UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

               For the quarterly period ended September 30, 2008

|_|  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: 000-30009

                            PETROL OIL AND GAS, INC.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Nevada                                               90-0066187
 ------------------------------                              ------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                          11020 King Street, Suite 375
                             Overland Park, Kansas                 66210
                     --------------------------------------       --------
                    (Address of principal executive offices)     (Zip Code)

                                 (913) 323-4925
               --------------------------------------------------
              (Registrant's telephone number, including area code)

               --------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

     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 last 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 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.

Large accelerated filer           Accelerated filer
                       -----                        -----
Non-accelerated filer  X          Smaller Reporting Company
                     -----                                 -----
(do not check if smaller
   reporting company)

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

The number of shares of Common Stock, $0.001 par value,  outstanding on
November 10, 2008 was 29,090,926.

<PAGE>
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<CAPTION>


                               PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.


                                  Petrol oil and Gas, Inc.
                            Condensed Consolidated Balance Sheet



                                                                September 30,   December 31,
                                                                    2008            2007
                                                                ------------    ------------
                                                                 (Unaudited)     (Audited)

<S>                                                             <C>             <C>
Assets
Current assets:
      Cash                                                      $    558,594    $    506,711
      Accounts receivable                                            373,665         529,554
      Prepaid expenses and other                                      42,495         120,295
                                                                ------------    ------------

                    Total current assets                             974,754       1,156,560
                                                                ------------    ------------
Fixed assets:

      Pipeline                                                     1,522,423       1,522,423
      Equipment and vehicles                                         405,941         388,762
                                                                ------------    ------------
                                                                   1,928,363       1,911,185
                    Less accumulated depreciation                    616,007         487,954
                                                                ------------    ------------
                                        Net fixed assets           1,312,356       1,423,231
                                                                ------------    ------------
Other assets:
      Oil and gas properties using full cost accounting:

                    Properties not subject to amortization           313,829         313,829
                    Properties subject to amortization             8,094,823       8,605,842
      Deposits                                                         3,000           3,000
                                                                ------------    ------------
                                        Total other assets         8,411,652       8,922,671
                                                                ------------    ------------


                                                                $ 10,698,762    $ 11,502,462
                                                                ============    ============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:

      Accounts payable                                          $    112,307    $     37,366
      Accrued liabilities                                          1,149,934         649,031
      Current portion of long term debt                           26,656,901      26,639,094
                                                                ------------    ------------
                                        Total liabilities         27,919,142      27,325,491
                                                                ------------    ------------


Asset retirement obligation                                          543,577         511,000
                                                                ------------    ------------

Commitments and contingencies:

Stockholders' Equity (Deficit):
      Preferred stock, $0.001 par value, 10,000,000 shares
      authorized, no shares issued and outstanding                       --              --

      Common stock, $0.001 par value, 100,000,000 shares
      authorized 29,090,926 shares issued and outstanding             29,090          29,090

      Additional paid-in capital                                  27,667,087      27,220,866
      Other comprehensive income (loss)                                  -0-          77,800
      Accumulated (deficit)                                      (45,460,134)    (43,661,785)
                                                                ------------    ------------
                                                                 (17,763,957)    (16,334,029)
                                                                ------------    ------------

                                                                $ 10,698,762    $ 11,502,462
                                                                ------------    ------------

See notes to condensed consolidated financial statements.

                                             2
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<TABLE>
<CAPTION>


                                    Petrol Oil and Gas, Inc.
                         Condensed Consolidated Statement of Operations
                                           (Unaudited)



                                       For the Quarter Ended        For the Nine Months Ended
                                           September 30,                   September 30,
                                   ------------    ------------    ------------    ------------
                                       2008            2007            2008            2007
                                   ------------    ------------    ------------    ------------
<S>                                <C>             <C>             <C>             <C>
Revenue

     Oil and gas activities        $  1,107,472    $  1,301,347    $  3,363,056    $  4,249,576
                                   ------------    ------------    ------------    ------------

Expenses:

     Direct costs                       481,758         187,794       1,354,303       1,687,861

     Pipeline costs                       8,439         206,644          41,734         758,363

     General and administrative         771,523         421,226       1,437,004       1,384,179
     Impairment of oil & gas
     properties and pipelines              --           264,138            --         9,076,165

     Professional and consulting
     fees                                75,646         195,726         369,932         707,233

     Depreciation, depletion and
     amortization                       225,404         468,824         649,513       1,714,278
                                   ------------    ------------    ------------    ------------

        Total expenses                1,562,770       1,744,352       3,852,486      15,328,079
                                   ------------    ------------    ------------    ------------


Net operating (loss)                   (455,298)       (443,005)       (489,430)    (11,078,503)
                                   ------------    ------------    ------------    ------------

Other income (expense):

     Interest income                      1,347            --             2,488            --

     Loss on disposal of assets            --              --           (26,775)           --

     Interest expense                   (12,366)       (971,089)     (1,284,632)     (3,126,777)
                                   ------------    ------------    ------------    ------------

                                        (11,019)       (971,089)     (1,308,919)     (3,126,777)


Net (loss)                         $   (466,317)   $ (1,414,094)   $ (1,798,349)   $(14,205,280)
                                   ============    ============    ============    ============


Weighted average number of
     common shares outstanding -
     basic and fully diluted         29,090,926      29,090,926      29,090,926      29,090,926
                                   ============    ============    ============    ============

Net (loss) per share - basic and
fully diluted                      $      (0.02)   $      (0.05)   $      (0.06)   $      (0.49)
                                   ============    ============    ============    ============


See notes to condensed consolidated financial statements.

