UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington
D.C., 20549





FORM
10-K





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


For
the fiscal year ended December 31, 2008





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


For
the transition period
from         to





Commission
File No. 000-51656





ECCO
ENERGY CORP.


(Exact
name of registrant as specified in its charter)





Nevada
              
              75-2990007(State
      of other jurisdiction of incorporation)
              
              (I.R.S.
      Employer Identification No.)3315
      Marquart STSuite
      206Houston,
      TX
              
              77027(Address
      of Principal Executive Office)
              
              (Zip
      Code)








Registrant’s
telephone number, including area code: (713) 771-5500





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





NONE





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





Common
Stock $0.001 par value





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.o
Yes     x
No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.o
Yes     x
No





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.x
Yes     o
No





Indicate
by check mark if disclosure if delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-Kx





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





Large accelerated
filer  o                                           Accelerated
filer o


Non-accelerated
filer    o                                           Smaller
reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).      o
Yes     x
No




The
issuer’s total revenues for the year ended December 31, 2008 were
$432,959





The
number of outstanding shares of common stock, as of April 14, 2009, was
9,624,954.





The
aggregate market value of non-affiliated common stock as of June 30, 2008 was
$3,493,457.













INDEX








ITEM 1. DESCRIPTION OF BUSINESS
                3ITEM 1A.  RISK FACTORS
                10ITEM 1B.  UNRESOLVED STAFF
    COMMENTS
                19ITEM 2. DESCRIPTION OF PROPERTY
                19ITEM 3. LEGAL PROCEEDINGS
                19ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                19ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS
                20ITEM 6. SLECTED FINANCIAL DATA
                23ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION
                23ITEM 8. FINANCIAL STATEMENTS
                26CONSOLIDATED BALANCE SHEETS
                F-4CONSOLIDATED STATEMENTS OF OPERATIONS
                F-5CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
    EQUITY
                F-6CONSOLIDATED STATEMENTS OF CASH FLOWS
                F-7NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
                F-8ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
                27ITEM 9A. CONTROL AND PROCEDURES
                27ITEM 9B. OTHER INFORMATION
                28ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS,
      PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH
      SECTION 16(a) OF THE EXCHANGE ACT
                29ITEM 11. EXECUTIVE COMPENSATION
                30ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STGOCKHOLDER MATTERS
                31ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
      DIRECTOR INDEPENDENCE
                31ITEM 14.PRINCIPAL ACCOUNTANT FEES AND
    SERVICES
                32ITEM 15. EXHIBITS
                32SIGNATURES
                34





2
 Index




FORWARD
LOOKING STATEMENTS





The
statements included or incorporated by reference in this Annual Report of ECCO
Energy Corp. (“ECCE” or “Company”), other than statements of historical fact,
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Act of
1934, as amended. In some cases, you can identify forward-looking statements by
the words “anticipate,” “estimate,” “expect,” “objective,” “projection,”
“forecast,” “goal,” and similar expressions. Such forward-looking statements
include, without limitation, the statements herein and therein regarding the
timing of future events regarding the operations of the Company and its
subsidiaries. Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Moreover, neither the Company
nor any other person assumes responsibility for the accuracy and completeness of
these forward-looking statements.  The Company is under no duty to
update any of the forward-looking statements after the date of this report to
conform its prior statements to actual results.  The Company’s actual
results could differ materially from those anticipated in these forward-looking
statements as a result of many factors including without limitation the
following risk factors:





-
            the
      cyclical nature of the natural gas and oil
  industries





-
            our
      ability to obtain additional
financing





-
            our
      ability to successfully and profitably find, produce and market oil and
      natural gas





-
            uncertainties
      associated with the United States and worldwide
  economies





-
            substantial
      competition from larger companies





-
            the
      loss of key personnel





-
            operating
      interruptions (including leaks, explosions and lack of rig
      availability)





This list
is not exhaustive of the factors that may affect our forward-looking statements.
Some of the important risks and uncertainties that could affect forward-looking
statements are described further under the sections titled “Item 1. Description
of the Business”, “Item 1.A. Risk Factors,” and “Item 6.-Management’s Discussion
and Analysis” of this Annual Report.  Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, believed,
estimated or expected.  We caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date
made.





Available
Information





The
Company files annual, quarterly, current reports, proxy statements, and other
information with the Securities and Exchange Commission (the “SEC”). You may
read and copy documents referred to in this Annual Report on Form 10-K that have
been filed with the SEC at the SEC’s Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C.  You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also
obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.





ITEM1.  DESCRIPTION OF BUSINESS





OVERVIEW





We are an
independent oil and gas company engaged in oil and gas development, exploration
and production with properties and operational focus in the Gulf Coast Region.
Our strategy is to grow our asset base by purchasing producing assets at a
discount to reserve value, increasing the production rate of reserves, and
converting proved developed non-producing reserves to proved developed producing
reserves. Acquisitions to date have provided both producing and non producing
assets. Our principal assets are oil and gas properties, including a 100%
working interest in oil and gas producing properties located in Nueces County,
Texas, and non producing properties in St. Mary’s Parish, Louisiana and in
Cameron Parish, Louisiana.





3
 Index





OUR
OPERATIONS





To date,
we have acquired interests in 330 gross acres of oil and gas leases located in
the State of Texas. These properties are producing.   We have
also acquired non producing properties, specifically Louisiana State Lease
Number 17742 in Block 4, covering 600 acres in the East Cameron Area in Cameron
Parish, Louisiana (“Louisiana Shelf Property”).  This property was
acquired through our acquisition of all the general and limited partner
interests of Louisiana Shelf Partners, LP (“Louisiana Shelf
Partners”).  We also acquired oil, gas and mineral lease no. 1337
located in the State of Louisiana, from VTEX Energy Inc. (the “Bateman Lake
Field”).  Our goal is to bring one property online during 2009 and the
other in 2010.





In
October 2008, ECCE acquired a gas pipeline (“Pipeline”) approximately 13 miles
in length located in Jefferson and Harrison Counties, Ohio.  The
Pipeline was purchased from M- J Oil Company of Paris, Ohio, an unaffiliated
third party, by issuing a mortgage note for $1,000,000.  The mortgage
note bears an 8% annual interest rate.  The mortgage is secured by the
Pipeline assets.  There are no payments due until September 30, 2009,
at which time, the entire unpaid balance of principal and accrued interest is
due.  The pipeline services oil and gas properties owned by Samurai
Corp, an affiliated company.





We plan
to target additional exploration and developmental properties for acquisition.
Our ability to complete any acquisitions will be subject to our obtaining
sufficient financing and our being able to conclude agreements with the property
owners on terms that are acceptable to us. No potential acquisition properties
have been specifically identified as of the date hereof.





OIL
AND GAS PROPERTIES





WILSON
PROPERTIES LEASE – NUECES COUNTY, TEXAS




We own
100% of the working interest in the E.C. Wilson and Wilson State Tract Leases
(“Wilson Properties”) located in Nueces County, TexasThe Wilson field is
currently producing oil and gas, and is the only field providing revenue to
ECCE.  ECCE’s goal for 2009 is to maintain, or increase production at
the Wilson Properties lease.  We anticipate capital expenditures of
approximately $465,000 during 2009.  These funds will need to be
raised in order for the drilling to occur..





BATEMAN
LAKE FIELD – ST. MARY’S PARISH, LOUISIANA





In
December 2007, the Company entered into a share exchange agreement (the “Share
Exchange Agreement”) with Old Jersey Oil Ventures LLC, a New Jersey limited
liability company (“Old Jersey”) and Eugene A. Noser, Jr. (“Noser”), who held of
record 100% of the total issued and outstanding interests in Old Jersey (the
“Membership Interest”), regarding acquisition by the Company of Old Jersey. In
accordance with the terms and provisions of the Share Exchange Agreement, the
Company  acquired from Noser all of his Membership Interest in
exchange for the issuance of 600,000 shares of the Company’s Series C Preferred
Stock and 303,936 shares of the Company’s Series D Preferred Stock.





Old
Jersey, together with the Moffat Group, were holders of approximately $5,900,000
in notes (the “Debt”) payable by VTEX Energy, Inc., a Nevada corporation
(“VTEX”), relating to the Bateman Lake Field. In January 2008, the Company
entered into an assignment of oil, gas and mineral lease (the “VTEX Assignment”)
with VTEX pursuant to which VTEX assigned to the Company all of its right, title
and interest in the Bateman Lake Field in exchange for
$1,000.   As a result of the VTEX Assignment, the Company
acquired 100% of the interest in the Bateman Lake Field. The Company also
assumed the Debt payable by VTEX to Old Jersey.





The lease
consists of 14 non-producing oil and gas wells on Louisiana State Lease No.
1337, in St. Mary’s Parish, Louisiana.  As of December 31, 2008, there
is no oil and gas production from this concession.





In
January 2008, we entered into a farmout agreement (the “Farmout Agreement”) with
an independent oil & gas corporation (the IOG), concerning our interest in
the Bateman Lake Field. In accordance with the terms of the Farmout Agreement,
the IOG had the exclusive right, but not the obligation, to re-enter the Bateman
Lake Field for the purpose of sidetracking, deepening, working over or
recompleting any of the wells situated on the Bateman Lake Field.





Upon
consummation of the Farmout Agreement: (i) the IOG agreed to pay us an aggregate
$750,000; (ii) we agreed to satisfy any liens on the Bateman Lake Field; and
(iii) we agreed to assign to the IOG all of our interest in and to the Bateman
Lake Field, subject to the satisfaction of certain conditions.  We
were paid nonrefundable amounts of $261,000 towards the $750,000 in the year
ending December 31, 2008.  The agreement contained drilling
committments that required the IOG to complete a certain number of wells during
2008 and 2009.





4
 Index





During
the third quarter of 2008, IOG notified us that the drilling commitments of the
Farmout Agreement would not be met within the allotted timeframe.  As
of December 31, 2008 the agreement had been terminated.  We are
exploring other avenues to raise funds, farmout or monetize the Bateman Lake
Field.





ECCE
continues to look for drilling partners for the Bateman Lake
Field.  We are considering farmouts and other means to develop the
field.  As of the date of this report, there has been no agreement
reached to begin such a program.








LOUISIANA
SHELF PROPERTY – CAMERON PARISH, LOUISIANA





On
September 28, 2007, we executed an agreement pursuant to which we acquired all
of the assets of Louisiana Shelf Partners for $5,000,000 by issuing 1,000,000
shares of Series B Convertible Preferred Stock. Louisiana Shelf Partners owned
the Louisiana Shelf Property, consisting of Louisiana State Lease Number 17742
in Block 4, covering 600 acres in the East Cameron Area in Cameron Parish,
Louisiana.  The Louisiana Shelf Property consists of two
wells:  the #1 well, proved developed non-producing (“PDNP”), and the
#2 well, which is a proved undeveloped location (“PUD”).  The #1 well
is not connected to any platform or other pipeline and is currently not in
production, and the #2 well has not been drilled.  We believe the #1
well will begin producing upon completion of a pipeline connection for
transportation of gas production.  We are currently in negotiations to
build a pipeline to a nearby platform at an estimated cost of
$900,000.





On
February 14, 2008, the Company purchased an additional 25% of the working
interest in Louisiana Shelf Property from the trustee of assets then held in
bankruptcy in exchange for $10,000, bringing the total working interest owned by
the Company to 100%.  As a result, we currently own 100% of the
interests in the Louisiana Shelf Property.





We are in
active negotiations to bring the first well into production.  Due to
the capital required, we will need to partner with another firm.  We
are hopeful an agreement will be reached during the second quarter
2009.





OHIO
PIPELINE





In October 2008, ECCE acquired a gas
pipeline (“Pipeline”) approximately 13 miles in length located in Jefferson and
Harrison Counties, Ohio.  The Pipeline was purchased from M- J Oil
Company of Paris, Ohio, an unaffiliated third party, by issuing a mortgage note
for $1,000,000.  The mortgage note bears an 8% annual interest
rate.  The mortgage is secured by the Pipeline
assets.  There are no payments due until September 30, 2009, at which
time, the entire unpaid balance of principal and accrued interest is
due.  The pipeline services oil and gas properties owned by Samurai
Corp, an affiliated company.





Negotiations
are underway with Samurai Corp to provide compensation for the use of the ECCE
pipeline. A sale or lease of the pipeline is also a possibility.




COMPETITION





We
encounter competition from other natural gas and oil companies in all areas of
our operations, including the acquisition of exploratory prospects and proven
properties. Many of our competitors are large, well-established companies that
have been engaged in the natural gas and oil business for much longer than we
have and possess substantially larger operating staffs and greater capital
resources than we do. Our ability to explore for oil and natural gas reserves
and to acquire additional properties in the future will be dependent upon our
ability to conduct our operations, to evaluate and select suitable properties
and to consummate transactions in this highly competitive
environment.





OIL
AND GAS EXPLORATION REGULATION





The
Company’s oil and gas exploration, including future production and related
operations are subject to extensive rules and regulations promulgated by federal
and state agencies. Failure to comply with such rules and regulations can result
in substantial penalties. The regulatory burden on the oil and gas industry adds
to our cost of doing business and affects our profitability. Because such rules
and regulations are frequently amended or interpreted differently by regulatory
agencies, we are unable to accurately predict the future cost or impact of
complying with such laws.





5
 Index





The
Company’s oil and gas exploration and future production operations are and will
be affected by state and federal regulation of gas production, federal
regulation of gas sold in interstate and intrastate commerce, state and federal
regulations governing environmental quality and pollution control, state limits
on allowable rates of production by a well or pro-ration unit and the amount of
gas available for sale, state and federal regulations governing the availability
of adequate pipeline and other transportation and processing facilities, and
state and federal regulation governing the marketing of competitive fuels. For
example, a productive gas well may be “shut-in” because of an over-supply of gas
or lack of an available gas pipeline in the areas in which we may conduct
operations. State and federal regulations generally are intended to prevent
waste of oil and gas, protect rights to produce oil and gas between owners in a
common reservoir, control the amount of oil and gas produced by assigning
allowable rates of production and control contamination of the environment.
Pipelines are subject to the jurisdiction of various federal, state and local
agencies.





Regulation
of Sale and Transportation of Oil





Sales of
crude oil, condensate and natural gas liquids are not currently regulated and
are made at negotiated prices. Nevertheless, Congress could reenact price
controls in the future.





Our sales
of crude oil are affected by the availability, terms and cost of transportation.
The transportation of oil in common carrier pipelines is also subject to rate
regulation. The Federal Energy Regulatory Commission, or the FERC, regulates
interstate oil pipeline transportation rates under the Interstate Commerce Act.
In general, interstate oil pipeline rates must be cost-based, although
settlement rates agreed to by all shippers are permitted and market-based rates
may be permitted in certain circumstances. Effective January 1, 1995, the
FERC implemented regulations establishing an indexing system (based on
inflation) for transportation rates for oil that allowed for an increase or
decrease in the cost of transporting oil to the purchaser. A review of these
regulations by the FERC in 2000 was successfully challenged on appeal by an
association of oil pipelines. On remand, the FERC in February 2003 increased the
index slightly, effective July 2001. Intrastate oil pipeline transportation
rates are subject to regulation by state regulatory commissions. The basis for
intrastate oil pipeline regulation, and the degree of regulatory oversight and
scrutiny given to intrastate oil pipeline rates, varies from state to state.
Insofar as effective interstate and intrastate rates are equally applicable to
all comparable shippers, we believe that the regulation of oil transportation
rates will not affect our operations in any way that is of material difference
from those of our competitors.





Further,
interstate and intrastate common carrier oil pipelines must provide service on a
non-discriminatory basis. Under this open access standard, common carriers must
offer service to all similarly situated shippers requesting service on the same
terms and under the same rates. When oil pipelines operate at full capacity,
access is governed by prorationing provisions set forth in the pipelines’
published tariffs. Accordingly, we believe that access to oil pipeline
transportation services generally will be available to us to the same extent as
to our competitors.





Regulation
of Sale and Transportation of Natural Gas





Historically,
the transportation and sale for resale of natural gas in interstate commerce
have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas
Policy Act of 1978 and regulations issued under those Acts by the FERC. In the
past, the federal government has regulated the prices at which natural gas could
be sold. While sales by producers of natural gas can currently be made at
uncontrolled market prices, Congress could reenact price controls in the future.
Deregulation of wellhead natural gas sales began with the enactment of the
Natural Gas Policy Act. In 1989, Congress enacted the Natural Gas Wellhead
Decontrol Act. The Decontrol Act removed all Natural Gas Act and Natural Gas
Policy Act price and non-price controls affecting wellhead sales of natural gas
effective January 1, 1993.





FERC
regulates interstate natural gas transportation rates and service conditions,
which affects the marketing of natural gas that we produce, as well as the
revenues we receive for sales of our natural gas. Since 1985, the FERC has
endeavored to make natural gas transportation more accessible to natural gas
buyers and sellers. The FERC has stated that open access policies are necessary
to improve the competitive structure of the interstate natural gas pipeline
industry and to create a regulatory framework that will put natural gas sellers
into more direct contractual relations with natural gas buyers by, among other
things, unbundling the sale of natural gas from the sale of transportation and
storage services. Beginning in 1992, the FERC issued Order No. 636 and a
series of related orders to implement its open access policies. As a result of
the Order No. 636 program, the marketing and pricing of natural gas have
been significantly altered. The interstate pipelines’ traditional role as
wholesalers of natural gas has been eliminated and replaced by a structure under
which pipelines provide transportation and storage service on an open access
basis to others who buy and sell natural gas. Although the FERC’s orders do not
directly regulate natural gas producers, they are intended to foster increased
competition within all phases of the natural gas industry.





6
 Index





In 2000,
the FERC issued Order No. 637 and subsequent orders, which imposed a number
of additional reforms designed to enhance competition in natural gas markets.
Among other things, Order No. 637 effected changes in FERC regulations
relating to scheduling procedures, capacity segmentation, penalties, rights of
first refusal and information reporting.





We cannot
accurately predict whether the FERC’s actions will achieve the goal of
increasing competition in markets in which our natural gas is sold. Additional
proposals and proceedings that might affect the natural gas industry are pending
before the FERC and the courts. The natural gas industry historically has been
very heavily regulated. Therefore, we cannot provide any assurance that the less
stringent regulatory approach recently established by the FERC will continue.
However, we do not believe that any action taken will affect us in a way that
materially differs from the way it affects other natural gas
producers.





Gathering
service, which occurs upstream of jurisdictional transmission services, is
regulated by the states on shore and in state waters. Although its policy is
still in flux, FERC has reclassified certain jurisdictional transmission
facilities as non-jurisdictional gathering facilities, which has the tendency to
increase our costs of getting natural gas to point of sale
locations.





Intrastate
natural gas transportation is also subject to regulation by state regulatory
agencies. The basis for intrastate regulation of natural gas transportation and
the degree of regulatory oversight and scrutiny given to intrastate natural gas
pipeline rates and services varies from state to state. Insofar as such
regulation within a particular state will generally affect all intrastate
natural gas shippers within the state on a comparable basis, we believe that the
regulation of similarly situated intrastate natural gas transportation in any
states in which we operate and ship natural gas on an intrastate basis will not
affect our operations in any way that is of material difference from those of
our competitors. Like the regulation of interstate transportation rates, the
regulation of intrastate transportation rates affects the marketing of natural
gas that we produce, as well as the revenues we receive for sales of our natural
gas.





