**Table of Contents**

| x      | Quarterly report pursuant to Section 13 or      15(d) of the Securities Exchange Act of 1934  |
|--------|-----------------------------------------------------------------------------------------------|
|   |                                                                                          |
|   | For the quarterly period ended June 30, 2009                                                  |
|   |                                                                                          |
| o      | Transition report pursuant to Section 13 or      15(d) of the Securities Exchange Act of 1934 |
|   |                                                                                          |
|   | For the transition period from ______________to      ______________.                          |
|   |                                                                                          |
|   |                                                                                          |

| **Nevada**                                                              |   |   |   | **20-8428738**                       |
|-------------------------------------------------------------------------|--------|--------|--------|--------------------------------------|
| (State or other jurisdiction of          incorporation or organization) |   |   |   | (I.R.S. Employer Identification No.) |
|                                                                         |   |        |   |                                      |

| ****   | Large accelerated filer o                                                  |                            | Accelerated filer o**** |   |
|--------|----------------------------------------------------------------------------|---------------------------------|-------------------------|--------|
|   |                                                                       |                            | ****                    |   |
| ****   | Non-accelerated filer o      (Do not check if a smaller reporting company) | Smaller reporting company x**** |                    |

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|                                     Class                                     | Outstanding at August 12, 2009 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                           |
| Common Stock, par value $0.001 per          share                                                                                                                                                                                                                                                                                                                                                                                                     | 80,353,912                     |

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

|                            | ITEM 1-- FINANCIAL STATEMENTS                                                                       |   1 |
|---------------------------------|-----------------------------------------------------------------------------------------------------|---------------|
|                            |                                                                                                |          |
|                            | ITEM 2-- MANAGEMENT'S DISCUSSION      AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |   6 |
|                            |                                                                                                |          |
|                            | ITEM 3-- QUANTITATIVE AND QUALITATIVE      DISCLOSURES ABOUT MARKET RISK                            | 13            |
|                            |                                                                                                |          |
|                            | ITEM 4T-- CONTROLS AND PROCEDURES                                                                   | 13            |
|                            |                                                                                                |          |
|                            |                                                                                                |          |
| **PART II - OTHER INFORMATION** |                                                                                                |
|                            |                                                                                                |          |
|                            | ITEM 1-- LEGAL PROCEEDINGS                                                                          | 13            |
|                            |                                                                                                |          |
|                            | ITEM 1A-- RISK FACTORS                                                                              | 13            |
|                            |                                                                                                |          |
|                            | ITEM 2-- UNREGISTERED SALES      OF EQUITY SECURITIES AND USE OF PROCEEDS                           | 13            |
|                            |                                                                                                |          |
|                            | ITEM 3-- DEFAULTS UPON SENIOR      SECURITIES                                                       | 14            |
|                            |                                                                                                |          |
|                            | ITEM 4-- SUBMISSION OF MATTERS      TO A VOTE OF SECURITY HOLDERS                                   | 14            |
|                            |                                                                                                |          |
|                            | ITEM 5-- OTHER INFORMATION                                                                          | 14            |
|                            |                                                                                                |          |
|                            | ITEM 6-- EXHIBITS                                                                                   | 14            |
|                            |                                                                                                |          |
|                            | SIGNATURES                                                                                          | 15            |