                                                3
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<PAGE>
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<CAPTION>

                               Petrol Oil and Gas, Inc.
                    Condensed Consolidated Statement of Cash Flows
                                      (unaudited)

                                                          For the Nine Months Ended
                                                                September 30,
                                                        ----------------------------
                                                            2008            2007
                                                        ------------    ------------
<S>                                                     <C>             <C>
Cash flows from operating activities

Net (loss)                                              $ (1,798,349)   $(14,205,280)

Depreciation, depletion and amortization                     639,072       1,376,468

Warrant accretion                                               --           752,110

Impairment of oil & gas properties                              --         9,076,165

Warrants, options, and shares issued for services            446,221         174,728

Loss on disposal of assets                                    26,775            --

Accretion of asset retirement obligation                      32,577          49,582

Adjustments to reconcile net (loss) to cash
     used in operating activities:
        Accounts receivable                                  155,889        (217,368)

        Prepaid and other assets                                --           (69,530)

        Accounts payable                                      74,941        (344,039)

        Accrued liabilities                                  500,902         (35,737)
                                                        ------------    ------------

Net cash provided by (used in) operating activities           78,028      (3,442,901)
                                                        ------------    ------------

Cash flows from investing activities

     Purchase of fixed assets                                (43,952)        (35,650)

     Additions to other assets                                  --           (23,136)

     Sale of oil and gas properties                             --           744,000

     Additions to oil and gas properties and deposits           --          (468,490)
                                                        ------------    ------------

Net cash provided from (used in) investing activities        (43,952)        216,724
                                                        ------------    ------------

Cash flows from financing activities

     Proceeds from loans payable                              42,469          23,452

     Amortized loan fees                                        --           337,817

     Payments on notes payable                               (24,662)     (1,842,583)
                                                        ------------    ------------

Net cash provided from financing activities                   17,807      (1,481,314)
                                                        ------------    ------------

Net increase (decrease) in cash                               51,883      (4,707,491)

Cash - beginning                                             506,711       5,917,958
                                                        ------------    ------------
Cash - ending                                           $    558,594    $  1,210,467
                                                        ============    ============
Supplemental disclosures:

     Interest paid                                      $    784,632    $  2,445,513
                                                        ============    ============
     Income taxes paid                                          --              --
                                                        ============    ============

     Options issued for services                        $    446,221    $    174,728
                                                        ============    ============

See notes to condensed consolidated financial statements.

                                       4
</TABLE>

<PAGE>


                            Petrol Oil and Gas, Inc.
                     Notes to Condensed Financial Statements


Note 1 - Basis of Presentation

The unaudited condensed  consolidated financial statements have been prepared in
accordance  with United States  generally  accepted  accounting  principles  for
interim financial information and with the instructions to Form 10-Q and reflect
all adjustments  which,  in the opinion of management,  are necessary for a fair
presentation. All such adjustments are of a normal recurring nature. The results
of  operations  for the interim  period are not  necessarily  indicative  of the
results  to be  expected  for a full  year.  Certain  amounts  in the prior year
statements have been reclassified to conform to the current year  presentations.
These statements should be read in conjunction with the financial statements and
footnotes  thereto  included  in the Form 10-K for the year ended  December  31,
2007.

Note 2 - Going Concern

The accompanying  condensed consolidated financial statements have been prepared
assuming that we will continue as a going concern.  Our ability to continue as a
going concern is dependent upon  attaining  profitable  operations  based on the
development  of  products  that can be sold.  We  intend to use  borrowings  and
security  sales to  mitigate  the  affects  of our cash  position,  however,  no
assurance can be given that debt or equity financing, if and when required, will
be available.  The financial  statements do not include any adjustments relating
to the  recoverability  and classification of recorded assets and classification
of  liabilities  that  might be  necessary  should we be unable to  continue  in
existence.

Note 3 - Stock Transactions

During the nine  months  ended  September,  2008,  there was no  activity in our
preferred or common stock.

In July of 2008, the Company  issued  4,400,000  options to directors  under the
2006 Stock  Option Plan.  The options have a term of 10 years and have  exercise
prices  ranging  from  $0.20  to  $1.25.  The  options  were  valued  using  the
Black-scholes pricing model using the following variables: stock price of $0.14,
exercise price ranging from $0.20 to $1.25,  volatility of 122%, and a risk-free
interest  rate of 3.85%.  The options  were valued at $446,221  and  expensed as
compensation expense.

There was no other  option or  warrant  activity  during the nine  months  ended
September 30, 2008.

A summary of stock options and warrants is as follows:

                               Options      Weighted      Warrants     Weighted
                                            Average                    Average
Outstanding - 01/01/08         760,000       $2.12       8,233,333      $2.28
Granted                      4,400,000        0.54            --          --
Cancelled                      (50,000)       3.25            --          --
Exercised                        --            --             --          --
                             -------------------------------------------------
Outstanding - 9/30/08        5,110,000       $0.74       8,233,333      $2.28
                             =================================================

Note 4 - Asset Retirement Obligation

Our asset retirement obligations relate to the abandonment of oil and gas wells.
The  amounts  recognized  are  based  on  numerous  estimates  and  assumptions,
including future retirement costs, inflation rates and credit adjusted risk-free
interest rates. The following shows the changes in asset retirement  obligations
for the financial statements presented.

                                                                 September 30,
                                                                     2008
                                                                   ---------
Asset retirement obligation -January 1, 2008                       $ 511,000
Liabilities incurred during the year                                    --
Liabilities settled during the year                                     --
Accretion of expense                                                  32,577
                                                                   ---------
Asset retirement obligations - September 30, 2008                  $ 543,577
                                                                   =========

                                       5

<PAGE>


Note 5 - Debt
Debt consists of the following:
                                                        September 30, 2008
                                                      -----------------------
Total notes payable                                        $ 26,656,901
                                                      =======================

All of our  debt  has  been  classified  as  current  as we were in  default  at
September 30, 2008.

Interest  expense  related to our debt was  $1,284,632 for the nine months ended
September 30, 2008 and $3,126,777 for the nine months ended September 30, 2007.

On April 30, 2008, Petrol Oil and Gas, Inc.,  Neodesha  Pipeline,  Inc. and Coal
Creek Pipeline, Inc. (collectively, "Petrol") entered into a Foreclosure-Related
Agreement  (the  "Agreement")  with LV  Administrative  Services,  Inc.  ("LV"),
administrative  and collateral  agent for Laurus Master Fund,  Ltd.  ("Laurus"),
Valens Offshore SPV I, Ltd. ("Valens Offshore"), Valens U.S. SPV I, LLC ("Valens
US"),  Calliope Capital  Corporation  ("Calliope")  and Pallas  Production Corp.
("Pallas",  and together with, Laurus, Valens Offshore,  Valens US and Calliope,
the "Holders").

Petrol is in default of certain  obligations  to its  Holders  under its Secured
Convertible  Term Note,  dated  October 28,  2004,  in the  principle  amount of
$8,000,000;  its Secured Term Note,  dated  October 31, 2005,  in the  principle
amount of  $10,000,000;  its Secured  Term Note,  dated March 31,  2006,  in the
principle  amount of $5,000,000;  and its Secured Term Note, dated May 26, 2006,
in the principle amount of $10,000,000 (collectively, the "Notes," and all other
obligations of Petrol together with the Notes, the  "Outstanding  Obligations"),
and has received from LV and the Holders a default and acceleration  notice with
respect to the Outstanding Obligations.