ENVIRONMENTAL
REGULATION





Our
activities will be subject to existing federal, state and local laws and
regulations governing environmental quality and pollution control. Our
operations will be subject to stringent environmental regulation by state and
federal authorities including the Environmental Protection Agency .Such
regulation can increase the cost of such activities. In most instances, the
regulatory requirements relate to water and air pollution control
measures.  Management believes that we are in substantial compliance
with current applicable environmental laws and regulations.





Waste
Disposal





The
Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes,
affect minerals exploration and production activities by imposing regulations on
the generation, transportation, treatment, storage, disposal and cleanup of
“hazardous wastes” and on the disposal of non-hazardous wastes. Under the
auspices of the EPA, the individual states administer some or all of the
provisions of RCRA, sometimes in conjunction with their own, more stringent
requirements.





Comprehensive
Environmental Response, Compensation and Liability





The
federal Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”) imposes joint and several liabilities for costs of investigation and
remediation and for natural resource damages, without regard to fault or the
legality of the original conduct, on certain classes of persons with respect to
the release into the environment of substances designated under CERCLA as
hazardous substances (“Hazardous Substances”). These classes of persons or
potentially responsible parties include the current and certain past owners and
operators of a facility or property where there is or has been a release or
threat of release of a Hazardous Substance and persons who disposed of or
arranged for the disposal of the Hazardous Substances found at such a facility.
CERCLA also authorizes the EPA and, in some cases, third parties to take actions
in response to threats to the public health or the environment and to seek to
recover the costs of such action. We may also in the future become an owner of
facilities on which Hazardous Substances have been released by previous owners
or operators. We may in the future be responsible under CERCLA for all or part
of the costs to clean up facilities or property at which such substances have
been released and for natural resource damages.





7
 Index





Air
Emissions





Our
operations are subject to local, state and federal regulations for the control
of emissions of air pollution. Major sources of air pollutants are subject to
more stringent, federally imposed permitting requirements. The Federal Clean Air
Act and comparable state laws regulate emissions of various air pollutants
through air emissions permitting programs and the imposition of other
requirements. In addition, EPA has developed and continues to develop stringent
regulations governing emissions of toxic air pollutants at specified sources.
Federal and state regulatory agencies can impose administrative, civil and
criminal penalties for non-compliance with air permits or other requirements of
the Federal Clean Air Act and associated state laws and regulations. Oil and gas
operations may in certain circumstances and locations be subject to permits and
restrictions under these statutes for emissions of air pollutants, including
volatile organic compounds, nitrous oxides, and hydrogen sulfide. Alternatively,
regulatory agencies could require us to forego construction, modification or
operation of certain air emission sources.





Clean
Water Act





The Clean
Water Act (“CWA”) imposes restrictions and strict controls regarding the
discharge of wastes, including mineral processing wastes, into waters of the
United States, a term broadly defined. Permits must be obtained to discharge
pollutants into federal waters. The CWA provides for civil, criminal and
administrative penalties for unauthorized discharges of hazardous substances and
other pollutants. It imposes substantial potential liability for the costs of
removal or remediation associated with discharges of oil or hazardous
substances. State laws governing discharges to water also provide varying civil,
criminal and administrative penalties and impose liabilities in the case of a
discharge of petroleum or it derivatives, or other hazardous substances, into
state waters. In addition, the EPA has promulgated regulations that may require
us to obtain permits to discharge storm water runoff. In the event of an
unauthorized discharge of wastes, we may be liable for penalties and
costs.





The Oil
Pollution Act of 1990, or OPA, which amends and augments the Clean Water Act,
establishes strict liability for owners and operators of facilities that are the
site of a release of oil into waters of the United States. In addition, OPA and
regulations promulgated pursuant thereto impose a variety of regulations on
responsible parties related to the prevention of oil spills and liability for
damages resulting from such spills. OPA also requires certain oil and natural
gas operators to develop, implement and maintain facility response plans,
conduct annual spill training for certain employees and provide varying degrees
of financial assurance.





National
Environmental Policy Act





Oil and
natural gas exploration and production activities on federal lands are subject
to the National Environmental Policy Act, or NEPA. NEPA requires federal
agencies, including the Department of Interior, to evaluate major agency actions
that have the potential to significantly impact the environment. In the course
of such evaluations, an agency will prepare an Environmental Assessment that
assesses the potential direct, indirect and cumulative impacts of a proposed
project and, if necessary, will prepare a more detailed Environmental Impact
Statement that may be made available for public review and comment. All of our
current exploration and production activities, as well as proposed exploration
and development plans, on federal lands require governmental permits that are
subject to the requirements of NEPA. This process has the potential to delay the
development of oil and natural gas projects.





Endangered
Species, Wetlands and Damages to Natural Resources





Various
state and federal statutes prohibit certain actions that adversely affect
endangered or threatened species and their habitat, migratory birds, wetlands,
and natural resources. These statutes include the Endangered Species Act, the
Migratory Bird Treaty Act, the CWA and CERCLA. Where takings of or harm to
species or damages to wetlands, habitat, or natural resources occur or may
occur, government entities or at times private parties may act to prevent oil
and gas exploration or production or seek damages to species, habitat, or
natural resources resulting from filling or construction or releases of oil,
wastes, hazardous substances or other regulated materials.





OSHA
and Other Laws and Regulations





We are
subject to the requirements of the federal Occupational Safety and Health Act
(OSHA) and comparable state statutes. The OSHA hazard communication standard,
the Emergency Planning and Community Right to Know Act and similar state
statutes require that we organize and/or disclose information about hazardous
materials stored, used or produced in our operations.





8
 Index





Recent
studies have indicated that emissions of certain gases may be contributing to
warming of the Earth’s atmosphere. In response to these studies, many nations
have agreed to limit emissions of “greenhouse gases” pursuant to the United
Nations Framework Convention on Climate Change, also known as the “Kyoto
Protocol.” Methane, a primary component of natural gas, and carbon dioxide, a
byproduct of the burning of oil and natural gas, and refined petroleum products,
are “greenhouse gases” regulated by the Kyoto Protocol. Although the United
States is not participating in the Kyoto Protocol, several states have adopted
legislation and regulations to reduce emissions of greenhouse gases.
Restrictions on emissions of methane or carbon dioxide that may be imposed in
various states could adversely affect our operations and demand for our
products. Additionally, the U.S. Supreme Court has ruled, in Massachusetts, et
al. v. EPA, that the U.S. Environmental Protection Agency abused its discretion
under the Clean Air Act by refusing to regulate carbon dioxide emissions from
mobile sources. This Supreme Court decision could result in federal regulation
of carbon dioxide emissions and other greenhouse gases, and may affect the
outcome of other climate change lawsuits pending in U.S. federal courts in a
manner unfavorable to our industry. Currently, our operations are not adversely
impacted by existing state and local climate change initiatives and, at this
time, it is not possible to accurately estimate how potential future laws or
regulations addressing greenhouse gas emissions would impact our
business.





Texas
Railroad Commission





The State
of Texas has promulgated certain legislative rules pertaining to exploration,
development and production of oil and gas that are administered by the Texas
Railroad Commission. The rules govern permitting for new drilling, inspection of
wells, fiscal responsibility of operators, bonding wells, the disposal of solid
waste, water discharge, spill prevention, liquid injection, waste disposal
wells, schedules that determine the procedures for plugging and abandonment of
wells, reclamation, annual reports and compliance with state and federal
environmental protection laws. We believe that we will function in compliance
with these rules.




Private
Lawsuits




In
addition to claims arising under state and federal statutes, where a release or
spill of hazardous substances, oil and gas or oil and gas wastes have occurred,
private parties or landowners may bring lawsuits against oil and gas companies
under state law. The plaintiffs may seek property damages, personal injury
damages, remediation costs or injunctions to require remediation or restoration
of contaminated property, soil, groundwater or surface water. In some cases, oil
and gas operations are located near populated areas and emissions or accidental
releases could affect the surrounding properties and population.




EMPLOYEES





Samuel
Skipper is our President and Chief Executive Officer and N. Wilson Thomas is our
Chief Financial Officer. These individuals are primarily responsible for the
majority of our day-to-day operations. Other services may be provided by
outsourcing and consultants and special purpose contracts. We currently employ
five persons on a full time basis and contract with approximately two
individuals for ongoing services provided to us. On March 1, 2009, the Company
hired Ray Ward as Chief Operating Officer, increasing the total number of
employees to six.





ORGANIZATIONAL
HISTORY





We were
incorporated under the laws of the State of Utah in 1989 under the name
“Bluefield Enterprises Inc.” During July 1992, we merged with Optical Express
Inc. wherein our name as changed to “Optical Express Inc.” During August 1993,
we then merged with The AppleTree Companies, Inc., whereby we were
reincorporated as a Delaware corporation and the operating subsidiary of The
AppleTree Company, Inc. and our name was changed to J R Bassett Optical Inc.
During April 1997, The AppleTree Companies, Inc. filed chapter 11 Bankruptcy in
the U.S. Bankruptcy Court for the Eastern District of Virginia. The U.S.
Bankruptcy Court subsequently approved the sale of 28,367,500 shares of J R
Bassett Optical Inc. owned by record by The AppleTree Companies, Inc. to Robert
E. Williams.





On
October 19, 2005, Robert E. Williams sold to Samuel Skipper approximately
28,800,000 shares of common stock of J R Bassett Optical Inc. for nominal
consideration and our name was subsequently changed to Samurai Energy Corp. On
June 30, 2006, The Company, Samurai Energy Corp. (“Samurai Energy”), and SEI
Acquisition Corp., the wholly owned subsidiary of Samurai Energy (“SEI”),
entered into an agreement and plan of merger (the “Merger Agreement”). In
accordance with the terms and provisions of the Merger Agreement and Nevada law:
(i) each three shares of the Company were exchanged for one fully paid
non-assessable share of the common stock of Samurai Energy, pursuant to which
Samurai Energy issued an aggregate of 1,415,999 shares of its common stock to
the shareholders of the Company; (ii) the separate corporate existence of SEI
ceased; and (iii) the Company was the surviving entity. After completion of the
transactions contemplated by the Merger Agreement, the Company became a
wholly-owned subsidiary of Samurai Energy and Samurai Energy merged with and
into the Company for the purpose of reincorporating under the laws of Nevada. On
August 28, 2006, the reincorporation became effective resulting in Samurai
Energy continuing its corporate existence in the State of Nevada under the name
ECCO Energy Corp.





9
 Index





The
acquisition has been accounted for as a business combination between entities
under common control similar to a pooling of interest. Prior to the Merger
Agreement, Samurai and the Company were controlled by the same management group
and had certain common ownership interests in their respective common stock.
Therefore, the Company recorded the acquisition of the Company at the carrying
value of the assets acquired with no adjustment for the fair value of the assets
acquired.





On March
14, 2007, our shares of common stock commenced trading on the Over-the-Counter
Bulletin Board under the symbol: “ECCE.OB.”  Our transfer agent is
Standard Registrar and Transfer, Draper, UT.





INSURANCE





We
currently maintain insurance coverage in amounts that we deem reasonable
for our current operations.





RESEARCH
& DEVELOPMENT





During
each of the last two fiscal years, the Company has not expended any capital on
research and development activities.





ITEM1.A.  RISK FACTORS





An
investment in our common stock involves a number of very significant risks. You
should carefully consider the following risks and uncertainties in addition to
other information in evaluating our company and its business before purchasing
shares of our common stock. Our business, operating results and financial
condition could be seriously harmed due to any of the following risks. The risks
described below are all of the material risks that we are currently aware of
that are facing our company. Additional risks not presently known to us may also
impair our business operations. You could lose all or part of your investment
due to any of these risks.





Risks
Related to our Financial Condition





We
are an early stage business and, as such, there is a risk of
failure.





Any
investment in ECCE should be considered a high-risk investment because investors
will be placing funds at risk in an early stage business with unforeseen costs,
expenses, competition, a history of operating losses and other problems to which
start-up ventures are often subject. Investors should not invest in ECCE unless
they can afford to lose their entire investment.  Your investment must
be considered in light of the risks, expenses, and difficulties encountered in
establishing a new business in a highly competitive and mature industry. Our
limited business history will make it difficult for you to analyze or to aid you
in making an informed judgment concerning the merits of an investment in
ECCE.





We
currently have revenues, but we are not profitable.





For the
year ended December 31, 2008, the Company had revenues of approximately
$432,959.  During this period, the Company had a net loss of
($2,040,477).  There can be no assurance that the Company will have
income from operations or net income in fiscal 2009 or thereafter.





10
 Index





We
have negative cash flow from operations.





We have
experienced losses and negative cash flows from operations since our inception.
These conditions raise substantial doubt about our ability to continue as a
going concern and management is attempting to raise additional capital to
address our liquidity. There can be no assurance that we will ever be able to
generate positive cash flow from operations.





We
will need additional capital in 2009 to implement our business plan and/or meet
our financial obligations.





At
December 31, 2008, we had a working capital deficit of
($2,413,238).  We will need to raise additional capital in the second
quarter of 2009 to fund general corporate working capital
needs.  Additionally, in 2009 the Company will be required to (i)
repay a $1,000,000 note, plus accrued interest, in connection with the
acquisition of the Pipeline, (ii) a $328,578 note with Ray Nesbitt, plus accrued
interest, (iii) a $25,000 note to Louisiana X Partners, plus accrued interest,
in connection with the purchase of the Louisiana Shelf property, and (iv) a
$25,000 note to Bamco Inc, plus accrued interest, in connection with the
purchase of the Louisiana Shelf property.  We also have a $444,821
demand note payable to Samurai Corp. and to Sam Skipper, with no interest
due.  As the Company has no debt or equity funding commitments, we
will need to rely upon best efforts financings.  There can be no
assurance that the Company will be successful in raising the required
capital.  The failure to raise sufficient capital through future debt
or equity financings or otherwise may cause the Company to curtail operations,
sell assets, or result in the failure of our business.





We
will need to obtain additional financing to complete further
exploration.





A
substantial portion of our proved oil and gas reserves are
undeveloped.  At December 31, 2008, we estimated that we would require
a total of $15 million of development costs to recover approximately $38 million
of discounted pretax cash flows from our reserves.





We will
require significant additional financing in order to continue our exploration,
development and production activities and our assessment of the commercial
viability of our properties. Furthermore, if the costs of our planned
exploration, development and production programs are greater than anticipated,
we may have to seek additional funds through public or private share offerings
or arrangements with partners. There can be no assurance that we will be
successful in our efforts to raise these required funds, or on terms
satisfactory to us. The continued exploration of properties and the development
of our business will depend upon our ability to establish the commercial
viability of our oil and gas properties and to ultimately develop cash flow from
operations and reach profitable operations. Although we have generated revenue
from operations, we are experiencing a negative cash flow. Accordingly, the only
other sources of funds presently available to us may be through the sale of
equity or through debt financing. It is possible that debt financing may not be
an alternative to us, due to the general instability of the credit market in the
current economic environment. Alternatively, we may finance our business by
offering an interest in prospective oil and gas properties to be earned by
another party or parties carrying out further exploration and development
thereof or to obtain project or operating financing from financial institutions.
If we are unable to obtain this additional financing, we will not be able to
continue our business activities and our assessment of the commercial viability
of our properties. Further, if we are able to establish that development of our
properties is commercially viable, our inability to raise additional financing
at this stage would result in our inability to place our properties into
production and recover our investment.





Risks
Related to our Business





We
depend on successful exploration, development and acquisitions to maintain
revenue in the future.





In
general, the volume of production from natural gas and oil properties declines
as reserves are depleted, with the rate of decline depending on reservoir
characteristics. Except to the extent that we conduct successful exploration and
development activities or acquire properties containing proved reserves, or
both, our proved reserves will decline as reserves are produced. Our future
natural gas and oil production is, therefore, highly dependent on our level of
success in finding or acquiring additional reserves. Additionally, the business
of exploring for, developing, or acquiring reserves is capital intensive.
Recovery of our reserves, particularly undeveloped reserves, will require
significant additional capital expenditures and successful drilling operations.
Our ability to make the necessary capital investment to maintain or expand our
asset base of natural gas and oil reserves will be impaired unless other
external sources of capital become available. In addition, we may be required to
find partners for any future exploratory activity. To the extent that others in
the industry do not have the financial resources or choose not to participate in
our exploration activities, we will be adversely affected.





11
 Index





Although
certain of our oil and gas properties contain known reserves, we may not
discover commercially exploitable quantities of oil or gas on other potential
oil and gas properties that would enable us to enter into commercial production,
achieve revenues and recover the money we spend on exploration.





There is
no assurance that any prospective oil and gas exploration and development
programs will result in establishment of reserves. Although our current oil and
gas properties are in the production stage, future prospective properties may be
only in the development stage and have no known body of reserves. Unproved or
proved reserves on these properties may never be determined to be economical. We
plan to conduct further exploration and development activities on properties,
which may include the completion of feasibility studies necessary to evaluate
whether a commercial reserve exists on any of the properties. There is a
substantial risk that these exploration activities will not result in
discoveries of commercially recoverable reserves of oil and gas. Any
determination that properties contain commercially recoverable quantities of oil
and gas may not be reached until such time that final comprehensive feasibility
studies have been concluded that establish that a reserve is likely to be
economic. There is a substantial risk that any preliminary or final feasibility
studies carried out by us will not result in a positive determination that such
properties can be commercially developed.





Reserve
estimates depend on many assumptions that may turn out to be inaccurate. Any
material inaccuracies in these reserve estimates or underlying assumptions will
materially affect the quantities and present value of our reserves.





The
process of estimating oil and natural gas reserves is complex. It requires
interpretations of available technical data and many assumptions, including
assumptions relating to economic factors. Any significant inaccuracies in these
interpretations or assumptions could materially affect the estimated quantities
and present value of our reported reserves. In order to prepare our estimates,
we must project production rates and the timing of development expenditures. We
must also analyze available geological, geophysical, production and engineering
data. The extent, quality and reliability of this data can vary. The process
also requires that economic assumptions be made about matters such as oil and
natural gas prices, drilling and operating expenses, capital expenditures, taxes
and availability of funds. Therefore, estimates of oil and natural gas reserves
are inherently imprecise.





Actual
future production, oil and natural gas prices received, revenues, taxes,
development expenditures, operating expenses and quantities of recoverable oil
and natural gas reserves most likely will vary from our estimates. Any
significant variance could materially affect the estimated quantities and
present value of our reported reserves. In addition, we may adjust estimates of
proved reserves to reflect production history, results of exploration and
development, prevailing oil and natural gas prices and other factors, many of
which are beyond our control.





Exploration
activities on oil and gas properties may not be commercially successful, which
could lead us to abandon our plans to develop the property and our investments
in exploration.





