**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**


(Mark
      One)


**x
      QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended July 31, 2006





Or





**o
      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 000-51519





**TRUE
                    NORTH
                    ENERGY
                    CORPORATION**(Exact
                name of small business issuer as specified in its
                charter)**Nevada**
            
            **98-043482**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS
                Employer Identification
              No.)**2
                Allen Center, 1200 Smith Street, 16****th****Floor**
              **Houston,
                Texas 77002**(Address
                of principal executive offices)**(713)
                353-3948**(Registrant’s
                telephone number, including area code)(Former
                address if changed since last
                report)





Check
      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,
      and (2) has been subject to such filing requirements for the past 90 days.
      Yes
x No
o





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





As
      of
      August 24, 2006, there were 62,350,000 shares of the issuer’s common stock, par
      value $0.001, issued and outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes o No
x







**TRUE
      NORTH ENERGY CORPORATION**


**JULY
      31, 2006 QUARTERLY REPORT ON FORM 10-QSB**


**TABLE
      OF CONTENTS**








**PAGE**Special
                Note Regarding Forward Looking Information
            
            3PART
                I - FINANCIAL INFORMATIONItem
                1.
            
            Financial
                Statements
            
            4Item
                2.
            
            Plan
                of Operation
            
            14Item
                3.
            
            Controls
                and Procedures
            
            16PART
                II - OTHER INFORMATIONItem
                2.
            
            Changes
                in Securities and Use of Proceeds
            
            16Item
                6.
            
            Exhibits
            
            17






2


**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





To
      the
      extent that the information presented in this Quarterly Report on Form 10-QSB
      for the quarter ended July 31, 2006 discusses financial projections, information
      or expectations about our products, markets, revenues, or anticipated results,
      or otherwise makes statements about future events, such statements are
      forward-looking. We are making these forward-looking statements in reliance
      on
      the safe harbor provisions of the Private Securities Litigation Reform Act
      of
      1995. Our actual results may differ significantly from those projected in the
      forward-looking statements. Factors that might cause or contribute to such
      differences include, but are not limited to, those discussed in the section
      "Plan of Operation". You should carefully review the risks described in our
      Annual Report and in other documents we file from time to time with the
      Securities and Exchange Commission. You are cautioned not to place undue
      reliance on the forward-looking statements, which speak only as of the date
      of
      this report. We undertake no obligation to publicly release any revisions to
      the
      forward-looking statements or reflect events or circumstances after the date
      of
      this document.




Although
      we believe that the expectations reflected in these forward-looking statements
      are based on reasonable assumptions, there are a number of risks and
      uncertainties that could cause actual results to differ materially from such
      forward-looking statements. These factors include, among others:




·
            The
                risks associated with oil and gas exploration;





·
            Our
                ability to raise capital to fund capital expenditures;





·
            Our
                ability to find, acquire, market, develop and product new properties;





·
            Oil
                and gas price volatility;





·
            Uncertainties
                in the estimation of provided reserves and in the projection of future
                rates of production and timing of development expenditures;





·
            Operating
                hazards attendant to the natural gas and oil business;





·
            Downhole
                drilling and completion risks that are generally not recoverable
                from
                third parties or insurance;





·
            Availability
                and cost of material and equipment;





·
            Delays
                in anticipated start-up dates;





·
            Actions
                or inactions of third-party operators of our properties;





·
            Our
                ability to find and retain skilled personnel;





·
            Regulatory
                developments;





·
            Environmental
                risks; and





·
            General
                economic conditions.







3


**PART
      1 –
      FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**







**PAGE**Balance
                Sheets as at July 31, 2006 (Unaudited) andApril
                30, 2006 (Audited)
            
            5Statements
                of Operations for the three monthsended
                July 31, 2006 and 2005 (Unaudited) and forthe
                period from April 7, 2004 (inception)to
                July 31, 2006 (Unaudited)
            
            6Statements
                of Cash Flows for the three monthsended
                July 31, 2006 and 2005 (Unaudited) and forthe
                period from April 7, 2004 (inception)to
                July 31, 2006 (Unaudited)
            
            7Notes
                to Financial Statements (Unaudited)
            
            8






4





**TRUE
        NORTH ENERGY CORPORATION**


**(A
      Exploration Stage Company)**


**BALANCE
      SHEETS** **(unaudited)**







July
                31,
            
            April
                30,2006
            
            2006**ASSETS**CURRENT
                ASSETSCash
            
            $
            161,946
            
            $
            37,223Accounts
                Receivable
            
            
            500,000
            
            
            -Total
                Current Assets
            
            
            661,946
            
            
            37,223OTHER
                ASSETSWebsite
                development, net of accumulated amortization
            
