
                41.00
                
                
                
                6.33June
                
                
                38.60
                
                
                
                1.59
                
                
                
                39.80
                
                
                
                6.75July
                
                
                38.80
                
                
                
                1.39
                
                
                
                41.00
                
                
                
                7.71August
                
                
                35.20
                
                
                
                1.40
                
                
                
                39.40
                
                
                
                5.90September
                
                
                33.60
                
                
                
                1.19
                
                
                
                37.80
                
                
                
                4.52




Vandenbos #19-1
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF
                  
                  
                  Share of
                    Production
                    Volumes
                  
                  
                  Price
                    Per
                    MCF2009
                  
                  
                  2008January
                  
                  
                  708.06
                  
                  
                  
                  3.09
                  
                  
                  
                  1792.93
                  
                  
                  
                  3.91February
                  
                  
                  632.57
                  
                  
                  
                  2.34
                  
                  
                  
                  1658.87
                  
                  
                  
                  4.45March
                  
                  
                  683.72
                  
                  
                  
                  1.80
                  
                  
                  
                  1578.84
                  
                  
                  
                  4.98April
                  
                  
                  551.10
                  
                  
                  
                  1.56
                  
                  
                  
                  1390.95
                  
                  
                  
                  5.35May
                  
                  
                  494.59
                  
                  
                  
                  1.41
                  
                  
                  
                  1328.66
                  
                  
                  
                  6.33June
                  
                  
                  451.69
                  
                  
                  
                  1.59
                  
                  
                  
                  1219.14
                  
                  
                  
                  6.75July
                  
                  
                  449.21
                  
                  
                  
                  1.39
                  
                  
                  
                  1,144.48
                  
                  
                  
                  7.71August
                  
                  
                  434.36
                  
                  
                  
                  1.40
                  
                  
                  
                  1,047.34
                  
                  
                  
                  5.90September
                  
                  
                  388.58
                  
                  
                  
                  1.19
                  
                  
                  
                  958.44
                  
                  
                  
                  4.52




Boucher #18-1
                    
                    Share of
                      Production
                      Volumes
                    
                    
                    Price
                      Per
                      MCF
                    
                    
                    Share of
                      Production
                      Volumes
                    
                    
                    Price
                      Per
                      MCF2009
                    
                    
                    2008January
                    
                    
                    413.33
                    
                    
                    
                    3.09
                    
                    
                    
                    0
                    
                    
                    
                    3.91February
                    
                    
                    356.40
                    
                    
                    
                    2.34
                    
                    
                    
                    0
                    
                    
                    
                    4.45March
                    
                    
                    365.48
                    
                    
                    
                    1.80
                    
                    
                    
                    0
                    
                    
                    
                    4.98April
                    
                    
                    299.89
                    
                    
                    
                    1.56
                    
                    
                    
                    0
                    
                    
                    
                    5.35May
                    
                    
                    237.81
                    
                    
                    
                    1.41
                    
                    
                    
                    0
                    
                    
                    
                    6.33June
                    
                    
                    196.76
                    
                    
                    
                    1.59
                    
                    
                    
                    0
                    
                    
                    
                    6.75July
                    
                    
                    187.69
                    
                    
                    
                    1.39
                    
                    
                    
                    0
                    
                    
                    
                    7.71August
                    
                    
                    194.49
                    
                    
                    
                    1.40
                    
                    
                    
                    471.49
                    
                    
                    
                    5.90September
                    
                    
                    189.75
                    
                    
                    
                    1.19
                    
                    
                    
                    546.77
                    
                    
                    
                    4.52





Stoltz #18-1
                    
                    Share of
                      Production
                      Volumes
                    
                    
                    Price
                      Per
                      MCF
                    
                    
                    Share of
                      Production
                      Volumes
                    
                    
                    Price
                      Per
                      MCF2009
                    
                    
                    2008January
                    
                    
                    27.83
                    
                    
                    
                    3.09
                    
                    
                    
                    0
                    
                    
                    
                    3.91February
                    
                    
                    19.50
                    
                    
                    
                    2.34
                    
                    
                    
                    0
                    
                    
                    
                    4.45March
                    
                    
                    13.41
                    
                    
                    
                    1.80
                    
                    
                    
                    0
                    
                    
                    
                    4.98April
                    
                    
                    8.13
                    
                    
                    
                    1.56
                    
                    
                    
                    0
                    
                    
                    
                    5.35May
                    
                    
                    10.77
                    
                    
                    
                    1.41
                    
                    
                    
                    0
                    
                    
                    
                    6.33June
                    
                    
                    15.03
                    
                    
                    
                    1.59
                    
                    
                    
                    0
                    
                    
                    
