**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**




(Mark
                One)þ
            
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**For
                the fiscal year ended September 30, 2005****or******o
            
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934FOR
                THE TRANSITION PERIOD FROM ________TO________**Commission
                File Number 0-24012**





**DEEP
      WELL OIL & GAS, INC.**


(Formerly
      ALLIED DEVICES CORPORATION)


(Name
      of
      small business issuer in its charter)





**Nevada**
            
            **13-3087510**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**510
                Royal Bank Building, 10117 Jasper Avenue, Edmonton, Alberta,
                Canada**
            
            **T5J
                1W8**(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer’s
      telephone number: **(780) 409-8144**





Securities
      registered under Section 12(b) of the Exchange Act:





Title
                of each class
            
            Name
                of each exchange on which registered**None**
            
            **None**





Securities
      registered under Section 12(g) of the Exchange Act:





**Common
                Stock, $0.001 par value per share**(Title
                of class)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15 (d) of the Exchange Act during the past 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 o  No
þ




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o  No
þ





The
      issuer had no revenues for its most recent fiscal year.





The
      aggregate market value of the registrant’s common stock held by non-affiliates
      computed by reference to the price at which the common equity was sold on August
      1, 2005 was $18,513,730.





**(ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
      YEARS)**





Check
      whether the issuer has filed all documents and reports required to be filed
      by
      Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
      securities under a plan confirmed by a court. Yes o  No
þ





As
      of
      August 1, 2005 the Issuer had approximately 51,320,343 shares of common stock,
      $0.001 par value per share outstanding. And as of March 31, 2008, the Issuer
      had
      approximately 83,635,961 shares of common stock, $0.001 par value per share
      outstanding.





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










**TABLE
        OF CONTENTS**


**Page
                Number****GLOSSARY
                AND ABBREVIATIONS**
            
            3**CURRENCY
                EXCHANGE RATES**
            
            5**CAUTIONARY
                STATEMENT REGARDING FORWARD-LOOKING INFORMATION**
            
            5**PART
                I**ITEM
                1.
            
            DESCRIPTION
                OF BUSINESS
            
            5General
                Overview
            
            5Business
                Development
            
            5Business
                of Issuer
            
            6*Overview*
            
            6*Operations*
            
            7*Recent
                Developments*
            
            8*Sales
                and Marketing*
            
            9*Research
                and Development*
            
            10*Competition*
            
            10*Canadian
                Government and Environmental Regulations*
            
            10*Employees*
            
            11*Royalty
                Agreements*
            
            11*Risk
                Factors*
            
            12Reports
                to Security Holders
            
            15ITEM
                2.
            
            DESCRIPTION
                OF PROPERTY
            
            15Office
                Leases
            
            15Oil
                & Gas Properties
            
            15*Acreage*
            
            15*Reserves,
                Production and Delivery Commitments*
            
            17*Drilling
                Activity*
            
            17*Present
                Activities*
            
            17ITEM
                3.
            
            LEGAL
                PROCEEDINGS
            
            19ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            22**PART
                II**ITEM
                5.
            
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            22Market
                Price Information for Common Stock
            
            23Holders
                of Record
            
            24Dividends
            
            24Equity
                Compensation Plan Information
            
            24Stock
                Option Plan
            
            24Sales
                of Unregistered Securities
            
            25ITEM
                6.
            
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            28**REPORT
                OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS**
            
            31ITEM
                7.
            
            CONSOLIDATED
                FINANCIAL STATEMENTSConsolidated
                Balance Sheet
            
            32Consolidated
                Statement of Operations
            
            33Consolidated
                Shareholders’ Equity
            
            34Consolidated
                Statement of Cash Flows
            
            35Notes
                to the Consolidated Financial Statements
            
            36ITEM
                8.
            
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            48ITEM
                8A.
            
            CONTROLS
                AND PROCEDURES
            
            48ITEM
                8B.
            
            OTHER
                INFORMATION
            
            49**PART
                III**ITEM
                9.
            
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT
            
            50ITEM
                10.
            
            EXECUTIVE
                COMPENSATION
            
            54ITEM
                11.
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            56ITEM
                12.
            
            CERTAIN
                RELATIONSHIP AND RELATED TRANSACTIONS
            
            57ITEM
                13.
            
            EXHIBITS
                AND REPORTS ON FORM 8-K
            
            58ITEM
                14.
            
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            61**SIGNATURES**
            
            62




2


**GLOSSARY
      AND ABBREVIATIONS**





The
      following are defined terms and abbreviations used herein:


**API** - a
        scale developed by the American Petroleum Institute for measuring the density
        or
        gravity (heaviness) of oil; the higher the number, the lighter the
        oil.
 
 **Barrel** - the
        common unit for measuring petroleum, including heavy oil. One barrel contains
        approximately 159 L
 
 **Battery** -
        equipment to process or store crude oil from one or more wells.
 
 **Bbl
        or Bbls** - means
        barrel or barrels.
 
 **Bitumen** - is a
        heavy, viscous form of crude oil, bitumen general has an API gravity of less
        than 10 degrees.
 
 **Cdn** - means
        Canadian dollars.
 
 **Celsius** - a
        temperature scale that registers the freezing point of water as 0 degrees
        and
        the boiling point as 100 degrees under normal atmospheric pressure. Room
        temperature is between 20 degrees and 25 degrees Celsius.
 
 **Cold
        Flow** - is a
        production technique where the oil is simply pumped out of the sands not
        using a
        Thermal Recovery Technique.
 
 **Conventional
        Crude Oil** - Crude
        oil that flows naturally or that can be pumped without being heated or
        diluted.
 
 **Core** - a
        cylindrical rock sample taken from a formation for geological
        analysis.
 
 **Crude
        Oil** - oil
        that has not undergone any refining. Crude oil is a mixture of hydrocarbons
        with
        small quantities of other chemicals such as sulphur, nitrogen and oxygen.
        Crude
        oil varies radically in its properties, namely specific gravity and
        viscosity.
 
 **Cyclic
        Steam Stimulation** (hereinafter referred to as “CSS”) - is a thermal in situ recovery method, which
        consists of a three-stage process involving high-pressure steam injected
        into
        the formation for several weeks. The heat softens the oil while the water
        vapor
        helps to dilute and separate the oil from the sand grains. The pressure also
        creates channels and cracks through which the oil can flow easier to the
        well.
        When a portion of the reservoir is thoroughly saturated, the steam is turned
        off
        and the reservoir “soaks” for several weeks. This is followed by the production
        phase, when the oil flows, or is pumped, up the same wells to the surface.
        When
        production rates decline, another cycle of steam injection begins. This process
        is sometimes called “huff-and-puff” recovery.
 
 **Darcy
        (Darcies)** -
        a
        measure of rock permeability (i.e., the degree to which natural gas and crude
        oil can move through the rocks).
 
 **Density** -
        the
        heaviness of crude oil, indicating the proportion of large, carbon-rich
        molecules, generally measured in kilograms per cubic metre (kg/m3) or degrees
        on
        the American Petroleum Institute (API) gravity scale.
 
 **Development
        Well** - is a
        well drilled within the proved area of a natural gas or oil reservoir to
        the
        depth of a stratigraphic horizon known to be productive.
 
 **Diluents** -
        light
        petroleum liquids used to dilute bitumen and heavy oil so they can flow through
        pipelines.
 
