SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

|X|   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                For the quarterly period ended September 30, 2006

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

       For the transition period from _______________ to ________________

                        Commission file number 333-116890

                            BASELINE OIL & GAS CORP.
           (Exact name of small business as specified in its charter)

             Nevada                                      30-0226902
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

                   20022 Creek Farm, San Antonio, Texas 78259
                    (Address of principal executive offices)

                                 (210) 481-5177
                (Issuer's telephone number, including area code)

Indicate by check mark whether the issuer (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. Yes |X|  No |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. Yes |X|  No |_|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 30,717,738 shares of Common
Stock, $.001 per share, as of November 7, 2006.

Transitional Small Business Disclosure Format (check one): Yes |_|  No |X|

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1. Financial Statements.

                            BASELINE OIL & GAS CORP.
                          (A Development Stage Company)
                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    September 30,   December 31,
                                                        2006           2005
                                                    ----------------------------
<S>                                                 <C>             <C>
ASSETS
  Cash and cash equivalents                           2,491,596         206,489
  Prepaid and other current assets                       18,750              --
                                                    -----------     -----------
     Total current assets                             2,510,346         206,489

  Deferred debt issuance costs, net of
  amortization of $177,894 and $0, respectively         148,245         326,139
  Property acquisition - deposit                             --       1,750,000
  Unproven leasehold acquisition costs                6,704,375              --
                                                    -----------     -----------
     Total assets                                     9,362,966       2,282,628
                                                    ===========     ===========

LIABILITIES & STOCKHOLDERS' EQUITY

  Accounts payable                                       57,799          98,726
  Accrued liabilities                                   773,926          56,492
  Derivative liability                                  136,501              --
  Short term debt and current portion
    long term debt, net of discount                          --         298,384
                                                    -----------     -----------
     Total current liabilities                          968,226         453,602
  Long term debt, net of discount                     1,663,334         809,333
                                                    -----------     -----------

     Total liabilities                                2,631,560       1,262,935
                                                    -----------     -----------

  Commitments and contingencies                              --              --

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value,
    10,000,000 shares authorized,
    none issued and outstanding                              --              --
  Common stock, $.001 par value, 140,000,000
    shares authorized, 30,271,818 and 20,270,000
    shares issued and outstanding, respectively          30,272          20,270
  Additional paid-in capital                         26,909,615      18,791,179
  Deficit accumulated in the development stage      (20,208,481)    (17,791,756)
                                                    -----------     -----------

     Total stockholders' equity                       6,731,406       1,019,693
                                                    -----------     -----------

     Total liabilities & stockholders' equity         9,362,966       2,282,628
                                                    ===========     ===========
</TABLE>

                 See accompanying summary of accounting policies
                       and notes to financial statements.

<PAGE>

                            BASELINE OIL & GAS CORP.
                          (A Development Stage Company)
                             STATEMENTS OF EXPENSES
        Three and Nine Months Ended September 30, 2006 and 2005, and the
         Period from June 29, 2004 (Inception) through September 30,2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 June 29, 2004
                                                                                                  (Inception)
                                   Three Months Ended                 Nine Months Ended             Through
                                      September 30,                     September 30,             September 30,
                                  2006             2005             2006             2005             2006
                              --------------------------------------------------------------------------------
<S>                           <C>              <C>              <C>              <C>              <C>
Selling
general and
administrative                $    449,042     $     61,123     $  1,595,721     $ 16,806,243     $ 18,990,809

Interest income                    (36,964)              --          (96,507)              --          (96,507)

Interest expense                   403,828           66,874        1,286,681          123,131        1,680,090
Gain on derivative
liability                          (35,493)              --         (369,170)              --         (369,170)

Other expense                           --               --               --               --            3,259
                              --------------------------------------------------------------------------------
Net loss                      $   (780,413)    $   (127,997)    $ (2,416,725)    $(16,929,374)    $(20,208,481)
                              ================================================================================

Basic and diluted
net loss per share            $      (0.03)    $      (0.01)    $      (0.09)    $      (1.29)

Basic and diluted weighted
average shares outstanding      30,271,818       19,320,000       28,068,166       13,157,121
</TABLE>

                 See accompanying summary of accounting policies
                       and notes to financial statements.