The Outstanding Obligations are secured by various mortgages and other fixed and
mixed  assets and real and  personal  property  pursuant to  security  and other
agreements  covering assets or other rights to which Petrol has rights (all such
assets,  rights and collateral,  collectively,  the "Collateral"),  a portion of
which are  assets  and  rights  referred  to as the  "Petrol-Neodesha  Project,"
located  in Neosho and Wilson  Counties,  Kansas,  consisting  of,  among  other
Collateral,  mortgages,  and real,  personal property and fixed and mixed assets
used in connection with the Petrol-Neodesha Project (the "Neodesha Collateral").


The  Agreement  allows the Holders to foreclose on the Neodesha  Collateral  and
governs the terms and conditions of the foreclosure. The Agreement provides that
Petrol  will not  contest  the sale of the  Neodesha  Collateral,  which will be
conducted as a public foreclosure sale in accordance with Kansas law. Petrol has
agreed  to  reasonably  assist  LV and  the  Holders  in the  completion  of the
foreclosure  sale. After the sale of the Neodesha  Collateral  becomes final, LV
and the Holders will release Petrol of all remaining amounts owed or claims they
may have,  and the Holders  will  reassign to Petrol  their  overriding  royalty
interests in the mineral leases located at Petrol's Coal Creek Project.


As part of the  Agreement,  Petrol  will  cancel all  outstanding  warrants  for
purchases of  securities  issued to Holders in connection  with the  outstanding
obligations  and replace  them with  warrants to  purchase  1,000,000  shares of
common stock at an initial exercise price of $0.20 per share.

On June 9, 2008, Laurus filed a foreclosure action in the Wilson County,  Kansas
district court. We expect the foreclosure action and sale to be completed during
the fourth quarter of 2008. The foreclosure by Laurus described above will leave
the  Company  with far  fewer  assets  than it  currently  has.  There can be no
assurance  that the Company will be able to continue  operations and satisfy its
obligations in the future.

Note 6 - Fixed Price Sales Contracts

During 2008, we entered into various contracts with our customers to sell gas at
a fixed price. At September 30, 2008 we have no fixed price sales contracts.

                                       6

<PAGE>


                           FORWARD-LOOKING STATEMENTS

     This document contains  "forward-looking  statements" within the meaning of
the Private Securities  Litigation Reform Act of 1995. All statements other than
statements of historical fact are  "forward-looking  statements" for purposes of
federal  and  state  securities  laws,  including,   but  not  limited  to,  any
projections of earnings, revenue or other financial items; any statements of the
plans,  strategies  and  objections of  management  for future  operations;  any
statements  concerning  proposed new services or  developments;  any  statements
regarding future economic  conditions or performance;  any statements of belief;
and any statements of assumptions underlying any of the foregoing.

     Forward-looking statements may include the words "may," "could," "will be,"
"estimate,"  "intend," "plan," "continue,"  "believe,"  "expect,"  "anticipate,"
"goal" or "forecast" or other similar words.  These  forward-looking  statements
present our estimates and assumptions only as of the date of this report. Except
as otherwise  required by  applicable  securities  laws,  we do not intend,  and
undertake no obligation, to update any forward-looking statement.

     Although we believe that the expectations  reflected in our forward-looking
statements are  reasonable,  actual results could differ  materially  from those
projected  or  assumed  in any of our  forward-looking  statements.  Our  future
financial  condition and results of operations,  as well as any  forward-looking
statements,  are subject to change and  inherent  risks and  uncertainties.  The
factors impacting these risks and uncertainties include, but are not limited to:

     o    attainment of profitable  operations  based on the  development of oil
          and gas products that can be sold, and the continued  availability  of
          debt or equity financing. The Company's ability to continue to operate
          is  contingent  on  refinancing  or  restructuring  indebtedness.  See
          "Liquidity and Capital Resources."

     o    increased  competitive  pressures  from existing  competitors  and new
          entrants;

     o    increases  in  interest  rates or our cost of  borrowing  or a default
          under any material debt agreements;

     o    deterioration in general or regional economic conditions;

     o    adverse state or federal  legislation or regulation that increases the
          costs of compliance,  or adverse  findings by a regulator with respect
          to existing operations;

     o    hedging risks;

     o    ability to attract and retain key personnel;

     o    inability to achieve future sales levels or other operating results;

     o    fluctuations of oil and gas prices;

     o    the unavailability of funds for capital expenditures; and

     o    operational inefficiencies in distribution or other systems.

     For a detailed  description  of these and other  factors  that could  cause
actual results to differ materially from those expressed in any  forward-looking
statement,  please see the "Risk  Factors"  section of our Annual Report on Form
10-K for the year ended  December  31,  2007 and to the extent  applicable,  our
Quarterly Reports on Form 10-Q.

     References  to  "Petrol,"  "the  Company,"  "we,"  "us," and "our" refer to
Petrol Oil and Gas, Inc.

                                       7

<PAGE>
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<CAPTION>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.


Results of Operations for the Three Months Ended September 30, 2008 and 2007.

     The  following  table  summarizes  selected  items  from the  statement  of
operations  for the three months ended  September 30, 2008 compared to the three
months ended September 30, 2007.


                                                 Three Months Ended
                                                    September 30,
                                              --------------------------     Increase       Percentage
                                                 2008           2007        (Decrease)       Change
                                              -----------    -----------    -----------    -----------
<S>                                           <C>            <C>            <C>               <C>
Revenue                                       $ 1,107,472    $ 1,301,347    $  (193,875)      14.9%

Expenses:
   Direct costs                                   481,758        187,794        293,964      156.5%
   Pipeline costs                                   8,439        206,644       (198,205)     (95.9)%
   General and administrative                     771,523        421,226        305,297       83.2%
   Impairment of oil and gas properties
   and pipelines                                     --          264,138       (264,138)    (100.0)%
   Professional and consulting fees                75,646        195,726       (120,080)     (61.4)%
   Depreciation, depletion and amortization       225,404        468,824       (243,420)     (51.9)%
                                              -----------    -----------    -----------    -----------
     Total expenses                             1,562,770      1,744,352       (181,582)     (10.4)%
                                              -----------    -----------    -----------    -----------

Net operating (loss)                             (455,298)      (443,005)       (12,293)       2.8%
                                              -----------    -----------    -----------    -----------

Other income (expense):
   Interest income                                  1,347           --            1,347        N/A
   Interest expense                               (12,366)      (971,089)       958,723      (98.7)%
                                              -----------    -----------    -----------    -----------
     Total other income (expense)                 (11,019)      (971,089)       960,070      (98.9)%

Net income (loss)                                (466,317)   $(1,414,094)   $   947,777      (67.0)%
                                              ===========    ===========    ===========    ===========

     Revenues.  Revenues  for the three  months  ended  September  30, 2008 were
$1,107,472  compared  to  revenues  of  $1,301,347  in the  three  months  ended
September 30, 2007.  This resulted in a decrease of $193,875 or 14.9%,  from the
same period one year ago. The  decrease in revenues is  primarily  the result of
decreased  production,  together  with  decreased  pricing  (after impact of the
Company's hedging activities).