 **Drill
        Stem Test (DST)** -
        a
        method of formation testing. The basic drill stem test tool consists of a
        packer
        or packers, valves or ports that may be opened and closed from the surface,
        and
        two or more pressure-recording devices. The tool is lowered on the drill
        string
        to the zone to be tested. The packer or packers are set to isolate the zone
        from
        the drilling fluid column.
 
 **Drill
        String** - the
        column, or string, of drill pipe with attached tool joints that transmits
        fluid
        and rotational power from the kelly to the drill collars and the bit. Often,
        the
        term is loosely applied to include both drill pipe and drill
        collars.
 
 **Enhanced
        Oil Recovery** - any
        method that increases oil production by using techniques or materials that
        are
        not part of normal pressure maintenance or water flooding operations. For
        example, natural gas can be injected into a reservoir to “enhance” or increase
        oil production.
 
 **Exploratory
        Well** - is a
        well drilled to find and produce natural gas or oil in an unproved area,
        to find
        a new reservoir in a field previously found to be productive of natural gas
        or
        oil in another reservoir, or to extend a known reservoir.
 
 **Farmout** - an
        arrangement whereby the owner (the “Farmor”) of a lease assigns some portion (or
        all) of the lease(s) to another company (the “Farmee”) for drilling in return
        for the Farmee paying for the drilling on at least some portion of the lease(s)
        under the Farmout.
 
 3
 **Gross
        Acre/Hectare** - a
        gross acre is an acre in which a working interest is owned. 1 acre = 0.404685
        hectares.
 
 **Heavy
        Oil** - oil
        having an API gravity less than 22.3 degrees.
 
 **Horizontal
        Well** - the
        drilling of a well that deviates from the vertical and travels horizontally
        through a producing layer.
 
 **In
        situ** - In the
        Oil Sands context, *In
        situ* methods, *In
        situ* means
“in place” in Latin, such as SAGD or CSS through horizontal or vertical wells
        are required if the oil sands deposits are too deep to mine from the
        surface.
 
 **Lease** - a
        legal document giving an operator the right to drill for or produce oil or
        gas;
        also, the land on which a lease has been obtained.
 
 **Light
        Crude Oil** - liquid
        petroleum which has a low density and flows freely at room temperature. Also
        called conventional oil, has an API gravity of at least 22 degrees and a
        viscosity less than 100 centipoise (cP).
 
 **Net
        Acre/Hectare** - a net
        acre is the result that is obtained when fractional ownership working interest
        is multiplied by gross acres.
 
 **Oil
        Sands** - are
        naturally occurring mixtures of bitumen, water, sand and clay that are found
        mainly in three areas of Alberta - Athabasca, Peace River and Cold Lake.
        A
        typical sample of oil sand might contain about 12 percent bitumen by
        weight.
 
 **Pay
        Zone (Net Oil Pay)** - the
        producing part of a formation.
 
 **Permeability** - the
        capacity of a reservoir rock to transmit fluids; how easily fluids can pass
        through a rock. The unit of measurement is the darcy or millidarcy.
 
 **Porosity** - the
        capacity of a reservoir to store fluids, the volume of the pore space within
        a
        reservoir, measured as a percentage.
 
 **Primary
        Recovery** - the
        production of oil and gas from reservoirs using the natural energy available
        in
        the reservoirs and pumping techniques.
 
 **Saturation** - the
        relative amount of water, oil and gas in the pores of a rock, usually as
        a
        percentage of volume.
 
 **SEC** - means
        United States Securities and Exchange Commission.
 
 **Section** - in
        reference to a parcel of land, means an area of land comprising approximately
        640 acres.
 
 **Solution
        Gas** -
        natural gas that is found with crude oil in underground reservoirs. When
        the oil
        comes to the surface, the gas expands and comes out of the
        solution.
 
 **Steam-Assisted
        Gravity Drainage (SAGD)** - pairs
        of horizontal wells (an upper well and a lower well) are drilled into an
        oil
        sands formation and steam is injected continuously into the upper well. As
        the
        steam heats the oil sands formation, the bitumen softens and drains into
        the
        lower well, from which it is produced to the surface.
 
 **Thermal
        Recovery** - a
        type of
        improved recovery in which heat is introduced into a reservoir to lower the
        viscosity of heavy oils and to facilitate their flow into producing wells.
        The
        pay zone may be heated by injecting steam (steam drive) or by injecting air
        and
        burning a portion of the oil in place (in situ combustion).
 
 **Upgrading** - the
        process that converts bitumen and heavy oil into a product with a density
        and
        viscosity similar to conventional light crude oil.
 
 **Viscosity** - is a
        measure of a fluids resistance to flow. To simplify, the oil’s viscosity
        represents the measure for which the oil wants to stay put when pushed (sheared)
        by moving mechanical components. It varies greatly with temperature. The
        more
        viscous the oil the greater the resistance and the less easy it is for it
        to
        flow. Centipoise (cp) is the common unit for expressing absolute viscosity.
        Viscosity matters to producers because the oil’s viscosity at reservoir
        temperature determines how easily oil flows to the well for
        extraction.
  4


**CURRENCY
      EXCHANGE RATES**





Our
      functional currency is the US dollar therefore our accounts are reported in
      United States dollars. However, our Canadian subsidiaries maintain their
      accounts and records in Canadian currency (“Cdn”). Therefore, all dollar amounts
      herein are stated in United States dollars except where otherwise
      indicated.





The
      following table sets forth the rates of exchange for Canadian dollars per
      US$1.00 in effect at the end of the following periods and the average rates
      of
      exchange during such periods, based on the Bank of Canada average noon spot
      rate
      of exchange.





**Year**
            
            **2007**
            
            **2006**
            
            **2005**
            
            **2004**Rate
                at end of year
            
            $
            1.0037
            
            $
            1.1153
            
            $
            1.1611
            
            $
            1.2639Average
                rate for the year
            
            $
            1.1132
            
            $
            1.1425
            
            $
            1.2231
            
            $
            1.3251





Unless
      the context indicates another meaning, the terms the “Company”, “we”, “us” and
“our” refer to Deep Well Oil & Gas, Inc. and its subsidiaries. For
      definitions of some terms used throughout this report, see “Glossary and
      Abbreviations”.





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**





This
      Annual Report Form 10-KSB, including all referenced exhibits, may contain
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
      1934,
      as amended. All statements other than statements of historical facts included
      or
      incorporated by reference in this report, including, without limitation,
      statements regarding our future financial position, business strategy, projected
      costs and plans and objectives of management for future operations, are
      forward-looking statements. In addition, forward-looking statements generally
      can be identified by the use of forward-looking terminology such as “may,”
“will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,”
“plan”, “future”, “strategy”, or “continue”, or the negative thereof or
      variations thereon or similar terminology. Although we believe that the
      expectations reflected in such forward-looking statements are reasonable, it
      can
      give no assurance that such expectations will prove to have been correct.
      Various factors could cause actual results to differ materially from those
      expressed in the forward-looking statements, including those described in,
      but
      not limited to “Risk Factors” in this Form 10-KSB. We caution readers not to
      place reliance on such statements. Unless otherwise required by applicable
      law,
      we assume no obligations to update these forward-looking statements to reflect
      actual results, changes in assumptions, or changes in other factors.