Our
long-term success depends on our ability to establish commercially recoverable
quantities of oil and gas on our properties that can then be developed into
commercially viable drilling operations. Oil and gas exploration is highly
speculative in nature, involves many risks and is frequently non-productive.
These risks include unusual or unexpected geologic formations, and the inability
to obtain suitable or adequate machinery, equipment or labor. The success of oil
and gas exploration is determined in part by the following factors:


·
              identification
      of potential reserves based on superficial
  analysis;


·
              availability
      of government-granted exploration
permits;


·
              the
      quality of management and geological and technical
      expertise; and


·
              the
      capital available for exploration and
  development.





Substantial
expenditures are required to establish proven and probable reserves through
drilling and analysis, and to develop the drilling and processing facilities and
infrastructure at any site chosen. Whether a property will be commercially
viable depends on a number of factors, which include, without limitation, the
particular attributes of the property, such as size, grade and proximity to
infrastructure; oil and gas prices, which fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of oil and gas
and environmental protection. We may invest significant capital and resources in
exploration activities and abandon such investments if we are unable to identify
commercially exploitable oil and gas reserves. The decision to abandon a project
may reduce the future trading price of our common stock and impair our ability
to raise financing. We cannot provide any assurance to investors that we will
discover or acquire any oil and gas reserves in sufficient quantities on any
properties to justify commercial operations. Further, we will not be able to
recover the funds that we may spend on exploration if we are not able to
establish commercially recoverable quantities of oil and gas.





12
 Index





As
part of our growth strategy, we intend to acquire additional oil and gas
properties.





As part
of our growth strategy, we intend to acquire additional oil and gas production
properties. Current and subsequent acquisitions may pose substantial risks to
our business, financial condition, and results of operations. In pursuing
acquisitions, we will compete with other companies, many of which have greater
financial and other resources to acquire attractive properties. Even if we are
successful in acquiring additional properties, some of the properties may not
produce positive results of exploration, or we may not complete exploration of
such prospects within specified time periods that may cause the forfeiture of
the lease in that prospect. There can be no assurance that we will be able to
successfully integrate acquired properties, which could result in substantial
costs and delays or other operational, technical, or financial problems.
Further, acquisitions could disrupt ongoing business operations. If we fail to
drill in a timely manner on our properties, the State may cancel our leases. If
any of these events occur, it would have a material adverse effect upon our
operations and results from operations.





We
are a new entrant into the oil and gas exploration and development industry
without a profitable operating history.





Our
recent activities have been limited to organizational efforts, obtaining working
capital and acquiring and developing a very limited number of properties. As a
result, there is limited information regarding production or revenue generation.
Further, our future revenues may be limited.





The
business of oil and gas exploration and development is subject to many risks and
if oil and gas is found in economic production quantities, the potential
profitability of future possible oil and gas ventures depends upon factors
beyond our control. The potential profitability of oil and gas properties if
economic quantities of oil and gas are found is dependent upon many factors and
risks beyond our control, including, but not limited to: (i) unanticipated
ground conditions; (ii) geological problems; (iii) drilling and other processing
problems; (iv) the occurrence of unusual weather or operating conditions and
other force majeure events; (v) lower than expected reserve quantities; (vi)
accidents; (vii) delays in the receipt of or failure to receive necessary
government permits; (viii) delays in transportation; (ix) labor disputes; (x)
government permit restrictions and regulation restrictions; (xi) unavailability
of materials and equipment; and (xii) the failure of equipment or drilling to
operate in accordance with specifications or expectations.





Our
drilling operations may not be successful.





In the
event we acquire additional oil and gas properties, we intend to test certain
zones in wellbores already drilled on the properties and if results are positive
and capital is available, drill additional wells and begin production operations
from existing and new wells. There can be no assurance that such well
re-completion activities or future drilling activities will be successful, and
we cannot be sure that our overall drilling success rate or our production
operations within a particular area will ever come to fruition and, if it does,
will not decline over time. We may not recover all or any portion of our capital
investment in the wells or the underlying leaseholds. Unsuccessful drilling
activities would have a material adverse effect upon our results of operations
and financial condition. The cost of drilling, completing, and operating wells
is often uncertain, and a number of factors can delay or prevent drilling
operations including: (i) unexpected drilling conditions; (ii) pressure or
irregularities in geological formations; (iii) equipment failures or accidents;
(iv) adverse weather conditions; and (iv) shortages or delays in availability of
drilling rigs and delivery of equipment.





Prospects
that we decide to drill may not yield natural gas or oil in commercially viable
quantities.





We
describe some of our current prospects in this Annual Report. Our prospects are
in various stages of preliminary evaluation and assessment and we have not
reached the point where we will decide to drill at all on the subject prospects.
However, the use of seismic data, historical drilling logs, offsetting well
information, and other technologies and the study of producing fields in the
same area will not enable us to know conclusively prior to drilling and testing
whether natural gas or oil will be present or, if present, whether natural gas
or oil will be present in sufficient quantities or quality to recover drilling
or completion costs or to be economically viable. In sum, the cost of drilling,
completing and operating any wells is often uncertain and new wells may not be
productive.





13
 Index





We
may be unable to identify liabilities associated with the properties or obtain
protection from sellers against them.





One of
our growth strategies is to capitalize on opportunistic acquisitions of oil and
natural gas reserves. However, our reviews of acquired properties are inherently
incomplete because it generally is not feasible to review in depth every
individual property involved in each acquisition. A detailed review of records
and properties may not necessarily reveal existing or potential problems, nor
will it permit a buyer to become sufficiently familiar with the properties to
assess fully their deficiencies and potential. Further, environmental problems,
such as ground water contamination, are not necessarily observable even when an
inspection is undertaken. We may not be able to obtain indemnification or other
protections from the sellers against such potential liabilities, which would
have a material adverse effect upon our results of operations.





The
potential profitability of oil and gas ventures depends upon global political
and market related factors beyond our control.





World
prices and markets for oil and gas are unpredictable, highly volatile,
potentially subject to governmental fixing, pegging, controls, or any
combination of these and other factors, and respond to changes in domestic,
international, political, social, and economic environments. Additionally, due
to worldwide economic uncertainty, the availability and cost of funds for
production and other expenses have become increasingly difficult, if not
impossible, to project. These and other changes and events may materially affect
our financial performance. The potential profitability of oil and gas properties
is dependent on these and other factors beyond our control.





Production
or oil and gas resources if found are dependent on numerous operational
uncertainties specific to the area of the resource that affects its
profitability.





Production
area specifics affect profitability. Adverse weather conditions can hinder
drilling operations and ongoing production work. A productive well may become
uneconomic in the event water or other deleterious substances are encountered
which impair or prevent the production of oil and/or gas from the well.
Production and treatments on other wells in the area can have either a positive
or negative effect on our production and wells. In addition, production from any
well may be unmarketable if it is impregnated with water or other deleterious
substances. The content of hydrocarbons is subject to change over the life of
producing wells. The marketability of oil and gas from any specific reserve
which may be acquired or discovered will be affected by numerous factors beyond
our control. These factors include, but are not limited to, the proximity and
capacity of oil and gas pipelines, availability of room in the pipelines to
accommodate additional production, processing and production equipment operating
costs and equipment efficiency, market fluctuations of prices and oil and gas
marketing relationships, local and state taxes, mineral owner and other
royalties, land tenure, lease bonus costs and lease damage costs, allowable
production, and environmental protection. These factors cannot be accurately
predicted and the combination of these factors may result in us not receiving an
adequate return on our invested capital.





We
are dependent upon transportation and storage services provided by third
parties.





We are
dependent on the transportation and storage services offered by various
interstate and intrastate pipeline companies for the delivery and sale of our
oil and gas supplies.  Both the performance of transportation and
storage services by interstate pipelines and the rates charged for such services
are subject to the jurisdiction of the Federal Energy Regulatory Commission or
state regulatory agencies. An inability to obtain transportation and/or storage
services at competitive rates could hinder our processing and marketing
operations and/or affect our sales margins.





Our
results of operations are dependent upon market prices for oil and gas, which
fluctuate widely and are beyond our control.





If and
when production from oil and gas properties is reached, our revenue,
profitability, and cash flow depend upon the prices and demand for oil and
natural gas. The markets for these commodities are very volatile and even
relatively modest drops in prices can significantly affect our financial results
and impede our growth. Prices received also will affect the amount of future
cash flow available for capital expenditures and may affect our ability to raise
additional capital. Lower prices may also affect the amount of natural gas and
oil that can be economically produced from reserves either discovered or
acquired. Factors that can cause price fluctuations include: (i) the level of
consumer product demand; (ii) domestic and foreign governmental regulations;
(iii) the price and availability of alternative fuels; (iv) technical advances
affecting energy consumption; (v) proximity and capacity of oil and gas
pipelines and other transportation facilities; (vi) political conditions in
natural gas and oil producing regions; (vii) the domestic and foreign supply of
natural gas and oil; (viii) the ability of members of Organization of Petroleum
Exporting Countries to agree to and maintain oil price and production controls;
(ix) the price of foreign imports; and (x) overall domestic and global economic
conditions.





14
 Index





The
availability of a ready market for our oil and gas depends upon numerous factors
beyond our control, including the extent of domestic production and importation
of oil and gas, the relative status of the domestic and international economies,
the proximity of our properties to gas gathering systems, the capacity of those
systems, the marketing of other competitive fuels, fluctuations in seasonal
demand and governmental regulation of production, refining, transportation and
pricing of oil, natural gas and other fuels.





The
oil and gas industry in which we operate involves many industry related
operating and implementation risks that can cause substantial losses, including,
but not limited to, unproductive wells, natural disasters, facility and
equipment problems and environmental hazards.





Our
success largely depends on the success of our exploitation, exploration,
development and production activities. Our oil and natural gas exploration and
production activities are subject to numerous risks beyond our control,
including the risk that drilling will not result in commercially viable oil or
natural gas production. Drilling for oil and natural gas can be unprofitable,
not only from dry holes, but from productive wells that do not produce
sufficient revenues to return a profit. In addition, our drilling and producing
operations may be curtailed, delayed or canceled as a result of other drilling
and production, weather and natural disaster, equipment and service failure,
environmental and regulatory, and site specific related factors, including but
not limited to: (i) fires; (ii) explosions; (iii) blow-outs and surface
fractures; (iv) uncontrollable flows of underground natural gas, oil, or
formation water; (v) natural disasters; (vi) facility and equipment failures;
(vii) title problems; (viii) shortages or delivery delays of equipment and
services; (ix) abnormal pressure formations; and (x) environmental hazards such
as natural gas leaks, oil spills, pipeline ruptures and discharges of toxic
gases. 1(xi) weather related events such as hurricanes can cause disruption of
deliveries or destruction of producing facilities, either on or off
shore.  Such damage may be to our facilities or to facilities operated
by other companies needed for the delivery of our production.





If any of
these events occur, we could incur substantial losses as a result of: (i) injury
or loss of life; (ii) severe damage to and destruction of property, natural
resources or equipment; (iii) pollution and other environmental damage; (iv)
clean-up responsibilities; (v) regulatory investigation and penalties; (vi)
suspension of our operations; or (vii) repairs necessary to resume
operations.





If we
were to experience any of these problems, it could affect well bores, gathering
systems and processing facilities, any one of which could adversely affect our
ability to conduct operations. We may be affected by any of these events more
than larger companies, since we have limited working capital.





Our
producing properties are located in regions which make us vulnerable to risks
associated with operating in a limited number of geographic areas, including the
risk of damage or business interruptions from hurricanes.




Our
properties are geographically located in the Texas Gulf Coast region. As a
result, we may be affected by any delays or interruptions in production or
transportation in these areas caused by governmental regulation, transportation
capacity constraints, natural disasters, regional price fluctuations or other
factors.





Such
disturbances could in the future have any or all of the following adverse
effects on our business:




·
            interruptions to our operations
      as we suspend any production in advance of an approaching
      storm;




·
            damage to our facilities and
      equipment, including damage that disrupts or delays any production;
      and




·
            disruption to any transportation
      systems we may rely upon for
delivery.





Terrorist
attacks aimed at our energy operations could adversely affect our
business.





The
continued threat of terrorism and the impact of military and other government
action has led and may lead to further increased volatility in prices for oil
and natural gas and could affect these commodity markets or the financial
markets used by us. In addition, the U.S. government has issued warnings that
energy assets may be a future target of terrorist organizations. These
developments have subjected our oil and natural gas operations to increased
risks. Any future terrorist attack.





15
 Index





The
oil and gas industry is highly competitive and there is no assurance that we
will be successful in acquiring leases.





The oil
and natural gas industry is intensely competitive, and we compete with other
companies that have greater resources. Many of these companies not only explore
for and produce oil and natural gas, but also carry on refining operations and
market petroleum and other products on a regional, national or worldwide basis.
These companies may be able to pay more for productive oil and natural gas
properties and exploratory prospects or define, evaluate, bid for and purchase a
greater number of properties and prospects than our financial or human resources
permit. In addition, these companies may have a greater ability to continue
exploration activities during periods of low oil and natural gas market prices.
Our larger competitors may be able to absorb the burden of present and future
federal, state, local and other laws and regulations more easily than we can,
which would adversely affect our competitive position. Our ability to acquire
additional properties and to discover reserves in the future will be dependent
upon our ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. In addition, because we have
fewer financial and human resources than many companies in our industry, we may
be at a disadvantage in bidding for exploratory prospects and producing oil and
natural gas properties.





We
may not be able to keep pace with technological developments in our
industry.





The
natural gas and oil industry is characterized by rapid and significant
technological advancements and introduction of new products and services which
utilize new technologies. As others use or develop new technologies, we may be
placed at a competitive disadvantage or competitive pressures may force us to
implement those new technologies at substantial costs. In addition, other
natural gas and oil companies may have greater financial, technical, and
personnel resources that allow them to enjoy technological advantages and may in
the future allow them to implement new technologies before we are able to. We
may not be able to respond to these competitive pressures and implement new
technologies on a timely basis or at an acceptable cost. If one or more of the
technologies we use now or in the future were to become obsolete or if we are
unable to use the most advanced commercially available technology, our business,
financial condition, and results of operations could be materially adversely
affected.





The
marketability of natural resources will be affected by numerous factors beyond
our control, which may result in us not receiving an adequate return on invested
capital to be profitable or viable.





The
marketability of natural resources which may be acquired or discovered by us
will be affected by numerous factors beyond our control. These factors include
market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment, governmental
regulations, land tenure, land use, regulation concerning the importing and
exporting of oil and gas and environmental protection regulations. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in us not receiving an adequate return on invested
capital to be profitable or viable.





Oil
and gas operations are subject to comprehensive regulation which may cause
substantial delays or require capital outlays in excess of those anticipated
causing an adverse effect on our business operations.





Oil and
gas operations are subject to federal, state, and local laws relating to the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations are also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards by regulating the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. Environmental
standards imposed by federal, provincial, or local authorities may be changed
and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us. Additionally, we may be subject to liability for pollution or other
environmental damages which we may elect not to insure against due to
prohibitive premium costs and other reasons. To date we have not been required
to spend material amounts on compliance with environmental regulations. However,
we may be required to do so in future and this may affect our ability to expand
or maintain our operations.





16
 Index





We
may not have enough insurance to cover all of the risks that we face and
operations of prospects in which we participate may not maintain or may fail to
obtain adequate insurance.





We cannot
insure fully against pollution and environmental risks. The occurrence of an
event not fully covered by insurance could have a material adverse effect on our
financial condition and results of operations. The impact of recent hurricanes
has resulted in escalating insurance costs and less favorable coverage
terms.





Oil and
natural gas operations are subject to particular hazards incident to the
drilling and production of oil and natural gas, such as blowouts, cratering,
explosions, uncontrollable flows of oil, natural gas or well fluids, fires and
pollution and other environmental risks. These hazards can cause personal injury
and loss of life, severe damage to and destruction of property and equipment,
pollution or environmental damage and suspension of operation. The occurrence of
a significant adverse event that is not fully covered by insurance could result
in the loss of our total investment in a particular prospect which could have a
material adverse effect on our financial condition and results of
operations





Any
change to government regulation/administrative practices may have a negative
impact on our ability to operate and our profitability.





The laws,
regulations, policies or current administrative practices of any government
body, organization or regulatory agency in the United States or any other
jurisdiction, may be changed, applied or interpreted in a manner which will
fundamentally alter our ability to carry on business. The actions, policies or
regulations, or changes thereto, of any government body or regulatory agency, or
other special interest groups, may have a detrimental effect on us. Any or all
of these situations may have a negative impact on our ability to operate and/or
our profitably.





We
may be unable to retain key employees or consultants or recruit additional
qualified personnel.





Our
extremely limited personnel means that we would be required to spend significant
sums of money to locate and train new employees in the event any of our
employees resign or terminate their employment with us for any reason. Due to
our limited operating history and financial resources, we are entirely dependent
on the continued service of Samuel Skipper, our Chief Executive Officer, and N.
Wilson Thomas, our Chief Financial Officer. Further, we do not have key man life
insurance on either of these individuals. We may not have the financial
resources to hire a replacement if one or both of our officers were to die. The
loss of service of either of these employees could therefore significantly and
adversely affect our operations.





We
may experience difficulty in achieving and managing future growth.





We may
not be successful in upgrading our technical, operations, and administrative
resources or in increasing our ability to internally provide certain of the
services currently provided by outside sources, and we may not be able to
maintain or enter into new relationships with project partners and independent
contractors. Our inability to achieve or manage growth may adversely affect our
financial condition and results of operations.





Nevada
law and our articles of incorporation may protect our directors from certain
types of lawsuits.





Nevada
law provides that our officers and directors will not be liable to us or our
stockholders for monetary damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
officers and directors caused by their negligence, poor judgment or other
circumstances. The indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims, including claims
arising out of their negligence, poor judgment, or other
circumstances.





Risks
Related to Our Common and Preferred Stock





Sales
of a substantial number of shares of our common stock into the public market by
stockholders may result in significant downward pressure on the price of our
common stock and could affect your ability to realize the current trading price
of our common stock.





Sales of
a substantial number of shares of our common stock in the public market by
stockholders could cause a reduction in the market price of our common
stock.  As of the date of this Annual Report, we have 9,424,952 shares
of common stock issued and outstanding, 100,000 of our Series A convertible
preferred stock (“Series A Preferred Stock”) issued and outstanding , 1,000,000
or our Series B convertible preferred stock (“Series B Preferred Stock”)issued
and outstanding, 660,000 of our Series C convertible preferred stock (“Series C
Preferred Stock”)issued and outstanding, and 303,936 of our Series D convertible
preferred stock (“Series D Preferred Stock”).  Each share of our
preferred stock is convertible into one share of our common stock. As of the
date of this Annual Report, there are 7,744,177 outstanding shares of our common
stock and 2,063,936 outstanding shares of our preferred stock that are
restricted securities as that term is defined in Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”). Although the Securities Act and
Rule 144 place certain prohibitions on the sale of restricted securities,
restricted securities may be sold into the public market under certain
conditions.  In the event that any of the convertible preferred shares
of stock are converted into shares of common stock, such shares may be available
for immediate resale which could have an adverse effect on the price of our
common stock.