     Direct  Costs.  Direct  costs  are  the  costs  associated  with  operating
producing  wells,  and  transporting  the oil and  natural gas to the market for
sale.  Direct costs for the three months ended September 30, 2008 were $481,758,
an increase of $293,964 or 156.5%,  from  $187,794  for the three  months  ended
September 30, 2007. This increase is a result of a cessation of operation of the
Burlington  properties  located  in the Coal  Creek  Project  during  the second
quarter of 2008,  and changes to our  compression  system,  resulting in reduced
compressor rentals.

     Pipeline  Costs.  Pipeline  costs for the three months ended  September 30,
2008 were $8,439, a decrease of $198,205,  or 95.9%, from $206,644 for the three
months ended  September  30, 2007.  This  decrease is primarily  the result of a
cessation of operation of the  Burlington  properties  located in the Coal Creek
Project  during  the  second  quarter of 2008,  and  changes to our  compression
system, resulting in reduced compressor rentals.

     General and Administrative  Expenses.  General and administrative  expenses
for the three  months ended  September  30, 2008 were  $771,523,  an increase of
$305,297, or 83.2%, from $421,226 for the three months ended September 30, 2007.
The increase in general and administrative expenses is primarily attributable to
a $446,221  compensation  expense  resulting  from the issuance of stock options
during the three months ended  September 30, 2008,  offset by  streamlining  and
reduction of other expenses.

                                       8
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


     Professional and Consulting Fees.  Professional and consulting fees for the
three months ended  September 30, 2008 was $75,646,  a decrease of $120,080,  or
61.4%, from $195,726 for the three months ended September 30, 2007. The decrease
in  professional  and  consulting  fees in the  current  period  was a result of
decreased   investor   relations  fees  and  a  lessened   reliance  on  outside
consultants.

     Depreciation, Depletion, and Amortization Expense. Depreciation, depletion,
and  amortization  expense for the three  months  ended  September  30, 2008 was
$225,404,  a decrease of $243,420 or 51.9%,  from  $468,824 for the three months
ended  September  30,  2007.  The  decrease  in   depreciation,   depletion  and
amortization  expense was a result of a significant decrease in fixed assets due
to the write off of the assets related to the Coal Creek Project.

     Net  Operating  Loss.  The net  operating  loss for the three  months ended
September 30, 2008 was $455,298, versus a net operating loss of $443,005 for the
three months ended September 30, 2007.

     Interest Expense. Interest expense for the three months ended September 30,
2008 was $12,366, a decrease of $958,723,  or 98.7%, from $971,089 for the three
months ended  September 30, 2007. The decrease in interest  expense results from
(a) the accretion of warrants in 2007 and no remaining accretion in 2008 and (b)
the  cessation of accrual of interest on debt owed to Laurus due to the terms of
the  Foreclosure  Agreement  which  provide for the release of any liability for
principal  and  interest  on  such  debt  upon  foreclosure  of  the  underlying
collateral, which foreclosure action was commenced in June 2008.

Results of Operations for the Nine Months Ended September 30, 2008 and 2007.

     The  following  table  summarizes  selected  items  from the  statement  of
operations  for the nine months ended  September  30, 2008  compared to the nine
months ended September 30, 2007.

                                                    Nine Months Ended
                                                      September 30,
                                              ----------------------------     Increase        Percentage
                                                  2008            2007         (Decrease)        Change
                                              ------------    ------------    ------------    ------------
<S>                                           <C>             <C>             <C>               <C>
Revenue                                       $  3,363,056    $  4,249,576    $   (886,520)     (20.9)%

Expenses:
   Direct costs                                  1,354,303       1,687,861        (333,558)     (19.8)%
   Pipeline costs                                   41,734         758,363        (716,629)     (94.5)%
   General and administrative                    1,437,004       1,384,179          52,825        3.8%
   Impairment of oil and gas properties
   and pipelines                                      --         9,076,165      (9,076,165)     100.0%
   Professional and consulting fees                369,932         707,233        (337,301)     (47.7)%
   Depreciation, depletion and amortization        649,513       1,714,278      (1,064,765)     (62.1)%
                                              ------------    ------------    ------------    ------------
     Total expenses                              3,852,486      15,328,079     (11,475,593)     (74.9)%
                                              ------------    ------------    ------------    ------------

Net operating (loss)                          $   (489,430)   $(11,078,503)   $ 10,589,073      (95.6)%
                                              ------------    ------------    ------------    ------------
Other income (expense):
   Interest income                                   2,488            --             2,488        N/A
   Loss on disposal of assets                      (26,775)           --           (26,775)       N/A
   Interest expense                             (1,284,632)     (3,126,777)      1,842,145      (58.9)%
                                              ------------    ------------    ------------    ------------
     Total other income (expense)               (1,308,919)     (3,126,777)      1,817,858      (58.1)%
Net income (loss)                               (1,798,349)   $(14,205,280)   $ 12,406,931      (87.3)%
                                              ============    ============    ============    ============


     Revenues.  Revenues  for the nine  months  ended  September  30,  2008 were
$3,363,056 compared to revenues of $4,249,576 in the nine months ended September
30, 2007. This resulted in a decrease of $886,520 or 20.9%, from the same period
one year ago.  The  decrease in revenues is  primarily  the result of  decreased
production,  together  with  decreased  pricing  (after  impact of the Company's
hedging activities).