**PART
      I**




**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





**General
      Overview**





We
      are an
      emerging independent junior oil and gas exploration and development company
      headquartered in Edmonton, Alberta, Canada. Our immediate corporate focus is
      to
      develop the existing land base that it presently owns in the Peace River Oil
      Sands area in North Central Alberta. Our principal office is located at 510
      Royal Bank Building, 10117 Jasper Avenue, Edmonton, Alberta T5J 1W8, our
      telephone number is (780) 409-8144 and our fax number is (780) 409-8146. Deep
      Well Oil & Gas, Inc. is a Nevada corporation and trades on the pink sheets
      under the symbol DWOG. We maintain a website at
      www.deepwelloil.com.





**Business
      Development**





Deep
      Well
      Oil & Gas, Inc. (hereinafter referred to as “Deep Well”) was originally
      incorporated on July 18, 1988 under the laws of the state of Nevada as Worldwide
      Stock Transfer, Inc. On October 25, 1990, Worldwide Stock Transfer, Inc. changed
      its name to Illustrious Mergers, Inc. On June 18, 1991, a company known as
      Allied Devices Corporation was merged with and into Illustrious Mergers, Inc.,
      and its name was at that time changed to Allied Devices Corporation. On August
      19, 1996 a company called Absolute Precision, Inc., was merged with and into
      Allied Devices Corporation and it retained its name as Allied Devices
      Corporation.





On
      February 19, 2003 Deep Well’s Predecessor Company, Allied Devices Corporation,
      filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in
      the
      United States Bankruptcy Court in and for the Eastern District of New York
      titled *In
      re: Allied Devices Corporation, et al* .,
      Chapter 11, Case No. 03-80962-511 (“the Bankruptcy Action”).





5


On
      September 10, 2003 after notice to all creditors and a formal hearing, U.S.
      Bankruptcy Judge Melanie L. Cyganowski issued an “Order Confirming Liquidating
      Plan of Reorganization” in the Bankruptcy Action (hereinafter referred to as
“Bankruptcy Order”). In conjunction with that Bankruptcy Order, Allied Devices
      Corporation’s (herein after referred to as the “Predecessor Company”)
      liabilities, among other things, were paid off and extinguished. The Bankruptcy
      Order, among other things, implemented a change of control and a group of new
      investors took control of the Predecessor Company and changed its name to Deep
      Well Oil and Gas, Inc.





Upon
      emergence from Chapter 11 proceedings, Deep Well adopted fresh-start reporting
      in accordance with the American Institute of Certified Public Accountants
      Statement of Position 90-7, Financial Reporting By Entities in Reorganization
      Under the Bankruptcy Code (SOP 90-7). For financial reporting purposes, Deep
      Well adopted the provisions of fresh-start reporting effective September 10,
      2003. All periods presented prior to September 10, 2003, have been designated
      Predecessor Company.





On
      August
      18, 2004 Deep Well and Pan Orient Energy Corp. (formerly known as Maxen
      Petroleum Inc. hereinafter referred to as “Pan Orient”) jointly participated in
      a public offering of Crown Oil Sands Rights held by the Alberta Department
      of
      Energy, in which the joint parties successfully bid on 3 Peace River Oil Sands
      Development leases for a total of 31 sections covering 19,609 gross acres (7,936
      gross hectares). Deep Well acquired an undivided 80% working interest and Pan
      Orient acquired an undivided 20% working interest in the joint
      property.





On
      June
      7, 2005 Deep Well acquired 100% of the common shares of Northern Alberta Oil
      Ltd. (formerly known as Mikwec Energy Canada, Ltd., hereinafter referred to
      as
“Northern”) in exchange for 18,208,875 shares of Deep Well’s common stock. Under
      the terms of the agreement, Deep Well acquired one hundred percent (100%) of
      Northern’s issued and outstanding common stock and obtained exclusive options to
      acquire one hundred percent (100%) of Northern’s preferred stock. The agreement
      provided that one hundred percent (100%) of Northern’s common and preferred
      shareholders would exchange their Northern shares for newly issued shares of
      Deep Well’s restricted common stock. Deep Well, through its acquisition of
      Northern, acquired a net 80% working interest in 3 Peace River Oil Sands
      Development leases, 1 Oil Sands permit and 1 Petroleum and Natural Gas License
      for a total of 38.5 sections covering 24,354 gross acres (9,856 gross hectares).
      Through this acquisition we have more than doubled our acreage position in
      the
      Peace River Oil Sands to 43,964 gross acres (17,792 gross hectares). Of the
      total acreage, 6.5 sections are classified as the Oil Sands Permit and Petroleum
      and Natural Gas License and were held by an injunction related to a court
      proceeding involving Classic Energy Inc., (hereinafter referred to as
“Classic”), the company Northern acquired this acreage from. The permit and
      license have now been released and as of November 15, 2005 were transferred
      to
      Northern.





On
      June
      29, 2005 pursuant to the authority contained in the Nevada Revised Statutes
      and
      Section 3.11 of the Bylaws of our Company, a new Board of Directors was elected
      by written consent of a majority of shareholders. The newly elected Board of
      Directors are Dr. Horst A. Schmid, Mr. Cyrus Spaulding, and Mr. Donald E. H.
      Jones.





On
      June
      29, 2005 Mr. Curtis Sparrow was added back to the Board of Directors. At this
      time Dr. Horst A. Schmid replaced Mr. Steven P. Gawne as Chief Executive Officer
      and President, Mr. Curtis Sparrow continued as Corporate Secretary, Treasurer
      and Chief Financial Officer of Deep Well.





On
      September 15, 2005 Deep Well Oil & Gas (Alberta) Ltd. (hereinafter referred
      to as “Deep Well Alberta”) a 100% wholly owned subsidiary company of Deep Well,
      was incorporated in the province of Alberta, Canada. Deep Well Alberta was
      incorporated in order to hold Deep Well’s Canadian oil sands leases other than
      the oil sands leases already held by Northern. At the time Deep Well owned
      100%
      of the 6,069,625 issued common shares of Northern but not the preferred shares
      of Northern. However, on June 7, 2005, the day Deep Well acquired the common
      shares of Northern, Deep Well entered into option agreements with the preferred
      shareholders of Northern to acquire 100% of the 432,500 Northern preferred
      shares in exchange for Deep Well shares. Deep Well acquired the last of the
      preferred shares of Northern on April 4, 2007, resulting in Northern now being
      a
      wholly owned subsidiary of Deep Well.





On
      April
      2, 2006 the directors of Deep Well added Mr. David Roff to the Board of
      Directors. Mr. Roff accepted the position on April 3, 2006. Mr. Roff was
      formerly the President and sole Director of Deep Well from September 10, 2003
      until his resignation on February 6, 2004.





**Business
      of Issuer**





***Overview***





At
      this
      time, our primary interest is the exploration for and production of oil in
      the
      Peace River Oil Sands area located in North Central Alberta, Canada. We are
      engaged in the identification, acquisition, exploration and development of
      oil
& gas prospects. Our immediate focus is the leases and permits we hold in
      the Peace River Oil Sands area. Our main objective is to develop our existing
      land holdings as well as identify and develop other commercially viable oil
      & gas properties. Exploration and development for commercially viable
      production of any oil and gas company includes a high degree of risk which
      careful evaluation, experience and factual knowledge may not
      eliminate.