17
 Index





Any
significant downward pressure on the price of our common stock as stockholders
sell their shares of our common stock could encourage short sales by others. Any
such short sales could place further downward pressure on the price of our
common stock.





The
trading price of our common stock on the OTC Bulletin Board will fluctuate
significantly and stockholders may have difficulty reselling their
shares.





Effective
March 14, 2007, our shares of common stock commenced trading on the
Over-the-County Bulletin Board. There is a volatility associated with Bulletin
Board securities in general and the value of your investment could decline due
to the impact of any of the following factors upon the market price of our
common stock: (i) disappointing results from our discovery or development
efforts; (ii) failure to meet our revenue or profit goals or operating budget;
(iii) decline in demand for our common stock; (iv) downward revisions in
securities analysts' estimates or changes in general market conditions; (v)
technological innovations by competitors or in competing technologies; (vi) lack
of funding generated for operations; (vii) investor perception of our industry
or our prospects; and (viii) general economic trends.





In
addition, stock markets have experienced price and volume fluctuations and the
market prices of securities have been highly volatile. These fluctuations are
often unrelated to operating performance and may adversely affect the market
price of our common stock.





Additional
issuance of equity securities may result in dilution to our existing
stockholders.





Our
Articles of Incorporation authorize the issuance of 75,000,000 shares of common
stock. We have also issued preferred stock classes A, B, C and D. The board of
directors has the authority to issue additional shares of our capital stock to
provide additional financing in the future and the issuance of any such shares
may result in a reduction of the book value or market price of the outstanding
shares of our common stock. If we do issue any such additional shares, such
issuance also will cause a reduction in the proportionate ownership and voting
power of all other stockholders. As a result of such dilution, your
proportionate ownership interest and voting power will be decreased accordingly.
Further, any such issuance could result in a change of control.





There
is not now, and there may not ever be, an active market for the Company’s common
stock.




There
currently is a limited public market for the Company’s common
stock.  Further, although the common stock is currently quoted on the
Over-the-County Bulletin Board, trading of its common stock may be extremely
sporadic.  For example, several days may pass before any shares may be
traded.  As a result, an investor may find it difficult to dispose of,
or to obtain accurate quotations of the price of, the common
stock.  Accordingly, investors must assume they may have to bear the
economic risk of an investment in the common stock for an indefinite period of
time.  This severely limits the liquidity of the common stock, and
would likely have a material adverse effect on the market price of the common
stock and on the Company’s ability to raise additional capital.





The
Company cannot assure you that our common stock will become liquid or that the
common stock will be listed on a securities exchange.




Until the
common stock is listed on an exchange, the Company expects its common stock to
remain eligible for quotation on the Over-the-County Bulletin Board, or on
another over-the-counter quotation system, or in the “pink
sheets.”  In those venues, however, an investor may find it difficult
to obtain accurate quotations as to the market value of the common
stock.  In addition, if the Company fails to meet the criteria set
forth in the SEC regulations, various requirements would be imposed by law on
broker-dealers who sell the Company’s securities to persons other than
established customers and accredited investors.  Consequently, such
regulations may deter broker-dealers from recommending or selling the common
stock, which may further affect the liquidity of the common
stock.  This would also make it more difficult for the Company to
raise additional capital.





18
 Index





Our
common stock is classified as a “penny stock” under SEC rules which limits the
market for our common stock.





The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in "penny stocks." Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system). Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure document prepared by the
SEC, which specifies information about penny stocks and the nature and
significance of risks of the penny stock market. A broker-dealer must also
provide the customer with bid and offer quotations for the penny stock, the
compensation of the broker-dealer, and sales person in the transaction, and
monthly account statements indicating the market value of each penny stock held
in the customer's account. In addition, the penny stock rules require that,
prior to a transaction in a penny stock not otherwise exempt from those rules;
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the trading activity in the secondary market for stock that becomes
subject to those penny stock rules. If a trading market for our common stock
develops, our common stock will probably become subject to the penny stock
rules, and shareholders may have difficulty in selling their
shares.





We
presently do not intend to pay cash dividends on our common stock.





We
currently anticipate that no cash dividends will be paid on the common stock in
the foreseeable future.  Therefore, prospective investors who
anticipate the need for immediate income by way of cash dividends from their
investment should not purchase our common stock.





ITEM1.B.  UNRESOLVED STAFF COMMENTS





Not
applicable.





ITEM2. DESCRIPTION OF PROPERTY





We leased
our principal office space located at 3315 Marquart St, Ste. 206, Houston, Texas
77027 on a month to month basis, which lease was originally cancelable with a
thirty day notice. During 2008, we increased the amount of space leased from
approximately 2,200 to 9,750 square feet.  On January 1, 2009, we
signed a  lease through 2014 on the office space at the 3315 Marquart
St. location.  During fiscal year ended December 31, 2008, aggregate
rent expense was $61,457. The office space cost was   $4,800 per
month during 2008, and is escalating to $14,625 per month in
2009.  The building at Marquart Street is 40% owned by our CEO, Sam
Skipper.





Our
principal assets are oil and gas properties, including a 100% working interest
in oil and gas producing properties located in Nueces County, Texas, and non
producing properties in St. Mary’s Parish, Louisiana and in Cameron Parish,
Louisiana.




ITEM3. LEGAL PROCEEDINGS





None.





ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None.





19
 Index





PART
II





ITEM5.
            MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES





Since
March 14, 2007, our shares of common stock have traded on the Over-the-Counter
Bulletin Board under the symbol: “ECCE.OB”. The market for our common stock is
and will be limited and can be volatile. The following table sets forth the high
and low bid prices relating to our common stock on a quarterly basis for the
periods indicated as compiled by Pink Sheets LLC. These quotations reflect
inter-dealer prices without retail mark-up, mark-down, or commissions, and may
not reflect actual transactions.





Quarter
      Ended
                    
                    High
      Bid
                    
                    
                    Low
      BidDecember
      31, 2008
                    
                    $
                    0.06
                    
                    
                    $
                    0.05September
      30, 2008
                    
                    $
                    1.01
                    
                    
                    $
                    0.06June
      30, 2008
                    
                    $
                    1.01
                    
                    
                    $
                    0.51March
      31, 2008
                    
                    $
                    0.95
                    
                    
                    $
                    0.25December
      31, 2007
                    
                    $
                    1.58
                    
                    
                    $
                    0.30September
      30, 2007
                    
                    $
                    0.45
                    
                    
                    $
                    0.26





As of
April 6, 2009, we had 166 shareholders of record.





DIVIDEND
POLICY





No
dividends have ever been declared by the board of directors on our common stock.
We do not intend to pay cash dividends on our common stock in the foreseeable
future.





SECURITIES
AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS





As of the
date of this Annual Report, we have one equity compensation plan titled the 2005
Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Awards
Plan (the “Plan”).  On December 14, 2005, our board of directors
approved and adopted the Plan. The Plan provides for the issuance of 100,000
shares of common stock.  As of the date of this Quarterly Report, we
have not granted any options under the Plan or outside of any plan.




RECENT
SALES OF UNREGISTERED SECURITIES





As of the
date of this Annual Report and during fiscal years ended December 31, 2008 and
2007, to provide capital, we sold stock in private placement offerings, issued
stock in exchange for our debts or pursuant to contractual agreements as set
forth below.  The issuances of these equity securities were
consummated pursuant to Section 4(2) of the Securities Act and the rules and
regulations promulgated thereunder on the basis that such transactions did not
involve a public offering and the offerees were sophisticated, accredited
investors with access to the kind of information that registration would
provide. The recipient of these securities represented its intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates and other instruments issued in such
transactions.  Unless otherwise noted, no sales commissions were
paid.





Common
Stock





During
2007, we issued 251,750 shares of our common stock to Ronald E. Reece M.D. in
connection with the purchase of the 20% working interest in the Wilson
Properties.





During
2007, we issued 75,000 shares of our common stock to an investor for aggregate
proceeds of $30,000.





20
 Index





During
the first quarter of 2008, we corrected errors relating to the issuance of
shares prior to our change in stock transfer agents.  We determined
that a total of 25,005 shares were not properly recorded during 2007 and prior
years.  These shares were issued to correct prior errors relating to
the former transfer agent.





On June
11, 2008, we issued 5,200 common shares for marketing services valued and
expensed at $5,129.





On August
14, 2008 we issued 10,000 common shares for consulting services valued and
expensed at $10,010.





On
October 1, 2008 we issued 10,000 common shares for consulting services valued
and expensed at $10,010





Preferred
Stock





On
September 28, 2007, we issued 1,000,000 shares of our Series B Preferred Stock
to an aggregate of 16 individuals and entities in connection with the
acquisition of the Louisiana Shelf Property valued at $5,000,000.





In
December 2007, we issued to one individual 660,000 shares of our Series C
Preferred Stock valued at $3,300,000 and 303,936 shares of the our Series D
Preferred Stock valued at $1,519,680 in connection with the acquisition of the
Bateman Lake Field.





Description
of Our Preferred Stock





In
addition to our common stock, we are authorized to issue up to 10,000,000 shares
of preferred stock, par value $.001.  As of the date of this Annual
Report, we have issued and outstanding 100,000 shares of our Series A Preferred
Stock, 1,000,000 shares of our Series B Preferred Stock, 660,000 shares of our
Series C Preferred Stock, and 303,936 shares of our Series D Preferred
Stock.





Series
A Preferred Stock:





On July
17, 2006, in connection with the merger, ECCE issued 100,000 shares of preferred
stock to Mr. Skipper.  The preferred stock of ECCE was valued at
$27,000 and recorded as compensation expense.  The preferred stock is
entitled to the number of votes equal to all votes of other security holders
plus one vote. As a result, Mr. Skipper has voting control of ECCE.





Series
B Preferred Stock





The
Series B Preferred Stock, with an initial value of $5.00 per share, ranks senior
to the Series A Preferred Stock, and ranks in parity as to dividends and
liquidation rights with our Series C Preferred Stock and Series D Preferred
Stock. So long as any Series B Preferred Stock is outstanding, we are prohibited
from issuing any series of stock having rights senior to or ranking on parity
with the Series B Preferred Stock without the approval of the holders of
two-thirds of the outstanding Series B Preferred Stock. The holders of the
outstanding shares of Series B Preferred Stock shall be entitled to receive in
preference to the holders of any other shares of capital stock of the Company
(other than the holders of Series C Preferred Stock and Series D Preferred
Stock), cumulative dividends whether or not declared, and accruing from issuance
at a per share amount equal to 8% per annum of the initial value. Additionally,
upon occurrence of our liquidation, dissolution or winding up, the holder of
shares of Series B Preferred Stock will be entitled to receive, before any
distribution of assets is made to holders of any other shares of capital stock
(other than the holders of Series C Preferred Stock and Series D Preferred
Stock), but only after all distributions to holders of Series B Preferred Stock
have been made in an amount per share of Series B Preferred Stock equal to 100%
of the initial value plus the amount of any accrued but unpaid dividends due for
each share of Series B Preferred Stock. Each share of Series B Preferred Stock
is convertible into fully paid and nonassessable shares of our common stock
determined by dividing the initial value of the Series B Preferred Stock plus
the amount of accrued and unpaid dividends due thereon by the conversion
price.  The initial conversion price is $5.00, and is subject to
adjustment.  Lastly, in addition to the rights discussed above of the
holders of the Series B Preferred Stock, at any time after June 15, 2008, and
provided a triggering event has occurred, each holder of Series B Preferred
Stock shall have the right at such holder’s option to require us to redeem for
cash all or a portion of such holder’s shares of Series B Preferred Stock at a
price per share equal to the liquidation amount. A “triggering event” shall mean
that the wells owned or operated by the limited partnership have generated an
aggregate of 1,500,000,000 cubic feet of natural gas.  No triggering
event has occurred as of the filing of this Annual Report.





21
 Index





Series
C Preferred Stock





The
Series C Preferred Stock, with an initial value of $5.00 per share, ranks senior
to the Series A Preferred Stock, and ranks in parity as to dividends and
liquidation rights with our Series B Preferred Stock and Series D Preferred
Stock. So long as any Series C Preferred Stock is outstanding, we are prohibited
from issuing any series of stock having rights senior to or ranking on parity
with the Series C Preferred Stock without the approval of the holders of
two-thirds of the outstanding Series C Preferred Stock. The holders of the
outstanding shares of Series C Preferred Stock shall be entitled to receive in
preference to the holders of any other shares of capital stock of the Company
(other than the holders of Series B Preferred Stock and Series D Preferred
Stock), cumulative dividends whether or not declared, and accruing from issuance
at a per share amount equal to 8% per annum of the initial value. Additionally,
upon occurrence of our liquidation, dissolution or winding up, the holder of
shares of Series C Preferred Stock will be entitled to receive, before any
distribution of assets is made to holders of any other shares of capital stock
(other than the holders of Series B Preferred Stock and Series D Preferred
Stock), but only after all distributions to holders of Series C Preferred Stock
have been made in an amount per share of Series C Preferred Stock equal to 100%
of the initial value plus the amount of any accrued but unpaid dividends due for
each share of Series C Preferred Stock.  Each share of Series C
Preferred Stock is convertible into fully paid and nonassessable shares of our
common stock determined by dividing the initial value of the Series C Preferred
Stock plus the amount of accrued and unpaid dividends due thereon by the
conversion price.  The initial conversion price is $5.00, and is
subject to adjustment.





Series
D Preferred Stock





The
Series D Preferred Stock, with an initial value of $5.00 per share, ranks senior
to the Series A Preferred Stock, and ranks in parity as to dividends and
liquidation rights with our Series B Preferred Stock and Series C Preferred
Stock. So long as any Series D Preferred Stock is outstanding, we are prohibited
from issuing any series of stock having rights senior to or ranking on parity
with the Series D Preferred Stock without the approval of the holders of 2/3’s
of the outstanding Series D Preferred Stock. The holders of the outstanding
shares of Series D Preferred Stock shall be entitled to receive in preference to
the holders of any other shares of capital stock of the Company (other than the
holders of Series B Preferred Stock and Series C Preferred Stock), cumulative
dividends whether or not declared, and accruing from issuance at a per share
amount equal to 8% per annum of the initial value. Additionally, upon occurrence
of our liquidation, dissolution or winding up, the holder of shares of Series D
Preferred Stock will be entitled to receive, before any distribution of assets
is made to holders of any other shares of capital stock (other than the holders
of Series B Preferred Stock and Series C Preferred Stock), but only after all
distributions to holders of Series D Preferred Stock have been made in an amount
per share of Series D Preferred Stock equal to 100% of the initial value plus
the amount of any accrued but unpaid dividends due for each share of Series D
Preferred Stock. Each share of Series D Preferred Stock is convertible into
fully paid and nonassessable shares of our common stock determined by dividing
the initial value of the Series D Preferred Stock plus the amount of accrued and
unpaid dividends due thereon by the conversion price.  The initial
conversion price is $5.00, and is subject to adjustment.





Commencing
upon the occurrence of a Triggering Event (as defined below), the Corporation
shall have the obligation to redeem on a pro-rata basis, but only for cash, in
an amount equal to  thirty and 19/100 (30.19%) percent
of  all proceeds received by the Corporation under the provisions of
that certain Farmout Agreement between the Corporation and Jurasin Oil &
Gas, Inc. (the “Farmout Agreement”) dated January 11, 2008 (“Proceeds”) from the
Property (as defined below), all or a portion of the holder’s shares of Series D
Convertible Preferred Stock at a price per share of Series D Convertible
Preferred Stock equal to the Liquidation Amount (for this purpose, the “Redemption Price”).
“Triggering
Event” shall be the date on which the Corporation first receives
Proceeds. The Property shall mean the Corporation’s interest in State of
Louisiana Lease No. 1337 (“Lease No. 1337”) located in St. Mary and Terrebonne
Parishes in Louisiana.





In the
event that the Triggering Event has not occurred within nine (9) months from the
date of the filing of this designation with the Secretary of State of the State
of Nevada or after the Triggering Event no redemptions have occurred for a
period of three (3) consecutive calendar months, the Corporation shall have the
obligation to redeem on a pro-rata basis, but only for cash, in an amount equal
to thirty and 19/100 (30.19%) percent of all net proceeds received by the
Corporation from the Property.  The term “Net Proceeds” as used in the
previous sentence shall be the total receipts by the Corporation less any
royalty, overriding royalty, net profits, severance and ad valorem taxes and
reasonable lease operating expenses and capital costs attributable to the
Property which are usual and customary in the industry.  Should the
Corporation develop the mineral interests which are subject to the Farmout
Agreement in whole or in part and/or enter into a subsequent development
arrangement to develop such mineral interests after the termination of the
Farmout Agreement, the Corporation shall have the obligation to redeem on a
pro-rata basis, but only for cash, in an amount equal to thirty and 19/100
(30.19%) percent of all proceeds received by the Corporation under such
development and/or under the provisions of such development
arrangement.





22
 Index





The
following table provides a summary of the potential dilution of common stock
should our Series B, C and/or D Preferred Stock be converted to common
stock.  The Series A Preferred Stock is not
convertible.  These valuations are as of December 31, 2008, and assume
a conversion of one share of preferred for one share of common at the designated
valuation price of $5.00 per share.





Preferred
                                          
                                          
                                          Preferred
                                          
                                          
                                          Accrued
                                          
                                          
                                          Conversion
                                          
                                          
                                          Conversion
                                          
                                          
                                          Number
      of Common SharesShares
                                          
                                          
                                          Shares @$5.00
                                          
                                          
                                          Dividends
                                          
                                          
                                          Valuation
                                          
                                          
                                          Price
                                          
                                          
                                          Issued upon
      ConversionSeries
      B
                                          
                                          
                                          1,000,000
                                          
                                          
                                          $
                                          5,000,000
                                          
                                          
                                          $
                                          500,000
                                          
                                          
                                          $
                                          5,500,000
                                          
                                          
                                          $
                                          5.00
                                          
                                          
                                          
                                          1,100,000Series
      C
                                          
                                          
                                          660,000
                                          
                                          
                                          
                                          3,300,000
                                          
                                          
                                          
                                          264,000
                                          
                                          
                                          
                                          3,564,000
                                          
                                          
                                          $
                                          5.00
                                          
                                          
                                          
                                          712,800Series
      D
                                          
                                          
                                          303,936
                                          
                                          
                                          
                                          1,519,680
                                          
                                          
                                          
                                          121,574
                                          
                                          
                                          
                                          1,641,254
                                          
                                          
                                          $
                                          5.00
                                          
                                          
                                          
                                          328,250Total
      Common
                                          
                                          
                                          1,963,936
                                          
                                          
                                          $
                                          9,819,680
                                          
                                          
                                          $
                                          885,574
                                          
                                          
                                          $
                                          10,705,254
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,141,050





Warrants





In  March 2008, and in September
2008, we issued a warrant to a third party to acquire up to 30,000 and 5,000
shares of common stock at an exercise price of $1.00 per share, with 30,000
shares expiring on March 19, 2010, and 5,000 shares expiring on September 30,
2010, as additional consideration in connection with a debt
financing.