                                       9
</TABLE>

<PAGE>


     Direct  Costs.  Direct costs for the nine months ended  September  30, 2008
were $1,354,303,  a decrease of $333,558, or 19.8%, from $1,687,861 for the nine
months ended September 30, 2007. This decrease reflects expenses incurred in the
first  quarter of 2007 related to the  Company's  failed  efforts to dewater and
obtain  commercial  production from wells drilled beginning during the last half
of 2006 with respect to its Burlington and Waverly  properties in the Coal Creek
Project. The Company ceased dewatering efforts in Coal Creek near the end of the
Company's  second  quarter  2007.  We have also  reduced  our costs  related  to
work-overs,  repairs and  modification to the Neodesha wells and pipeline system
that we had previously  experienced during the same period in the previous year.
We do not  anticipate  maintenance  and  work-over  costs to that  extent in the
future and our current direct operating costs are more indicative of our overall
production costs.

     Pipeline Costs. Pipeline costs for the nine months ended September 30, 2008
were $41,734 a decrease of $716,629, or 94.5%, from $758,363 for the nine months
ended September 30, 2007. This decrease is primarily the result of our cessation
of the  operation  of the  Company's  pipeline  system  supporting  its  Waverly
properties  in the Coal Creek  Project and reduced  operation of its  Burlington
properties,  also in the Coal Creek  Project  during the  second  quarter  2007,
followed by a cessation of operation of the Burlington properties located in the
Coal  Creek  Project  during  the second  quarter  of 2008,  and  changes to our
compression system, resulting in reduced compressor rentals.

     General and Administrative  Expenses.  General and administrative  expenses
for the nine months ended  September  30, 2008 were  $1,437,004,  an increase of
$52,825 or 3.8%,  from  $1,384,179 for the nine months ended September 30, 2007.
The increase in general and administrative expenses is primarily attributable to
a $446,221  compensation  expense  resulting  from the issuance of stock options
during the three months ended  September 30, 2008,  offset by  streamlining  and
reduction of other expenses.

     Impairment  of Oil  and  Gas  Properties.  During  the  nine  months  ended
September 30, 2007, we impaired our oil and gas properties by $9,076,165,  based
on our reserve  study of the present  value of future cash flows  discounted  by
10%. The impairment is primarily attributable to the decrease in reserves.

     Professional and Consulting Fees.  Professional and consulting fees for the
nine months ended  September 30, 2008 was $369,932,  a decrease of $337,301,  or
47.7%,  from $707,233 for the nine months ended September 30, 2007. The decrease
in  professional  and  consulting  fees in the  current  period  was a result of
decreased   investor   relations  fees  and  a  lessened   reliance  on  outside
consultants.

     Depreciation, Depletion, and Amortization Expense. Depreciation, depletion,
and  amortization  expense  for the nine  months  ended  September  30, 2008 was
$649,513,  a decrease of  $1,064,765,  or 62.1%,  from  $1,714,278  for the nine
months ended  September 30, 2007.  The decrease in  depreciation,  depletion and
amortization  expense reflects a significantly  lower level of applicable assets
in the first  quarter  2008 as compared to the first  quarter of 2007 due to the
charge for  impairment of oil and gas  properties  and pipelines and the sale of
oil properties.

     Net  Operating  Loss.  The net  operating  loss for the nine  months  ended
September 30, 2007 was $11,078,503,  versus a net operating loss of $489,430 for
the nine months ended September 30, 2008.

     Interest Expense.  Interest expense for the nine months ended September 30,
2008 was $1,284,632, a decrease of $1,842,145, or 58.9%, from $3,126,777 for the
nine months ended  September 30, 2007. The decrease in interest  expense results
from (a) the  accretion of warrants in 2007 and no  remaining  accretion in 2008
and (b) the  cessation  of accrual of interest on debt owed to Laurus due to the
terms  of the  Foreclosure  Agreement  which  provide  for  the  release  of any
liability  for  principal  and  interest  on such debt upon  foreclosure  of the
underlying collateral, which foreclosure action was commenced in June 2008.

     In the nine months  ended  September  30,  2008,  we incurred a loss on the
disposal of fixed assets of $26,775.

                                       10

<PAGE>
<TABLE>
<CAPTION>


Liquidity and Capital Resources

     During the nine months ended September 30, 2008 our cash position increased
by $51,883.  During that period,  our operating  activities  provided $78,028 of
cash mainly from operating  expenses we incurred,  and we made payments on notes
payable of $24,662.  The following table  summarizes  total assets,  accumulated
deficit, stockholders' equity and working capital at September 30, 2008 compared
to December 31, 2007.


                                                                                       Increase / (Decrease)
                                                                                -------------------------------------
                                        September 30, 2008   December 31, 2007          $                  %
                                        ------------------- ------------------- ------------------ ------------------
<S>                                           <C>                 <C>                <C>                     <C>
Current assets                                $    974,754        $  1,156,560       $   (181,806)           (15.72)%
                                        =================== =================== ================== ==================
Current liabilities                           $ 27,919,142        $ 27,325,491       $    593,651                2.2%
                                        =================== =================== ================== ==================
Working capital (deficit)                     $(26,944,388)       $(26,168,931)      $   (775,457)              2.96%
                                        =================== =================== ================== ==================

     Financing.  On October 28,  2004,  we entered into  agreements  with Laurus
Master Fund, Ltd., a Cayman Islands  corporation.  Under the terms of the Laurus
Funds agreements,  we issued a Secured Convertible Term Note (the "Note") in the
aggregate principal amount of $8,000,000 and a five-year warrant (the "Warrant")
to  purchase  3,520,000  shares  of our  common  stock at $2.00  per  share  and
1,813,333 shares of our common stock at $3.00 per8share. On June 2, 2006, Laurus
transferred the 5,333,333  warrants to Pallas Production Corp.  ("Pallas").  The
Note is convertible  into shares of our common stock at a fixed conversion price
of $1.50 per share.  The Note has a three-year  term and bears an interest  rate
equivalent to the "prime rate" published by the Wall Street Journal from time to
time plus 3%, subject to a floor of 7.5% per annum.

