| **[X**]         | Quarterly report under Section 13 or 15(d)      of the Securities Exchange Act of 1934  |
|-----------------|-----------------------------------------------------------------------------------------|
|            |                                                                                    |
|            | For the quarterly period ended September 30,      2007.                                 |
|            |                                                                                    |
| [   ] | Transition report under Section 13 or 15(d)      of the Securities Exchange Act of 1934 |
|            |                                                                                    |
|            | For the transition period from ______________to      ______________.                    |
|            |                                                                                    |
|            |                                                                                    |
|            | Commission File Number **000-52316**                                                    |

| **Nevada**                                     |   |   |   | **20-8428738**                    |
|------------------------------------------------|--------|--------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation) |   |   |   | (IRS Employer Identification No.) |
|                                                |   |        |   |                                   |

|                                     Class                                     | Outstanding at October 31, 2007 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                            |
| Common Stock, par value $0.001 per share                                                                                                                                                                                                                                                                                                                                                                                                              | 79,831,310                      |

----

|   |   | Page |
|--------|--------|------|

|                            | ITEM 1-- FINANCIAL STATEMENTS                                             |   1 |
|---------------------------------|---------------------------------------------------------------------------|---------------|
|                            |                                                                      |               |
|                            | ITEM 2-- MANAGEMENT'S DISCUSSION AND ANALYSIS      OR PLAN OF OPERATION   |   8 |
|                            |                                                                      |               |
|                            | ITEM 3-- CONTROLS AND PROCEDURES                                          | 15            |
|                            |                                                                      |               |
| **PART II - OTHER INFORMATION** |                                                                           |
|                            |                                                                      |               |
|                            | ITEM 1-- LEGAL PROCEEDINGS                                                | 15            |
|                            |                                                                      |               |
|                            | ITEM 2-- UNREGISTERED SALES OF EQUITY SECURITIES      AND USE OF PROCEEDS | 15            |
|                            |                                                                      |          |
|                            | ITEM 3-- DEFAULTS UPON SENIOR SECURITIES                                  | 15            |
|                            |                                                                      |          |
|                            | ITEM 4-- SUBMISSION OF MATTERS TO A VOTE OF      SECURITY HOLDERS         | 15            |
|                            |                                                                      |          |
|                            | ITEM 5-- OTHER INFORMATION                                                | 15            |
|                            |                                                                      |          |
|                            | ITEM 6-- EXHIBITS                                                         | 15            |
|                            |                                                                      |          |
|                            | SIGNATURES                                                                | 16            |
|                            |                                                                      |          |
|                            |                                                                      |          |