ITEM6.  SELECTED FINANCIAL DATA





Not
required.





ITEM7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.





The
summarized financial data set forth below is derived from and should be read in
conjunction with our audited consolidated financial statements for fiscal years
ended December 31, 2008 and 2007, including the notes to those financial
statements which are included in this Annual Report. The following discussion
should be read in conjunction with our audited financial statements and the
related notes that appear elsewhere in this Annual Report. The following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to those discussed below and elsewhere
in this Annual Report, particularly in the section entitled "Risk Factors". Our
audited financial statements are stated in United States Dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has negative working capital and
has suffered recurring losses from operations, which raises substantial doubt
about its ability to continue as a going concern. Management’s plans regarding
those matters are described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.





RESULTS
OF OPERATIONS




We have
incurred recurring losses to date. Over the next twelve months our strategy is
to grow and develop our asset base.   In addition, we plan to use
what we believe to be innovative and sound engineering principles to enhance
existing production and to acquire additional operated, as well as non-operated
properties.  Our goal is to (i) develop our existing properties so
that sufficient cash flow is obtained to meet our internal financing needs and
(ii) sell properties when management is of the opinion that the sale price
realized will provide an above average rate of return for the property or when
the property no longer matches the profile of properties we desire to
own.





23
 Index





The
execution of our growth strategy is dependent on a number of factors including
oil and gas prices, the availability of oil and gas properties that meet our
economic criteria and the availability of funds on terms that are acceptable to
us, if at all. There is no assurance that these factors will occur. We will
require additional capital to meet our long term operating requirements. Our
plan is to raise additional capital through, among other things, the sale of
equity or debt securities.





Fiscal
Year Ended December 31, 2008 Compared to Fiscal Year Ended December 31,
2007





Our net
loss applicable to common stockholders for 2008 was $2,040,477 compared to a net
loss of $341,155 for the year ended 2007 (a decrease of $1,699,322). The net
loss was $1,154,903, or $.11 per share compared to $241,155 or $0.03 per share
in 2007.





During
2008, we generated revenue of $432,959 compared to revenue of $468,831 during
2007 (a decrease of $35,872). The decrease in revenues during 2008 compared to
2007 was attributable to a decline in total production sales from 17,990 barrels
oil equivalent (“BOE”) in 2007 to 9,968 BOE in 2008, resulting from depletion of
the Wilson Properties.





During
2008, we incurred operating expenses of $1,444,689 compared to $652,992 incurred
during 2007 (an increase of $791,697). These operating expenses incurred during
fiscal year ended December 31, 2008 consisted of: (i) salaries and compensation
expense of $243,938 (2007: $218,703); (ii) professional and consulting fees of
$478,870 (2007: $115,247); (iii) depreciation and depletion of $121,088 (2007:
$83,064); (iv) general and administrative expenses of $278,397 (2007: $103,619);
and (v) lease operating expenses of $322,394 (2007: $132,359).





Salaries
and compensation expenses, professional and consulting fees, and general and
administrative expenses incurred during 2008 increased, respectively, primarily
due to the increase in operating costs associated with the increased development
of our oil and gas properties, related infrastructure and overall corporate
activity. Accounting and audit fees of $90,780 were paid to our outside
auditors. General and administrative expenses generally include corporate
overhead, financial and administrative contracted services, marketing, and
consulting costs.





Depreciation
and depletion of oil and gas properties decreased during 2008 primarily due to
the decline in gas (47,056 mcf) and oil (179 bbl) production from our Wilson
properties.





Our lease
operating expenses increased during fiscal year ended December 31,
2008.  We recognized the need to maintain, improve and repair several
portions of the Wilson Property.  These additional expenses were
primarily attributable to increased costs in maintenance and repairs at the
field.  Most of the reasons for the maintenance occurred before we
purchased the property.   We also experienced increases in
compressor fees, pumping expenses, insurance and similar costs related to the
production of oil and gas.  The cost of insuring our oil and gas
properties also increased during the year.





Interest
expense of $130,424 (2007: $15,652) increased during 2008 due to increased debt
resulting from the short-term and long term obligations incurred in 2007 and
2008 for the purchase of our Wilson properties, as well as other
activities.




LIQUIDITY
AND CAPITAL RESOURCES





Balance
Sheet Data





At
December 31, 2008, our current assets were $73,273 and our current liabilities
were $2,486,511, which resulted in a working capital deficiency of $2,413,238.
At December 31, 2008, current assets were comprised of $833 of cash and $72,440
or Prepaid expenses.  At December 31, 2008, current liabilities were
comprised of: (i) $197,376 in accounts payable-trade; (ii) $1,432,217 in current
maturities of debt; (iii) $444,822 in accounts payable – related parties, and
(iv) $412,096 in accrued expenses.  Accrued expenses include $232,526
for liens on the recently acquired Bateman Lake properties.





24
 Index





At
December 31, 2008, our total assets were $12,827,262 comprised of: (i) $833 in
current assets and $72,440 of Prepaid insurance; (ii) $12,020,011 in oil and gas
properties and equipment and a $1,000,000 pipeline, less accumulated depletion
and depreciation of $285,725. The increase in total assets during fiscal year
ended December 31, 2008 from fiscal year ended December 31, 2007 ($1,748,744)
was primarily due to the ongoing development work at Bateman Lake.





At
December 31, 2008, our total liabilities were $3,826,830, comprised of: (i)
$2,486,511 in current liabilities; and (ii) $1,340,319 in long term debt and
asset retirement obligations. The increase in liabilities during fiscal year
ended December 31, 2008 from fiscal year ended December 31, 2007 was primarily
due to the increase in accounts payable – trade $134,606, accrued expenses
$287,213 and net short debt $1,151,605.  The increase in accrued
expenses was largely the result of the inclusion of various liens related to our
purchase of the Bateman Lake properties in 2007.





Stockholders’
equity decreased from $10,102,497 for fiscal year ended December 31, 2007 to
$9,000,432 for fiscal year ended December 31, 2008 due to the current year
loss.





Cash
Flows from Operating Activities





During
2008, net cash decreased by $79,522 consisting of $219,925 used in operations
and ($7,367) used in investing activities, which was offset by $147,770 which
was the net provided by financing activities.





For 2008,
net cash flows used in operating activities was $219,925 consisting primarily of
a net loss of $1,080,412. Net cash flows used in operating activities was
adjusted by: (i) $46,597 for the non-cash expense of depreciation, depletion and
accretion; (ii) $134,606 for the increase in accounts payable-trade and $424,395
for accounts payable – related party; (iii) $35,005 decrease in accounts
receivable.





Cash
Flows from Investing Activities





For 2008,
net cash flows used in investing activities was $7,367 consisting of the
improvements of oil and gas properties, primarily the Bateman Lake
field.  We also received $261,000 as a partial payment on the Bateman
Lake Farmout agreement.  However, as this agreement is now terminated,
no additional cash will be forthcoming from this source.





Cash
Flows from Financing Activities





We have
financed most of our operations and all of our acquisitions from the issuance of
equity and debt instruments.  For 2008, net cash flows provided by
financing activities was $147,770, compared to net cash flows provided by
financing activities of $348,613 for 2007.  This amount consists of
proceeds from common stock sales, $25,149, and debt issuance of
$190,000.





We expect
that working capital requirements will continue to be funded through a
combination of our future revenues, existing funds and further issuances of
securities and debt. Our working capital requirements are expected to increase
in line with the growth of our business.





WORKING
CAPITAL NEEDS





At
December 31, 2008, we had a working capital deficit of $2,413,238.  We
will need to raise additional capital in the second quarter of 2009 to fund
general corporate working capital needs.  Additionally, in 2009 the
Company will be required to (i) repay a $1,000,000 note, including accrued
interest, in connection with the acquisition of the Pipeline, (ii) a $328,578
note with Ray Nesbitt, plus accrued interest, (iii) a $25,000 note to Louisiana
X Partners, plus accrued interest, in connection with the purchase of the
Louisiana Shelf property, and (iv) a $25,000 note to Bamco Inc, plus accrued
interest, in connection with the purchase of the Louisiana Shelf
property.  We also have a $444,821 demand note payable to Samurai Corp
and to Sam Skipper, with no interest due.   As the Company has no
debt or equity funding commitments, we will need to rely upon best efforts
financings.  There can be no assurance that the Company will be
successful in raising the required capital.  The failure to raise
sufficient capital through future debt or equity financings or otherwise may
cause the Company to curtail operations, sell assets, or result in the failure
of our business.





25
 Index





MATERIAL
COMMITMENTS





Contractual
      Obligations
                        
                        Payments
      due by periodTotal
                        
                        
                        Less
      than 1 year
                        
                        1-3
      years
                        
                        3-5
      years
                        
                        
                        More
      than 5 yearsLong
      Term Debt
                        
                        
                        3
                        
                        
                        
                        
                        
                        
                        
                        592,610Samurai
      Corp
                        
                        
                        1
                        
                        
                        
                        444,822MJ
      Pipeline
                        
                        
                        1
                        
                        
                        
                        1,000,000Short
      Term Notes
                        
                        
                        6
                        
                        
                        
                        432,217Asset
      Retirement Obligations
                        
                        
                        1
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        747,709Total
                        
                        
                        
                        
                        
                        
                        1,877,039
                        
                        
                        
                        
                        592,610
                        
                        
                        
                        747,709





PURCHASE
OF SIGNIFICANT EQUIPMENT





We do not
intend to purchase any significant equipment during the next twelve
months.





OFF-BALANCE
SHEET ARRANGEMENTS





As of the
date of this Annual Report, we do not have any off balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.





RECENT
ACCOUNTING PRONOUNCEMENTS





We do not
expect the adoption of recently issued accounting pronouncements to have a
significant impact on our results of operations, financial position or cash
flow.




ITEM8.  FINANCIAL STATEMENTS
 
 The
Company’s financial statements and footnotes are set forth on pages F-1 through
F-19.




26
 Index




Index
      to Financial StatementsPageReport
      of Independent Registered Public Accounting Firms
                  F-2
      and 3Consolidated
      Balance Sheets at December 31, 2008 and 2007
                  F-4Consolidated
      Statements of Operations for the years ended December 31, 2008 and
      2007
                  F-5Consolidated
      Statements of Changes in Shareholders’ Equity for the years ended December
      31, 2008 and 2007
                  F-6Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
                  F-7Notes
      to Consolidated Financial Statements
                  F-8
      to 19





F-1
 Index





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


ECCO
Energy Corp.


Houston,
Texas





We have
audited the accompanying consolidated balance sheet of ECCO Energy Corp. as of
December 31, 2008, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended. These consolidated
financial statements are the responsibility of ECCO Energy Corp.’s management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of ECCO Energy Corp., as of
December 31, 2008, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has negative working capital and
has suffered recurring losses from operations, which raises substantial doubt
about its ability to continue as a going concern. Management’s plans regarding
those matters are described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.








/s/
GBH CPAs, PC





www.gbhcpas.com


Houston,
Texas





April 14,
2009





F-2
 Index








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


ECCO
Energy Corp.


Houston,
Texas





We have
audited the accompanying consolidated balance sheet of ECCO Energy Corp. as of
December 31, 2007, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of ECCO Energy Corp.’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of ECCO Energy Corp., as of
December 31, 2007, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has negative working capital and
suffered recurring losses from operations, which raises substantial doubt about
its ability to continue as a going concern. Management’s plans regarding those
matters are described in Note 2. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.








/s/
MALONE & BAILEY, PC





www.malone-bailey.com


Houston,
Texas





April 22,
2008





F-3
 Index




ECCOENERGY CORP.CONSOLIDATED
      BALANCE SHEETSDecember 31,2008
                
                
                2007ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                833
                
                
                $
                80,355Accounts
      receivable
                
                
                -
                
                
                
                35,005Prepaid
      expenses
                
                
                72,440
                
                
                
                -Total
      current assets
                
                
                73,273
                
                
                
                115,360PROPERTY
      and EQUIPMENTOil
      and gas properties, using full cost accounting
                
                
                12,020,011
                
                
                
                11,177,355Pipeline
      transmission properties
                
                
                1,000,000
                
                
                
                -Equipment
                
                
                19,703
                
                
                
                28,217Less
      accumulated depreciation and depletion
                
                
                (285,725
                )
                
                
                (242,414
                )Property
      and equipment, net
                
                
                12,753,989
                
                
                
                10,963,158TOTAL
      ASSETS
                
                $
                12,827,262
                
                
                $
                11,078,518LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable-trade
                
                $
                197,376
                
                
                $
                62,770Accounts
      payable-related parties
                
                
                444,822
                
                
                
                19,886Accrued
      expenses
                
                
                412,096
                
                
                
                124,883Current
      maturities of long-term debt
                
                
                1,432,217
                
                
                
                555,548Current
      maturities of long-term debt – related parties
                
                
                -
                
                
                
                150,000Total
      current liabilities
                
                
                2,486,511
                
                
                
                913,087LONG-TERM
      LIABILITIESLong
      term debt
                
                
                227,131
                
                
                
                -Long
      term debt – related parties
                
                
                365,479
                
                
                
                -Asset
      retirement obligations
                
                
                747,709
                
                
                
                62,934TOTAL
      LIABILITIES
                
                
                3,826,830
                
                
                
                976,021SHAREHOLDERS’
      EQUITYPreferred
      stock, 10,000,000 shares authorized:Series
      A, $.001 par value; 100,000 issued and outstanding
                
                
                100
                
                
                
                100Series
      B, $.001 par value; 1,000,000 issued and outstanding
                
                
                1,000
                
                
                
                1,000Series
      C, $.001 par value; 660,000 issued and outstanding
                
                
                660
                
                
                
                660Series
      D, $.001 par value; 303,936 issued
    and  outstanding
                
                
                304
                
                
                
                304Common
      stock, $.001 par value; 75,000,000 shares authorized;9,424,952
      and 9,374,753 shares issued and outstanding
                
                
                9,425
                
                
                
                9,375Additional
      paid-in-capital
                
                
                10,873,721
                
                
                
                10,820,933Accumulated
      deficit
                
                
                (1,884,778
                )
                
                
                (729,875
                )Total
      shareholders’ equity
                
                
                9,000,432
                
                
                
                10,102,497TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                
                
                12,827,262
                
                
                $
                11,078,518





See
summary of significant accounting policies and notes to consolidated financial
statements.





F-4
 Index





ECCOENERGY CORP.CONSOLIDATED
      STATEMENTS OF OPERATIONSYears
      EndedDecember
      31,2008
                
                
                2007REVENUE
                
                $
                432,959
                
                
                $
                468,831OPERATING
      EXPENSESSalaries
      and compensation expense
                
                
                243,938
                
                
                
                218,703Professional
      and consulting fees
                
                
                478,870
                
                
                
                115,247General
      and administrative expenses
                
                
                278,399
                
                
                
                103,619Lease
      operating expenses
                
                
                322,394
                
                
                
                132,359Depreciation,
      depletion and accretion
                
                
                121,088
                
                
                
                83,064Total
      operating expenses
                
                
                1,444,689
                
                
                
                652,992Net
      operating loss
                
                
                (1,011,730
                )
                
                
                (184,161
                )OTHER
      INCOME (EXPENSE)Other
      expenses
                
                
                (12,749
                )
                
                
                (41,342
                )Interest
      expense
                
                
                (130,424
                )
                
                
                (15,652
                )Total
      other income (expense)
                
                
                (143,173
                )
                
                
                (56,994
                )Net
      loss
                
                
                (1,154,903
                )
                
                
                (241,155
                )Dividends
      applicable to preferred stock
                
                
                (885,574
                )
                
                
                (100,000
                )Net
      loss attributable to common shareholders
                
                $
                (2,040,477
                )
                
                $
                (341,155
                )Basic
      and diluted net loss per share
                
                $
                (0.22
                )
                
                $
                (0.04
                )Weighted
      average shares outstanding – basic and diluted
                
                
                9,404,403
                
                
                
                9,165,575





See
summary of significant accounting policies and notes to consolidated financial
statements.





F-5
 Index





ECCOENERGY CORP.


CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


Years
Ended December 31, 2008, and 2007





Preferred
      Shares
                    
                    
                    Preferred
      Share Amount
                    
                    
                    Common
      Shares
                    
                    
                    Common
      Stock Amount
                    
                    
                    Additional
      Paid in Capital
                    
                    
                    Accumulated
      Deficit
                    
                    
                    TotalBalances,
      December 31, 2006
                    
                    
                    100,000
                    
                    
                    
                    100
                    
                    
                    
                    9,048,003
                    
                    
                    
                    9,048
                    
                    
                    
                    874,223
                    
                    
                    
                    (388,720
                    )
                    
                    
                    494,651Capital
      from sale of subsidiary
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    19,271
                    
                    
                    
                    -
                    
                    
                    
                    19,271Common
      shares issued -R.
      Reece 20% interest
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    141,750
                    
                    
                    
                    142
                    
                    
                    
                    36,713
                    
                    
                    
                    -
                    
                    
                    
                    36,855Common
      shares issued -R.
      Reece 11% interest
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    110,000
                    
                    
                    
                    110
                    
                    
                    
                    91,236
                    
                    
                    
                    -
                    
                    
                    
                    91,346Series
      B Preferred - LouisianaShelf
      acquisition
                    
                    
                    1,000,000
                    
                    
                    
                    1,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,999,000
                    
                    
                    
                    -
                    
                    
                    
                    5,000,000Series
      C Preferred - BatemanLake
      acquisition
                    
                    
                    660,000
                    
                    
                    
                    660
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,299,340
                    
                    
                    
                    -
                    
                    
                    
                    3,300,000Series
      D Preferred - BatemanLake
      acquisition
                    
                    
                    303,936
                    
                    
                    
                    304
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,519,376
                    
                    
                    
                    -
                    
                    
                    
                    1,519,680Common
      shares issued for cash
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    75,000
                    
                    
                    
                    75
                    
                    
                    
                    29,925
                    
                    
                    
                    -
                    
                    
                    
                    30,000Adjustment
      from R. Reece -Wilson
      acquisition
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (48,151
                    )
                    
                    
                    -
                    
                    
                    
                    (48,151
                    )Preferred
      stock dividends
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (100,000
                    )
                    
                    
                    (100,000
                    )Net
      Loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (241,155
                    )
                    
                    
                    (241,155
                    )Balances,
      December 31, 2007
                    
                    
                    2,063,936
                    
                    
                    
                    2,064
                    
                    
                    
                    9,374,753
                    
                    
                    
                    9,375
                    
                    
                    
                    10,820,933
                    
                    
                    
                    (729,875
                    )
                    
                    
                    10,102,497Common
      shares issued to adjust transfer agent records
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    25,005
                    
                    
                    
                    25
                    
                    
                    
                    (25
                    )
                    
                    
                    
                    
                    
                    
                    -Common
      shares issued for services
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    25,200
                    
                    
                    
                    25
                    
                    
                    
                    25,124
                    
                    
                    
                    
                    
                    
                    
                    25,149Warrants
      issued with debt
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    27,689
                    
                    
                    
                    
                    
                    
                    
                    27,689Net
      Loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,154,903
                    )
                    
                    
                    (1,154,903
                    )Balances,
      December 31, 2008
                    
                    
                    2,063,936
                    
                    
                    $
                    2,064
                    
                    
                    
                    9,424,952
                    
                    
                    $
                    9,425
                    
                    
                    $
                    10,873,721
                    
                    
                    $
                    (1,884,778
                    )
                    
                    $
                    9,000,432





See
summary of significant accounting policies and notes to consolidated financial
statements.