            
            16,438
            
            
            4,817Unproven
                oil & gas properties, using successful efforts
                accounting
            
            
            1,086,261
            
            
            373,775Total
                Other Assets
            
            
            1,102,699
            
            
            378,592ASSETS
                FROM DISCONTINUED OPERATIONS
            
            
            -
            
            
            -**TOTAL
                ASSETS**
            
            $
            1,764,645
            
            $
            415,815**LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIESAccounts
                payable and accrued liabilites
            
            $
            9,535
            
            $
            16,097Deposits
                on stock purchase
            
            
            -
            
            
            50,000Total
                Current Liabilities
            
            
            9,535
            
            
            66,097LIABILITIES
                FROM DISCONTINUED OPERATIONS
            
            
            15,000
            
            
            15,000COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -**STOCKHOLDERS'
                EQUITY**Preferred
                stock, $0.0001 par value; 20,000,000 sharesauthorized,
                0 and 0 shares issued and outstanding
            
            
            -
            
            
            -Common
                stock, $0.0001 par value; 100,000,000 sharesauthorized,
                62,000,000 and 60,100,000 shares issuedand
                outstanding, respectively
            
            
            6,200
            
            
            6,010Additional
                paid-in capital
            
            
            2,181,464
            
            
            481,654Pre-exploration
                stage accumulated deficit
            
            
            (72,350
            )
            
            (72,350
            )Accumulated
                deficit during exploration stage
            
            
            (375,204
            )
            
            (80,596
            )Total
                Stockholders' Equity
            
            
            1,740,110
            
            
            334,718**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            1,764,645
            
            $
            415,815





See
        accompanying notes to financial statements
  5





**TRUE
        NORTH ENERGY CORPORATION**


**(A
        Exploration Stage Company)**
 **STATEMENTS
        OF OPERATIONS (unaudited)**
   Three
                  Months Ended
              
              Three
                  Months Ended
              
              From
                  April 7, 2004July
              
              July
              
              (Inception)
                  to2006
              
              2005
              
              July
                  31, 2006**REVENUES**
              
              $
              -
              
              $
              336
              
              $
              -**OPERATING
                  EXPENSES**Geological
                  and Geophysical costs
              
              
              101,605
              
              
              -
              
              
              101,605General
                  and administrative
              
              
              74,896
              
              
              1,694
              
              
              86,559Investor
                  Relations
              
              
              60,739
              
              
              -
              
              
              60,739Officers
                  and directors fees
              
              
              41,463
              
              
              -
              
              
              61,463Legal
                  and Professional Fees
              
              
              17,734
              
              
              12,100
              
              
              66,065Amortization
              
              
              951
              
              
              602
              
              
              1,553**TOTAL
                  OPERATING EXPENSES**
              
              
              297,388
              
              
              14,396
              
              
              377,984**Other
                  Income**Interest
                  Income
              
              
              2,780
              
              
              -
              
              
              2,780**NET
                  LOSS**
              
              $
              (294,608
              )
              $
              (14,060
              )
              
              (375,204
              )**NET
                  LOSS PER COMMON SHARE,****BASIC
                  AND DILUTED**
              
              $
              (0.00
              )
              $
              (0.00
              )**WEIGHTED
                  AVERAGE NUMBER OF****COMMON
                  STOCK SHARES****OUTSTANDING,
                  BASIC AND DILUTED**
              
              
              61,255,978
              
              
              10,000,000
  See
        accompanying notes to financial statements
  6





**TRUE
        NORTH ENERGY CORPORATION**


**(A
        Exploration Stage Company)**
 **STATEMENTS
        OF CASH FLOWS (unaudited)**
   FromApril
                  7, 2004Three
                  months Ended
              
              (Inception)
                  toJuly
                  31,
              
              July
                  31,2006
              
              2005
              
              2006**CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (294,608
              )
              $
              (14,060
              )
              $
              (415,816
              )Discontinued
                  operations
              
              
              -
              
              
              
              
              
              40,603Net
                  loss from continuing operations
              
              
              (294,608
              )
              
              (14,060
              )
              
              (375,213
              )Adjustments
                  to reconcile net loss to net cashprovided
                  (used) by operating activities:Amortization
              
              
              951
              
              
              602
              
              
              1,553Increase
                  (decrease) in:
              
              
              
              
              
              
              
              
              -Accounts
                  payable
              
              
              (6,562
              )
              