6


***Operations***





Sawn
      Lake
      Heavy Oil Sands Project:





We
      currently own an 80% working interest in 51 contiguous sections of oil sands
      development leases, a 40% working interest in an additional 12 sections of
      oil
      sands development leases and an 80% working interest in 6.5 sections of oil
      sands permits in the Sawn Lake heavy oil area in North Central Alberta. The
      leases and permits cover 43,964 gross acres (17,792 gross hectares). Because
      of
      the earlier exploration for conventional crude oil, other operators targeting
      the deeper Slave Point Formation have previously drilled in some areas of our
      lands. We were able to benefit from data collected by others pertaining to
      the
      drilling of more than seventy-five wells that penetrated and partially
      delineated the heart of the Bluesky Formation heavy oil reservoir.





On
      April
      26, 2004 Northern signed a Joint Operating Agreement with Pan Orient to provide
      for the manner of conducting operations on 3 Peace River oil sands development
      leases, totaling 32 sections. The 32 sections were acquired jointly on April
      23,
      2004, with Northern having an 80% working interest and Pan Orient having a
      20%
      working interest in the joint lands.





On
      December 9, 2004 Deep Well signed a Joint Operating Agreement with 1132559
      Alberta Ltd. (hereinafter referred to as “1132559”) under which 1132559
      acknowledged the terms under which their 10% working interest acquired from
      Pan
      Orient, in the joint lands covering 3 Peace River oil sands development leases
      totaling 31 sections, would be governed.





On
      February 25, 2005 Deep Well and Northern signed a Farmout Agreement (hereinafter
      referred to as the “Farmout Agreement”) with Surge Global Energy, Inc.
      (hereinafter referred to as “Surge US”) and Signet Energy Inc. (formerly known
      as Surge Global Energy Canada Ltd., and hereinafter referred to as “Signet”)
      (collectively, “Surge”). Signet subsequently merged with 1350826 Alberta Ltd. a
      wholly owned subsidiary of Andora Energy Corporation, which in turn is a
      subsidiary of Pan Orient, hereinafter referred to as “Andora”). This agreement
      allowed Surge to earn up to a 40% working interest in the farmout lands (50%
      of
      our share). Among other things the agreement called for Surge to drill 10 wells,
      pay $2,000,000 (less expenses related to a financing) as a prospect fee, payable
      as ninety percent (90%) to Northern and ten percent (10%) to Deep Well, and
      grant us, in the same proportions, 33.33% of the shares of Surge US outstanding
      on the day the agreement was signed. On February 28, 2005 Deep Well, Northern
      and Surge, also agreed that Deep Well would be responsible for the portion
      of
      the 6.5% royalty payable by Surge, if any, on lands earned under the February
      25, 2005 Farmout Agreement. This liability could arise by virtue of a royalty
      agreement between Northern and Nearshore Petroleum Corporation (hereinafter
      referred to as “Nearshore”) dated December 12, 2003. And on February 28, 2005
      Nearshore, Northern and Surge, mutually agreed that an area of exclusion between
      Nearshore and Northern was terminated effective February 17, 2005 since the
      area
      of exclusion could interfere with the area of mutual interest provisions in
      the
      Farmout Agreement with Surge. Nearshore is a private corporation incorporated
      in
      Alberta, Canada, and is owned and controlled by Mr. Steven P. Gawne and his
      wife, Mrs. Rebekah J. Gawne, who each own 50%. Mr. Steven P. Gawne was formerly
      the President, Chief Executive Officer and Director of Deep Well Oil & Gas,
      Inc. from February 6, 2004 to June 29, 2005. This obligation of our Company
      was
      further modified on November 26, 2007 where we would not be liable or obligated
      to pay any of this portion of the royalty due, if any, on the portion of the
      royalty acquired by Andora. Also on November 26, 2007 we entered into an
      agreement that, in addition to addressing other issues, terminated the Farmout
      Agreement and decided the final resolution all that Signet earned from us under
      the Farmout Agreement.





On
      March
      3, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending
      agreement to extend the payment of the prospect fee under Article 13 of the
      Farmout Agreement dated February 25, 2005, whereby Surge was granted an
      extension for payment of the prospect fee to the closing date of March 18,
      2005.





On
      March
      10, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending
      agreement that Surge US is only a party to the Farmout Agreement for the
      purposes of Article 14 of the Farmout Agreement dated February 25, 2005.





On
      March
      10, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending
      agreement to establish a procedure whereby Signet is to be appointed as the
      Operator under the Existing Joint Operating Agreements in respect of all Farmout
      Lands in which Signet earns an interest pursuant to Article 7 of the Farmout
      Agreement dated February 25, 2005.





On
      July
      14, 2005 our Company and Surge mutually agreed to amend the Farmout Agreement
      dated February 25, 2005, to extend the date to spud the first well until
      September 25, 2005.





7


On
      September 21, 2005 Signet was issued a permit by the Energy Resources
      Conservation Board (hereinafter referred to as “ERCB”) for a test well and on
      September 28, 2005, Signet, began drilling our first well 1-36-091-13W5
      (hereinafter referred to as “1-36”) at Sawn Lake, Alberta Canada. Signet did not
      spud the first well by the 25 th of
      September 2005 and we noted them in default of the Farmout
      Agreement.





On
      October 2005 the ERCB granted our farmout partner and operator, Signet, an
      amendment to the original test well permit at Sawn Lake, Alberta Canada, to
      proceed with the drilling of our first well at Sawn Lake.





On
      November 15, 2005 as part of the settlement of the litigation as described
      in
      this report we agreed to amend the Farmout Agreement signed on February 25,
      2005, between our Company and Surge that had previously been terminated by
      Deep
      Well (as previously disclosed on Form 8-K on September 29, 2005). The amendments
      to the agreement provided that; 1) all conditions of the Farmout Agreement
      will
      be deemed to have been satisfied on September 25, 2005; 2) the earning period
      (the period during which Signet has to drill 10 wells) under the agreement
      will
      be extended until February 25, 2008; 3) Signet will have until September 25,
      2006 to drill an option well (the second well); 4) an additional 6.5 sections
      of
      land will be added to the land subject to the agreement; 5) Signet will pay
      Deep
      Well $1,000,000 on November 15, 2005 in satisfaction of the prospect fee
      outstanding instead of after drilling the second well as stated in the Farmout
      Agreement; and 6) no shares of Surge US will be issued to Deep Well or Northern,
      instead we will receive 7,550,000 common shares of Signet, a private subsidiary
      company of Surge US.





On
      July
      17, 2006 Signet had been issued the required licenses by the Government of
      Alberta to drill the next 3 horizontal wells in the Bluesky Formation of the
      Sawn Lake Heavy Oil Sands project. The next 3 wells to be drilled are within
      less than one mile (1.6 km) of the first test well already drilled. These
      surface locations were 4-32-091-12W5 (hereinafter referred to as “4-32”),
      7-30-091-12W5 (hereinafter referred to as “7-30”) and 13-29-091-12W5
      (hereinafter referred to as “13-29”). Seismic and reservoir mapping were
      undertaken to be used to support and progress work on near and long term plans
      of development for the Sawn Lake heavy oil project. For further information
      on
      drilling and results see “Present Activities” under Item 2 “Oil and Gas
      Properties” herein described in this report.





