**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

** **

**FORM 40-F**

** **

**(Check One)**

 

| o      | **REGISTRATION STATEMENT PURSUANT TO  SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934**               |
|--------|--------------------------------------------------------------------------------------------------------------|
|   |                                                                                                         |
| **x**  | **ANNUAL  REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934** |

 

| **For the fiscal year ended  December 31, 2007** | ** ** | ** ** | ** ** | **Commission  File Number: 001-31395** |
|-------------------------------------------------------|------------|------------|------------|----------------------------------------|

** **

**CANADIANSUPERIOR ENERGY INC.**

(Exact name of Registrant as specified in itscharter)

 

| **Alberta**                                                        | ** ** | **1311**                                                            | ** ** | **Not  Applicable**                                      |
|--------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|----------------------------------------------------------|
| (Province or other jurisdiction of  incorporation or organization) | * *   | (Primary Standard Industrial   Classification Code (if applicable)) | * *   | (I.R.S. Employer Identification Number (if  applicable)) |

* *

**Suite 2700,605 5th Avenue SW**

**Calgary,Alberta, Canada  T2P 3H5**

**(403)294-1411**

(Address and telephone number of Registrant’sprincipal executive offices)

* *

**PTSGECorp.**

**Attn:  Gary Kocher**

**925Fourth Avenue, Suite 2900**

**Seattle,Washington 98104**

**(206)623-7580**

(Name, address (includingzip code) and telephone number

(including area code) ofagent for service in the United States)

* *

Securities registered or to be registered pursuant to Section 12(b) ofthe Act.

** **

| **Title**     | ** ** | **Name  of Each Exchange on Which Quoted**       |
|---------------|------------|--------------------------------------------------|
| Common Shares |       | American Stock  Exchange  Toronto Stock Exchange |

 

Securities registered or to be registered pursuant to Section 12(g) ofthe Act.  **None.**

 

Securities for which there is a reporting obligationpursuant to Section 15(d) of the Act. **None.**

** **

For annual reports, indicate by check mark theinformation filed with this Form:

 

|   | x  Annual  information form |   | x  Audited  annual financial statements |
|--------|---------------------------------------|--------|---------------------------------------------------|

 

Indicate number ofoutstanding shares of each of the issuer’s classes of capital or common stockas of the close of the period covered by the annual report.

 

The Registrant had140,312,273 common shares outstanding as of December 31, 2007

 

Indicate by checkmark whether the Registrant by filing the information contained in this form isalso thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) underthe Securities Exchange Act of 1934 (the “Exchange Act”).  If “Yes” is marked, indicate the file numberassigned to the Registrant in connection with such Rule.

 

Yes  o                   No  x

 

                Indicate by checkmark whether the Registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Exchange Act during the preceding 12months (or for such shorter period that the Registrant was required to filesuch reports) and (2) has been subject to such filing requirements for thepast 90 days.

 

Yes  x                   No  o

 

 

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**TABLE OFCONTENTS**

** **
| ** **                                 | **Page**   |
|--------------------------------------------|------------|
| ** **                                 | ** ** |
|                                       |       |
| Principal Documents                        | 1          |
| Disclosure  Controls and Procedures        | 1          |
| Internal  Control Over Financial Reporting | 1          |
| Remediation Effort                         | 2          |
| Audit  Committee Financial Expert          | 2          |
| Code of Ethics                             | 3          |
| Principal  Accountant Fees and Services    | 3          |
| Pre-Approval  Policies                     | 3          |
| Off-Balance  Sheet Arrangements            | 3          |
| Disclosure  of Contractual Obligations     | 4          |
| Audit Committee                            | 4          |
| Undertaking                                | 4          |
| Consent to  Service of Process             | 4          |

 

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**Exceptwhere otherwise indicated, all dollar amounts stated in this Annual Report on Form 40-Fare Canadian dollars.**

** **

**PrincipalDocuments**

** **

The followingdocuments have been filed as part of this Annual Report on Form 40-F:

 

**A.****    Annual Information Form**

** **

For our AnnualInformation Form for the twelve-month period ended December 31, 2007,see Exhibit 99.1 to this Annual Report on Form 40-F.

 

**B.****    Audited Annual FinancialStatements**

** **

For ourConsolidated Audited Financial Statements for the twelve-month period ended December 31,2007, including the report of independent registered public accounting firmwith respect thereto, see Exhibit 99.2 to this Annual Report on Form 40-F.  For a reconciliation of important differencesbetween Canadian and United States generally accepted accounting principles,see Note 19 of the Notes to the Consolidated Financial Statements.