F-6
 Index





ECCOENERGY CORP.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


For
      the Years EndedDecember
      31,2008
                
                
                2007Cash
      flows from operating activities:Net
      loss
                
                $
                (1,154,903
                )
                
                $
                (241,155
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation,
      depletion and accretion
                
                
                121,088
                
                
                
                83,064Common
      stock issued for services
                
                
                25,149
                
                
                
                -Loss
      on disposal of fixed asset
                
                
                12,749
                
                
                
                -Amortization
      of debt discount
                
                
                27,689
                
                
                
                -Changes
      in assets and liabilities:Accounts
      receivable
                
                
                35,005
                
                
                
                (34,019
                )Inventory
                
                
                -
                
                
                
                (12,764
                )Prepaid
      expenses
                
                
                23,430
                
                
                
                -Other
      assets
                
                
                -
                
                
                
                2,340Accounts
      payable – trade
                
                
                134,606
                
                
                
                61,374Accounts
      payable – related parties
                
                
                424,935
                
                
                
                132,609Accrued
      liabilities
                
                
                130,327
                
                
                
                (3,510
                )Net
      cash used in operating activities
                
                
                (219,925
                )
                
                
                (12,061
                )Cash
      flows from investing activities:Acquisitions
      of oil and gas properties
                
                
                -
                
                
                
                (17,500
                )Additions
      to oil and gas properties
                
                
                (260,261
                )
                
                
                (221,647
                )Proceeds
      from sale of oil and gas interest under farmout agreement
                
                
                261,000Purchase
      of equipment
                
                
                (8,106
                )
                
                
                (18,562
                )Net
      cash used in investing activities
                
                
                (7,367
                )
                
                
                (257,709
                )Cash
      flows from financing activities:Proceeds
      from sale of common stock
                
                
                -
                
                
                
                30,000Proceeds
      from issuance of short term debt
                
                
                220,000
                
                
                
                400,000Payments
      made on short term debt
                
                
                (72,230
                )
                
                
                (81,387
                )Net
      cash provided by financing activities
                
                
                147,770
                
                
                
                348,613Net
      change in cash and cash equivalents
                
                
                (
      79,522
                )
                
                
                78,843Cash
      and cash equivalents, at beginning of year
                
                
                80,355
                
                
                
                1,512Cash
      and cash equivalents, at end of year
                
                $
                833
                
                
                $
                80,355Supplemental
      cash flow information:Interest
      paid
                
                $
                9,015
                
                
                $
                9,613Taxes
      paid
                
                
                -
                
                
                
                -Non
      cash investing and financial activities:Contributed
      capital from sale of subsidiary
                
                $
                -
                
                
                $
                19,271Equipment
      purchased on account
                
                
                -
                
                
                
                18,393Assumption
      of Bateman Lake liens
                
                
                232,526
                
                
                
                -Related
      party payable relieved for oil and gas properties
                
                
                -
                
                
                
                257,430Asset
      retirement obligations assumed for oil and gas properties
                
                
                610,871
                
                
                
                19,122Debt
      issued for oil and gas properties
                
                
                1,000,000
                
                
                
                355,548Debt
      issued for prepaid insurance
                
                
                95,870
                
                
                
                -Issuance
      of notes payable for related party notes payable and accrued
      interest
                
                
                175,479
                
                
                
                -Issuance
      of notes payable for notes and accrued interest
                
                
                555,709
                
                
                
                -Shares
      reissued due to clerical error
                
                
                25
                
                
                
                -Preferred
      stock issued for oil and gas properties
                
                
                -
                
                
                
                9,819,680Common
      stock issued for oil and gas properties
                
                
                -
                
                
                
                128,201Purchase
      price adjustment for oil and gas acquisition
                
                
                -
                
                
                
                48,151Preferred
      stock dividends
                
                
                -
                
                
                
                100,000





See
summary of significant accounting policies and notes to consolidated financial
statements





F-7
 Index




ECCOENERGY CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Organization





ECCO
Energy Corp. (“ECCE”) is an independent oil and gas company organized in Nevada
actively engaged in oil and gas development, exploration and production with
properties and operational focus in the Texas Gulf Coast Region. ECCE’s strategy
is to grow its asset base by purchasing producing assets at a discount to
reserve value, increasing the production rate of reserves, and converting proved
undeveloped and developed non-producing reserves to proved developed producing
reserves. On July 12, 2006 Samurai Energy Corp., a Delaware corporation, ECCO
Energy Corp., a Nevada corporation (“ECCE”), and SEI Acquisition Corp., a Nevada
corporation and a wholly owned subsidiary of Samurai (“Samurai Sub”) completed
the transactions contemplated by the Agreement and Plan of Merger (“Agreement”),
dated June 30, 2006. Samurai Sub merged with and into ECCE. As a result of the
Merger, each three shares of ECCE common stock issued and outstanding converted
into the right to receive one Samurai common share, the separate corporate
existence of Samurai Sub ceased, and ECCE was the surviving corporation in the
Merger. Samurai issued 1,415,999 shares to ECCE shareholders.  After
completion of the transaction, ECCE became a wholly-owned subsidiary of Samurai
and Samurai merged with and into ECCE, for the sole purpose of reincorporating
into Nevada. On August 28, 2006, the reincorporation became effective resulting
in Samurai continuing its corporate existence in Nevada under the name ECCO
Energy Corp.





The
acquisition was accounted for as a business combination between entities under
common control similar to a pooling of interests. Prior to the merger, Samurai
and ECCE were controlled by the same management group and had certain common
ownership interests in their respective common stock. Therefore, ECCE recorded
the acquisition at the carrying value of the assets acquired with no adjustment
for the fair value of the assets acquired.





In 2007,
ECCE acquired the assets of LS Gas, LLC consisting of Louisiana Shelf Partners,
LP for its Series B Preferred stock.  The assets of this entity
consist solely of the property at East Cameron Block 4, in Cameron Parish,
Louisiana.  ECCE has decided to maintain this entity and to
consolidate it on its income statement, balance sheet and changes in financial
position.  Louisiana Shelf Partners, LP is a wholly owned subsidiary
of ECCE.





Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
that affect the reported amounts of revenues and expenses during the reporting
period.





Cash
and Cash Equivalents





ECCE
considers all highly liquid investments with original maturities of three months
or less at the date of purchase to be cash equivalents.





Oil
and Gas Properties, Full Cost Method





ECCE uses
the full cost method of accounting for oil and gas producing activities. Costs
to acquire mineral interests in oil and gas properties, to drill and equip
exploratory wells used to find proved reserves, and to drill and equip
development wells including directly related overhead costs and related asset
retirement costs are capitalized.





Under
this method, all costs, including internal costs directly related to
acquisition, exploration and development activities are capitalized as oil and
gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. ECCE assesses the realizability
of unproved properties, if any, on at least an annual basis or when there has
been an indication that impairment in value may have occurred. Impairment of
unproved properties is assessed based on management's intention with regard to
future exploration and development of individually significant properties and
the ability of ECCE to obtain funds to finance such exploration and development.
If the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be
amortized.





F-8
 Index





Costs of
oil and gas properties are amortized using the units of production method.
Amortization expense calculated per equivalent physical unit of production
amounted to $7.41 and $3.06 per barrel oil equivalent for the years ended
December 31, 2008 and 2007, respectively.





In
applying the full cost method, ECCE performs an impairment test (ceiling test)
at each reporting date, whereby the carrying value of property and equipment is
compared to the “estimated present value,” of its proved reserves discounted at
a 10-percent interest rate of future net revenues, based on current economic and
operating conditions, plus the cost of properties not being amortized, plus the
lower of cost or fair market value of unproved properties included in costs
being amortized, less the income tax effects related to book and tax basis
differences of the properties. If capitalized costs exceed this limit, the
excess is charged as an impairment expense. As of December 31, 2008 and 2007, no
impairment of oil and gas properties was recorded.





Revenue
and Cost Recognition





ECCE uses
the sales method of accounting for natural gas and oil revenues. Under this
method, revenues are recognized based on the actual volumes of gas and oil sold
to purchasers. The volume sold may differ from the volumes to which ECCE is
entitled based on our interest in the properties. Costs associated with
production are expensed in the period incurred.





Concentrations





Trade
accounts receivables are generated from companies with significant oil and gas
marketing activities, which would be impacted by conditions or occurrences
affecting that industry. In 2008 and 2007, 100% of oil and gas revenues were
attributable to one customer. ECCE performs ongoing credit evaluations of its
customers and, generally, requires no collateral. ECCE is not aware of any
significant credit risk relating to its customers and has not experienced any
credit loss associated with such receivables.





Income
Taxes





ECCE
recognizes deferred tax assets and liabilities under the liability method based
on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. The Company provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to more likely than not.





Loss
per Share





Basic and
diluted net loss per share calculations are presented in accordance with
Financial Accounting Standards Statement 128, and are calculated on the basis of
the weighted average number of common shares outstanding during the year. Common
stock equivalents are excluded from the calculation when a loss is incurred as
their effect would be anti-dilutive. The basic income per share of common stock
is based on the weighted average number of shares issued and outstanding at the
date of the financial statements.





New
Accounting Standards





ECCE does
not expect the adoption of recently issued accounting pronouncements to have a
significant impact on our results of operations, financial position or cash
flow.





2.
            GOING
      CONCERN





As shown
in the accompanying financial statements, we incurred net losses attributable to
common shareholders of $2,040,477 and $341,155 for 2008 and 2007, respectively.
In addition, we had an accumulated deficit of $1,884,778 and a working capital
deficit of $2,413,238 as of December 31, 2008. These conditions raise
substantial doubt as to our ability to continue as a going concern. Management
is working to improve its liquidity and its results from operations by raising
additional capital through the farmout of oil and gas properties, reworking
current wells, and drilling of additional wells to improve future earnings and
cash flow. We are also actively attempting to raise funds through debt and
equity transactions. The financial statements do not include any adjustments
that might be necessary if we are unable to continue as a going
concern.





F-9
 Index





3.
            OIL
      AND GAS PROPERTIES





All of
ECCE’s oil and gas properties are located in the United States.





Costs
being amortized at December 31, 2008 are as follows:





Year
      Incurred
                
                Acquisition
      Costs
                
                
                Development
      Costs
                
                
                Sale
      of Properties
                
                
                Asset
      Retirement Costs
                
                
                Total2007
      and prior
                
                $
                10,982,352
                
                
                $
                134,481
                
                
                $
                -
                
                
                $
                60,522
                
                
                $
                11,177,3552008
                
                
                237,182
                
                
                
                179,287
                
                
                
                (261,000
                )
                
                
                687,187
                
                
                
                842,656Total
                
                $
                11,219,534
                
                
                $
                313,768
                
                
                $
                (261,000
                )
                
                $
                747,709
                
                
                $
                12,020,011





WILSON
PROPERTIES





On July
12, 2006, ECCE acquired a 32% working interest in producing oil and gas
properties (“Wilson Properties”).





During
2007, ECCE subsequently acquired, through a series of transactions, the
remaining working interests in the Wilson Properties resulting in the ownership
of 100% of the working interests.





BATEMAN
LAKE FIELD





On
December 1, 2007, ECCO Energy Corp., a Nevada corporation (the “Company”)
entered into a share exchange agreement (the “Share Exchange Agreement”) with
Old Jersey Oil Ventures LLC, a New Jersey limited liability company (“Old
Jersey”) and Eugene A. Noser, Jr. (“Noser”), who held 100% of the total issued
and outstanding interests in Old Jersey (the “Membership Interest”), regarding
acquisition by the Company of Old Jersey. In accordance with the terms and
provisions of the Share Exchange Agreement, the Company  acquired from
Noser all of his  Membership Interest in exchange for the issuance of
660,000 shares of the Company’s Series C Preferred Stock and 303,936 shares of
the Company’s Series D Preferred Stock.





Old
Jersey, together with the Moffat Group, was the holder of approximately
$5,900,000 in notes (the “Debt”) payable by VTEX Energy, Inc., a Nevada
corporation (“VTEX”), relating to that certain oil, gas and mineral lease no.
1337 located in the State of Louisiana (the “Bateman Lake Field”). Therefore, on
January 11, 2008, the Company entered into an assignment of oil, gas and mineral
lease (the “VTEX Assignment”) with VTEX pursuant to which VTEX assigned to the
Company all of its interest in lease no. 1337 on the Bateman Lake Field in
exchange for $1,000. The Company also acquired the debt payable by VTEX to Old
Jersey as a result of consummation of the Share Exchange
Agreement.





The lease
consists of 14 non-producing oil and gas wells.  As of December 31,
2008, none of the wells are producing.





ECCE
entered into a farmout agreement dated January 11, 2008 (the “Farmout
Agreement”) with an independent oil & gas corporation (the IOG), concerning
the interest in lease no. 1337 on the Bateman Lake Field. In accordance with the
terms of the Farmout Agreement, the IOG had the exclusive right, but not the
obligation, to re-enter the Bateman Lake Field for the purpose of sidetracking,
deepening, working over or recompleting any of the wells situated on the Bateman
Lake Field.





Upon
consummation of the Farmout Agreement: (i) the IOG agreed to pay ECCE an
aggregate $750,000; (ii) ECCE agreed to satisfy any liens on lease no. 1337; and
(iii) ECCE entered into an assignment dated January 11, 2008 with the IOG
pursuant to which ECCE assigned to the IOG all of the interest in lease no. 1337
on the Bateman Lake Field.  ECCE was paid nonrefundable amounts of
$261,000 towards the $750,000 in the year ending December 31,
2008.  The agreement required the IOG complete a certain number of
wells during 2008 and 2009.





F-10
 Index





During
the third quarter of 2008, the IOG notified ECCE that the drilling commitments
of the Farmout Agreement would not be met within the allotted
timeframe.  ECCE continues discussions with the IOG about creating a
new agreement.  However, as of December 31, 2008, we consider the
agreement has been terminated.  ECCE is also exploring other avenues
to raise funds, farmout or sell the Bateman Lake properties.





LOUISIANA
SHELF PROPERTY





On
September 28, 2007, ECCE executed an agreement pursuant to which ECCE acquired
all of the assets of Louisiana Shelf Partners LP, a Delaware limited
partnership, for $5,000,000 by issuing to the General Partner and limited
partners of Louisiana Shelf Partners, 1,000,000 shares of Series B Convertible
Preferred Stock, convertible into ECCE restricted common stock at 1 common share
per share of Series B Convertible Preferred Stock. Louisiana Shelf Partners
owned Louisiana State Lease Number 17742 in Block 4, covering 600 acres in East
Cameron Area in Cameron Parish, Louisiana.  The property consists of
two wells:  the #1 well,, and the #2 well, which are  proved
undeveloped locations (PUD).  The #1 well is not connected to any
platform or other pipeline and is currently not in production, and the #2 well
has not been drilled.  The #1 well will begin producing upon
completion of a pipeline connection for transportation of gas
production.  ECCE is currently seeking funds to build a pipeline to a
nearby platform.





On
February 14, 2008, ECCE purchased an additional 25% of the working interest in
Louisiana Shelf East Cameron Block 4, from the trustee of assets then held in
bankruptcy for $10,000 bringing the total working interest owned by ECCE to
100%.  The purchase received final approval in February 2008 by the
bankruptcy court, whereupon the interest was purchased from the Trustee of the
United States Bankruptcy Court.





ACQUISITION
OF GAS PIPELINE





On
October 15, 2008, ECCE acquired a gas pipeline (“Pipeline”) which services the
oil and gas properties subsequently purchased by Samurai Corp in 2008. Samurai
Corp is wholly owned by the President and CEO of ECCE, Sam
Skipper.  The gas pipeline system, approximately 13 miles in length,
is located in Jefferson and Harrison Counties, Ohio.  The pipeline was
purchased from M- J Oil Company of Paris, Ohio, by issuing a mortgage note for
$1,000,000.  The mortgage note bears an 8% annual interest rate and is
secured by the pipeline assets.  There are no payments due until
September 30, 2009, at which time, the entire unpaid balance of principal and
accrued interest is due.





4.      
      LONG AND SHORT TERM DEBT





RELATED PARTIES





ECCE has
notes payable to related parties including a note payable to Samurai Energy LLC;
a company controlled by ECCE’s CEO, and consisted of the following at December
31, 2008 and 2007.  Both related party notes were renegotiated during
2008, with interest accrued being added to the outstanding note
payable.





2008
                
                
                2007Promissory
      note to Samurai Corp - payable in full including principal and interest
      at  5% due January 1, 2012; unsecured
                
                $
                110,706
                
                
                $
                100,000Promissory
      note to Rick Bobigian- Payable in full including principal and interest at
      8% due January 1, 2012; unsecured
                
                $
                254,773
                
                
                $
                50,000Totals
      Related Party Debt
                
                
                365,479
                
                
                
                150,000





F-11
 Index





NON RELATED PARTIES





2008
                
                
                2007Promissory
      note - Payable in total plus accrued interest of 12% due September 30,
      2009. Secured by Wilson Field Properties. (1)
                
                $
                328,578
                
                
                $
                300,000Promissory
      note - Payable in total plus accrued interest of 6% due June 26, 2008; not
      secured. (2)
                
                $
                25,000
                
                
                $
                25,000Promissory
      note - Payable in total plus accrued interest of 6% due June 26, 2008; not
      secured. (2)
                
                $
                25,000
                
                
                $
                25,000Promissory
      note - Payable in total plus accrued interest of 5% due January 1, 2012;
      not secured.
                
                $
                227,131
                
                
                $
                205,548Pipeline
      Mortgage
                
                $
                1,000,000
                
                
                
                -Total
      debt to non-related parties
                
                $
                1,605,709
                
                
                $
                555,548Total
      debt
                
                $
                1,971,188
                
                
                $
                705,548





(1)
            ECCE
      issued 35,000 warrants with the issuance of the note
      payable.  ECCE valued the warrants using the Black-Scholes
      option model and calculated the relative fair value of the warrants and
      recorded a discount of $27,689 on the debt for the value of the
      warrants.  The discount was amortized over the life of the note.
      The assumptions used in the Black-Scholes pricing model for the warrants
      issued with the debt include (1) discount rate of 1.75%, (2) warrant life
      of 2 years, (3) expected volatility of 538.77% and (4) zero expected
      dividends.


(2)
            The
      notes payable relate to the acquisition of Louisiana Shelf
      LP.  ECCE has not been able to locate these note
      holders.  All principal and interest became due June 26,
      2008.  No demands have been made for
  payment.