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**Table of Contents**

|                                                                                                                                                                                                                                                                                                                                                                                                                              | **June 30, 2009         (unaudited)** |       | **March 31, 2009** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|------------|--------------------|--------|
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                        |                                  |            |               |   |  |   |
| Current Assets:                                                                                                                                                                                                                                                                                                                                                                                                                   |                                  |       |               |   |   |   |
|          Cash                                                                                                                                                                                                                                                                                                                                                                        | $                                     | 518,822    |               | $      | 426,430 |   |
|          Accounts      Receivable:                                                                                                                                                                                                                                                                                                                                                   |                                  |       |               |   |   |   |
|                   Oil      & Gas - Related Party                                                                                                                                                                                                                                                                                        |                                  | 424,701    |               |   | 337,879 |   |
|                   Related      Party                                                                                                                                                                                                                                                                                                    |                                  | 1,366,835  |               |   | 1,107,854 |   |
|                   Other                                                                                                                                                                                                                                                                                                                 |                                  | 29,845     |               |   | 15,760 |   |
|          Inventory                                                                                                                                                                                                                                                                                                                                                                   |                                  | 24         |               |   | 7,514 |   |
|          Other      Current Assets                                                                                                                                                                                                                                                                                                                                                   |                                  | 6,317      |               |   | 6,317 |   |
|          Total      Current Assets                                                                                                                                                                                                                                                                                                                                                   |                                  | 2,346,544  |               |   | 1,901,754 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |            |               |   |  |   |
| Note      Receivable                                                                                                                                                                                                                                                                                                                                                                                                              |                                  | 553,536    |               |   | 553,536 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |            |               |   |  |   |
| Oil      and Gas Properties - successful efforts method                                                                                                                                                                                                                                                                                                                                                                           |                                  | 25,389,613 |               |   | 25,254,777 |   |
|          Less      Accumulated Depletion and Depreciation                                                                                                                                                                                                                                                                                                                            |                                  | (6,786,629 | )                  |   | (6,206,558 | ) |
|                   Oil      & Gas Properties (net)                                                                                                                                                                                                                                                                                       |                                  | 18,602,984 |               |   | 19,048,219 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |            |               |   |  |   |
| Other      Depreciable Assets:                                                                                                                                                                                                                                                                                                                                                                                                    |                                  | 2,285,642  |               |   | 2,171,654 |   |
|          Less      Accumulated Depreciation                                                                                                                                                                                                                                                                                                                                          |                                  | (364,554   | )                  |   | (315,093 | ) |
|                   Other      Depreciable Assets (net)                                                                                                                                                                                                                                                                                   |                                  | 1,921,088  |               |   | 1,856,561 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |            |               |   |  |   |
| Leasehold      Held for Sale                                                                                                                                                                                                                                                                                                                                                                                                      |                                  | 150,000    |               |   | 150,000 |   |
| Total Assets                                                                                                                                                                                                                                                                                                                                                                                                                      | $                                     | 23,574,152 |               | $      | 23,510,070 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                                                                                                                                                   |                                  |       |               |   |   |   |
| Current      Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                         |                                  |       |               |   |   |   |
|          Accounts      Payable                                                                                                                                                                                                                                                                                                                                                       | $                                     | 46,788     |               | $      | 22,033 |   |
|          Payable      to Related Parties                                                                                                                                                                                                                                                                                                                                             |                                  | 78,476     |               |   | 148,550 |   |
|          Accrued      Expenses                                                                                                                                                                                                                                                                                                                                                       |                                  | 104,915    |               |   | 106,141 |   |
|          Accrued      Expenses - Related Parties                                                                                                                                                                                                                                                                                                                                     |                                  | 120,267    |               |   | 130,870 |   |
|                   Total      Current Liabilities                                                                                                                                                                                                                                                                                        |                                  | 350,446    |               |   | 407,594 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |  |   |
|          Notes      Payable                                                                                                                                                                                                                                                                                                                                                          |                                  | 10,037,236 |               |   | 8,955,202 |   |
|          Notes      Payable - Related Parties                                                                                                                                                                                                                                                                                                                                        |                                  | 3,518,924  |               |   | 3,518,924 |   |
|                   Total      Long-Term Debt                                                                                                                                                                                                                                                                                             |                                  | 13,556,160 |               |   | 12,474,126 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |   |   |
|          Asset      Retirement Obligation                                                                                                                                                                                                                                                                                                                                            |                                  | 354,829    |               |   | 344,079 |   |
|          Deferred      Tax Liability                                                                                                                                                                                                                                                                                                                                                 |                                  | 1,362,738  |               |   | 1,702,782 |   |
|                   Total      Liabilities                                                                                                                                                                                                                                                                                                |                                  | 15,624,173 |               |   | 14,928,581 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |   |   |
|          Commitments      & Contingencies:                                                                                                                                                                                                                                                                                                                                           |                                  | -          |               |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |   |   |
| **Stockholders'      Equity**                                                                                                                                                                                                                                                                                                                                                                                                     |                                  |       |               |   |   |   |
|          Common      Stock, $.001 par,200,000,000 shares authorized and                         80,353,912      and outstanding on June 30, 2009 and                         March      31, 2009 |                                  | 80,353     |               |   | 80,353 |   |
|          Additional      Paid-In-Capital                                                                                                                                                                                                                                                                                                                                             |                                  | 11,032,868 |               |   | 10,959,965 |   |
|          Retained      Deficit                                                                                                                                                                                                                                                                                                                                                       |                                  | (3,163,242 | )                  |   | (2,458,829 | ) |
|                   Total      Stockholders' Equity                                                                                                                                                                                                                                                                                       |                                  | 7,949,979  |               |   | 8,581,489 |   |
|                   Total      Liabilities & Stockholders' Equity                                                                                                                                                                                                                                                                         | $                                     | 23,574,152 |               | $      | 23,510,070 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                                  |       |               |   |   |   |