              (2,000
              )
              
              9,479Accrued
                  liabilities
              
              
              -
              
              
              (2,521
              )
              
              -Liability
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (33,346
              )Net
                  cash provided (used) by operating activities
              
              
              (300,219
              )
              
              (17,979
              )
              
              (397,527
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Additions
                  to Oil & Gas Property
              
              
              (712,486
              )
              
              -
              
              
              (712,486
              )Website
                  Development
              
              
              (12,572
              )
              
              -
              
              
              (12,572
              )Net
                  cash provided (used by investing activites)
              
              
              (725,058
              )
              
              -
              
              
              (725,058
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from issuance of common stock
              
              
              1,150,000
              
              
              -
              
              
              1,250,000Net
                  cash provided (used) by financing activities
              
              
              1,150,000
              
              
              162
              
              
              1,250,000Net
                  increase in cash and cash equivalents
              
              
              124,723
              
              
              (17,817
              )
              
              127,415**Cash,
                  beginning of period**
              
              
              37,223
              
              
              34,531
              
              
              34,531**Cash,
                  end of period**
              
              $
              161,946
              
              $
              16,714
              
              $
              161,946-**SUPPLEMENTAL
                  CASH FLOW INFORMATION:**Interest
                  paid
              
              $
              -
              
              $
              -
              
              $
              -Income
                  taxes paid
              
              $
              -
              
              $
              -
              
              $
              -**NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:**
              
              $
              -
              
              $
              -
              
              $
              -


See
        accompanying notes to financial statements
  7


**TRUE
        NORTH ENERGY CORPORATION**
 **(An
        Exploration Stage Company)**
 **NOTES
        TO THE FINANCIAL STATEMENTS**


---

**NOTE
      1 - NATURE AND CONTINUANCE OF OPERATIONS**





The
      accompanying unaudited interim financial statements of True North Energy
      Corporation 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
      the
      audited financial statements and notes thereto contained in True North Energy
      Corporation’s Annual Report filed with the SEC on Form.10-KSB 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 contained in the audited
      financial statements for fiscal April 30, 2006 as reported in the Form 10-KSB
      have been omitted.





**NOTE
      2 – GOING CONCERN**





These
      financial statements have been prepared on a going concern basis, which implies
      True North Energy Corporation will continue to realize its assets and discharge
      its liabilities in the normal course of business. The continuation of True
      North
      Energy Corporation as a going concern is dependent upon the continued financial
      support from its shareholders, the ability of True North Energy Corporation
      to
      obtain necessary equity financing to continue operations and the attainment
      of
      profitable operations. As at April 30, 2006, True North Energy Corporation
      had
      no revenues, had negative working capital, and had accumulated losses since
      inception. These financial statements do not include any adjustments to the
      recoverability and classification of recorded asset amounts and classification
      of liabilities that might be necessary should True North Energy Corporation
      be
      unable to continue as a going concern. These factors raise substantial doubt
      regarding True North Energy Corporation’s ability to continue as a going
      concern.





**NOTE
      3 – CAPITAL STOCK**





On
      May 9,
      2006, True North Energy Corporation sold 1,250,000 units at a price of $0.80
      per
      unit or $1,000,000 on an aggregate basis to one person in reliance on Regulation
      S under the Securities Act of 1933, as amended. Each unit consists of one share
      of True North Energy Corporation’s common stock and one common stock purchase
      warrant exercisable for the purchase of an additional share of common stock.
      Each warrant is exercisable for a period of 3 years at an exercise price of
      $1.60 per share. The relative fair value of the common stock is $618,232 and
      the
      relative fair vale of the warrants is $381,768.





On
      May 9,
      2006, True North Energy Corporation entered into a purchase agreement (the
      “Agreement”) and acquired rights in State of Alaska oil and gas leases ADL
      390834, 390839, 390840 and 390841 (the “Un-Issued Leases”) from two unrelated
      persons (the “Sellers”). The total purchase price for the Un-Issued Leases
      pursuant to the Agreement is $276,480 (the “Purchase Price”). The Un-Issued
      Leases cover an aggregate of approximately 10,000 acres of land on the North
      Slope of Alaska. The Sellers are reported to have submitted the winning bids
      for
      the unissued leases but as of the date of the agreement, the State of Alaska,
      Department of Natural Resources, has not issued a high bidder notice or an
      award
      notice to the Sellers. Upon receipt of an award notice, the Sellers have 30
      days
      within which to pay the remaining 80% of the bid amount for the Un-Issued Leases
      together with the first year annual rentals due thereon. It is not presently
      known when or if the Un-Issued Leases will be issued to Sellers.