     On January 28, 2005, we amended the Laurus Note and the Registration Rights
Agreement.  Laurus  agreed to move five months of  principal  payments  (January
through  May of  2005)  to be paid on the  Maturity  Date  (October  28,  2007).
Additionally,  Laurus agreed to extend  certain filing and  effectiveness  dates
under the registration rights agreement.  In consideration for the amendment, we
issued an additional  common stock purchase  warrant to Laurus to purchase up to
1,000,000  shares of our common  stock at $2.50 per share for the first  666,667
shares and $3.00 per share for the remaining  333,333 shares.  On June 20, 2006,
Laurus  transferred the 1,000,000 warrants to Pallas.  Further,  pursuant to the
amendment  agreement  executed  on  April  28,  2004,  we  have  agreed  to file
semi-annual  registration  statements  to  register  shares of our common  stock
issued to Laurus for the conversion of interest under the Note.

     As of June 30, 2007, Laurus had converted  $2,283,823 of principal payments
into 1,522,550  shares of our common stock and $779,352 of accrued interest into
519,568 shares of our common stock (2,042,118  shares in total).  The conversion
of  principal  and accrued  interest  allowed us  additional  cash to use in our
operations.

     On October 31,  2005,  we entered  into another  financing  agreement  with
Laurus,  under  which  $10,000,000  was funded  into an escrow  account  and was
disbursed  to  us  in  November  2005  after  finalization  of  certain  closing
requirements.  We  issued  a  three-year  Secured  Term  Note  in the  aggregate
principal  amount of $10,000,000 and a five-year  warrant to purchase  1,000,000
shares  of our  common  stock at $2.00  per  share.  On June  20,  2006,  Laurus
transferred  the 1,000,000  warrants to Pallas.  The note bears an interest rate
equivalent to the "prime rate" published by the Wall Street Journal from time to
time plus  3.25%,  subject to a floor of 10% and a ceiling of 14% per annum.  In
addition,  Laurus,  in their sole  discretion,  was able to purchase  additional
notes from us in an aggregate principal amount of up to $40,000,000  pursuant to
substantially similar terms of the initial note dated October 31, 2005.

     On June 30, 2006,  we entered into  agreements  with Laurus to draw down an
additional  $5,000,000  under the credit facility  provided by Laurus in October
2005. Under the terms of the Laurus  agreements we issued a Secured Term Note in
the aggregate principal amount of $5,000,000 and a five-year warrant to purchase
200,000 shares of our common stock at $1.80 per share. On June 20, 2006,  Laurus
transferred the 200,000  warrants to Pallas.  The Note has a three-year term and
bears an interest  rate  equivalent  to the "prime  rate"  published by the Wall
Street  Journal  from time to time plus  3.25%,  subject to a floor of 10% and a
ceiling of 14% per annum.  Concurrently  with the  agreements  listed above,  we
amended and restated our previous  $10,000,000  Secured Term Note dated  October
31, 2005 with Laurus.

                                       11
</TABLE>

<PAGE>


     On April 7, 2006,  the funds were  released  from  Escrow.  Net proceeds to
Petrol from the financing,  after payment of fees and expenses to Laurus and its
affiliates,  were $4,806,688. The proceeds were primarily utilized by Petrol for
drilling activities on our Coal Creek Project.

     On May 31,  2006,  we entered into  agreements  with Laurus to draw down an
additional  $10,000,000  under the credit facility provided by Laurus in October
2005. Under the terms of the Laurus  agreements we issued a Secured Term Note in
the  aggregate  principal  amount of  $10,000,000  and a  five-year  warrant  to
purchase  400,000  shares of our common  stock at $1.65 per  share.  On June 20,
2006,  Laurus  transferred  the  400,000  warrants  to  Pallas.  The  Note has a
three-year  term and bears an  interest  rate  equivalent  to the  "prime  rate"
published by the Wall Street Journal from time to time plus 3.25%,  subject to a
floor of 10% and a ceiling of 14% per annum.  Concurrently with the execution of
the new Laurus  Funds  agreements,  Petrol  amended and  restated  its  previous
$10,000,000  Secured Term Note dated October 31, 2005 and the $5,000,000 Secured
Term Note dated September 30, 2006 with Laurus Funds.

     On June 2, 2006,  the funds were  released  from  Escrow.  Net  proceeds to
Petrol from the  financing,  after  payment of fees and expenses to Laurus Funds
and its affiliates,  were  $9,629,679.  The proceeds were primarily  utilized by
Petrol for drilling activities on Petrol's Coal Creek Project.

     At December 31, 2007, the Company had long term debt (including the current
portion of long term debt) of  approximately  $26.7 million.  Approximately  $15
million of this debt was utilized to develop the Coal Creek  Project,  which has
contributed no significant  revenue to the Company.  As a result,  the Company's
cash  position has  seriously  declined.  On October 28,  2007,  the Company was
required to make a principal payment of approximately  $1.1 million on a portion
of its long term  debt.  The  Company  did not have  adequate  cash to make such
principal  payment and is currently  in default  under the terms of the note for
this long term debt.

     On  April  9,  2008,  the  Company's  debt  was  declared  in  default  and
accelerated by Laurus.

     On April 30, 2008, the Company entered into a Foreclosure-Related Agreement
(the "Foreclosure Agreement") with Laurus. The aggregate amount due and owing to
Laurus as of April 30, 2008 was approximately $35.7 million.

     The  outstanding  obligations  are secured by various  mortgages  and other
fixed and mixed assets and real and personal  property  pursuant to security and
other agreements covering assets or other rights to which the Company has rights
(all such assets,  rights and collateral,  collectively,  the  "Collateral"),  a
portion  of which are  assets and  rights  referred  to as the  "Petrol-Neodesha
Project,"  located in Neosho and Wilson Counties,  Kansas,  consisting of, among
other  Collateral,  mortgages,  and real,  personal property and fixed and mixed
assets  used in  connection  with the  Petrol-Neodesha  Project  (the  "Neodesha
Collateral").

     The Agreement  requires Laurus to foreclose on the Neodesha  Collateral and
governs the terms and conditions of the foreclosure. The Agreement provides that
the Company will not contest the sale of the Neodesha Collateral,  which will be
conducted  as a public  foreclosure  sale in  accordance  with Kansas  law.  The
Company  has  agreed  to  reasonably  assist  Laurus  in the  completion  of the
foreclosure  sale.  After the sale of the  Neodesha  Collateral  becomes  final,
Laurus will  release  Petrol of all  remaining  amounts  owed or claims they may
have, and Laurus will reassign to Petrol their overriding  royalty  interests in
the mineral leases located at the Company 's Coal Creek Project.

     As part of the Agreement,  the Company will cancel all outstanding warrants
for purchases of securities  issued to Laurus in connection with the Outstanding
Obligations  and replace  them with  warrants to  purchase  1,000,000  shares of
common stock at an initial exercise price of $0.20 per share.