The
following are debt maturities for the next five years:





Principal
      Amount2009
                  
                  $
                  1,605,7092010
                  
                  
                  -2011
                  
                  
                  -2012
                  
                  
                  365,4792013
                  
                  
                  -Thereafter
                  
                  
                  -Total
      long term debt
                  
                  $
                  1,971,188





5.
            ASSET
      RETIREMENT OBLIGATIONS





In
accordance with SFAS 143, “Accounting for Asset Retirement Obligations” ECCE
records the fair value of a liability for asset retirement obligations (“ARO”)
in the period in which it is incurred and a corresponding increase in the
carrying amount of the related long-lived asset. The present value of the
estimated asset retirement cost is capitalized as part of the carrying amount of
the long-lived asset and is depreciated over the useful life of the asset. ECCE
accrues an abandonment liability associated with its oil and gas wells when
those assets are placed in service. The ARO is recorded at its estimated fair
value and accretion is recognized over time as the discounted liability is
accreted to its expected settlement value. Fair value is determined by using the
expected future cash outflows discounted at ECCE's credit-adjusted risk-free
interest rate. No market risk premium has been included in ECCE's calculation of
the ARO balance. ECCE recorded $610,871 and $21,534 of asset retirement
obligations for the years ending December 31, 2008 and 2007,
respectively.





F-12
 Index





The
following is a description of the changes to the Company's asset retirement
obligations for the years ended December 31,





2008
                
                
                2007Asset
      retirement obligations at beginning of year
                
                $
                62,934
                
                
                $
                41,400Additions
      for acquisitions of properties
                
                
                -
                
                
                
                19,122Change
      in estimate
                
                
                610,871
                
                
                
                -Accretion
      expense
                
                
                73,904
                
                
                
                2,412Asset
      retirement obligations at end of year
                
                $
                747,709
                
                
                $
                62,934







6.
            INCOME
      TAXES






As of
December 31, 2008, ECCO Energy had accumulated net operating losses, and
therefore, had no tax liability.  The net deferred tax asset generated by
the loss carry-forward has been fully reserved.  The cumulative net
operating loss carry-forward is approximately $1,676,737 at December 31, 2008,
and will expire in the years 2019 through 2027.






At
December 31, 2008, the deferred tax assets consisted of the
following:




Deferred
      tax assetsNet
      operating losses
                  
                  $
                  570,091Less: 
      valuation allowance
                  
                  
                  (570,091
                  )Net
      deferred tax asset
                  
                  $
                  –




The
change in the valuation allowance for the years ended December 31, 2008 and 2007
totaled approximately ($392,667) and ($81,993), respectively.




7.
            SHAREHOLDERS’
      EQUITY





Preferred
Stock





Series
A Convertible Preferred Stock:





On July
17, 2006, in connection with the merger, ECCE issued 100,000 shares of preferred
stock to Samuel M. Skipper, a preferred shareholder of ECCE and Chief Executive
Officer of ECCE.  The preferred stock of ECCE is not convertible to
common stock and was valued at $27,000 on the date of issuance and recorded as
compensation expense.  The preferred stock is entitled to the number
of votes equal to all votes of other security holders plus one vote. As a
result, Mr. Skipper has voting control of ECCE.





Series
B Convertible Preferred Stock:





On
September 30, 2007, ECCE issued 1,000,000 shares of the 10,000,000 shares of
authorized preferred stock as Series B Preferred Stock, with an initial value of
$5.00 to acquire the Louisiana Shelf Property. The Series B Preferred Stock is a
new series of preferred stock, which ranks senior and is not subordinated in any
respects to the Series A Preferred Stock. As long as any Series B Preferred
Stock is outstanding, ECCE is prohibited from issuing any series of stock having
rights senior to or ranking on parity with the Series B Preferred Stock without
the approval of the holders of two-thirds of the outstanding Series B Preferred
Stock. The holders of the outstanding shares of Series B Preferred Stock shall
be entitled to receive in preference to the holders of any other shares of
capital stock of the Corporation, cumulative dividends when and as if they may
be declared by the Board of Directors at a per share equal to 8% per annum of
the Initial Value. Additionally, upon occurrence of our liquidation, dissolution
or winding up, the holder of shares of Series B Preferred Stock will be entitled
to receive, before any distribution of assets is made to holders of our common
stock or any other stock ranking junior to the Series C Preferred Stock
Preferred Stock as to dividends or liquidation rights, but only after all
distributions to holders of Series C Preferred Stock have been made in an amount
per share of Series B Preferred Stock equal to 100% of the Initial Value plus
the amount of any accrued but unpaid dividends due for each share of Series B
Preferred Stock (the “Liquidation Amount”). Lastly, in addition to the rights
discussed above of the holders of the Series B Preferred Stock, at any time
after June 15, 2008, and provided a triggering event has occurred, each holder
of Series B Preferred Stock shall have the right at such holder’s option to
require us to redeem for cash all or a portion of such holder’s shares of Series
B Preferred Stock at a price per share equal to the Liquidation Amount. A
“triggering event” shall mean that the wells owned or operated by the Limited
Partnership have generated an aggregate of 1,500,000,000 cubic feet of natural
gas.  No triggering event has occurred as of the filing of this Annual
Report.





F-13
 Index





Convertible
Series C and D Preferred Stock





On
December 1, 2007, ECCE entered into a Share Exchange Agreement with Old Jersey
Oil.  Noser held 100% of the Membership Interest of Old Jersey. In
accordance with the Share Exchange Agreement, ECCE acquired from Noser all of
his Membership Interest in exchange for the issuance of 660,000 shares of Series
C Preferred Stock and 303,936 shares of Series D Preferred Stock.





On March 27, 2008, ECCE filed with the
Nevada Secretary of State a First Amended Certificate of Designation of Series C
Convertible Preferred Stock designating 660,000 shares of the 10,000,000 shares
of authorized preferred stock as Series C Preferred Stock, with an initial value
of $5.00 (the “Initial Value”). The Series C Preferred Stock had been authorized
by ECCE’s Board of Directors as a new series of preferred stock, which ranks
senior and is not subordinated in any respects to the Series A or B Preferred
Stocks. So long as any Series C Preferred Stock is outstanding, ECCE are
prohibited from issuing any series of stock having rights senior to or ranking
on parity with the Series C Preferred Stock without the approval of the holders
of two-thirds of the outstanding Series C Preferred Stock. The holders of the
outstanding shares of Series C Preferred Stock shall be entitled to receive in
preference to the holders of any other shares of capital stock of the
Corporation, cumulative dividends when and as if they may be declared by the
Board of Directors at a per share equal to 8% per annum of the Initial Value.
Additionally, upon occurrence of ECCE’s liquidation, the holder of shares of
Series C Preferred Stock will be entitled to receive, before any distribution of
assets is made to holders of ECCE’s common stock or any other stock ranking
junior to the Series C Preferred Stock Preferred Stock as to dividends or
liquidation rights, but only after all distributions to holders of Series C
Preferred Stock have been made in an amount per share of Series C Preferred
Stock equal to 100% of the Initial Value plus the amount of any accrued but
unpaid dividends due for each share of Series C Preferred Stock (the
“Liquidation Amount).





On March 27, 2008, ECCE filed with the
Nevada Secretary of State a First Amended Certificate of Designation of Series D
Convertible Preferred Stock designating 303,396 shares of the 10,000,000 shares
of authorized preferred stock as Series D Preferred Stock, with an initial value
of $5.00 (the “Initial Value”). The Series C Preferred Stock had been authorized
by ECCE’s Board of Directors as a new series of preferred stock, which ranks
senior and is not subordinated in any respects to the Series A or B or C
Preferred Stocks. As long as any Series D Preferred Stock is outstanding, ECCE
is prohibited from issuing any series of stock having rights senior to or
ranking on parity with the Series C Preferred Stock without the approval of the
holders of two-thirds of the outstanding Series D Preferred Stock. The holders
of the outstanding shares of Series D Preferred Stock shall be entitled to
receive in preference to the holders of any other shares of capital stock of the
Corporation, cumulative dividends when and as if they may be declared by the
Board of Directors at a per share equal to 8% per annum of the Initial Value.
Additionally, upon occurrence of ECCE’s liquidation, the holder of shares of
Series B or C Preferred Stock will be entitled to receive, before any
distribution of assets is made to holders of ECCE common stock or any other
stock ranking junior to the Series D Preferred Stock Preferred Stock as to
dividends or liquidations rights, but only after all distributions to holders of
Series B or C Preferred Stock have been made in an amount per share of Series B
or C Preferred Stock equal to 100% of the Initial Value plus the amount of any
accrued but unpaid dividends due for each share of Series D Preferred Stock (the
“Liquidation Amount).





Commencing
upon the occurrence of a Triggering Event (as defined below), the Corporation
shall have the obligation to redeem on a pro-rata basis, but only for cash, in
an amount equal to  thirty and 19/100 (30.19%) percent
of  all proceeds received by the Corporation under the provisions of
that certain Farmout Agreement between the Corporation and Jurasin Oil &
Gas, Inc. (the “Farmout Agreement”) dated January 11, 2008 (“Proceeds”) from the
Property (as defined below), all or a portion of the holder’s shares of Series D
Convertible Preferred Stock at a price per share of Series D Convertible
Preferred Stock equal to the Liquidation Amount (for this purpose, the “Redemption Price”).
“Triggering
Event” shall be the date on which the Corporation first receives
Proceeds. The Property shall mean the Corporation’s interest in State of
Louisiana Lease No. 1337 (“Lease No. 1337”) located in St. Mary and Terrebonne
Parishes in Louisiana.





F-14
 Index





In the
event that the Triggering Event has not occurred within nine (9) months from the
date of the filing of this designation with the Secretary of State of the State
of Nevada or after the Triggering Event no redemptions have occurred for a
period of three (3) consecutive calendar months, the Corporation shall have the
obligation to redeem on a pro-rata basis, but only for cash, in an amount equal
to thirty and 19/100 (30.19%) percent of all net proceeds received by the
Corporation from the Property.  The term “Net Proceeds” as used in the
previous sentence shall be the total receipts by the Corporation less any
royalty, overriding royalty, net profits, severance and ad valorem taxes and
reasonable lease operating expenses and capital costs attributable to the
Property which are usual and customary in the industry.  Should the
Corporation develop the mineral interests which are subject to the Farmout
Agreement in whole or in part and/or enter into a subsequent development
arrangement to develop such mineral interests after the termination of the
Farmout Agreement, the Corporation shall have the obligation to redeem on a
pro-rata basis, but only for cash, in an amount equal to thirty and 19/100
(30.19%) percent of all proceeds received by the Corporation under such
development and/or under the provisions of such development
arrangement.









Common
Stock – Features.





During
2007, ECCE issued 141,750 shares and 110,000 shares to Ronald E. Reece M.D. in
connection with the purchase of the 20% working interest in the E.C. Wilson and
Wilson State Tract Leases located in Nueces County, Texas from Ronald E. Reece
M.D. Revocable Trust of 2000, in exchange for properties valued at
$80,050.





During
2007, ECCE offered and issued 75,000 shares of restricted common stock to an
investor for aggregate proceeds of $30,000.





During
2008, ECCE issued 25,005 shares that were not properly transferred or recorded
correctly by the Transfer Agent in prior years.





On June
11, 2008, ECCE issued 5,200 common shares for marketing services valued at
$5,129.





On August
14, 2008 ECCE issued 10,000 common shares for consulting services valued at
$10,010.





On
October 1, 2008 ECCE issued 10,000 common shares for consulting services valued
at $10,010.





The
following table provides a summary of the potential dilution of common stock
should ECCE’s Preferred Series B, C and/or D be converted to common
stock.  These valuations are as of December 31, 2008, and assume a
conversion of one share of preferred stock for one share of common stock at the
designated valuation price of $5.00 per share.





Preferred
                              
                              
                              Preferred
                              
                              
                              Accrued
                              
                              
                              Conversion
                              
                              
                              Conversion
                              
                              
                              Number
      of CommonShares
                              
                              
                              Shares @$5.00
                              
                              
                              Dividends
                              
                              
                              Valuation
                              
                              
                              Price
                              
                              
                              Shares after ConversionSeries
      B
                              
                              
                              1,000,000
                              
                              
                              $
                              5,000,000
                              
                              
                              $
                              500,000
                              
                              
                              $
                              5,500,000
                              
                              
                              $
                              5.00
                              
                              
                              
                              1,100,000Series
      C
                              
                              
                              660,000
                              
                              
                              
                              3,300,000
                              
                              
                              
                              264,000
                              
                              
                              
                              3,564,000
                              
                              
                              $
                              5.00
                              
                              
                              
                              712,800Series
      D
                              
                              
                              303,936
                              
                              
                              
                              1,519,680
                              
                              
                              
                              121,574
                              
                              
                              
                              1,641,254
                              
                              
                              $
                              5.00
                              
                              
                              
                              328,250Total
      Common
                              
                              
                              1,963,936
                              
                              
                              $
                              9,819,680
                              
                              
                              $
                              885,574
                              
                              
                              $
                              10,705,254
                              
                              
                              
                              
                              
                              
                              
                              2,141,050





F-15
 Index





WARRANTS





8.
            COMMITMENTS
      AND CONTINGENCIES





Legal
Proceedings





ECCE is
Involved in litigation involving its sale of ECCO Biofuels during
2007.  We do not consider the possible outcome of this lawsuit to be
material.





Operating
Leases





During
2008, ECCE leased office space in Houston, Texas on a month to month operating
lease; cancelable with thirty days written notice. Rent expense was $61,457 and
$27,608 for 2008 and 2007, respectively.    ECCE moved to
its new location 3315 Marquart Street., Suite 206, Houston,
Texas  77027 during 2007, and expanded its office space from about
2,000 sq. ft. to 9,750 sq. ft. during 2008.  ECCE entered into a new
lease agreement through December 31, 2014.  The rent for 2009 will be
$18 per square foot, or approximately $14,625 per month.





Environmental
Matters





ECCE’s
operations and properties are subject to extensive federal, state, and local
laws and regulations relating to the generation, storage, handling, emission,
transportation, and discharge of materials into the environment. Permits are
required for several of ECCE’s operations and these permits are subject to
revocation, modification, and renewal by issuing authorities. ECCE’s also is
subject to federal, state, and local laws and regulations that impose liability
for the cleanup or remediation of property which has been contaminated by the
discharge or release of hazardous materials or wastes into the environment.
Governmental authorities have the power to enforce compliance with their
regulations, and violations are subject to fines or injunctions, or both.
Certain aspects of ECCE’s operations may not be in compliance with applicable
environmental laws and regulations, and such noncompliance may give rise to
compliance costs and administrative penalties. It is not anticipated that ECCE
will be required in the near future to expend amounts that are material to the
financial condition or operations, but because such laws and regulations are
frequently changed and, as a result, may impose increasingly strict
requirements, ECCE is unable to predict the ultimate cost of complying with such
laws and regulations.





9.
            RELATED
      PARTY TRANSACTIONS





ECCO
Biofuels, Inc.





ECCO
Biofuels, Inc. was our wholly-owned subsidiary and was formed to offer plant
operators the option of financing 100% of the construction of biodiesel
plants.  On June 27, 2007, we sold all of the total issued and
outstanding shares of ECCO Biofuels; and (ii) in payment, Saber Energy, a
privately held Texas corporation, agreed to assume all of the liabilities of
ECCO Biofuels.





Samurai
Operating Company L.L.C., a related party, is the operator of ECCE’s properties
and provides production, engineering and maintenance services and charged an
operating fee for its services of $24,000 and $28,800 in 2008 and 2007,
respectively.





10.
            SUPPLEMENTAL OIL AND GAS
      INFORMATION-(Unaudited)





Proved
oil and gas reserve quantities are based on estimates prepared internally by
ECCE’s engineer in accordance with guidelines established by the Securities
Exchange Commission (SEC).





There are
numerous uncertainties inherent in estimating quantities of proved reserves and
projecting future rates of production. The following reserve data related to the
properties represents estimates only and should not be construed as being exact.
The reliability of these estimates at any point in time depends on both the
quality and quantity of the technical and economic data, the performance of the
reservoirs, as well as extensive engineering judgment. Consequently, reserve
estimates are subject to revision as additional data becomes available during
the producing life of a reservoir. The evolution of technology may also result
in the application of improved recovery techniques, such as supplemental or
enhanced recovery projects, which have the potential to increase reserves beyond
those currently envisioned.





F-16
 Index





Estimates
of proved reserves are derived from quantities of crude oil and natural gas that
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing operating and
economic conditions and rely upon a production plan and strategy.





Statement
of Financial Accounting Standards No. 69, Disclosures About Oil and Gas
Producing Activities (“FAS 69”), requires calculation of future net cash flows
using a 10% annual discount factor and year-end prices, costs and statutory tax
rates, except for known future changes such as contracted prices and legislated
tax rates. The price used was the NYMEX price at December 31, 2008 of
approximately $44.60 per barrel of oil and $5.622 per Mcf of natural gas, plus
or minus differentials.  Reserves and pricing were calculated by
qualified internal engineers, utilizing third party reserve reports and related
information.





Gas
                  
                  
                  Oil(MMcf)
                  
                  
                  (MBbls)Total
      Proved Reserves:Balance,
      December 31, 2007
                  
                  
                  18,205.14
                  
                  
                  
                  264.57Acquisition
      of oil and gas properties
                  
                  
                  0
                  
                  
                  
                  0Production
                  
                  
                  (41.85
                  )
                  
                  
                  (.39
                  )Adjustment
      of oil and gas properties
                  
                  
                  (0
                  )
                  
                  
                  (0
                  )Balance,
      December 31, 2008
                  
                  
                  18,163.29
                  
                  
                  
                  264.1825,885.80
                  
                  
                  
                  367.63





F-17
 Index





Capitalized
Costs of Oil and Gas Producing Activities





The
following table sets forth the aggregate amounts of capitalized costs relating
to the ECCE's oil and gas producing activities and the related accumulated
depletion as of December 31,





2008
                        
                        
                        2007Proved
      properties
                        
                        
                        11,704,766
                        
                        
                        
                        11,042,601Less
      accumulated depletion
                        
                        
                        (270,127
                        )
                        
                        
                        (229,244
                        )Net
      capitalized costs
                        
                        $
                        11,434,639
                        
                        
                        $
                        10,813,357





Costs Incurred in Oil and
Gas Producing Activities





The
following table reflects the costs incurred in oil and gas property acquisition,
exploration and development activities during the years ended December 31, 2008
and 2007:





2008
                    
                    
                    2007Acquisition
      costs
                    
                    $
                    0
                    
                    
                    $
                    10,078,597Development
      costs
                    
                    
                    375,089
                    
                    
                    
                    125,981Total
      Costs Incurred
                    
                    $
                    288,952
                    
                    
                    $
                    10,204,578





The
following disclosures concerning the standardized measure of future cash flows
from proved oil and gas reserves are presented in accordance with FAS 69. As
prescribed by FAS 69, the amounts shown are based on prices and costs at the end
of each period and a 10 percent annual discount factor.





Future
cash flows are computed by applying fiscal year-end prices of natural gas and
oil to year-end quantities of proved natural gas and oil reserves. Future
operating expenses and development costs are computed primarily by ECCE’s
petroleum engineer by estimating the expenditures to be incurred in developing
and producing ECCE’s proved natural gas and oil reserves at the end of the year,
based on year end costs and assuming continuation of existing economic
conditions. Future income taxes are based on currently enacted statutory
rates.