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**Table of Contents**

|                                                                                                                                                                                                                                                                                                                                   | **Three          Months Ended**         |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                   | **June 30, 2009           (unaudited)** |       | **June          30, 2008          (unaudited)****** |   |
| **Revenues**                                                                                                                                                                                                                                                                                                                           |                                    |       |   |   |   |   |
|          Oil        & Gas Sales                                                                                                                                                                                                                                                           | $                                       | 618,071    |   | $ | 2,752,747 |   |
|          Other        Income                                                                                                                                                                                                                                                              |                                    | 83,463     |   |   | 99,416 |   |
|                                                                                                                                                                                                                                         |                                    | 701,534    |   |   | 2,852,163 |   |
|                                                                                                                                                                                                                                                                                                                                   |                                    |            |   |   |  |   |
| **Costs        and Expenses**                                                                                                                                                                                                                                                                                                          |                                    |            |   |   |  |   |
|          Oil        & Gas Lease Operating Expenses                                                                                                                                                                                                                                        |                                    | 528,203    |   |   | 596,033 |   |
|          Workover        Expenses                                                                                                                                                                                                                                                         |                                    | -          |   |   | 72,425 |   |
|          Severance        & Ad Valorem Taxes                                                                                                                                                                                                                                              |                                    | 34,066     |   |   | 154,620 |   |
|          Depletion        & Depreciation                                                                                                                                                                                                                                                  |                                    | 711,566    |   |   | 400,976 |   |
|          ARO        Accretion                                                                                                                                                                                                                                                             |                                    | 10,750     |   |   | - |   |
|          General        & Administrative:                                                                                                                                                                                                                                                 |                                    |            |   |   |  |   |
|                   Salaries        & Benefits                                                                                                                                                                                                 |                                    | 201,560    |   |   | 196,376 |   |
|                   Legal        & Professional                                                                                                                                                                                                |                                    | 127,851    |   |   | 149,334 |   |
|                   Other        General & Administrative                                                                                                                                                                                      |                                    | 145,965    |   |   | 132,326 |   |
|          Interest,        net of capitalized interest of $121,898        and $161,576                           for        the three months ended June 30, 2009 and June 30, 2008, respectively |                                    | -          |   |   | - |   |
|                                                                                                                                                                                                                                         |                                    | 1,759,961  |   |   | 1,702,090 |   |
| Other        Income (Expense)                                                                                                                                                                                                                                                                                                          |                                    |       |   |   |   |   |
|          Interest        Income                                                                                                                                                                                                                                                           |                                    | 13,970     |   |   | 61,205 |   |
|          Hedging        Losses                                                                                                                                                                                                               |                                    | -          |   |   | (6,653 | ) |
|                                                                                                                                                                                                                                                                                                                                   |                                    |            |   |   |  |   |
| Income        (Loss) from continuing operations before income taxes                                                                                                                                                                                                                                                                    |                                    | (1,044,457 | ) |   | 1,204,625 |   |
|                                                                                                                                                                                                                                                                                                                                   |                                    |            |   |   |  |   |
| Income        Tax Benefit (Expense)                                                                                                                                                                                                                                                                                                    |                                    | 340,044    |   |   | (421,618 | ) |
| Net        Income (Loss)                                                                                                                                                                                                                                                                                                               |                                    | (704,413   | )  |  | 783,007 |   |
|                                                                                                                                                                                                                                                                                                                                   |                                    |       |   |   |   |   |
| **Basic        & Diluted (Loss) Income per Common Share:**                                                                                                                                                                                                                                                                             |                                    | -          |    |   | - |   |
|          Net        Income (Loss) per Common Share                                                                                                                                                                                                                                        | $                                       | (0.01      | ) | $ | 0.01 |   |
|                                                                                                                                                                                                                                                                                                                                   |                                    |       |   |   |   |   |
| **Weighted        Average Common Shares Outstanding**                                                                                                                                                                                                                                                                                  |                                    | 80,353,912 |   |   | 80,181,310 |   |
|                                                                                                                                                                                                                                                                                                                                   |                                    |       |   |   |   |   |