 

**C.****    Management’s Discussion andAnalysis**

** **

For Management’sDiscussion and Analysis for the twelve-month period ended December 31,2007, see Exhibit 99.3 to this Annual Report on Form 40-F.

 

**Disclosure Controls and Procedures**

** **

In accordance with the Rules 13a-15and 15d-15 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), under the supervision and with the participation of the Chief ExecutiveOfficer and the Chief Financial Officer, we have carried out an evaluation ofthe effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) ofthe Exchange Act) as of December 31, 2007. Based on that evaluation, theChief Executive Officer and the Chief Financial Officer concluded that, becauseof material weaknesses described below in “Internal Control over FinancialReporting”, our disclosure and procedures were not effective as of December 31,2007.

 

**Internal Control over Financial Reporting**

** **

Our management isresponsible for establishing and maintaining adequate internal control overfinancial reporting and designing such internal control over financial reportingto provide reasonable assurance regarding the reliability of financialreporting and the preparation and fair presentation of financial statements forexternal purposes in accordance with Canadian generally accepted accountingprinciples (GAAP), including a reconciliation to U.S. GAAP. Our management,including the Chief Executive Officer and Chief Financial Officer, conducted anevaluation of the effectiveness of our internal control over financialreporting based on the framework in Internal Control – Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission(“COSO”). Based on this evaluation, our management concluded that our internalcontrol over financial reporting was not effective as December 31, 2007due to the material weaknesses described below. A material weakness is adeficiency, or a combination of deficiencies, in internal control overfinancial reporting, such that there is a reasonable possibility that amaterial misstatement of the annual or interim financial statements will not beprevented or detected on a timely basis.

 

During the fourth quarterof 2007 a new CEO was hired along with a new CFO and finance and accountingteam in the first quarter of 2008. Although material deficiencies existed atDecember 31, 2007, the Corporation has taken significant steps in Q1 2008 toalleviate in the near term some of the noted material weaknesses, such assegregation of duties and financial preparation and review procedures and hasimplemented an aggressive plan that by the end of 2008 all noted materialweaknesses at December 31 will be substantially eliminated.

 

Management’s assessmentidentified the following material weaknesses in internal control over financialreporting as of December 31, 2007:

 

·      Thereare no effective controls or procedures related to significant accounts orprocesses to provide reasonable assurance that transactions are recordedaccurately, are recorded timely and are complete;

 

1

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·      TheCorporation was not adequately staffed with accounting personnel possessing anadequate level of technical expertise and did not maintain effectivesegregation of duties over automated and manual transactions leading toineffective monitoring, supervision and reviews.

 

·      TheCorporation did not maintain effective controls over the safeguarding ofmonetary assets. The material weakness affects cash and short-term investments.

 

Meyers Norris Penny LLP,the independent registered public accounting firm that audited our consolidatedfinancial statements has issued an attestation report on our internal controlover the financial reporting. For Meyers Norris Penny LLP’s report, see Exhibit 99.5to this Annual Report on Form 40-F.

 

**Remediation Effort**

** **

Our management completedits assessment of the effectiveness of our internal control over financialreporting as of December 31, 2007, and in performing its assessment,identified the material weaknesses described above. These material weaknesseshave been discussed with the Audit Committee. The Audit Committee has taken anactive role in overseeing management’s implementation of the remedial measuresdescribed below. By implementing these remedial measures, management intends toimprove our internal control over financial reporting and to avoid materialmisstatements in consolidated financial statements prepared for externalpurposes, in the future. Our management is working under the supervision of theAudit Committee to identify and implement additional corrective actions, whererequired, to improve the effectiveness of our internal control over financialreporting, including the enhancement of systems and procedures.

 

We have implemented or are implementing the following measures, whichwill improve significantly our internal control over financial reporting:

 

·              The hiringof a new CFO and Corporate Controller and key additional operational accountingand financial reporting staff of which a number are Chartered Accountants withCanadian and US financial and regulatory reporting experience;

 

·              Theimplementation of regular management meetings to provide operational,financial, and accounting updates of the Corporation;

 

·              A budgetingprocess which will compare actual results to budgeted results for management toreview and query on a monthly basis;

 

·              Theimplementation of controls to safeguard monetary assets; and

 

·              Theinitiation of an ongoing and comprehensive review of financial controls andprocedures to address the issues identified above and to bring into compliancewith the requirements of the Sarbanes-Oxley Act with respect to internalcontrols and procedures.