<PAGE>

                            BASELINE OIL & GAS CORP.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
                  Nine Months Ended September 30, 2006 and 2005
    and the Period from June 29, 2004 (Inception) through September 30, 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Inception
                                                             Nine Months Ended                 Through
                                                               September 30,                September 30,
                                                          2006               2005               2006
                                                      --------------------------------------------------
<S>                                                   <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                (2,416,725)       (16,929,374)       (20,208,481)
Adjustments to reconcile net loss to
 cash used in operating activities:
 Share based compensation                                       --         16,462,694         16,499,670
 Unrealized (gain)/loss on derivative liability           (369,170)                --           (369,170)
 Amortization of debt discount                             921,910            105,642          1,227,735
 Amortization of debt issuance costs                       177,894                 --            207,543

Changes in:
 Prepaid and other assets                                  (18,750)                --            (18,750)
 Accounts payable and accruals                             685,819             32,265            842,330
                                                      ------------       ------------       ------------

NET CASH USED IN OPERATING ACTIVITIES                   (1,019,022)          (328,773)        (1,819,123)
                                                      ------------       ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Property acquisition costs                              (4,954,375)              (749)        (6,704,375)
                                                      ------------       ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from note payable                                     --                 --             15,000
 Payments on note payable                                  (16,496)                --            (16,496)
 Proceeds from sale of common stock                      8,275,000             16,764          8,291,590
 Proceeds convertible notes                                     --            350,000          2,725,000
                                                      ------------       ------------       ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                8,258,504            366,764         11,015,094
                                                      ------------       ------------       ------------

NET CHANGE IN CASH                                       2,285,107             37,242          2,491,596
  Cash and cash equivalents, beginning of period           206,489                 --                 --
                                                      ------------       ------------       ------------

  Cash and cash equivalents, end of period            $  2,491,596       $     37,242       $  2,491,596
                                                      ============       ============       ============

SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                              $         --       $         --       $         --
  Cash paid for income taxes                          $         --       $         --       $         --

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Warrants issued in connection with
  issuance of stock                                   $    505,671                          $    505,671
  Stock issued for conversion of debt                      359,109                               359,109
</TABLE>

                 See accompanying summary of accounting policies
                       and notes to financial statements.

<PAGE>

                            BASELINE OIL & GAS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations and organization

Baseline Oil & Gas Corp. is an independent exploration and production company,
with operations presently focused in the Illinois Basin New Albany Shale play.

Basis of Presentation

The accompanying unaudited interim financial statements of Baseline have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with Baseline's audited 2005
annual financial statements and notes thereto. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements, which would substantially
duplicate the disclosure required in Baseline's 2005 annual financial statements
have been omitted.

Use of estimates

The preparation of these financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

NOTE 2 - ISSUANCE OF COMMON STOCK

On January 16, 2006, Baseline entered into a definitive Purchase Agreement
("Purchase Agreement") to purchase certain assets from Rex Energy Operating
Corp. ("Rex Energy") and its affiliates (collectively the "Rex Parties"), and
the 50% membership in the New Albany -Indiana, LLC ("New Albany") that we did
not already own. Concurrently with the execution of the Purchase Agreement, we
entered into a Stock Agreement with certain individuals designated by Rex
Energy, pursuant to which we issued a total of 12,069,250 common shares of our
Common Stock valued at $1,206,925 or $0.10 per share. The issuance of such
shares was subject to our right of first refusal to repurchase all such shares
at a price $ 1.00 below any bona fide purchase offer for such shares made by a
third party. We accounted for the aforementioned shares as a stock subscription
receivable.

On June 8, 2006, Baseline entered into a Mutual Termination Agreement
("Termination Agreement") and Mutual Release Agreement ("Release Agreement")
with the Rex Parties pursuant to which we and the Rex Parties mutually
terminated (i) that certain purchase agreement between us dated January 16, 2006
and (ii) that certain stock agreement dated January 16, 2006 (as amended on
March 10, 2006).