8


**TRUE
          NORTH ENERGY CORPORATION**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO THE FINANCIAL STATEMENTS**




At
      such
      time that the Un-Issued Leases are issued to Sellers, Sellers shall own or
      otherwise have the right to assign and convey or cause to be assigned and
      conveyed the Un-Issued Leases, all of which shall be free and clear of any
      liens
      and encumbrances and provide for a net revenue interest to Sellers of not less
      than 83.33334% prior to reservation of a 5% overriding royalty which overriding
      royalty shall also apply to all renewals and extensions of the Un-Issued
      Leases.





Pursuant
      to the Agreement, True North Energy Corporation has delivered an aggregate
      amount of $286,720 to an escrow account. At closing, $81,920 of the escrowed
      funds shall be used to pay to the State of Alaska all balances due on the
      Un-Issued Leases and $10,240 of the escrowed funds shall be used to pay to
      the
      State of Alaska the first year of rental payments due on the Un-Issued
      Leases.




On
      June
      7, 2006, True North Energy Corporation entered into oil and gas well
      participation agreements with Bayou City Exploration, Inc. ("Bayou City")
      whereby True North Energy Corporation agreed to participate with Bayou City
      in
      the drilling of a test well on each of three oil and gas prospects including
      the
      Jaboncillo Windfall Prospect and Frost National Bank Deep Prospect, each located
      in Live Oak County Texas and the Zodiac II Prospect located in Jeff Davis and
      Calcasieu Parishes in Louisiana.





On
      July
      27, 2006 True North Energy Corporation agreed to sell 650,000 units at a price
      of $1.00 per unit or $650,000 on an aggregate basis to one person in reliance
      on
      Regulation S under the Securities Act of 1933, as amended. Each unit consists
      of
      one share of our common stock and one common stock purchase warrant exercisable
      for the purchase of an additional share of common stock. Each warrant is
      exercisable for a period of 3 years at an exercise price of $1.70 per share.
      The
      relative fair value of the common stock is $381,246 and the relative fair vale
      of the warrants is $268,754. Of the total proceeds, $150,000 was received on
      July 31, 2006, and $500,000 was received on August 30, 2006.





On
      July
      28, 2006, True North Energy Corporation entered into a participation agreement
      with Whitmar Exploration Company (“Whitmar”) respecting our participation in the
      drilling of a 13,000 foot test well to test the Yegua Sands on the Deweyville
      Prospect located in Newton County, Texas and Calcasieu Parish, Louisiana.




Please
        see Note 6 - SUBSEQUENT EVENTS, regarding all capital stock transactions
        that
        occurred after July 31, 2006.


9




**TRUE
        NORTH ENERGY CORPORATION**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO THE FINANCIAL STATEMENTS**





**NOTE
      4 – OIL AND GAS LEASES**





On
      January 23, 2006 we acquired rights in State of Alaska Oil and Gas Leases ADL
      389208, 389932, 390087, 390383, 390567, and 390572 (the “Issued Leases”) from
      Massimiliano Pozzoni pursuant to an Asset Purchase Agreement (the “Agreement”)
      among us, Massimiliano Pozzoni and Kevin Moe. We are presently working to have
      the leases registered in our name and expect to complete this process in the
      near future. Pursuant to the Agreement, we also acquired Massimiliano Pozzoni’s
      rights in State of Alaska Oil and Gas Leases ADL 390722, 390723 and 390745
      (the
“Un-Issued Leases”). The Issued Leases and Un-Issued Leases involve land in the
      Cook Inlet area of Alaska. The Un-Issued Leases have not been issued by the
      State of Alaska as of the date hereof but are expected to be issued in the
      near
      future. Upon issuance and payment of related bid amounts and rental fees, we
      will start the process of having the Un-Issued Leases assigned to us and
      registered in our name. Rental fees are due on a yearly basis. The Issued Leases
      are in full force and effect and are free and clear of any liens or
      encumbrances. They provide for a net revenue interest of 87.5% prior to an
      overriding 5% royalty. If and when assigned to us, our rights in the Un-Issued
      Leases will be the same as our rights in the Issued Leases.





In
      connection with the acquisition, we have also assumed obligation to drill or
      cause to be drilled, at our sole expense, within 5 years of November 28, 2005,
      a
      test well, to completion or abandonment, on at least one of ADL 390087, ADL
      390722 or ADL 390723, to a bottomhole depth and location at least sufficient
      to
      test both the West Foreland and Hemlock Formations. Failure to drill the test
      well by November 27, 2010 to completion or abandonment will result in our
      forfeiture of leases ADL 390087, AL 390722, and ADL 390723. The closing of
      the
      Agreement took place on January 27, 2006.