In
      October 2006 the 4-32 and 7-30 wells along with the 1-36 well were suspended.
      Signet had undertaken a mapping of the reservoir to assist in its delineation
      for any future development of the Sawn Lake property. The first three wells
      were
      drilled in the most heavily documented portion of the Sawn Lake lands. Although,
      as indicated by Signet, the preliminary results from the last 2 wells indicated
      a lack of cold flow production from well 4-32 and 7-30, the compartmentalized
      nature of the reservoir and varying characteristics of these compartments may
      show different results with further evaluation. Our Company felt that the level
      of testing on these wells to determine their complete potential was deficient.





On
      December 16, 2006 Signet’s right to earn additional interest in the Sawn Lake
      acreage from our Company had expired, based on our Company not receiving notice
      from Signet to drill the next option well. In December 2006 we notified Signet
      that it was disputing Signet earning an additional 12 sections, as a result
      of
      drilling the 4-32 and 7-30 wells, because Signet failed to properly complete
      the
      wells by not conducting the production testing as reasonably required under
      the
      Farmout Agreement. The Farmout Agreement states that the sustained production
      test must be of sufficient duration to establish to the Farmor’s reasonable
      satisfaction the initial productivity of the earning well. Signet’s view is that
      it has earned an additional 12 sections pursuant to the terms of the Farmout
      Agreement. These additional 12 sections are subject to selection in accordance
      with the provisions of the Farmout Agreement.





***Recent
      Developments since the last 10-KSB filed on February 23,
      2007***





We
      completed 3 private placements in the fiscal year 2007. For a description of
      these transactions, see “Sales of Unregistered Securities” under Item 5
      herein.





On
      September 7, 2007, the claims of Star Capital Inc. against us were dismissed
      in
      their entirety pursuant to an Order granted by the court. Star Capital Inc.’s
      claims were originally filed with the Court of Queen’s Bench of Alberta in the
      Judicial District of Calgary pursuant to an Originating Notice of Motion which
      was filed on December 21, 2006 and a Amended Originating Notice which was filed
      on March 29, 2007 against Deep Well, Deep Well Alberta, Northern and some of
      the
      directors of Deep Well and its subsidiaries in addition to other individuals
      as
      set out in its Amended Originating Notice. An Amending Agreement and Mutual
      General Release was later implemented by the parties. Subsequent to this
      Amending Agreement and Mutual General Release, Star Capital Inc. filed an
      additional Originating Notice of Motion on February 26, 2008. The settlement
      of
      this further claim was completed in March of 2008, whereby the parties agreed
      upon a Full and Final Mutual Release.





8


On
      September 11, 2007, we exercised our dissenting rights at Signet’s special
      meeting of shareholders held in Calgary, Alberta with respect to the
      amalgamation between Signet and Andora. Our Company reserves its right to file
      a
      Notice of Motion with the Court of Queen’s Bench of Alberta, Canada as a step
      towards enforcing our rights to dissent.





On
      October 1, 2007, we entered into a Consulting Agreement, effective September
      20,
      2007, with R.N. Dell Energy Ltd. whose primary consultant is Mr. Edward A.
      Howard, to assist us in the further exploitation and development of Deep Well’s
      Sawn Lake project. Mr. Howard, a Geologist and Palynologist has over 40 years
      of
      heavy oil experience. Most recently Mr. Howard was Vice President Exploration
      and Development for Signet (recently acquired by Andora). Signet was the Farmee
      which had the right to earn acreage from Deep Well. Signet’s rights, under the
      Farmout Agreement to drill to earn more acreage, has since expired and as of
      November 26, 2007 the Farmout Agreement has been terminated. At Signet Mr.
      Howard was responsible for the planning and execution of the Sawn Lake drilling
      program. Mr. Howard has also worked with several companies in the heavy oil
      sector including Sceptre Resources (taken over by CNRL) at their Tangleflags
      field and Shell Canada at their Peace River Project. Mr. Howard was credited
      with the discovery and early development of the first successful Steam Assisted
      Gravity Drainage heavy oil extraction project for Sceptre at the Tangleflags
      field. While at Shell from 1967 to 1977 Mr. Howard was instrumental in
      developing Shell’s Peace River strategy from the early inception through to the
      Pilot Plant stage. This project continues to be one of the most successful
      in
      situ oil sands producers. Also Mr. Howard has implemented noteworthy Cyclical
      Stream Simulation projects in Alberta. Some of these projects have proven to
      increase primary and secondary recovery by 50% - 60%. Mr. Howard’s extensive
      experience with the primary and secondary recovery of heavy oil as well as
      his
      direct knowledge of the Peace River oil sands area, specifically the Sawn Lake
      project will be a great benefit to Deep Well.





On
      October 15, 2007, we entered into a Consulting Agreement with Picoplat
      Consulting Inc. whose primary consultant is Mr. Ferdinand Brathwaite to assist
      us in the exploitation and development of Deep Well’s Sawn Lake project. Mr.
      Ferdinand Brathwaite is an Engineering Technologist, who has substantial
      knowledge and expertise related to oil and gas recovery in the Western
      Sedimentary Basin.





On
      November 26, 2007, we entered into mediation with Signet and resolved our
      differences and certain collateral matters. The settlement included but is
      not
      limited to:





·
            the
                Farmout Agreement dated February 25, 2005, being effectively terminated
                concurrently with the execution of the settlement agreement;





·
            Signet
                being regarded as having earned the two sections on which the option
                wells
                were drilled and 4 additional sections as set out in the Settlement;





·
            Signet
                being required to reconvey registered title to 57.5 unearned sections
                of
                the Farmout Lands, as defined in the Farmout Agreement, back to us;
                and





·
            our
                Company having the right to retest, at no cost to Signet, the option
                wells
                previously drilled.





On
      April
      2, 2008, our Company participated in a public offering of Crown Petroleum and
      Natural Gas Rights held by the Alberta Department of Energy, in which the
      Company successfully bid on 1 Petroleum and Natural Gas Rights parcel covering
      3,795 gross acres (1,536 gross hectares) for a total of 6 sections in the Ochre
      area. Our Company acquired an undivided 100% working interest in these 6
      sections located in the Peace River Oil Sands area approximately 14 miles west
      of our Sawn Lake properties, increasing our land holdings in the Peace River
      Oil
      Sands area by 8%.





On
      April
      4, 2008, the Company commenced a lawsuit against Tamm Oil and Gas Corp.
      (hereinafter referred to as “Tamm”). Our Company filed a Complaint with the
      United States District Court for the District of Nevada alleging that Tamm
      has
      violated United States federal and Nevada state law in connection with Tamm’s
      recent public statements and activities related to our Company, its operations
      and the ownership of its common shares. On April 7, 2008, our Company issued
      a
      press release with respect to the commencement of the lawsuit and an 8-K was
      also filed on April 10, 2008.





***Sales
      and Marketing***





As
      we
      remain in the exploration stage, we have not yet generated any revenues, nor
      do
      we have any customers at this time. The principal target customers for our
      crude
      oil production are expected to be refiners, remarketers and other companies,
      some of which have pipeline facilities near our properties. In the event
      pipeline facilities are not conveniently available, we intend to truck our
      oil
      to alternative storage, refining or pipeline facilities.