 

Management believesthat, through implementation of the measures noted above, we will begin toaddress the conditions identified above as material weaknesses. We will monitorthe effectiveness of these measures, and our internal control over financialreporting on an ongoing basis. We will continue to asses our remediation plansand will take further action, as appropriate, to strengthen our internal controlover financial reporting.

 

**Audit Committee Financial Expert**

 

Our Board of Directorshas determined that Mr. Squires is an audit committee financial expertserving on our audit committee (as defined in paragraph 8(b) ofGeneral Instruction B to Form 40-F). Our Board of Directors has determined that Mr. Squires isindependent pursuant to the standards of the American Stock Exchange.  For a description Mr. Squires’ relevantexperience in financial matters, see his employment history in the section “Directorsand Officers” in our Annual Information Form for the year ended December 31,2007, which is filed as Exhibit 99.1 to this Annual Report on Form 40-F.

 

2

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**Code of Ethics**

** **

Our code of ethicsapplicable to our principal executive officer, principal financial officer,principal accounting officer or controller, or persons performing similarfunctions is disclosed in our Code of Business Conduct and Ethics, which isapplicable to all of our directors, officers and employees. Our Code ofBusiness Conduct and Ethics is filed as Exhibit 99.4 to this Annual Reporton Form 40-F. In the event that we:

 

(i)    amend any provision of ourCode of Business Conduct and Ethics that applies to our principal executiveofficer, principal financial officer, principal accounting officer orcontroller or persons performing similar functions that relates to any elementof the code of ethics definition enumerated in paragraph (9)(b) ofGeneral Instruction B to Form 40-F, or

 

(ii)   grant a waiver, including animplicit waiver, from a provision of our Code of Business Conduct and Ethics toany of our principal executive officer, principal financial officer, principalaccounting officer or controller or persons performing similar functions thatrelates to any element of the code of ethics definition as enumerated inparagraph (9)(b) of General Instruction B to Form 40-F,

 

then we will disclose in a Form 6-K any suchamendment or waiver. Such disclosure will specifically describe the nature ofthe amendment or waiver, and will, in the case of a waiver, name the person towhom the waiver was granted.

 

**PrincipalAccountant Fees and Services**

** **

The followingtable provides information about the fees billed to us for professionalservices rendered by Meyers Norris Penny LLP, our principal accountant duringfiscal years 2007 and 2006:

 
| ** **          | ** ** | **   2007** | ** ** | **   2006** | ** ** |
|---------------------|------------|----------------------------|------------|----------------------------|------------|
| Audit fees          |       | $                          | 201,798    |                       | $          | 141,820 |   |
| Audit-related  fees |       | 52,115                     |       | 35,490                     |       |
| Tax fees            |       | 7,420                      |       | 6,400                      |       |
| All other fees      |       | 50,032                     |       | 44,245                     |       |
| Total fees          |       | $                          | 311,365    |                       | $          | 227,955 |   |

 

**Audit Fees. **Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements.

 

**Audit-Related Fees. **Audit-related fees included fees relating to the review of our quarterly financial statements.

 

**Tax Fees. **Tax fees included tax compliance, tax planning, tax advice and various taxation matters.

 

**All Other Fees. **All other fees consists of services provided by our principal accountant other than audit, audit-related and tax services, including prospectus and other offering related work.

 

**Pre-ApprovalPolicies**

** **

All audit andnon-audit services performed by our auditors for the 2007 and 2006 fiscal yearswere pre-approved by our audit committee. It is our policy that all audit and non-audit services performed by ourauditors will continue to be pre-approved by our audit committee.

 

**Off-BalanceSheet Arrangements**

** **

We have nooff-balance sheet arrangements to report.