On
      May 9,
      2006 we entered into a Purchase Agreement (the “Agreement”) whereby we acquired
      rights in State of Alaska Oil and Gas Leases ADL 390834, 390839, 390840 and
      390841 (the “Un-Issued Leases”) from two unrelated persons (the “Sellers”). The
      Agreement was amended July 31, 2006 to extend certain timelines contained
      therein. The total purchase price for the Un-Issued Leases pursuant to the
      Agreement was $276,480 (the “Purchase Price”). The Un-Issued Leases cover an
      aggregate of approximately 10,000 acres of land, both onshore and offshore
      in
      the Beaufort Sea area on the North Slope of Alaska. The Sellers received a
      High
      Bidder Notice from the State of Alaska, Department of Natural Resources in
      or
      about June 26, 2006 with respect to the Un-Issued Leases and expect to receive
      an Award Notice on or before October 2006.





If
      the
      closing of the transaction does not occur by the close of business on December
      31, 2006, Anchorage, Alaska time, the Agreement shall be null and void and
      we
      and Sellers shall have no further rights or obligations under the Agreement.
      Pursuant to the Agreement we have delivered the Purchase Price and an additional
      $10,240 (being an aggregate amount of $286,720) to an escrow account. At Closing
      $81,920 of the escrowed funds shall be used to pay to the State of Alaska all
      balances due on the Un-Issued Leases and $10,240 of the escrowed funds shall
      be
      used to pay to the State of Alaska the first year of rental payments due on
      the
      Un-Issued Leases.




10


**TRUE
          NORTH ENERGY CORPORATION**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
   On
      June
      7, 2006 we entered into oil and gas well participation agreements with Bayou
      City Exploration, Inc. ("Bayou City") whereby we agreed to participate with
      Bayou City in the drilling of a test well on each of three (3) oil and gas
      prospects including the Jaboncillo Windfall Prospect (“the Jaboncillo Windfall
      Prospect”) and Frost National Bank Deep Prospect (the “Frost National Bank Deep
      Prospect”), each located in Live Oak County Texas and the Zodiac II Prospect
      (the “Zodiac Prospect”) located in Jeff Davis and Calcasieu Parishes in
      Louisiana.





The
      agreement terms with respect to the two (2) Live Oak County Prospects (the
      "Live
      Oak Prospects") are that by participating in the drilling of a test well we
      will
      earn a 16.67% working interest in the Live Oak Prospects before payout and
      a
      12.5% working interest after payout. “Payout” is defined as that point in time
      when there has been recovered from one hundred percent (100%) of production,
      less only royalties, overriding royalties and production taxes an amount of
      money equal to one hundred percent (100%) of the drilling, completing and
      operating costs (during the payout period) of the initial test well.





We
      have
      further agreed to pay 16.67% of all well costs to the initial casing point
      on
      the initial test well drilled on each Live Oak Prospect, to pay 16.67% of all
      well completion costs and to pay our proportionate share of the prospect costs
      including geological and geophysical costs, third party prospect fees, land
      brokerage costs, lease bonus and all other costs associated with the respective
      Live Oak Prospects. These prospect costs were $20,375 with regard to the
      Jaboncillo Windfall Prospect and $94,888 with regard to the Frost National
      Bank
      Deep Prospect, all of which have been paid.


The
        agreement terms with respect to the Zodiac Prospect are that we will earn
        a 25%
        working interest in the initial test well drilled on the Zodiac Prospect
        at such
        time as the test well has reached the objective depth. We have further agreed
        to
        pay 33.33% of well costs to the casing point on the test well drilled on
        the
        Zodiac Prospect, to pay 25% of all well completion costs and to pay our
        proportionate share of prospect costs including geological and geophysical
        costs, third party prospect fees, land brokerage costs, lease bonus and all
        other similar costs associated with the Zodiac Prospect. Our prospect costs
        with
        regard to the Zodiac Prospect are $267,056, which have not yet been paid,
        and
        the drilling services have not yet been performed.


The
      entire prospect costs for each prospect are fully refundable in the event the
      applicable agreement is rescinded by Bayou City for any reason or Bayou City
      fails to cause the initial test well to be drilled for any reason.