Pursuant to the termination agreement, the Rex Parties surrendered for
cancellation of the aforementioned, 12,069,250 shares of our common stock,
previously issued to them pursuant to the Stock Agreement. In connection with
the surrender of these shares, the $1,206,925 of stock subscription receivable
relating to the shares was eliminated as an adjustment to equity. After giving
effect to the cancellation of such shares, we have 30,271,818 shares of common
stock outstanding as of September 30, 2006 and options, warrants and convertible
promissory notes to purchase up to an additional 19,871,590 shares of our common

<PAGE>

stock. Pursuant to the Release Agreement, we and the Rex Parties have agreed to
release and hold each other harmless from all Claims stemming from Controversies
(each as defined in the Release Agreement) arising out of our dealings with one
another.

On February 1, 2006 Baseline completed a private placement of $ 9,000,000 by
selling an aggregate of 8,181,819 shares of newly-issued Common Stock at $ 1.10
per share. As part of the transaction, Baseline issued warrants to the placement
agents ("Placement Warrants") to purchase an aggregate of 204,546 shares of
Common Stock at an exercise price of $1.32 per share. These warrants have a
three year term. Baseline agreed to register the resale of the shares of common
stock issuable upon exercise of the Placement Warrants. Based on the guidance in
SFAS 133 "Accounting for Derivative Instruments and Hedging Activities" and EITF
00-19 "Accounting for Derivative Financial Instruments Indexed to and
Potentially Settled in a Company's Own Stock", Baseline concluded the Placement
Warrants qualified for derivative accounting. Baseline determined the Placement
Warrants had the attributes of a liability and therefore recorded the fair value
of the Placement Warrants on day one as a current liability and a reduction of
additional paid in capital as a cost of equity issuance. Baseline is required to
record the unrealized changes in fair value in subsequent periods of the
Placement Warrants as an adjustment to the current liability with unrealized
changes in the fair value of the derivative reflected in the statement of
expenses as "(Gain)/loss on derivative liability." The fair value of the
Placement Warrants was $505,671 at February 1, 2006. The fair value of the
Placement Warrants was determined utilizing the Black-Scholes stock option
valuation model. The significant assumptions used in the valuation were: the
exercise price as noted above; the market value of Baseline's common stock on
February 1, 2006, $2.50; expected volatility of 268%; risk free interest rate of
approximately 4.54%; and a term of three years. The fair value of the Placement
Warrants was $136,501 at September 30, 2006. The fair value of the Placement
Warrants was determined utilizing the Black-Scholes stock option valuation
model. The significant assumptions used in the valuation were: the exercise
price as noted above; the market value of Baseline's common stock on September
30, 2006, $0.75; expected volatility of 222%; risk free interest rate of
approximately 4.71%; and a term of two years and four months. The resulting
unrealized change in fair value of $369,170 from February 1, 2006 was recorded
in the statement of expenses as a gain on derivative liability.

On April 6, 2006, holders of Baseline's convertible promissory notes issued in
April of 2005 in the aggregate principal amount of $350,000 converted all of
such notes into 1,820,000 shares of Baseline's common stock.

NOTE 3 - INVESTMENT IN JOINT VENTURE

On November 25, 2005, Baseline entered into a joint venture with Rex Energy, a
privately held company, for the purpose of acquiring a working interest in
certain leasehold interests located in the Illinois Basin, Indiana. The joint
venture will be conducted through New Albany, a Delaware limited liability
company. Pursuant to a Limited Liability Company Agreement, Baseline has a 50%
economic/voting interest in New Albany and Rex Energy and its affiliates has a
50% economic/voting interest in New Albany. Rex Energy Wabash, LLC, an affiliate
of Rex, is the Managing Member of New Albany and manages the day to day
operations of New Albany.

On November 15, 2005, New Albany entered into a Purchase and Sale Agreement with
Aurora Energy Ltd ("Aurora"), pursuant to which New Albany has agreed to
purchase from Aurora an undivided 48.75% working interest (40.7% net revenue
interest) in (i) certain oil, gas and mineral leases covering acreage in several
counties in Indiana and (ii) all of Aurora's rights under a certain Farmout and
Participation Agreement with a third party ("Farmout Agreement"). In addition,
at the closing of the transaction, New Albany was granted an option from Aurora,
exercisable by New Albany for a period of eighteen (18) months thereafter, to
acquire a fifty percent (50%) working interest in any and all acreage leased or
acquired by Aurora or its affiliates within certain other counties located in
Indiana, at a fixed price per acre.