     On June 9, 2008,  Laurus filed a foreclosure  action in the Wilson  County,
Kansas district court. We expect the foreclosure action and sale to be completed
during the fourth quarter of 2008. The  foreclosure  by Laurus  described  above

                                       12

<PAGE>


will leave the Company with far fewer assets than it currently has. There can be
no assurance  that the Company will be able to continue  operations  and satisfy
its obligations in the future.

     Cash  Flows.  Since  inception,  we have  financed  cash flow  requirements
through debt financing, the issuance of common stock and revenues generated from
the sale of oil and gas. As we expand operational activities,  we may experience
net negative cash flows from operations, pending receipt of sales or development
fees,  and may be required to obtain  additional  financing  to fund  operations
through common stock  offerings and debt  borrowings to the extent  necessary to
provide working capital.

Critical Accounting Policies and Estimates

     Our accounting  estimates  include bad debts on our receivables,  amount of
depletion  of our oil and gas  properties  subject  to  amortization,  the asset
retirement  obligation  and the value of the options and warrants that we issue.
Our trade  receivables have been fully  collectible  since inception and we only
have sales to a small base of customers.  We believe that all of our receivables
are collectible. The depletion of our oil and gas properties is based in part on
the  evaluation  of our reserves and an estimate of our  reserves.  We obtain an
evaluation of the proved reserves from a professional engineering company and on
a quarterly  basis we review the estimates and determine if any  adjustments are
needed.  If the actual reserves are less than the estimated  reserves,  we would
not fully deplete our costs. The asset retirement obligation relates to the plug
and  abandonment  costs when our wells are no longer  useful.  We determine  the
value of the  liability  by  obtaining  quotes for this service and estimate the
increase we will face in the future.  We then discount the future value based on
an intrinsic  interest rate that is appropriate  for Petrol.  If costs rise more
than what we have  expected,  there  could be  additional  charges in the future
however we monitor  the costs of the  abandoned  wells and we will  adjust  this
liability if necessary.  The value we assign to the options and warrants that we
issue is  based on the fair  market  value as  calculated  by the  Black-Scholes
pricing  model.  To  perform  a  calculation  of the  value of our  options  and
warrants,  we determine the volatility of our stock.  We believe our estimate of
volatility is reasonable  and we review the  assumptions  used to determine this
whenever we have an equity  instrument that needs a fair market value.  Although
the offset to the valuation is in paid in capital,  were we to have an incorrect
material volatility assumption, our expenses could be understated or overstated.
The preparation of our financial  statements requires us to make assumptions and
estimates that affect the reported amounts of assets, liabilities,  revenues and
expenses,  as well as the disclosure of contingent  assets and  liabilities.  We
base our  assumptions  and estimates on historical  experience and other sources
that we believe to be reasonable at the time.  Actual  results may vary from our
estimates due to changes in circumstances,  weather, politics, global economics,
mechanical problems, general business conditions and other factors.

General Operations

     Petrol's field development plans and strategies are employed throughout its
multiple project areas and incorporates several assessment stages. Each new well
is drilled through all possible CBM reservoirs and individually evaluated.  Upon
a favorable evaluation of its overall production capacity the well will be fully
completed in as many gas producing  intervals as possible and then  connected to
our local gas gathering and water disposal pipelines.

     When a proposed drilling site is identified,  as a licensed operator in the
State of Kansas, Petrol is engaged in all aspects of well site operations.  As a
state  licensed  operator we are  responsible  for  permitting  the well,  which
includes obtaining permission from the Kansas Oil and Gas Commission relative to
spacing  requirements  and any other  county,  state and  federal  environmental
regulatory  issues required at the time that the permitting  process  commences.
Additionally, Petrol formulates and delivers to all interest owners an operating
agreement  establishing  each  participant's  rights  and  obligations  in  that
particular well based on the location of the well and the ownership. In addition
to the permitting  process,  we as the operator are  responsible  for hiring the
driller, geologist and land men to make final decisions relative to the zones to
be targeted, confirming that we have good title to each leased parcel covered by
the spacing permit and to actually drill the well to the target zones. Petrol is
responsible  for completing  each  successful well and connecting it to the most
appropriate section of the gas gathering system.

     As the operator,  we are also the caretaker of the well once production has
commenced.  We are  responsible  for paying  bills  related to the  drilling and
development of the well, billing working interest owners for their proportionate
expenses in drilling and completing  the well,  and selling the production  from

                                       13

<PAGE>


the well. Once the production is sold, we anticipate that the purchaser  thereof
carries out its own research  with respect to ownership of that  production  and
sends out a  division  order to confirm  the nature and amount of each  interest
owned by each interest  owner.  Once a division order has been  established  and
confirmed by the interest owners, the production  purchaser issues the checks to
each interest owner in accordance with its appropriate interest. From that point
forward,  we as operator are  responsible  for maintaining the well and the well
site during the entire term of the production or until such time as we have been
replaced or the site appropriately abandoned.

     Along  with the  drilling  and  completion  of our  production  wells,  our
subsidiary pipeline companies formulate,  design and install a gas gathering and
compression  system to  transport  the gas from  wellhead  to the high  pressure
interstate  pipeline tap and sales  market.  We have  identified  several  major
interstate  distribution  pipelines  that  operate  within and pass  through the
counties in which we have lease  holdings.  These  include  pipelines  owned and
operated by Southern  Star,  CMS Energy,  Enbridge  and Kinder  Morgan.  We have
initiated  contact with these  companies to ascertain the specific  locations of
their pipelines,  their  requirements to transport gas from us (including volume
of gas and  quality of gas),  and the costs to connect  to their  pipelines.  We
currently have agreements with Southern Star in our Petrol-Neodesha  Project and
Enbridge in our Coal Creek Project

     The price  obtained  for  produced  oil and gas is  dependent  on  numerous
factors beyond our control,  including  domestic and foreign production rates of
oil and gas,  market  demand  and the  effect of  governmental  regulations  and
incentives.  To reduce the impact of these  extraneous  factors,  we often enter
into  forward  sales  contracts  for a  portion  of the gas and oil we  produce.
However,  we do not have any delivery  commitments for gas or oil from wells not
currently  drilled  or  producing.   Because  the  U.S.  government's  has  been
encouraging  increases in domestic  production of energy,  coupled with the high
demand for natural gas, we do not anticipate any difficulties in selling any oil
and gas we produce, once it has been delivered to a distribution facility.