Drilling
      has been completed on the Frost National Bank Deep Prospect. To date we have
      paid $132,000 in drilling costs and $226,000 in completion costs related to
      the
      Frost National Bank Deep Prospect. The well was completed and fracture
      stimulated. During the initial production tests, the well produced gas in excess
      of 1 million cubic feet of gas per day and approximately 1,000 barrels of water
      per day. The well is currently being evaluated to determine if the well is
      commercial and capable of economic gas production. Determining factors in the
      evaluation will be the estimate of recoverable reserves, sustainability of
      gas
      flow rates and an economic disposal of produced water.




11


**TRUE
          NORTH ENERGY CORPORATION**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
   Subject
      to rig availability and resolution of a land/lease issue, drilling is expected
      to commence on the Jaboncillo Windfall Prospect on or before January 31, 2007.
      Drilling had been expected to commence by August 1, 2006 but has been delayed
      due to an illegal lease trespass by a third party that the current lease owner
      is presently working to resolve. Subject to rig availability, drilling is
      expected to commence on the Zodiac Prospect on or before December 31, 2006.


On
        July
        28, 2006 we entered into a participation agreement (the “Participation
        Agreement”) with Whitmar Exploration Company (“Whitmar”) respecting our
        participation in the drilling of a 13,000 foot test well to test the Yegua
        Sands
        on the Deweyville Prospect located in Newton County, Texas and Calcasieu
        Parish,
        Louisiana. Thereunder we paid Whitmar, within 5 days of the date of the
        Participation Agreement $42,500 representing our proportionate share of
        leasehold costs and an additional $57,500 representing a deposit on our share
        of
        drilling costs for the test well. Our participation will involve a 10% working
        interest and 72% net revenue interest whereby we will pay 12.5% of drilling
        costs to the casing point and 10% of all costs after the casing point. Our
        estimated shares of such costs is $552,000 for drilling and, if applicable,
        $114,000 for completion. We paid Whitmar, within 15 days of the date of the
        Participation Agreement, an additional $494,500 representing the balance
        of our
        share of estimated drilling costs. Under the agreement, we also have the
        right
        to participate in one additional well on the prospect on a proportionate
        basis.
        The services had not been performed, and the costs were not incurred and
        capitalized, as of July 31, 2006.
 
 As
        of
        September 13, 2006, the test well has reached the target drill depth of 13,000
        feet. The well was logged and was deemed non-commercial. The operator will
        plug
        and abandon the well. We will recognize a charge to Dry Hole Costs during
        the
        quarter ended October 31, 2006.


**NOTE
      5– RELATED PARTY TRANSACTIONS**





True
      North Energy Corporation had a balance due to our former president of $15,000
      on
      April 30, 2006. The debt was unsecured, non-interest bearing and due on
      demand.





True
      North Energy Corporation repaid the outstanding balance of $15,000 due to our
      former president on August 27, 2006.





**NOTE
      6 – SUBSEQUENT EVENTS**





On
      August
      11, 2006 True North Energy Corporation sold 350,000 units at a price of $1.00
      per unit or $350,000 on an aggregate basis to one person in reliance on
      Regulation S under the Securities Act of 1933, as amended. Each unit consists
      of
      one share of our common stock and one common stock purchase warrant exercisable
      for the purchase of an additional share of common stock. Each warrant is
      exercisable for a period of 3 years at an exercise price of $1.70 per share.
      The
      relative fair value of the common stock is $198,147 and the relative fair vale
      of the warrants is $151,853.




12


**TRUE
          NORTH ENERGY CORPORATION**
 **(An
          Exploration Stage Company)**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
   On
      August
      27, 2006 True North Energy Corporation agreed to sell 555,555 units at a price
      of approximately $3.60 per unit or $2,000,000 on an aggregate basis to one
      person in reliance on Regulation S under the Securities Act of 1933, as amended.
      Each unit consists of one share of our common stock and one common stock
      purchase warrant exercisable for the purchase of an additional share of common
      stock. Each warrant is exercisable for a period of 3 years at an exercise price
      of $5.00 per share. Of the total proceeds, $500,000 was received on August
      30,
      2006 and $1,500,000 has yet to be received. The relative fair value of the
      common stock is $1,198,496 and the relative fair vale of the warrants is
      $801,504.





13


**ITEM
      2.**  **PLAN
      OF OPERATION**





We
      began
      operations as an oil and gas exploration and development company in January
      2006. We are in the development stage as an oil and gas exploration company
      and
      are presently engaged in oil and gas activities in Texas, Louisiana and
      Alaska.