On February 1, 2006, New Albany completed its acquisition of certain oil and gas
leases and other rights from Aurora pursuant to the November 15, 2005 Purchase
and Sale Agreement mentioned above. The total purchase price under the Aurora
Purchase Agreement and the grant of the Aurora Option was $10,500,000 of which
Baseline paid $5,250,000.

On February 28, 2006, New Albany acquired a 45% working interest (37.125% net
revenue interest) in certain oil, gas and mineral leases covering approximately
21,000 acres of prospective New Albany Shale acreage in Knox and Sullivan

<PAGE>

Counties, Indiana. New Albany acquired its 45% working interest from Source Rock
Resources, Inc., for a total consideration of $735,000 (of which Baseline paid
half).

On July 21, 2006 Baseline transferred $88,714 to New Albany to fund the purchase
of working interests in additional acreage acquired from Source Rock Resources,
Inc.

On July 31, 2006 Baseline transferred $200,938 to New Albany to fund the
purchase of working interests in additional acreage acquired from Aurora.

NOTE 4 REGISTRATION STATEMENT-PENALTY INTEREST SHARES

As part of its Common Stock Offering in February 2006 (see Note 2), Baseline was
subject to a Registration Rights Agreement requiring it to file a registration
statement under the Securities Act by April 2, 2006. The company did not file by
April 2, but did so on June 13, 2006. As a result, Baseline incurred a $540,000
penalty, which was paid by issuing 445,920 common shares in November 2006.

NOTE 5 - SUBSEQUENT EVENTS

On October 20, 2006, Baseline's registration statement was declared effective.

On October 26, 2006, Baseline transferred $680,643 to New Albany to fund its
share of the pilot drilling program on the acreage acquired from Aurora and the
acquisition of additional acreage from Source Rock Resources, Inc.

On October 20, 2006, Baseline granted a stock option to its President, Carey
Birmingham, exercisable for up to 100,000 shares of Common Stock at an exercise
price of $0.43 per share. Mr. Birmingham subsequently resigned as President of
Baseline on November 10, 2006.

In November 2006, Baseline issued an aggregate of 445,920 shares of Common Stock
to investors in our February 2006 private offering. Such shares were issued as a
result of Baseline's failure to timely register the shares purchased in the
private offering.

<PAGE>

Item 2. Management's Plan of Operation.

Introduction.

      We were incorporated as a Nevada corporation in February 2004 under the
name of College Oak Investments, Inc., and changed our name to Baseline Oil &
Gas Corp. on January 17, 2006. We are a "shell company" as that term is defined
in Rule 405 promulgated under the Securities Act of 1933 (the "Securities Act")
and Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), and as such, are subject to rules of the Securities Exchange
Commission (SEC) applicable to shell companies.

      On November 25, 2005, we entered into a joint venture with Rex Energy
Operating Corp. ("Rex Energy"), a privately held Delaware corporation, for the
purpose of acquiring working interests in leasehold interests in leasehold
acreage in the Illinois Basin located in Southern Indiana known to contain New
Albany Shale formations. Under this joint venture, we and Rex Energy formed New
Albany-Indiana, LLC ("New Albany"), a Delaware limited liability company.
Pursuant to a Limited Liability Company Agreement (the "LLC Agreement"), we have
a 50% economic/voting interest in New Albany and certain affiliates of Rex
Energy have a 50% economic/voting interest in New Albany. Rex Energy had
originally been a member of New Albany but, on January 30, 2006, Rex Energy
withdrew as a member and assigned its membership interests to several of its
affiliates, namely Lance T. Shaner, Shaner Limited Partnership & Hulburt Capital
Partners Limited Partnership, Rex Energy II Limited Partnership, Douglas Oil &
Gas and Rex Energy Wabash, LLC (collectively, the "LLC Assignees").