The
standardized measure of discounted future net cash flows is not intended to
represent the replacement costs or fair value of ECCE’s natural gas and oil
properties. An estimate of fair value would take into account, among other
things, anticipated future changes in prices and costs, and a discount factor
more representative of the time value of money and the risks inherent in reserve
estimates of natural gas and oil producing operation.





Reserve
estimates were prepared by both external and internal sources.





Standardized
Measure of Discounted Future Net Cash Flow





2008
                  
                  
                  2007Future
      cash inflows at December 31,
                  
                  $
                  114,043,660
                  
                  
                  $
                  152,559,236Future
      costs-Operating
                  
                  
                  (24,809,030
                  )
                  
                  
                  (31,003,304
                  )Development
      and abandonment
                  
                  
                  (15,580,350
                  )
                  
                  
                  (12,272,052
                  )Future
      net cash flows before income taxes
                  
                  
                  70,235,550
                  
                  
                  
                  109,283,883Future
      income taxes
                  
                  
                  (23,880,087
                  )
                  
                  
                  (37,156,520
                  )Future
      net cash flows after taxes
                  
                  
                  46,355,463
                  
                  
                  
                  72,127,363Discount
      at 10% annual rate
                  
                  
                  (20,444,800
                  )
                  
                  
                  (20,094,735
                  )Standardized
      measure of discounted future net cash flows
                  
                  $
                  (25,910,066
                  )
                  
                  $
                  52,032,628





F-18
 Index





The
following reconciles the change in the standardized measure of discounted net
cash flow for the year ended December 31,




2008
                  
                  
                  2007Beginning
      of the year
                  
                  $
                  52,032,628
                  
                  
                  $
                  1,355,086Acquisition
      of oil and gas properties
                  
                  
                  0
                  
                  
                  
                  50,708,487Sales,
      net of production costs
                  
                  
                  (432,959
                  )
                  
                  
                  (468,831
                  )Net
      change in prices and production costs
                  
                  
                  25,689,006
                  
                  
                  
                  437,886Change
      in future development costs
                  
                  
                  0
                  
                  
                  
                  0Revision
      of quantity estimates
                  
                  
                  0
                  
                  
                  
                  0Disposal
      of oil and gas properties
                  
                  
                  (0
                  )
                  
                  
                  (0
                  )Ending
      of year
                  
                  $
                  25,910,663
                  
                  
                  $
                  52,032,628








F-19
 Index





ITEM9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.





None





ITEM9A(T).
            CONTROLS
      AND PROCEDURES.





Disclosure
Controls and Procedures





We
maintain "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that
are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. We
conducted an evaluation (the "Evaluation"), under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer of the
effectiveness of the design and operation of our disclosure controls and
procedures ("Disclosure Controls") as of the end of the period covered by this
report pursuant to Rule 13a-15 of the Exchange Act. The evaluation of our
disclosure controls and procedures included a review of the disclosure controls’
and procedures’ objectives, design, implementation and the effect of the
controls and procedures on the information generated for use in this report. In
the course of our evaluation, we sought to identify data errors, control
problems or acts of fraud and to confirm the appropriate corrective actions, if
any, including process improvements, were being undertaken. Our Chief Executive
Officer and our Chief Financial Officer concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were not
effective at the level of operations we experienced in 2008 and were operating
at the reasonable assurance level. However, as we grow, we will need to enhance
our controls.  We intend to take measures in 2009 that will enhance
controls over various functions of our operations so as to insure the level of
such controls is effective in the future.





Managements’
Annual Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act, as
amended, as a process designed by, or under the supervision of, a company’s
principal executive and principal financial officers and effected by a company’s
board of directors, management and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. Our internal control over financial reporting
includes those policies and procedures that:





* pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;





* provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and
directors;





* and
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.





Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management override. Because of such
limitations, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. In addition, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may
deteriorate.





27
 Index





In order
to evaluate the effectiveness of our internal control over financial reporting
as of December 31, 2008 as required by Sections 404 of the Sarbanes-Oxley Act of
2002, our management commenced an assessment, based on the criteria set forth in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the “COSO Framework “). A material
weakness is a control deficiency, or a combination of control deficiencies, that
results in more than a remote likelihood that a material misstatement of our
annual or interim financial statements will not be prevented or detected on a
timely basis. In assessing the effectiveness of our internal control over
financial reporting, our management, including the chief executive officer and
chief financial officer, identified the following deficiencies: (1) Deficiencies
in Segregation of Duties. The Chief Executive Officer and the Chief Financial
Officer are actively involved in the preparation of the financial statements,
and therefore cannot provide an independent review and quality assurance
function within the accounting and financial reporting group. The limited number
of qualified accounting personnel discussed above results in an inability to
have independent review and approval of financial accounting entries.
Furthermore, management and financial accounting personnel have wide-spread
access to create and post entries in the Company’s financial accounting system.
There is a risk that a material misstatement of the financial statements could
be caused, or at least not be detected in a timely manner, due to insufficient
segregation of duties, and (2) Our financial statement closing process did not
identify all the journal entries that needed to be recorded as part of the
closing process for certain complex and non-routine transactions. As part of the
audit, our independent registered public accounting firm proposed certain
entries that should have been recorded as part of the normal closing process.
Our internal control over financial reporting did not detect such matters and,
therefore, was not effective in detecting misstatements in the financial
statements.





To
address the material weakness, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented. As a result, we are developing an implementation plan in be
put in place whereby in 2009 sufficient testing to satisfy COSO requirements
will be performed. The absence of the ability to conclude as to the sufficiency
of internal controls is a material weakness.





This
annual report does not include an attestation report of the company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
company’s registered public accounting firm pursuant to temporary rules of the
SEC that permits the company to provide only management’s report in this annual
report.





ITEM9B. OTHER INFORMATION





Not
applicable.





28
 Index





PART
III





ITEM10.  DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT





IDENTIFICATION
OF DIRECTORS AND EXECUTIVE OFFICERS





All of
our directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our board of directors and hold office until their earlier
death, retirement, resignation or removal.





Our
directors and executive officers, their ages, positions held are as
follows:





Name
                  
                  Age
                  
                  Position
      with the CompanySamuel
      Skipper
                  
                  49
                  
                  President,
      Chief Executive Officer and a DirectorN.
      Wilson Thomas
                  
                  54
                  
                  Chief
      Financial OfficerRaymond
      Ward
                  
                  57
                  
                  Chief
      Operating Officer





Samuel M.
Skipperis our
President/Chief Executive Officer and a director. For the past sixteen years,
Mr. Skipper has assisted in the consolidation of private and public companies
and the entry of such companies into the public markets. From 1998 to 2003, Mr.
Skipper was the founder, chairman of the board and the chief executive officer
of VTEX Energy, Inc. From 1990 to 1993, Mr. Skipper was the founder of and
served as the president and chief executive officer of ImageTrust, Inc. a public
company in the health care industry.





N. Wilson
Thomas was appointed our Chief Financial Officer in November
2007.  Mr. Thomas is a CPA and received a BBA from the University of
Texas, Austin in 1976.  Since 2006, Mr. Thomas has worked as a CPA
specializing in representing emerging companies.  Prior to 2006, Mr.
Thomas spent twenty years in the distribution industry, with sixteen of those
years working for SYSCO Corporation as a CFO of a SYSCO subsidiary.





Raymond
Ward has served as Chief Operating Officer and a director since March
2009.  From 2005 to 2009, Mr. Ward served as Secretary and Managing
Partner for Republic Petroleum, LLC.  From 2003 to 2005, Mr. Ward
served as Vice-President of Operations and Production for Millennium Offshore
Group.  Mr. Ward received his B.S. in Petroleum Engineering from
Mississippi State University and is currently a licensed Professional Engineer
in the state of Texas.





AUDIT
COMMITTEE





As of the
date of this Annual Report, we have not appointed members to an audit committee
and, therefore, the respective role of an audit committee has been conducted by
our board of directors. When established, the audit committee's primary function
will be to provide advice with respect to our financial matters and to assist
our board of directors in fulfilling its oversight responsibilities regarding
finance, accounting, tax and legal compliance. The audit committee's primary
duties and responsibilities will be to: (i) serve as an independent and
objective party to monitor our financial reporting process and internal control
system; (ii) review and appraise the audit efforts of our independent
accountants; (iii) evaluate our quarterly financial performance as well as our
compliance with laws and regulations; (iv) oversee management's establishment
and enforcement of financial policies and business practices; and (v) provide an
open avenue of communication among the independent accountants, management and
our board of directors.  The Company has no audit committee financial
expert as defined under 17 CFR Section 228.41.





The board
of directors has considered whether the regulatory provision of non-audit
services is compatible with maintaining the principal independent accountant's
independence.





COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT





Section
16(a) of the Exchange Act requires our directors and officers, and the persons
who beneficially own more than ten percent of our common stock, to file reports
of ownership and changes in ownership with the SEC. Copies of all filed reports
are required to be furnished to us pursuant to Rule 16a-3 promulgated under the
Exchange Act. Based solely on the reports received by us and on the
representations of the reporting persons, we believe that these persons have
complied with all applicable filing requirements during the fiscal year ended
December 31, 2007.





29
 Index





CODE
OF ETHICS





The
Company adopted a code of ethics (“Code”) that applies to all of its directors
and officers.  The Code is being filed as an exhibit to this Annual
Report.  Copies of the Company’s Code of Ethics are available, free of
charge, by submitting a written request to the Company at 3315 Marquart St.,
Suite 206, Houston, Texas 77027.





ITEM11.  EXECUTIVE COMPENSATION





The
following table sets forth the compensation paid to our chief executive officer
and chief financial officer for fiscal year ended December 31, 2008, our only
two executive officers during 2008 (collectively, the “Named Executive
Officers”):




SUMMARY
COMPENSATION TABLE




Stock
                  
                  
                  Option
                  
                  
                  Non-Equity
      Incentive Plan
                  
                  
                  Non-Qualified
      Deferred Compensation
                  
                  
                  All
      OtherName
      and Principal Position
                  Year
                  
                  Salary
                  
                  
                  Bonus
                  
                  
                  Awards
                  
                  
                  Awards
                  
                  
                  Compensation
                  
                  
                  Earnings
                  
                  
                  Compensation
                  
                  
                  Total($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)Samuel
      Skipper,President/CEO
                  2008
                  
                  $
                  60,000
                  
                  
                  $
                  -
                  
                  
                  $
                  0
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  60,0002007
                  
                  $
                  60,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  60,000N.
      Wilson Thomas
                  2008
                  
                  $
                  10,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  55,000
                  
                  
                  $
                  65,000Chief
      Financial Officer
                  2007
                  
                  $
                  0$
                  -
                  
                  
                  $
                  
                  
                  
                  $
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  55,000




Note:  Mr.
Thomas postponed salary payment of $55,000 until 2009.  The expense is
recorded on the balance sheet under accrued liabilities.





GRANTS
OF PLAN-BASED AWARDS





The
Company has reserved 100,000 shares of our common stock for issuance under the
Plan.  No securities or options have been issued pursuant to the
Plan.  No options have been issued to the named executive officers
under the Plan or any other plan.





EMPLOYMENT
AGREEMENTS





The
Company has not entered into any employment agreements with any of its executive
officers.




DIRECTOR
COMPENSATION





During
fiscal year ended December 31, 2008, we did not pay any compensation to our
directors for their respective position on the board of directors.





30
 Index





ITEM12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




As of the
date of this Annual Report, the following table sets forth certain information
with respect to the beneficial ownership of our common stock and our Series A
Preferred Stock (our only class of preferred stock that has voting rights) by
each stockholder known by us to be the beneficial owner of more than 5% of our
common stock and Series A Preferred Stock, by each of our directors, our Named
Executive Officers, and our executive officers and directors as a group. Each
person has sole voting and investment power with respect to the shares, except
as otherwise indicated. Under Rule 13d-3, a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares: (i) voting
power, which includes the power to vote, or to direct the voting of shares; and
(ii) investment power, which includes the power to dispose or direct the
disposition of shares. Certain shares may be deemed to be beneficially owned by
more than one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of the date as of which
the information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason of
these acquisition rights. As of the date of this Annual Report, there are
9,624,954 shares issued and outstanding.





Name
      and Address of Beneficial Owner (1)
                          
                          Shares
      of Common Stock
                          
                          
                          Shares
      of Series A Preferred Stock
                          
                          
                          Total
      Percentage of Voting PowerNo.
                          
                          
                          %
                          
                          
                          Series
      A
                            No.
                          
                          
                          Series
      A %
                          
                          
                          No.
                          
                          
                          %Directors
      & OfficersSamuel
      Skipper
                          
                          
                          5,120,499
                          (2)
                          
                          
                          52.12
                          
                          
                          
                          100,000
                          
                          
                          
                          100
                          
                          
                          
                          5,120,499
                          (4))
                          
                          
                          53.20N.
      Thomas Wilson
                          
                          
                          30,000
                          
                          
                          
                          *
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          30,000
                          
                          
                          
                          *All
      executive officers & directors as a group (3 persons)
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          5,150,499
                          
                          
                          
                          53.20Beneficial
      Owners of more than 5%Richard
      A. Bobigian
                          
                          
                          1,180,998
                          (3)
                          
                          
                          12.02
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,180,998
                          
                          
                          
                          12.2715907
      Chilton Circle
                            Spring,
      Texas 77379




*Less
than one percent.




(1)
            Unless
      otherwise indicated, the business address of the individuals listed is
      3315 Marquart St., Suite
      206, Houston, Texas 77027.




(2)
            Includes:
      (i) 2,406,000 shares of common stock held of record by Mr. Skipper; (ii)
      2,611,500 shares of common stock held of record by Samurai, an entity of
      which Mr. Skipper controls; and (iii) 102,999 shares of common stock held
      of record by Samurai Energy LLC, an entity of which Mr. Skipper
      controls.




(3)
            Includes:
      (i) 125,000 shares of common stock held of record by Mr. Bobigian; and
      (ii) 1,080,999 shares of common stock held of record by RAB Ventures,
      Inc., an entity of which Mr. Bobigian
controls.




(4)
            The
      Series A Preferred Stock provides that Mr. Skipper shall, at a minimum,
      have voting power of 50.1% of the issued and outstanding common
      stock.





ITEM13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





Samurai
Operating Company L.L.C., an entity owned by our president, is the operator of
the properties and provides production, engineering and maintenance services and
charged an operating fee for its services of $24,000 and $28,800 in 2008 and
2007, respectively.





Sam
Skipper acquired 2,406,000 shares of our common stock in 2006 for nominal
consideration.  Samurai, and entity controlled by Mr. Skipper,
acquired 2,611,500 of our shares of common stock in 2006 for nominal
consideration.  Samurai Energy LLC, an entity controlled by our Mr.
Skipper, acquired 102,999 shares of our common stock in 2006 for nominal
consideration.   Mr. Skipper acquired 100,000 shares of our
Series A Preferred Stock for nominal consideration in 27,000, which provides him
common stock voting power of at least 50.1%.





Samurai
provides loans to the Company on a demand basis from time to time and, at
December 31, 2008; the Company owed Samurai Corp $443,304, and $1,517 to Mr.
Skipper.





The
Company subleased its office space from a building that is 40% owned by Mr.
Skipper on a month to month basis at market rates during 2008, escalating to
$14,625 during 2009.





The
Company pays Samurai a monthly fee of $2,000 for management services related to
Mr. Skipper.





31
 Index





ITEM14.  PRINCIPAL ACCOUNTING FEES AND
SERVICES





During
fiscal year ended December 31, 2008, we incurred approximately $83,700 in fees
to our principal independent accountants for professional services rendered in
connection with the audit of our financial statements for the fiscal year ended
December 31, 2008 and for the review of our financial statements for the
quarters ended March 31, 2008, June 30, 2008 and September 30,
2008.





During
2008, we did not incur any other fees for professional services rendered by our
principal independent accountant for all other non-audit services which may
include, but is not limited to, tax-related services, actuarial services or
valuation services.





During
fiscal year ended December 31, 2007, we incurred approximately $55,300 in fees
to our principal independent accountants for professional services rendered in
connection with the audit of our financial statements for the fiscal year ended
December 31, 2007 and for the review of our financial statements for the
quarters ended March 31, 2007, June 30, 2007 and September 30,
2007.





During
2007, we did not incur any other fees for professional services rendered by our
principal independent accountant for all other non-audit services which may
include, but is not limited to, tax-related services, actuarial services or
valuation services.




ITEM15. EXHIBITS





The
following exhibits are filed with this Annual Report on Form 10-K:





Exhibit
      Number
                                                Description
      of Exhibit3.1
                                                Articles
      of Incorporation, as amended (1)3.2
                                                Certificate
      of Amendment to Articles of Incorporation (2)3.1.2
                                                First
      Amended Certificate of Designation of Convertible Series B Preferred Stock
      (4)3.1.3
                                                First
      Amended Certificate of Designation of Convertible Series C Preferred Stock
      (5)3.1.4
                                                First
      Amended Certificate of Designation of Convertible Series D Preferred Stock
      (5)3.2
                                                Bylaws
      (1)4.1
                                                Form
      of Common Stock Certificate (1)4.2
                                                Agreement
      and Plan of Merger among Samurai Energy Corp. and ECCO Energy Corp. dated
      June 26, 2006 (2)4.3
                                                Assignment,
      Conveyance, and Bill of Sale with respect to 37% working interest in
      Wilson Wells (3)10.1
                                                2005
      Directors, Officer and Consultants Stock Option, Stock Warrants and Stock
      Awards Plan (4)14.1
                                                Code
      of Ethics (7)14.2
                                                Whistleblower
      Policy (7)31.1
                                                Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002. (7)31.2
                                                Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002. (7)32.1
                                                Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002. (7)32.2
                                                Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.
(7)




(1)
              Incorporated
      by reference to our Registration Statement on Form 8-A filed with the SEC
      on December 7, 2005.




(2)
              Incorporated
      by reference to our Report on Form 8-K filed with the SEC on June 30,
      2006.




(3)
              Incorporated
      by reference to our Annual Report on Form 10-K filed with the SEC on March
      20, 2006.





32
 Index







(4)
              Incorporated
      by reference to our Registration Statement on Form S-8 filed with the
      Securities and Exchange     Commission on June
      26, 2006.




(5)
              Incorporated
      by reference to our Current Report on Form 8-K filed with the SEC on
      October 5, 2007.




(6)
              Incorporated
      by reference to our Current Report on Form 8-K filed with the SEC on April
      11, 2008.




(7)
              Filed
      herewith.





33
 Index





SIGNATURES





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








ECCO
      ENERGY CORP.Dated:
      April 14, 2009
              By:
      /s/SAMUEL M. SKIPPERSamuel
      M. Skipper, President/ChiefExecutive
      Officer and DirectorDated:
      April 14, 2009
              By:
      /s/N. Wilson ThomasN.
      Wilson Thomas CPA/ChiefFinancial
      Officer and Principal Accounting
Officer
   34