We
      had
      minimal operations and generated no revenues during the fiscal year ended April
      30, 2006. Our ability to develop and maintain a meaningful level of revenues
      from operations is dependent on our ability to successfully drill exploration
      and development wells and complete producing property acquisitions.





At
      the
      present time, we have no developed properties and no production.





In
      January 2006 and May 2006, we negotiated acquisition of oil and gas leases
      consisting of approximately 25,000 acres in the Cook Inlet basin, Alaska and
      approximately 10,000 acres in the North Slope basin, Alaska. We anticipate
      closing the related purchase and sale agreements and registering all the leases
      in our name by October of 2006. We will have a 100% working interest ownership
      in the Alaska leases, except to the extent we determine to sell off parts of
      our
      interests.





Our
      current business plan strategy is to develop these properties and any other
      prospects that we may acquire interests in. We intend to fund any additional
      lease acquisitions and any additional seismic costs needed to further define
      the
      prospects from existing working capital and additional financing. No assurance
      can be given that such additional financing will be available to us as and
      when
      needed or, if available, the terms on which it will be available.





We
      also
      intend to continue reviewing other potential acreage in Texas, Louisiana, Alaska
      and Canada. We will continue to review prospects generated by outside parties
      and if the economics fit into our business plan, participating in these
      projects. Our efforts currently are focused in on-shore Texas and Louisiana
      properties. Our current activities are concentrated in the Texas counties of
      Live Oak and Newton, and in Louisiana in Jefferson Davis and Calcasieu Parishes.





At
      July
      31, 2006, we have a 12.5% working interest in a well in Live Oak County Texas.
      The well, McLean #1 Well was completed and fracture stimulated. During the
      initial production tests, the well produced gas in excess of 1 million cubic
      feet of gas per day and approximately 1,000 barrels of water per day. The well
      is currently being evaluated to determine if the well is commercial and capable
      of economic gas production. Determining factors in the evaluation will be the
      estimate of recoverable reserves, sustainability of gas flow rates and an
      economic disposal of produced water.





As
      of
      September 13, 2006 our second prospect, Hankamer #1 Well at Deweyville in the
      Newton County Texas has reached projected drilling depth of 13,000 feet. The
      well was drilled to test the productivity of Yegua Sands. The well has been
      logged and deemed to be non-commercial. The operator will plug and abandon
      the
      well. We had a 10.0% working interest in the prospect earned by paying a 12.5%
      of the well drilling cost. All costs incurred by us with respect to this well
      were incurred after the period covered by this report.




14




We
      plan
      to spend approximately $1,500,000 during 2006 and 2007 on exploration and
      development activities such as seismic data acquisition, additional lease
      acquisition, technical studies and participating in joint venture development
      and exploration drilling. We do not anticipate any drilling on our Alaska
      properties over the next twelve months. Our primary effort in Alaska will be
      to
      acquire additional seismic data, conduct additional technical evaluation of
      our
      Alaska leases and to find compatible partners by selling down our 100% working
      interest to reduce our risk level and financial exposure.





We
      will
      require financing to meet working capital costs, including the cost of reviewing
      and negotiating transactions and other ordinary general and administrative
      costs
      such as regulatory compliance, investor relations, advisory services,
      Internet/web-hosting, officer's salaries, director's fees, office and general
      expenses, professional fees, travel and entertainment and rent and related
      expenses. We estimate that the level of working capital needed for these general
      and administrative costs for the next twelve months will be approximately
      $750,000. However, this estimate is subject to change, depending on the number
      of transactions in which we ultimately become involved. In addition, funding
      will be required for follow-on development of working interest obligations
      of
      any successful exploration prospects.





Oil
      and
      gas exploration requires significant outlays of capital and in many situations
      may offer a limited probability of success. We hope to enhance our chances
      for
      success by effectively using available technology, rigorously evaluating
      sub-surface data, and, to the extent possible, managing dry-hole and financial
      risks.





We
      intend
      to rely on synergistic partnering with sophisticated industry partners. The
      ideal partner would tend to be a regionally focused independent which has a
      large seismic database, a solid grasp on the play's history, and a lead in
      understanding technology to exploit the play. However, there is no assurance
      that we will be able to successfully negotiate any such partnering agreement
      or
      raise the necessary financing to invest in such a venture, or that any such
      venture will yield us any revenues or profits.





In
      addition, we are targeting selected, negotiated acquisitions of proved on-shore
      properties in the United States and Canada. Our management is biased toward
      acquisitions of long-lived reserves. We intend to target negotiated acquisitions
      and to avoid more competitive bidding situations that are the norm for the
      sale
      of assets.