     The timing of most of our capital expenditures is discretionary.  Currently
there  are  no  material  long-term  commitments  associated  with  any  capital
expenditure  plans or that are currently in the  investigative  planning  stage.
Consequently, we have a significant degree of flexibility to adjust the level of
such   expenditures  as  circumstances   warrant.   The  level  of  our  capital
expenditures  will vary in future periods  depending on energy market conditions
and other related economic factors.  However, we expect to significantly  reduce
our drilling activity due to our limited available cash.

Derivatives

     To reduce our  exposure to  unfavorable  changes in natural gas prices,  we
have  entered  into an  agreement  to  utilize  energy  swaps in order to have a
fixed-price  contract.  This contract,  which was terminated in September  2008,
allowed us to predict with greater certainty the effective natural gas prices to
be received for hedged  production and benefit operating cash flows and earnings
when market prices are less than the fixed prices  provided under the contracts.
At September 30, 2008, we have no fixed price sales contracts.


Item 3. Quantitative and Qualitative Disclosure About Market Risk.

         Not applicable.

Item 4T. Controls and Procedures.

     We  carried  out an  evaluation  of the  effectiveness  of the  design  and
operation of our disclosure  controls and procedures (as defined in Exchange Act
Rules  13a-15(e) and  15d-15(e)) as of September 30, 2008.  This  evaluation was
carried  out  under  the  supervision  and  with the  participation  of our sole
executive officer,  Chief Executive Officer,  Loren Moll and with the assistance
of our company accountant.  Based upon that evaluation,  they concluded that, as
of September 30, 2008,  our  disclosure  controls and  procedures  have not been
identified and we have not yet tested their effectiveness.  Because of this lack
of  identification  and  testing,  we cannot  assure  the  effectiveness  of the
controls and procedures.  There have been no significant changes in our internal
controls over financial  reporting for the quarter ended September 30, 2008 that
have  materially  affected or are  reasonably  likely to materially  affect such
controls.

                                       14

<PAGE>


     Disclosure  controls and procedures are controls and other  procedures that
are designed to ensure that information  required to be disclosed in our reports
filed or submitted  under the Exchange Act are recorded,  processed,  summarized
and  reported,  within the time periods  specified in the SEC's rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed in our
reports  filed  under  the  Exchange  Act is  accumulated  and  communicated  to
management,  including our Chief Executive  Officer,  to allow timely  decisions
regarding required disclosure.

     The Company has  established  disclosure  controls and procedures to ensure
that information disclosed in this MD&A and the related financial statements was
properly recorded, processed,  summarized and reported to the Company`s Board of
Directors.  A control  system,  no matter how well  conceived or  operated,  can
provide only  reasonable,  not absolute,  assurance  that the  objectives of the
control system are met.

     There has been no change in the Company's  disclosure  controls the quarter
ended September 30, 2008 that has materially affected or is likely to materially
affect its control over financial reporting.

Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------

     The CEO of the Company  acknowledges  that he is responsible  for designing
internal controls over financial  reporting or causing them to be designed under
their  supervision  in order  to  provide  reasonable  assurance  regarding  the
reliability of financial  reporting and the preparation of financial  statements
for  external   purposes  in  accordance   with  Rule   240.13a-15(f)   or  Rule
240.15d-15(f).  This  report  shall not be deemed  to be filed for  purposes  of
Section 18 of the Exchange Act or otherwise  subject to the  liabilities of that
section.

     Management  and the  Board  of  Directors  work to  mitigate  the risk of a
material misstatement in financial reporting, however, there can be no assurance
that this risk can be  reduced  to less than a remote  likelihood  of a material
misstatement.

     Management  has not yet  identified  the critical  disclosure  controls and
procedures  associated  with  the  Company's  internal  control  over  financial
reporting  for the quarter  ended  September 30, 2008 and has not yet tested the
effectiveness of these disclosure controls and procedures and, therefore, cannot
yet deem these controls to be effective.  Therefore,  the Company has determined
that a  material  weakness  exists  related  to the lack of  identification  and
testing of  disclosure  controls and  procedures  associated  with the Company's
internal  control over financial  reporting for the quarter ended  September 30,
2008. This material  weakness could materially affect the Company's control over
financial reporting.

Limitations on the Effectiveness of Internal Controls
-----------------------------------------------------

     Our management does not expect that our disclosure  controls and procedures
or our internal control over financial  reporting will  necessarily  prevent all
fraud and material error.

     Weaver & Martin LLC, the Company's independent registered public accounting
firm,  was  not  required  to  and  has  not  issued  a  report  concerning  the
effectiveness of the Company's  internal control over financial  reporting as of
September 30, 2008.

                           PART II--OTHER INFORMATION

Item 1.   Legal Proceedings.

     Petrol is and may become  involved  in various  routine  legal  proceedings
incidental to its  business.  However,  to Petrol's  knowledge as of the date of
this report,  there are no material pending legal proceedings to which Petrol is
a party or to which any of its property is subject.

Item 1A. Risk Factors.

     There have been no material changes from the risk factors  disclosed in the
"Risk  Factors"  section  of our  Annual  Report on Form 10-K for the year ended
December 31, 2007.

                                       15

<PAGE>


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.

         None.

Item 3.   Defaults Upon Senior Securities.

     The  Company  continues  to be in default  on the debt owed to Laurus.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources - Financing."


Item 4.   Submission of Matters to a Vote of Security Holders.

         None.

Item 5.   Other Information.

         None.

Item 6.   Exhibits.

     The  information  required  by this  Item 6 is set  forth  in the  Index to
Exhibits accompanying this Quarterly Report on Form 10-Q.

                                       16

<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.


                                            PETROL OIL AND GAS, INC.


                                            By:  /s/  Loren Moll
                                               --------------------------------
                                                      Loren Moll,
                                                      Chief Executive Officer
                                                      (On behalf of the
                                                      registrant and as
                                                      principal accounting
                                                      officer)

Date:  November 13, 2008

                                       17

<PAGE>



                                             INDEX TO EXHIBITS

Exhibit
Number              Exhibits
-------------       ------------------------------------------------------------

31.1                Certification  of the Company's Chief Executive  Officer and
                    principal  accounting  officer  Pursuant  to Section  302 of
                    Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).

32.1                Certification  of the Company's Chief Executive  Officer and
                    principal  accounting officer Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

                                       18