----

| **ASSETS**                                                                                                                                                                                                                                                                                      |   |            |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|
| Current Assets:                                                                                                                                                                                                                                                                                 |   |       |   |
|          Cash                                                                                                                                                                                                                                      | $      | 3,571,920  |   |
|          Accounts      Receivable:                                                                                                                                                                                                                 |   |       |   |
|                   Oil      and Gas                                                                                                                                                                    |   | 637,299    |   |
|                   Lease      Sales                                                                                                                                                                    |   | 737,913    |   |
|                   Related      Party                                                                                                                                                                  |   | 403,111    |   |
|          Total      Current Assets                                                                                                                                                                                                                 |   | 5,350,243  |   |
|                                                                                                                                                                                                                                                                                            |   |            |   |
| Note Receivable                                                                                                                                                                                                                                                                                 |   | 1,465,424  |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
| Oil and Gas      Properties - successful efforts method                                                                                                                                                                                                                                         |   | 14,816,930 |   |
|          Less      Accumulated Depletion and Depreciation                                                                                                                                                                                          |   | (3,327,272 | )      |
|                   Oil      and Gas Properties (net)                                                                                                                                                   |   | 11,489,658 |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
| Other Depreciable      Assets:                                                                                                                                                                                                                                                                  |   | 1,372,717  |   |
|          Less      Accumulated Depreciation                                                                                                                                                                                                        |   | (31,147    | )      |
|                   Other      Depreciable Assets (net)                                                                                                                                                 |   | 1,341,570  |   |
| Total Assets                                                                                                                                                                                                                                                                                    | $      | 19,646,895 |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                 |   |       |   |
| Current Liabilities:                                                                                                                                                                                                                                                                            |   |       |   |
|          Accounts      Payable                                                                                                                                                                                                                     | $      | 1,002,267  |   |
|          Payable      to Related Parties                                                                                                                                                                                                           |   | 250,750    |   |
|          Royalties      Payable                                                                                                                                                                                                                    |   | 13,834     |   |
|          Accrued      Expenses                                                                                                                                                                                                                     |   | 1,037,870  |   |
|          Current      Portion of Long-Term Debt                                                                                                                                                                                                    |   | 3,194,594  |   |
|                   Total      Current Liabilities                                                                                                                                                      |   | 5,499,315  |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
|          Notes      Payable                                                                                                                                                                                                                        |   | 1,646,334  |   |
|          Notes      Payable - Related Parties                                                                                                                                                                                                      |   | 3,618,924  |   |
|          Less      Current Portion of Notes Payable                                                                                                                                                                                                |   | (3,194,594 | )      |
|                   Total      Long-Term Debt                                                                                                                                                           |   | 2,070,664  |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
|          Deferred      Tax Liability                                                                                                                                                                                                               |   | 2,454,476  |   |
|                   Total      Liabilities                                                                                                                                                              |   | 10,024,455 |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
|          Commitments      and Contingencies:                                                                                                                                                                                                       |   | -          |   |
|                   Contingent      Stock Based Compensation                                                                                                                                            |   | 309,451    |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |
| **Stockholders' Equity**                                                                                                                                                                                                                                                                        |   |       |   |
|          Common      Stock, $.001 par,200,000,000 shares authorized                         79,831,310      and shares outstanding on September 30, 2007 |   | 79,831     |   |
|          Additional      Paid-In-Capital                                                                                                                                                                                                           |   | 9,147,072  |   |
|          Retained      Earnings                                                                                                                                                                                                                    |   | 86,086     |   |
|                   Total      Stockholders' Equity                                                                                                                                                     |   | 9,312,989  |   |
|                   Total      Liabilities and Stockholders' Equity                                                                                                                                     | $      | 19,646,895 |   |
|                                                                                                                                                                                                                                                                                            |   |       |   |