      On February 1, 2006, New Albany completed its acquisition of certain
undeveloped oil and gas leases and other rights from Aurora, pursuant to a
Purchase and Sale Agreement dated November 15, 2005 (the "Aurora Agreement").
Pursuant to the Aurora Agreement, New Albany initially purchased from Aurora an
undivided 48.75% working interest (40.7% net revenue interest) in (i) certain
oil, gas and mineral leases initially covering approximately 80,000 acres in
several counties in Indiana (the "Leases") and (ii) all of Aurora's rights under
a certain Farmout and Participation Agreement with a third party ("Farmout
Agreement"). In addition, New Albany was granted an option from Aurora (the
"Option"), exercisable by New Albany until August 1, 2007, to acquire a 50%
working interest in any and all acreage leased or acquired by Aurora or its
affiliates within certain other counties located in Indiana (currently estimated
to be 50,000 acres), at a fixed price of $25 per net acre. The total purchase
price for the acquisition of the working interests in the Leases and the Farmout
Agreement, together with the grant of the Option, was $10,500,000. Of the total
purchase price, we paid an aggregate of $5,250,000. Since February, New Albany
has acquired a working interest in leases covering approximately 42,000
additional acres and an option to acquire an additional 18,000 acres pursuant to
the Option.

      On March 6, 2006, New Albany purchased from Source Rock Resources, Inc.
("Source Rock") a 45% working interest in certain oil, gas and mineral leases
initially covering approximately 21,000 acres in Knox and Sullivan Counties in
Indiana, which the Company believes contain New Albany Shale formation stratum.
The purchase price paid by New Albany was $735,000 (of which we paid half). Rex
Energy will be the operator for wells drilled on the acreage. Since March, New
Albany has acquired a working interest in leases covering an additional 20,000
acres.

      In June 2006, New Albany entered into a Joint Operating Agreement (the
"JOA") with El Paso Exploration & Development Corp., Pogo Producing Company and
Aurora Energy Ltd., pursuant to which New Albany contributed certain of its
acreage in exchange for a 17% working interest in a new area of mutual interest,
targeting the New Albany Shale formation in Greene County, Indiana. Under the
JOA, El Paso will serve as operator.

<PAGE>

Recent Activity.

      To date, New Albany has participated in the drilling of four pilot wells
on acreage acquired from Aurora, designed to test the New Albany Shale
formation. The first of these pilot wells was drilled into the New Albany
formation and a horizontal lateral attempting to connect this pilot well to a
nearby existing vertical producing well was attempted. Although the lateral had
a number of gas shows during drilling, the well was temporarily abandoned due to
the heaving and collapsing of the Borden formation which lies directly above the
New Albany formation. A second vertical pilot well was then drilled and,
utilizing a modified technique, a horizontal lateral was drilled connecting this
pilot well to a nearby vertical producing well. Evaluation of this well to date
has not established the presence of hydrocarbons in commercial quantities. In
late October, a third pilot well was drilled and successfully intercepted a
nearby vertical producer. The lateral carried shows of gas throughout drilling.
Testing of this well began on October 30, 2006 and preliminary indications are
that the well should be capable of producing gas in paying quantities. A fourth
pilot well was spudded on October 26, 2006 and is presently drilling ahead.

      In connection with our recent JOA with El Paso, Pogo Producing and Aurora
Energy, a well was successfully drilled during the second quarter. The well is
presently awaiting pipeline hook-up.

      During the third quarter, New Albany received a request from Aurora to
participate in the building of a central compression and processing facility on
acreage New Albany acquired a working interest in from Aurora. This facility
will enable New Albany to market and sale gas by removing impurities from
recovered gas and by providing the necessary compression needed to tie into the
Texas Gas Transmission Pipeline. The total cost for this facility is anticipated
to be approximately $2 million, of which we will be responsible for $500,000.

      With respect to the properties acquired from Source Rock, New Albany has
not yet determined the timing of an initial well.

      We are actively seeking an operating company with which to enter into a
merger or acquisition transaction. We are also exploring various strategic joint
ventures as well as the acquisition of producing or non-producing properties.
There can be no assurance that we will be able to enter into any such
transaction. We believe that we have sufficient capital to satisfy our existing
cash requirements to fund New Albany's original obligations over the next twelve
months. However, in order to fully participate in drilling activities that may
be proposed on the various properties in which we hold a working interest, we
will need to raise additional capital in order to participate in such
activities. Likewise, we will be required to raise additional capital in order
to complete any acquisitions of properties. There can be no assurances that we
will be able to raise such capital.