We
      will
      face competition from firms that are well-established, successful, better
      capitalized and, in many instances, willing to pay more for properties than
      what
      we might consider prudent. Thus, our success will depend on the execution of
      our
      business model to





·
            identify
                available transactions;





·
            quickly
                evaluate which transactions are most promising; and





·
            negotiate
                a creative transaction structure.






15




Presently
      our staff consists of our two executive officers. We expect to be expanding
      the
      executive leadership of the Company during the next twelve months.





We
      intend
      to contract out certain technical and administrative functions on an as-needed
      basis in order to conduct our operating activities. Our management team will
      select and hire these contractors and manage and evaluate their work
      performance.





Additionally,
      we intend to form an advisory board with experienced independent and unrelated
      industry veterans to assist us with corporate governance, compliance, deal
      flow,
      financing efforts and technical matters such as geoscience, drilling,
      engineering and risk management.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





(a)  *Evaluation
      of Disclosure Controls and Procedures.* Under
      the supervision and with the participation of our senior management consisting
      of our chief executive officer and chief financial officer, we conducted an
      evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934, as amended, as of the end of the period covered
      by this report (the “Evaluation Date”). Based on this evaluation, our chief
      executive officer and chief financial officer concluded as of the Evaluation
      Date that our disclosure controls and procedures were effective such that the
      information relating to us, including our consolidated subsidiary, required
      to
      be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is
      recorded, processed, summarized and reported within the time periods specified
      in SEC rules and forms, and (ii) 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.





(b)  *Changes
      in Internal Control over Financial Reporting* .
      There
      were no changes in our internal control over financial reporting that occurred
      during the period covered by this report that have materially affected or are
      reasonably likely to materially affect our internal control over financial
      reporting.





**PART
      II**





**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





On
      August
      27, 2006 we agreed to sell 555,555 units at a price of approximately $3.60
      per
      unit or $2,000,000 on an aggregate basis to one person in reliance on Regulation
      S under the Securities Act of 1933, as amended. Each unit consists of one share
      of our common stock and one common stock purchase warrant exercisable for the
      purchase of an additional share of common stock. Each warrant is exercisable
      for
      a period of 3 years at an exercise price of $5.00 per share. Of the total
      proceeds, $500,000 was received on August 30, 2006 and $1,500,000 has yet to
      be
      received.




16




On
      August
      11, 2006 we sold 350,000 units at a price of $1.00 per unit or $350,000 on
      an
      aggregate basis to one person in reliance on Regulation S under the Securities
      Act of 1933, as amended. Each unit consists of one share of our common stock
      and
      one common stock purchase warrant exercisable for the purchase of an additional
      share of common stock. Each warrant is exercisable for a period of 3 years
      at an
      exercise price of $1.70 per share.





On
      July
      27, 2006 we agreed to sell 650,000 units at a price of $1.00 per unit or
      $650,000 on an aggregate basis to one person in reliance on Regulation S under
      the Securities Act of 1933, as amended. Each unit consists of one share of
      our
      common stock and one common stock purchase warrant exercisable for the purchase
      of an additional share of common stock. Each warrant is exercisable for a period
      of 3 years at an exercise price of $1.70 per share. Of the total proceeds,
      $150,000 was received on July 31, 2006, and $500,000 was received on August
      30,
      2006.





On
      May 9,
      2006 we sold 1,250,000 units at a price of $0.80 per unit or $1,000,000 on
      an
      aggregate basis to one person in reliance on Regulation S under the Securities
      Act of 1933, as amended. Each unit consists of one share of our common stock
      and
      one common stock purchase warrant exercisable for the purchase of an additional
      share of common stock. Each warrant is exercisable for a period of 3 years
      at an
      exercise price of $1.60 per share.




**ITEM
      6.**  **EXHIBITS**





(a)  Exhibits.


Exhibit
                  No.
              
              Description31.1
              
              Rule
                  13(a)-14(a)/15(d)-14(a) Certification of Principal Executive
                  Officer31.2
              
              Rule
                  13(a)-14(a)/15(d)-14(a) Certification of Principal Financial
                  Officer32.1
              
              Rule
                  1350 Certification of Chief Executive Officer32.2
              
              Rule
                  1350 Certification of Chief Financial
                  Officer




17





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


**TRUE
              NORTH
              ENERGY CORPORATION**Dated:
              September 14, 2006
            By:
            /s/
              John
              FolnovicJohn
              FolnovicPresident,
              Chief
              Executive Officer





18