----

|                                                                                                                                                                                                                                                                                                                                                                        |   | **Three Months Ended**                  |   | **Six Months Ended** |                                   | **Twelve Months          Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------|----------------------------------------|----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                        |   | **Sept. 30, 2007          (unaudited)** |   |                 | **June 30, 2007          (unaudited)** |                             |   | **Sept. 30, 2007          (unaudited)** |   |   | **December 31, 2006          (audited)** |   |
| **Revenues**                                                                                                                                                                                                                                                                                                                                                                |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
|          Oil        and Gas Sales                                                                                                                                                                                                                                                                                              | $      | 1,019,222                               |   | $                    | 813,924                                |                             | $      | 1,833,146 |   | $ | 2,874,291 |   |
|          Sale        of Leases                                                                                                                                                                                                                                                                                                 |   | 307,028                                 |   |                 | -                                      |                             |   | 307,028 |   |   | 400,378 |   |
|          Other        Income                                                                                                                                                                                                                                                                                                   |   | 79,367                                  |   |                 | 65                                     |                             |   | 79,432 |   |   | 45,771 |   |
|                   Total        Revenue                                                                                                                                                                                                                                            |   | 1,405,617                               |   |                 | 813,989                                |                             |   | 2,219,606 |   |   | 3,320,440 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
| **Costs and Expenses**                                                                                                                                                                                                                                                                                                                                                      |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
|          Oil        & Gas Lease Operating Expenses                                                                                                                                                                                                                                                                             |   | 491,703                                 |   |                 | 333,521                                |                             |   | 825,224 |   |   | 1,131,502 |   |
|          Severance        and Ad Valorem Taxes                                                                                                                                                                                                                                                                                 |   | 59,947                                  |   |                 | 48,936                                 |                             |   | 108,883 |   |   | 163,523 |   |
|          Delay        Rentals                                                                                                                                                                                                                                                                                                  |   | 8,571                                   |   |                 | 43,615                                 |                             |   | 52,186 |   |   | - |   |
|          Depletion        & Depreciation                                                                                                                                                                                                                                                                                       |   | 332,245                                 |   |                 | 286,131                                |                             |   | 618,376 |   |   | 1,856,365 |   |
|          General        & Administrative:                                                                                                                                                                                                                                                                                      |   | -                                       |   |                 | -                                      |                             |   | - |   |   | 281,727 |   |
|                   Salaries        and Benefits                                                                                                                                                                                                                                    |   | 249,533                                 |   |                 | 233,479                                |                             |   | 483,012 |   |   | - |   |
|                   Legal        & Professional                                                                                                                                                                                                                                     |   | 121,953                                 |   |                 | 157,849                                |                             |   | 279,802 |   |   | - |   |
|                   Other        General & Administrative                                                                                                                                                                                                                           |   | 101,751                                 |   |                 | 59,415                                 |                             |   | 161,166 |   |   | - |   |
|          Interest,        net of capitalized interest of $126,676 and                             $141,012 for the periods ended 9/30/2007 and                     6/30/2007,        respectively |   | -                                       |   |                 | -                                      |                             |   | - |   |   | 13,660 |   |
|                   Total        Costs and Expenses                                                                                                                                                                                                                                 |   | 1,365,703                               |   |                 | 1,162,946                              |                             |   | 2,528,649 |   |   | 3,446,777 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
| Income from continuing operations before        income taxes                                                                                                                                                                                                                                                                                                                |   | 39,914                                  |   |                 | (348,957                               | )                                |   | (309,043 | ) |   | (126,337 | ) |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
| Income from discontinued operations:                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
|          Pipeline        Income                                                                                                                                                                                                                                                                                                |   | -                                       |   |                 | 35,277                                 |                             |   | 35,277 |   |   | 319,093 |   |
|          Gain        on Sale of Pipeline                                                                                                                                                                                                                                                                                       |   | (7,952                                  | )      |                 | 2,244,349                              |                             |   | 2,236,397 |   |   | - |   |
|          Income        from discontinued operations                                                                                                                                                                                                                                                                            |   | (7,952                                  | )      |                 | 2,279,626                              |                             |   | 2,271,674 |   |   | 319,093 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |                 |                                        |                             |   |  |   |   |  |   |