                    6.75July
                    
                    
                    12.80
                    
                    
                    
                    1.39
                    
                    
                    
                    0
                    
                    
                    
                    7.71August
                    
                    
                    5.28
                    
                    
                    
                    1.40
                    
                    
                    
                    43.27
                    
                    
                    
                    5.90September
                    
                    
                    0.41
                    
                    
                    
                    1.19
                    
                    
                    
                    54.03
                    
                    
                    
                    4.52




15





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 nine month period ended September 30, 2009 were
10,063.08 MCF compared to 16,547.28 MCF for nine month period ended September
30, 2008. The production decrease is a result of natural decline in production
over time.   The Company expects to see an increase in production
volumes due to new wells planned in its development of oil and natural gas
prospects in the Lake Frances area.





Our total
expenses decreased by $58,992 from the $150,843 reported for the nine months
ended September 30, 2008 compared to the $91,851 reported for the nine months
ended September 30, 2009. Of those expenses, Production (Lifting) Costs
decreased by $12,312 from $25,501 for the nine months ended September 30, 2008
to $13,189 for the nine months ended September 30, 2009. This decrease is
directly attributable to the decrease in production volumes between the two
periods. There was a decrease in the Selling, General & Administrative
Expenses of $32,380 from the $47,532 reported for the nine month period ended
September 30, 2009 compared to the $79,912 reported for the same nine month
period in 2008. The primary reason for the decrease was a decrease of
approximately $20,000 in engineering and professional fees incurred. As
mentioned above, revenues for the nine month period decreased significantly as a
result of the combination of lower production volumes and the price per
MCF.





The
Company showed a Net Loss of ($66,557) for the nine months ended September 30,
2009. This compares to the Net Loss of ($42,086) for the nine months ended
September 30, 2008. The variance between these nine month periods is directly
related to the decrease in revenues and volumes during the nine month period
ended September 30, 2009. 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.
While the price of natural gas has significantly decreased and oil prices have
remained steady.  In spite of the drop in the price of 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
nine months ended September 30, 2009 and 2008:





Drilling
      ActivityGross
      Wells
                
                
                Net
      WellsNine
      months ended
                  September
      30,
                
                Total
                
                
                Producing
                
                
                Dry
                
                
                Total
                
                
                Producing
                
                
                Dry2009
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                02008
                
                
                2
                
                
                
                2
                
                
                
                2
                
                
                
                0.5
                
                
                
                0.5
                
                
                
                0




16


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 nine month periods ended September 30, 2009 and 2008, 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:





Nine
      months ended September 30,
                
                2009
                
                
                2008Net
      ProductionOil
      (Bbls)
                
                
                40.06Gas
      (Mcf)
                
                
                10,063.08
                
                
                
                16,547.28Average
      Sales PricesOil
      (per Bbl)
                
                $
                53.08
                
                
                $Gas
      (per Mcf)
                
                $
                1.75
                
                
                $
                5.55Average
      Production Cost Per MCF
                
                $
                
                
                
                $





LIQUIDITY AND RESOURCE
CAPITAL





We are
still a development stage company. From our inception to September 30, 2009, we
incurred an accumulated deficit of ($690,371). This deficit is primarily the
result of approximately $300,000 in expenses associated with stock issuances
during fiscal Year Ended December 31, 2002, and $282,000 in legal, accounting
and filing fees incurred since inception associated with being a publicly traded
company. As of September 30, 2009, we had $51,549 of current cash available. Our
cash resources of $51,549 are not sufficient to satisfy our cash requirements
over the next 12 months.





We need
an additional minimum of $1,000,000 to finance our planned expansion in the next
12 months, which funds will be used for drilling of development oil and natural
gas wells in the Lake Frances and Williams Fields. We hope to be able to raise
additional funds from an offering of our stock in the future. However, this
offering may not occur, or if it does occur, may not result in the amount
necessary. We may also consider securing debt financing. We may not raise other
equity or debt financing sufficient to fund the amount necessary to proceed. If
we do not raise or generate these funds, the implementation of our short-term
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 may 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 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.


17





During
the Second Quarter 2007, the Company entered into a Farm-out Agreement with
Altamont Oil & Gas, Inc and Numbers, Inc 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.





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 September 30, 2009 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.





PART
II — OTHER INFORMATION





Item
1. Legal Proceedings.





None.


18





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. Submission of Matters to a Vote of Security Holders.





The
Registrant did not submit any matters to a vote of its security holders during
the three months ended September 30, 2009.





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.





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: November 16,
      2009
              By:
              /s/ Patrick
  Montalban(Authorized
      Officer/principal Executive
                Officer,
      Principal Financial Officer/principal
                Financial
      Officer}




19





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




20