Market
      pricing for bitumen is seasonal with lower prices in and around the calendar
      year-end being the norm due to lower demand for asphalt and other bitumen
      derived products. By necessity, bitumen is regularly blended with diluent in
      order to facilitate its transportation via pipeline to North American markets.
      As such, the effective field price for bitumen is also directly impacted by
      the
      input cost of the diluent required, the demand and price of which is also
      seasonal in nature (higher in winter as colder temperatures necessitate more
      diluent for transportation). Consequently, bitumen pricing is notoriously weak
      in and around December 31 and not reflective of the annual average realized
      price or the economics of the “business” overall. We have been advised that, to
      price bitumen, marketers apply formulas that take as a reference point the
      prices published for crude oil of particular qualities such as “Edmonton light”,
“Lloydminster blend”, or the more internationally known “West Texas
      Intermediate” (hereinafter referred to as WTI). We also understand that the
      price of bitumen fluctuates widely during the course of a year, with the lowest
      prices typically occurring at the end of the calendar year because of decreased
      seasonal demand for asphalt and other bitumen-derived products coupled with
      higher prices for diluents added to facilitate pipeline transportation of
      bitumen.





9


We
      intend
      to sell our oil and gas production under both short-term (less than one year)
      and long-term (one year or more) agreements at prices negotiated with third
      parties. Under both short-term and long-term contracts, typically either the
      entire contract (in the case of short-term contracts) or the price provisions
      of
      the contract (in the case of long-term contracts) are renegotiated from
      intervals ranging in frequency from daily to annual.





We
      will
      adopt specific sales and marketing plans once production is
      achieved.





***Research
      and Development***





We
      had no
      material research and development costs for the fiscal years ended September
      30,
      2005 and 2004.





***Competition***





We
      operate in a highly competitive environment, competing with major integrated
      and
      independent energy companies for desirable oil and natural gas properties,
      as
      well as for the equipment, labour and materials required to develop and operate
      those properties. Many of our competitors have longer operating histories and
      substantially greater financial and other resources greater than ours. Many
      of
      these companies not only explore for and produce crude oil and natural gas,
      but
      also carry on refining operations and market petroleum and other products on
      a
      worldwide basis. Our larger competitors, by reason of their size and relative
      financial strength, can more easily access capital markets than we can and
      may
      enjoy a competitive advantage, whereas we may incur higher costs or be unable
      to
      acquire and develop desirable properties at costs we consider reasonable because
      of this competition. Larger competitors may be able to absorb the burden of
      any
      changes in laws and regulation in the jurisdictions in which we do business
      and
      handle longer periods of reduced prices of gas and oil more easily than we
      can.
      Our competitors may be able to pay more for productive oil and natural gas
      properties and may be able to define, evaluate, bid for and purchase a greater
      number of properties and prospects than we can. Our ability to acquire
      additional properties in the future will depend upon our ability to conduct
      efficient operations, evaluate and select suitable properties, implement
      advanced technologies and consummate transactions in a highly competitive
      environment.





Competitive
      conditions may be substantially affected by various forms of energy legislation
      and/or regulation considered from time to time by the government of Canada
      and
      other countries, as well as factors that we cannot control, including
      international political conditions, overall levels of supply and demand for
      oil
      and gas, and the markets for synthetic fuels and alternative energy sources.





***Canadian
      Government and Environmental Regulations***





Our
      Business is Governed by Numerous Laws and Regulations at Various Levels of
      Government .
      These
      laws and regulations govern the operation and maintenance of our facilities,
      the
      discharge of materials into the environment and other environmental protection
      issues. Under these laws and regulations, we could be liable for personal
      injury, clean-up costs and other environmental and property damages, as well
      as
      administrative, civil and criminal penalties. Our operator of the properties
      with activity on them maintains limited insurance coverage. We as operator
      will
      acquire insurance coverage on properties in which it intends to have activity
      on. Accordingly, we could be liable, or could be required to cease production
      on
      properties, if environmental damage occurs. The costs of complying with
      environmental laws and regulations in the future may harm our business.
      Furthermore, future changes in environmental laws and regulations could occur
      that result in stricter standards and enforcement, larger fines and liability,
      and increased capital expenditures and operating costs, any of which could
      have
      a material adverse effect on our financial condition or results of
      operations.





Exploration
      and Production. Our
      operations are subject to federal and provincial governmental regulations.
      Such
      regulations include requiring licenses for the drilling of wells, regulating
      the
      location of wells and the method and ability to produce wells, surface usage
      and
      the restoration of land upon which wells have been drilled, the plugging and
      abandoning of wells and the transportation of production from wells. Our
      operations are also subject to various conservation regulations, including
      the
      regulation of the size of spacing units, the number of wells which may be
      drilled in a unit, the unitization or pooling of oil and gas properties, the
      rate of production allowable from oil and gas wells, and the ability to produce
      oil and gas.





10


Royalties
      and Incentives. Each
      province and the federal government of Canada have legislation and regulations
      governing land tenure, royalties, production rates and taxes, environmental
      protection and other matters under their respective jurisdictions. The royalty
      regime is a significant factor in the profitability of oil and natural gas
      production. Royalties payable on production from lands other than Crown lands
      are determined by negotiations between the parties. Crown royalties are
      determined by government regulation and are generally calculated as a percentage
      of the value of the gross production with the royalty rate dependent in part
      upon prescribed reference prices, well productivity, geographical location,
      field discovery date and the type and quality of the petroleum product produced.
      From time to time, the governments of Canada, Alberta, British Columbia and
      Saskatchewan have also established incentive programs such as royalty rate
      reductions, royalty holidays and tax credits for the purpose of encouraging
      oil
      and natural gas exploration or enhanced recovery projects. These incentives
      generally increase cash flow. See new Alberta Royalty Regime under “Risk
      Factors” of this report.





Pricing
      and Marketing. The
      price of oil, natural gas and NGLs sold is determined by negotiation between
      buyers and sellers. An order from the National Energy Board (hereinafter
      referred to as “NEB”) is required for oil exports from Canada. Any oil export to
      be made pursuant to an export contract of longer than one year, in the case
      of
      light crude, and two years, in the case of heavy crude, requires an exporter
      to
      obtain an export license from the NEB. The issue of such a license requires
      the
      approval of the Government of Canada. Natural gas exported from Canada is also
      subject to similar regulation by the NEB. Natural gas exports for a term of
      less
      than two years, or for a term of two to twenty years in quantities of not more
      than 20,000 Mcf per day, must be made pursuant to an NEB order. Any natural
      gas
      exports to be made pursuant to a contract of larger duration (to a maximum
      of 25
      years) or in larger quantities require an exporter to obtain a license from
      the
      NEB, which requires the approval of the Government of Canada. Exporters are
      free
      to negotiate prices and other terms with purchasers, provided that the export
      contracts meet certain criteria prescribed by the NEB. The governments of
      Alberta, British Columbia and Saskatchewan also regulate the volume of natural
      gas, which may be removed from those provinces for consumption elsewhere based
      on such factors as reserve availability, transportation arrangements and market
      considerations.