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**Table of Contents**

|                                                                                                                                                          | ****Three        Months Ended****               |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|-----------|
| ****                                                                                                                                                          | ****June        30, 2009        (unaudited)**** |      | ************June        30, 2008        (unaudited)**** |   |
| **Operating      Activities:**                                                                                                                                |                                            |      |   |   |   |   |
|                Net      Income (Loss)                                                                            | $                                               | (704,413  | ) | $ | 783,007 |   |
|                Adjustments      to reconcile net income to net cash from operating activities:                   |                                            |           |   |   |  |   |
|                   Deferred      Income Tax Expense                  |                                            | (340,044  | ) |   | 421,619 |   |
|                   Depletion,      Depreciation, & Amortization      |                                            | 711,566   |   |   | 400,976 |   |
|                   ARO      accretion                                |                                            | 10,750    |   |   | - |   |
|                   Stock      based compensation                     |                                            | 72,903    |   |   | 53,880 |   |
|          Changes      in Operating Assets and Liabilities                                                        |                                            |      |   |   |   |   |
|                   Changes      in Accrued Liabilities               |                                            | (1,226    | ) |   | 59,395 |   |
|                   Change      in Inventory                          |                                            | 7,490     |   |   | (13,210 | ) |
|                   Change      in Related Party Receivables/Payables |                                            | (339,658  | ) |   | (237,156 | ) |
|                   Changes      in Other Receivables                 |                                            | (14,085   | ) |   | (40,339 |  ) |
|                   Changes      in Other Current Assets              |                                            | -         |   |   | 6,652 |   |
|                   Change      in Revenue Receivables                |                                            | (86,822   | ) |   | (1,008,975 | ) |
|                   Changes      in Accounts Payable                  |                                            | 24,755    |   |   | 36,220 |   |
|          Net      Cash provided (used) by operating activities                                                   |                                            | (658,784  | ) |   | 462,069 |   |
|                                                                                                                                                          |                                            |           |   |   |  |   |
| **Investing      Activities:**                                                                                                                                |                                            |           |   |   |  |   |
|          Oil      & Gas Drilling, Completing and Leasehold Acquisition Costs                                     |                                            | (134,836  | ) |   | (4,451,908 | ) |
|          Change      in Related Party Payable related to drilling                                                |                                            | -         |   |   | 2,753,088 |   |
|          Investment      in Other Depreciable Assets                                                             |                                            | (113,988  | ) |   | (177,368 | ) |
|          Note      Receivable Collections                                                                        |                                            | -         |   |   | 14,166 |   |
|          Net      Cash used by investing activities                                                              |                                            | (248,824  | ) |   | (1,862,022 | ) |
|                                                                                                                                                          |                                            |           |   |   |  |   |
| **Financing      Activities**                                                                                                                                 |                                            |           |   |   |  |   |
|          Notes      Payable Advances Net of Loan Fees                                                            |                                            | 1,000,000 |   |   | 653,564 |   |
|          Related      Party Note Advances                                                                        |                                            | -         |   |   | 500,000 |   |
|          Net      Cash provided by financing activities                                                          |                                            | 1,000,000 |   |   | 1,153,564 |   |
|                                                                                                                                                          |                                            |      |   |   |   |   |
| Net      Increase (Decrease) in cash                                                                                                                          |                                            | 92,392    |   |   | (246,389 | ) |
| Cash      - Beginning of the period                                                                                                                           |                                            | 426,430   |   |   | 592,665 |   |
| Cash      - End of the period                                                                                                                                 | $                                               | 518,822   |   | $ | 346,276 |   |
|                                                                                                                                                          |                                            |      |   |   |   |   |