| Interest Income                                                                                                                                                                                                                                                                                                                                                             |   | 70,930                                  |   |                 | 23,332                                 |                             |   | 94,262 |   |   | - |   |
| Income Tax Provision                                                                                                                                                                                                                                                                                                                                                        |   | (36,013                                 | )      |                 | (683,900                               | )                                |   | (719,913 | ) |   | - |   |
| Net (Loss) Income                                                                                                                                                                                                                                                                                                                                                           | $      | 66,879                                  |   | $                    | 1,270,101                              |                             | $      | 1,336,980 |   | $ | 192,756 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
| **Basic and Diluted Loss per Common Share**                                                                                                                                                                                                                                                                                                                                 | $      | 0.00                                    |   | $                    | 0.02                                   |                             | $      | 0.02 |   |   |   |   |
| **Weighted Average Common Shares Outstanding**                                                                                                                                                                                                                                                                                                                              |   | 79,711,310                              |   |                 | 76,524,026                             |                             |   | 77,907,148 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
| **Pro-Forma Earnings Per Share**                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
|          Net        Income                                                                                                                                                                                                                                                                                                     |   |                                    |   |                 |                                   |                             |   |   |   | $ | 192,756 |   |
|          Proforma        Income Tax Expense at Statutory Rate (35%)                                                                                                                                                                                                                                                            |   |                                    |   |                 |                                   |                             |   |   |   |   | (67,465 | ) |
|          Proforma        Net Income                                                                                                                                                                                                                                                                                            |   |                                    |   |                 |                                   |                             |   |   |   | $ | 125,291 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
| **Proforma Weighted Average Shares Outstanding**                                                                                                                                                                                                                                                                                                                            |   |                                    |   |                 |                                   |                             |   |   |   |   | 68,129,310 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |
| **Proforma Basic and Diluted Earnings Per        Share**                                                                                                                                                                                                                                                                                                                    |   |                                    |   |                 |                                   |                             |   |   |   | $ | 0.00 |   |
|                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |                 |                                   |                             |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                           |   | **Three Months Ended**                |   | **Six Months Ended** |                                 | **Twelve Months        Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------------------|--------------------------------------|--------------------------------|--------|
| **Operating Activities:**                                                                                                                                                                                                                                      |   | **Sept. 30, 2007        (unaudited)** |   |                 | **June 30, 2007        (unaudited)** |                           |   | **Sept. 30, 2007        (unaudited)** |   |   | **December 31, 2006        (audited)** |   |
|          Net      (Loss) Income                                                                                                                                                                                   | $      | 66,879                                |   | $                    | 1,270,101                            |                           | $      | 1,336,980 |   | $ | 192,756 |   |
|                   Adjustments      to reconcile net cash from operating activities:                                                                                  |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
|                   Deferred      Income Tax Expense                                                                                                                   |   | 36,013                                |   |                 | 683,900                              |                           |   | 719,913 |   |   | - |   |
|                   Depletion,      Depreciation, & Amortization                                                                                                       |   | 332,245                               |   |                 | 286,131                              |                           |   | 618,376 |   |   | 1,856,365 |   |
|                   Note      Accretion                                                                                                                                |   | 35,000                                |   |                 | 35,000                               |                           |   | 70,000 |   |   | 128,334 |   |
|                   Stock      based compensation                                                                                                                      |   | 165,381                               |   |                 | 144,070                              |                           |   | 309,451 |   |   | - |   |
|                   Joint      Venture Partner Expense                                                                                                                 |   | 7,952                                 |   |                 | 3,072,448                            |                           |   | 3,080,400 |   |   | 332,413 |   |
|                   Gain      on Sale of Pipeline                                                                                                                      |   | -                                     |   |                 | (5,272,701                           | )                              |   | (5,272,701 | ) |   | - |   |
|          Changes      in Operating Assets and Liabilities                                                                                                                                                         |   | -                                     |   |                 | -                                    |                           |   | - |   |   | - |   |
|                   Cash      Overdraft                                                                                                                                |   | -                                     |   |                 | -                                    |                           |   | - |   |   | 186,912 |   |
|                   Changes      in Other Assets                                                                                                                       |   | -                                     |   |                 | -                                    |                           |   | - |   |   | (13,455 | ) |
|                   Changes      in Accrued Liabilities                                                                                                                |   | 87,339                                |   |                 | 37,027                               |                           |   | 124,366 |   |   | 86,667 |   |