Environmental
      Regulation *.* The oil
      and natural gas industry is subject to environmental regulation pursuant to
      local, provincial and federal legislation. Environmental legislation provides
      for restrictions and prohibitions on releases or emissions of various substances
      produced or utilized in association with certain oil and gas industry
      operations. In addition, legislation requires that well and facility sites
      be
      monitored, abandoned and reclaimed to the satisfaction of provincial
      authorities. A breach of such legislation may result in the imposition of fines
      and penalties. We are committed to meeting our responsibilities to protect
      the
      environment and anticipate making increased expenditures of both a capital
      and
      expense nature as a result of the increasingly stringent laws relating to the
      protection of the environment.





The
      North American Free Trade Agreement *.* The
      North American Free Trade Agreement (hereinafter referred to as “NAFTA”) grants
      Canada the freedom to determine whether exports to the United States or Mexico
      will be allowed. In making this determination, Canada must ensure that any
      export restrictions do not (i) reduce the proportion of energy exported relative
      to the supply of the energy resource; (ii) impose an export price higher than
      the domestic price; or (iii) disrupt normal channels of supply. All parties
      to
      NAFTA are also prohibited from imposing minimum export or import price
      requirements.





Investment
      Canada Act .
      The *Investment Canada Act* requires
      notification and/or review by the Government of Canada in certain cases,
      including but not limited to, the acquisition of control of a Canadian Business
      by a non-Canadian. In certain circumstances, the acquisition of a working
      interest in a property which contains recoverable reserves will be treated
      as
      the acquisition of an interest in a “business”, and may be subject to either
      notification or review, depending on the size of the interest being acquired
      and
      the asset size of the business.





***Employees***





We
      currently have two full time employees, three part time office staff and five
      prime subcontractors. For
      further information on our subcontractors see “Compensation Arrangements for
      Executive Officers” under item 10 “Executive Compensation” herein described in
      this report. We
      expect
      to hire from time to time more employees, independent consultants and
      contractors during the stages of implementing our plans.





***Royalty
      Agreements***





Through
      the acquisition of Northern, our Company became a party to the following royalty
      agreement:




On
        December 12, 2003 Nearshore entered into a Royalty Agreement with Northern
        which
        potentially encumbers 3 oil sands development leases and 1 oil sands Permit
        located within our Sawn Lake properties. Nearshore claims a 6.5% gross
        overriding royalty from Northern on the leased substances on the land interests
        in which Northern holds in the above 3 Leases and permit. Nearshore is a
        private
        corporation incorporated in Alberta, Canada, and is owned and controlled
        by Mr.
        Steven P. Gawne and his wife, Mrs. Rebekah J. Gawne, who each own 50% of
        Nearshore. Mr.
        Steven P. Gawne was formerly the President, Chief Executive Officer and Director
        of Deep Well Oil & Gas, Inc. from February 6, 2004 to June 29,
        2005.





11


***Risk
      Factors***





*An
      investment in our common stock is speculative and involves a high degree of
      risk
      and uncertainty. You should carefully consider the risks described below,
      together with the other information contained in our reports filed with the
      SEC,
      including the consolidated financial statements and notes thereto of our
      Company, before deciding to invest in our common stock. The risks described
      below are not the only ones facing our Company. Additional risks not presently
      known to us or that we presently consider immaterial may also adversely affect
      our Company. If any of the following risks occur, our business, financial
      condition and results of operations and the value of our common stock could
      be
      materially and adversely affected.*





Any
      Development Of Our Resource Will Be Directly Affected By The New Royalty Regime
      For Alberta .
      In
      October 2007, the Government of Alberta unveiled a new royalty regime. Under
      the
      new royalty regime, the Government of Alberta will increase its royalty share
      from oil sands development by introducing price-sensitive formulas both pre-
      and
      post-payout, rather than implementing an industry-wide tax on oil sands
      production. The base royalty will start at one per cent of gross bitumen revenue
      and will increase for every dollar the world oil price, as reflected by West
      Texas Intermediate (WTI) crude oil price, is priced above $55 per barrel, to
      a
      maximum of nine per cent when oil is priced at Cdn$120 or higher. The net
      royalty on oil sands will start at 25 percent and increase for every dollar
      the
      WTI crude oil is priced above Cdn$55 per barrel to 40 percent when the WTI
      crude
      oil is priced at Cdn$120 or higher. The government plans to adopt a permanent
      generic “bitumen valuation methodology” by June 30, 2008, after consulting with
      stakeholders and independent advisors.  The
      government also plans to comprehensively and extensively review and tighten,
      if
      required, current rules and enforcement procedures to ensure that absolutely
      clear, transparent, auditable and appropriate definitions exist for oil sands
      projects and eligible expenditures. Currently, a royalty of one percent of
      gross
      bitumen revenue is payable prior to the payout of specified allowed costs,
      including certain exploration and development costs, operating costs and a
      return allowance. Once such allowed costs have been recovered, the
      applicable royalty is equivalent to the greater of 25% of net project revenue
      or
      1% of gross revenue. All costs (operating and capital) are 100% deductible
      in
      the year in which they are incurred. The
      implementation of the proposed changes to the new royalty regime in Alberta
      is
      subject to certain risks and uncertainties. The significant changes to the
      royalty regime require new legislation, changes to existing legislation and
      regulation and development of proprietary software to support the calculation
      and collection of royalties. Additionally, certain proposed changes contemplate
      further public and/or industry consultation. There may be modifications
      introduced to the proposed royalty structure prior to the implementation
      thereof. There can be no assurance that the Government of Alberta or the
      Government of Canada will not adopt a new fiscal regime or otherwise modify
      the
      existing fiscal regime (royalties and taxes) governing oil sands producers
      in a
      manner that could materially affect the financial prospects and results of
      operations of oil sands developers and producers in Alberta.





We
      Are
      A Exploration Stage Company Implementing A New Business Plan .
      We are
      an exploration stage Company with only a limited operating history upon which
      to
      base an evaluation of our current business and future prospects, and we have
      just begun to implement our business plan. Since our inception, we have suffered
      recurring losses from operations and have been dependent on new investment
      to
      sustain our operations. During the years ended September 30, 2005 and 2004,
      we
      reported net losses of $1,262,549 and $525,754, respectively. In addition,
      our
      consolidated financial statements for the year ended September 30, 2005, contain
      a “going concern” qualification and we cannot give any assurances that we can
      achieve profits from operations.





The
      Successful Implementation Of Our Business Plan Is Subject To Risks Inherent
      In
      The Oil Business. Our oil
      operations are subject to the economic risks typically associated with
      exploration, development and production activities, including the necessity
      of
      significant expenditures to locate and acquire properties and to drill
      exploratory wells. In addition, the cost and timing of drilling, completing
      and
      operating wells is often uncertain. In conducting exploration and development
      activities, the presence of unanticipated pressure or irregularities in
      formations, miscalculations or accidents may cause our exploration, development
      and production activities to be unsuccessful. This could result in a total
      loss
      of our investment in a particular property. If exploration efforts are
      unsuccessful in establishing proved reserves and exploration activities cease,
      the amounts accumulated, as unproved costs will be charged against earnings
      as
      impairments. Our exploitation and development of oil and gas reserves depends
      upon access to the areas where our operations are to be conducted. We conduct
      a
      portion of our operations in regions where we are only able to do so on a
      seasonal basis. Unless the surface is sufficiently frozen, we are unable to
      access our properties, drill or otherwise conduct our operations as planned.
      In
      addition, if the surface thaws earlier than expected, we must cease our
      operations for the season earlier than planned. Our operations are affected
      by
      road bans imposed from time to time during the break-up and thaw period in
      the
      Spring. Road bans are also imposed due to snow, mud and rock slides and periods
      of high water, which can restrict access to our well sites and production
      facility sites. Our inability to access our properties or to conduct our
      operations as planned will result in a shutdown or slow down of our operations,
      which will adversely affect our business.