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**Table of Contents**

|                                                                                                                          | **Three        Months Ended**                           |    |
|-------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|---------|
|                                                                                                                          | ****June        30, 2009        (unaudited****)******** |    | ******June        30, 2008         (unaudited)****** |   |
| **Supplemental      Disclosure of Cash Flow Information**                                                                     |                                                    |    |   |   |   |   |
|                Cash paid during period for:                                      |                                                    |    |   |   |   |   |
|                   Interest          | $                                                       | 139,771 |   | $ | 87,988 |   |
|                                                                                                                          |                                                    |    |   |   |   |   |
|                   Income      Taxes | $                                                       | -       |   | $ | - |   |
|                                                                                                                          |                                                    |    |   |   |   |   |
| **Non      Cash Investing and Financing Activities**                                                                          |                                                    |    |   |   |   |   |
|          Stock      Issued for Interest                                          | $                                                       | -       |   | $ | 36,967 |   |
|                                                                                                                          |                                                    |    |   |   |   |   |
|          Stock      Based Compensation                                           | $                                                       | 72,903  |   | $ | 53,880 |   |
|                                                                                                                          |                                                    |    |   |   |   |   |

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|                                 | Fiscal        Years Ending March 31, |   |   |   |   |   |   |       |
|--------------------------------------|--------------------------------------|--------|--------|--------|--------|--------|--------|------------|
|                                 |                                 | 2010   |   |   | 2011   |   |   | 2012       |   |   | Thereafter |   |   | Total |   |
| Office Lease Payments                | $                                    | 93,100 |   | $      | -      |   | $      | -          |   | $ | - |   | $ | 93,100 |   |
| Notes Payable      - Related Parties |                                 | -      |   |   | -      |   |   | -          |   |   | 3,518,92 |   |   | 3,518,924 |   |
| Senior      Secured Note Payable     |                                 | -      |   |   | -      |   |   | 10,800,000 |   |   | - |   |   | 10,800,000 |   |
|                                      | $                                    | 93,100 |   | $      | -      |   | $      | 10,800,000 |   | $ | 3,518,924 |   | $ | 14,412,024 |   |
|                                 |                                 |   |   |   |   |   |   |       |   |   |   |   |   |   |   |

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| EXHIBIT      NUMBER |   | DESCRIPTION                                                                                                                          |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                 |
| 10.1                |        | Purchase      and Sale Agreement, dated May 20, 2009, among ReoStar Energy Corporation,      ZAZA Energy, LLC, and Eli Smith.        |
| 10.2                |        | Exploration      and Development Agreement dated May 20, 2009, between ReoStar Energy Corporation      and ZAZA Energy, LLC.         |
| 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**                                                                                                                                                                                                     |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                    |
| August      14, 2009 |                                                                                                                                                                                                                                    |
|            | By    /s/      Scott D. Allen                                 |
|                 |      Scott      D. Allen, Chief Financial Officer            (Principal Financial Officer and duly authorized      signatory)                                                         |
|                 |                                                                                                                                                                                                                                    |
|                 |                                                                                                                                                                                                                                    |

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| EXHIBIT      NUMBER |   | DESCRIPTION                                                                                                                          |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                 |
| 10.1                |        | Purchase      and Sale Agreement, dated May 20, 2009, among ReoStar Energy Corporation,      ZAZA Energy, LLC, and Eli Smith.        |
| 10.2                |        | Exploration      and Development Agreement dated May 20, 2009, between ReoStar Energy Corporation      and ZAZA Energy, LLC.         |
| 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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