 

3

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**Disclosure of Contractual Obligations**

** **

In the normalcourse of business we are obligated to make future payments.  These obligations represent contracts andother commitments that are known and committed.

 
| ** **                                                                                                                     | ** ** | **Payment Due by Period** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                                                                     | ** ** | **Total**                                | ** ** | **Less than  1 year** | ** ** | **1 – 3 years** | ** ** | **3 – 5 years** | ** ** | **More than  5 years** | ** ** |
| Long-term debt  obligations                                                                                                    |       | —                                   |       | — |   | — |   | — |   | — |   |
| Capital  (finance) lease obligations                                                                                           |       | —                                   |       | — |   | — |   | — |   | — |   |
| Operating lease  obligations                                                                                                   |       | $                                        | 1,122,543  |   | $ | 471,166 |   | $ | 651,377 |   | — |   | — |   |
| Purchase  obligations                                                                                                          |       | —                                   |       | — |   | — |   | — |   | — |   |
| Other long-term  liabilities reflected on the Company’s balance sheet under the GAAP of the  primary financial statements |       | —                                   |       | — |   | — |   | — |   | — |   |
| Total                                                                                                                          |       | $                                        | 1,122,543  |   | $ | 471,166 |   | $ | 651,377 |   | — |   | — |   |

 

**AuditCommittee**

** **

We haveestablished an audit committee in accordance with section 15 U.S.C.78c(a)(58)(A). Each of the following directors serves on the audit committee:Mssrs. Squires, Watkins and Dallas.  Seethe section entitled “Audit Committee” in our Annual Information Form forthe year ended December 31, 2007, which is filed as Exhibit 99.1 tothis Annual Report on Form 40-F.

 

**Undertaking**

** **

We undertake tomake available, in person or by telephone, representatives to respond toinquiries made by the Commission staff, and to furnish promptly, when requiredto do so by the Commission staff, information relating to: the securitiesregistered pursuant to Form 40-F; the securities in relation to which theobligation to file an Annual Report on Form 40-F arises; or transactionsin said securities.

 

**Consentto Service of Process**

** **

We have previouslyfiled a Form F-X in connection with the class of securities in relation towhich the obligation to file this Annual Report on Form 40-F arises.  Any change to the name and address of theagent for service for service of process shall be communicated promptly to theSecurities and Exchange Commission by an amendment to the Form F-X.

 

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**SIGNATURES**

** **

        Pursuant to therequirements of the Exchange Act, the Registrant certifies that it meets all ofthe requirements for filing on Form 40-F and has duly caused this AnnualReport to be signed on its behalf by the undersigned, thereto duly authorized.

 
|   | CANADIAN SUPERIOR ENERGY INC. |
|--------|-------------------------------|
|   |                          |   |
|   |                          |   |
|   | By:                           | /s/  CRAIG MCKENZIE |
|   | Name:                         | Craig McKenzie |
|   | Title:                        | Chief Executive Officer |
|   | Date:                         | March 30, 2008 |

 

5

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**EXHIBITS**

 
| **Exhibit** | ** ** | **Description**                                                                                                                                                              |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                   |
| 99.1        |       | Annual Information Form of the Registrant for  the twelve-month period ended December 31, 2007.                                                                    |
|        |       |                                                                                                                                                                         |
| 99.2        |       | Consolidated Audited Financial Statements of the  Registrant for the twelve-month period ended December 31, 2007, including  Auditors’ Report to the Shareholders.      |
|        |       |                                                                                                                                                                         |
| 99.3        |       | Management’s Discussion and Analysis of the  Registrant for the twelve-month period ended December 31, 2007.                                                       |
|        |       |                                                                                                                                                                         |
| 99.4        |       | Code of Ethics.                                                                                                                                                              |
|        |       |                                                                                                                                                                         |
| 99.5        |       | Report of Meyers Norris Penny LLP on Internal  Control over Financial Reporting.                                                                                             |
|        |       |                                                                                                                                                                         |
| 99.6        |       | Consent of Meyers Norris Penny LLP.                                                                                                                                          |
|        |       |                                                                                                                                                                         |
| 99.7        |       | Consent of GLJ Petroleum Consultants Ltd.                                                                                                                                    |
|        |       |                                                                                                                                                                         |
| 99.8        |       | Certifications of Chief Executive Officer pursuant  to Rule 13a-14(a).                                                                                                  |
|        |       |                                                                                                                                                                         |
| 99.9        |       | Certifications of Chief Financial Officer pursuant  to Rule 13a-14(a).                                                                                                  |
|        |       |                                                                                                                                                                         |
| 99.10       |       | Certifications of Chief Executive Officer pursuant  to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18  of the United States Code (18 U.S.C. 1350). |
|        |       |                                                                                                                                                                         |
| 99.11       |       | Certifications of Chief Financial Officer pursuant  to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18  of the United States Code (18 U.S.C. 1350). |

 

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