|                   Change      in Related Party Receivables/Payables                                                                                                  |   | (418,070                              | )      |                 | 25,902                               |                           |   | (392,168 | ) |   | (543,483 | ) |
|                   Changes      in Other Receivables                                                                                                                  |   | (737,913                              | )      |                 | 63,389                               |                           |   | (674,524 | ) |   | 2,324 |   |
|                   Changes      in Royalties Payable                                                                                                                  |   | 13,834                                |   |                 | -                                    |                           |   | 13,834 |   |   | - |   |
|                   Change      in Revenue Receivables                                                                                                                 |   | (132,712                              | )      |                 | (9,387                               | )                              |   | (142,099 | ) |   | 86,762 |   |
|                   Changes      in Accounts Payable                                                                                                                   |   | 261,006                               |   |                 | (193,131                             | )                              |   | 67,875 |   |   | - |   |
|          Net      Cash provided from operating activities                                                                                                                                                         |   | (283,046                              | )      |                 | 142,749                              |                           |   | (140,297 | ) |   | 2,315,595 |   |
|          Net      Cash provided (used) from discontinued operations                                                                                                                                               |   | (362,292                              | )      |                 | 7,164,405                            |                           |   | 6,802,113 |   |   | (2,103,248 | ) |
|          Net      Cash provided (used) by operating activities and                              discontinued operations |   | (645,338                              | )      |                 | 7,307,154                            |                           |   | 6,661,816 |   |   | 212,347 |   |
|                                                                                                                                                                                                                                                           |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
| **Investing Activities:**                                                                                                                                                                                                                                      |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
|                                                                                                                                                                                                                                                           |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
|          Oil      & Gas Drilling, Completing and Leasehold Acquisition Costs                                                                                                                                      |   | (1,852,728                            | )      |                 | (960,681                             | )                              |   | (2,813,409 | ) |   | (6,371,739 | ) |
|          Change      in Drilling Reimbursements in Excess of Costs                                                                                                                                                |   | -                                     |   |                 | -                                    |                           |   | - |   |   | 492,160 |   |
|          Change      in Related Party Payable related to drilling                                                                                                                                                 |   | (293,993                              | )      |                 | (3,826,575                           | )                              |   | (4,120,568 | ) |   | 2,220,498 |   |
|          Deposits                                                                                                                                                                                                 |   | -                                     |   |                 | -                                    |                           |   | - |   |   | 200,000 |   |
|          Investment      in Other Depreciable Assets                                                                                                                                                              |   | (454,038                              | )      |                 | (918,679                             | )                              |   | (1,372,717 | ) |   | - |   |
|          Note      Receivable Collections                                                                                                                                                                         |   | 67,343                                |   |                 | 81,451                               |                           |   | 148,794 |   |   | - |   |
|          Net      Cash used in investing activities                                                                                                                                                               |   | (2,533,416                            | )      |                 | (5,624,484                           | )                              |   | (8,157,900 | ) |   | (3,459,081 | ) |
|                                                                                                                                                                                                                                                           |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
| **Financing Activities**                                                                                                                                                                                                                                       |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
|          Notes      Payable (Payments) Advances                                                                                                                                                                   |   | (79,603                               | )      |                 | (1,950,000                           | )                              |   | (2,029,603 | ) |   | 704,466 |   |
|          Changes      in Notes Payable Related Party                                                                                                                                                              |   | -                                     |   |                 | -                                    |                           |   | - |   |   | 1,264,957 |   |
|          Net      cash received from common stock subscriptions                                                                                                                                                   |   | -                                     |   |                 | 6,885,353                            |                           |   | 6,885,353 |   |   | - |   |
|          Net      Cash provided from financing activities.                                                                                                                                                        |   | (79,603                               | )      |                 | 4,935,353                            |                           |   | 4,855,750 |   |   | 1,969,423 |   |
|                                                                                                                                                                                                                                                           |   |                                       |   |                 |                                      |                           |   |  |   |   |  |   |
| Net Increase in cash                                                                                                                                                                                                                                           |   | (3,258,357                            | )      |                 | 6,618,023                            |                           |   | 3,359,666 |   |   | (931,139 | ) |
| Cash - Beginning of the period                                                                                                                                                                                                                                 |   | 6,830,277                             |   |                 | 212,254                              |                           |   | 212,254 |   |   | 1,263,552 |   |
| Cash - End of the period                                                                                                                                                                                                                                       | $      | 3,571,920                             |   | $                    | 6,830,277                            |                           | $      | 3,571,920 |   | $ | 332,413 |   |
|                                                                                                                                                                                                                                                           |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |

----

|                                                                                                                          |   | **Three Months Ended**                |   | **Six Months Ended** |                                 | **Twelve Months        Ended** |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------------------|--------------------------------------|--------------------------------|--------|
|                                                                                                                          |   | **Sept. 30, 2007        (unaudited)** |   |                 | **June 30, 2007        (unaudited)** |                           |   | **Sept. 30, 2007        (unaudited)** |   |   | **December 31, 2006        (audited)** |   |
| **Supplemental Disclosure      of Cash Flow Information**                                                                     |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |
|          Cash      paid during period for:                                       |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |
|                   Interest          | $      | 4,337                                 |   | $                    | 59,993                               |                           | $      | 64,330 |   | $ | 185,284 |   |
|                                                                                                                          |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |
|                   Income      Taxes |   | -                                     |   |                 | -                                    |                           |   | - |   |   | - |   |
|                                                                                                                          |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |
| **Non Cash Investing and Financing Activities**                                                                               |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |
|          Stock      Based Property Acquisition                                   | $      | 298,800                               |   | $                    | -                                    |                           | $      | - |   | $ | - |   |
|                                                                                                                          |   |                                  |   |                 |                                 |                           |   |   |   |   |   |   |

----

|                                      | Quarter Ended         September 30, 2007 |   |
|-------------------------------------------|------------------------------------------|--------|
| Beginning Balance                         | 79,591,310                               |   |
| Wilson Energy Inc. Asset Acquisition      | 240,000                                  |   |
| Shares outsanding September      30, 2007 | 79,831,310                               |   |
|                                      |                                     |   |

----

|                               | Year Ending March 31 |    |
|-------------------------------|----------------------|---------|
|                          |                 | 2008    |   |   | 2009 |   |   | 2010 |   |
| Restricted Stock Compensation | $                    | 581,137 |   | $ | $195,336 |   | $ | - |   |
| Stock Option Compensation     |                 | 39,382  |   |   | 21,256 |   |   | 9,232 |   |
|                          | $                    | 620,519 |   | $ | 216,592 |   | $ | 9,232 |   |
|                          |                 |    |   |   |   |   |   |   |   |

|                                             |   | Sept. 30, 2007 |   |
|--------------------------------------------------|--------|----------------|--------|
| Total Proceeds                                   | $      | 15,000,000     |   |
| Closing adjustment for unpaid capital      calls |   | (900,000       | )      |
| Net Proceeds                                     |   | 14,100,000     |   |
| Basis in the pipeline                            |   | (8,827,299     | )      |
| Total Gain on sale                               |   | 5,272,701      |   |
| Less Allocations to Minority Interest            |   | (3,036,304     | )      |
| Gain on Sale of Pipeline                         | $      | 2,236,397      |   |
|                                             |   |           |   |

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|                                |   | Sept. 30, 2007 |   |
|-------------------------------------|--------|----------------|--------|
| Workover Drilling      Rig          | $      | 687,777        |   |
| Swab Rig                            |   | 175,000        |   |
| Service Rig                         |   | 200,000        |   |
| Office Equipment & Other        |   | 309,940        |   |
| Total Other Depreciable      Assets | $      | 1,372,717      |   |
|                                |   |           |   |

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|                        | Fiscal year ended March 31 |   |
|-----------------------------|----------------------------|--------|
|                        | 2008                       |   | 2009 |   | 2010 |   |
| Office Lease                | 111,000                    |        | 150,000 |  | 132,000 |   |
| Mineral Lease loans         | -                          |        | 100,000 |  | - |   |
| Related Party Notes Payable | 3,194,594                  |        | 324,330 |  | - |   |

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| EXHIBIT NUMBER |   | DESCRIPTION                                                                                                                     |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                            |
| 31.1           |   | CEO Certification pursuant to Section      302 of the Sarbanes-Oxley Act of 2002                                                |
| 31.2           |   | CFO Certification pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002                                                |
| 32.1           |   | CEO Certification pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2           |   | CFO Certification pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

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|              | REOSTAR ENERGY CORPORATION                                                                                                                                                                                                                                                  |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| November 14, 2007 |                                                                                                                                                                                                                                                                        |
|         | By /s/ Mark S. Zouvas                                          |
|              | Mark S. Zouvas, Chief Executive Officer                                                                                                                                                                                                                                     |
|              |                                                                                                                                                                                                                                                                        |
|              |                                                                                                                                                                                                                                                                        |

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| EXHIBIT NUMBER |   | DESCRIPTION                                                                                                                                                                                                      |
|----------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                                                             |
| 10.1           |   | Purchase and Sale Agreement by and between      ReoStar Energy Corporation and Vern Wilson Energy, Inc. dated September      28, 2007. (Incorporated by reference to the Form 8-K filed on October 4,      2007) |
|           |   |                                                                                                                                                                                                             |
| 31.1           |   | CEO Certification pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002                                                                                                                                 |
| 31.2           |   | CFO Certification pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002                                                                                                                                 |
| 32.1           |   | CEO Certification pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                  |
| 32.2           |   | CFO Certification pursuant to 18 U.S.C. Section      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                  |
|           |   |                                                                                                                                                                                                             |
|           |   |                                                                                                                                                                                                             |

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