<PAGE>

FORWARD LOOKING STATEMENTS

      With the exception of historical information, certain matters discussed in
this Form 10-QSB are forward looking statements that involve risks and
uncertainties. Certain statements contained in this Form 10-QSB, including
statements which may contain words such as "could", "should", "expect",
"believe", "will", and similar expressions and statements relating to matters
that are not historical facts are forward-looking statements. Such statements
involve known and unknown risks and uncertainties which may cause our actual
results, performances or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Although we believe that our expectations are based
on reasonable assumptions, we can give no assurance that our goals will be
achieved. Important factors that could cause actual results to differ materially
from those in the forward-looking statements herein include, but are not limited
to, our ability to raise capital as and when required, the timing and extent of
changes in prices for oil and gas, the availability of drilling rigs,
competition, environmental risks, drilling and operating risks, uncertainties
about the estimates of reserves, the prices of goods and services, legislative
and government regulations, political and economic factors in countries in which
we operate and implementation of our capital investment program.

Item 3. Controls and Procedures.

      We maintain disclosure controls and procedures 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 SEC's 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 based closely on the definition of "disclosure controls and
procedures" in Rule 13a-15(e). In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

      At the end of the period covered by this quarterly report, we carried out
an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based upon the foregoing, our Chief Executive Officer
and Chief Financial Officer concluded that, as of September 30, 2006, our
disclosure controls and procedures are effective.

      During the quarter ended September 30, 2006, there were no changes in our
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

<PAGE>

Item 5. Other Information.

      In November 2006, we issued an aggregate of 445,920 shares of our Common
Stock to investors that participated in our February Private Placement. Such
shares were issued pursuant to a Registration Rights Agreement between us and
such investors, as a result of our not filing a registration statement under the
Securities Act with respect to such investor's shares by April 2, 2006 (we filed
it on June 13, 2006) and not attaining effectiveness of such registration
statement by June 1, 2006 (it was declared effective on October 20, 2006).

                                     PART II
                                OTHER INFORMATION

Item 6. Exhibits, List and Reports on Form 8-K.

      (a) Exhibits

      Exhibit Number                                Description
--------------------------------------------------------------------------------
      31.1                            Certification of Chief Executive Officer
                                      pursuant to Section 302 of the
                                      Sarbanes-Oxley Act of 2002
      31.2                            Certification of Chief Financial Officer
                                      pursuant to Section 302 of the
                                      Sarbanes-Oxley Act of 2002
      32.1                            Certification pursuant to 18 U.S.C. 1350,
                                      adopted pursuant to Section 906 of the
                                      Sarbanes-Oxley Act of 2002, by Chief
                                      Executive Officer
      32.2                            Certification pursuant to 18 U.S.C. 1350,
                                      adopted pursuant to Section 906 of the
                                      Sarbanes-Oxley Act of 2002, by Chief
                                      Financial Officer

      (b) Reports on Form 8-K

      During the period covered by this Report, we filed no Reports on Form 8-K.

<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        BASELINE OIL & GAS CORP.


Date: November 14, 2006                 By: /s/ Barrie M. Damson
                                            ------------------------------------
                                        Name: Barrie M. Damson
                                        Title: Chairman, Chief Executive Officer


Date: November 14, 2006                 By: /s/ Richard M. Cohen
                                            ------------------------------------
                                        Name: Richard M. Cohen
                                        Title: Chief Financial Officer

<PAGE>

                                INDEX TO EXHIBITS

      Exhibit Number                                Description
--------------------------------------------------------------------------------
      31.1                            Certification of Chief Executive Officer
                                      pursuant to Section 302 of the
                                      Sarbanes-Oxley Act of 2002
      31.2                            Certification of Chief Financial Officer
                                      pursuant to Section 302 of the
                                      Sarbanes-Oxley Act of 2002
      32.1                            Certification pursuant to 18 U.S.C. 1350,
                                      adopted pursuant to Section 906 of the
                                      Sarbanes-Oxley Act of 2002, by Chief
                                      Executive Officer
      32.2                            Certification pursuant to 18 U.S.C. 1350,
                                      adopted pursuant to Section 906 of the
                                      Sarbanes-Oxley Act of 2002, by Chief
                                      Financial Officer