12


We
      Expect Our Operating Expenses To Increase Substantially In The Future And We
      May
      Need To Raise Additional Funds .
      We have
      a history of net losses and expect that our operating expenses will increase
      substantially over the next 12 months as we continue to implement our business
      plan. In addition, we may experience a material decrease in liquidity due to
      unforeseen capital calls or other events and uncertainties. As a result, we
      may
      need to raise additional funds, and such funds may not be available on
      favourable terms, if at all. If we cannot raise funds on acceptable terms,
      we
      may not be able to execute on our business plan, take advantage of future
      opportunities or respond to competitive pressures or unanticipated requirements.
      This may seriously harm our business, financial condition and results of
      operations.





Our
      Ability To Produce Sufficient Quantities Of Oil From Our Properties May Be
      Adversely Affected By A Number Of Factors Outside Of Our Control .
      The
      business of exploring for and producing oil and gas involves a substantial
      risk
      of investment loss. Drilling oil wells involves the risk that the wells may
      be
      unproductive or that, although productive, that the wells may not produce oil
      in
      economic quantities. Other hazards, such as unusual or unexpected geological
      formations, pressures, fires, blowouts, loss of circulation of drilling fluids
      or other conditions may substantially delay or prevent completion of any well.
      Adverse weather conditions can also hinder drilling operations. A productive
      well may become uneconomic due to pressure depletion, water encroachment,
      mechanical difficulties, etc., which impair or prevent the production of oil
      and/or gas from the well.





There
      can
      be no assurance that oil will be produced from the properties in which we have
      interests. Marketability of any oil that we acquire or discover may be
      influenced by numerous factors beyond our control. The marketability of our
      production will depend on the proximity of our reserves to and the capacity
      of,
      third party facilities and services, including oil and natural gas gathering
      systems, pipelines, trucking or terminal facilities, and processing facilities.
      The unavailability or insufficient capacity of these facilities and services
      could force us to shut-in producing wells, delay the commencement of production,
      or discontinue development plans for some of our properties, which would
      adversely affect our financial condition and performance. There may be periods
      of time when pipeline capacity is inadequate to meet our oil transportation
      needs. During periods when pipeline capacity is inadequate, we may be forced
      to
      reduce production or incur additional expense as existing production is
      compressed to fit into existing pipelines. Other risk factors include
      availability of drilling and related equipment, market fluctuations of prices,
      taxes, royalties, land tenure, allowable production and environmental
      protection. We cannot predict how these factors may affect our
      business.





In
      addition, the success of our business is dependent upon the efforts of various
      third parties that we do not control. We rely upon various companies to assist
      us in identifying desirable oil prospects to acquire and to provide us with
      technical assistance and services. We also rely upon the services of geologists,
      geophysicists, chemists, engineers and other scientists to explore and analyze
      oil prospects to determine a method in which the oil prospects may be developed
      in a cost-effective manner. In addition, we rely upon the owners and operators
      of oil drilling equipment to drill and develop our prospects to production.
      Although we have developed relationships with a number of third-party service
      providers, we cannot assure that we will be able to continue to rely on such
      persons. If any of these relationships with third-party service providers are
      terminated or are unavailable on commercially acceptable terms, we may not
      be
      able to execute our business plan.





We
      Do
      Not Control All Of Our Operations .
      We do
      not operate all of our properties and we therefore have limited influence over
      the testing, drilling and production operations of those properties. 12 of
      our
      69.5 sections in which we have a working interest are operated by Andora. We
      have a 40% working interest in these 12 sections. Our lack of control of these
      12 sections could result in the following:





·
            The
                operator might initiate exploration or development on a faster or
                slower
                pace than we prefer;





·
            The
                operator might propose to drill more wells or build more facilities
                on a
                project than we have funds for or that we deem appropriate, which
                could
                mean that we are unable to participate in the project or share in
                the
                revenues generated by the project;





·
            If
                an operator refuses to initiate a project, we might be unable to
                pursue
                the project.





Any
      of
      these events could materially reduce the value of those properties
      affected.





We
      Are
      Party To Some Lawsuits And Will Be Adversely Affected If We Are Found To Be
      Liable In Connection With Any Legal Proceedings. **** We
      are
      party to some lawsuits described in this Form 10-KSB under the heading “Legal
      Proceedings”. We intend to vigorously defend ourselves against the claims made
      in the lawsuits, but we cannot predict the outcome of these proceedings, the
      commencement or outcome of any future proceedings against us, or whether any
      such proceeding would lead to monetary damages that would have a material
      adverse effect on our financial position.





13


Aboriginal
      Peoples May Make Claims Regarding The Lands On Which Our Operations Are
      Conducted. Aboriginal peoples have claimed aboriginal title and rights to a substantial
      portion of western Canada. If any aboriginal peoples file a claim claiming
      aboriginal title or rights to the lands on which any of our properties are
      located, and if any such claim is successful, it could have a material adverse
      effect on our operations.





The
      Energy Resources Conservation Board (“ERCB”) that governs our operations in
      Alberta, Canada have implemented a new directive (Directive 056) that the
      Alberta Government issued its First Nations Consultation Policy on Land
      Management and Resource Development on May 16, 2005. The ERCB expects that
      all
      industry applicants must adhere to this policy and the consultation guidelines.
      These requirements and expectations apply to the licensing of all new energy
      developments and all modifications to existing energy developments, as covered
      in Directive 056. In the policy, the Alberta Government has developed
      consultation guidelines to address specific questions about how consultation
      for
      land management and resource development should occur in relation to specific
      activities. Prior to filing an application, the applicant must address all
      questions, objections, and concerns regarding the proposed development and
      attempt to resolve them. This includes concerns and objections raised by members
      of the public, industry, government representatives, First Nations, Métis, and
      other interested parties. If there are no outstanding concerns/objections and
      a
      confirmation of non-objection has been obtained if required. This process can
      cause significant delays in obtaining a drilling permit for exploration and/or
      a
      production well license for both oil and gas.





Market
      Fluctuations In The Prices Of Oil Could Adversely Affect Our
      Business .
      Prices
      for oil tend to fluctuate significantly in response to factors beyond our
      control. These factors include, but are not limited to, the continued threat
      of
      war in the Middle East and actions of the Organization of Petroleum Exporting
      Countries and its maintenance of production constraints, the U.S. economic
      environment, weather conditions, the availability of alternate fuel sources,
      transportation interruption, the impact of drilling levels on crude oil and
      natural gas supply, and the environmental and access issues that could limit
      future drilling activities for the industry.





Changes
      in commodity prices may significantly affect our capital resources, liquidity
      and expected operating results. Price changes directly affect revenues and
      can
      indirectly impact expected production by changing the amount of funds available
      to reinvest in exploration and development activities. Reductions in oil and
      gas
      prices not only reduce revenues and profits, but could also reduce the
      quantities of reserves that are commercially recoverable. Significant declines
      in prices could result in non-cash charges to earnings due to
      impairment.





Changes
      in commodity prices may also significantly affect our ability to estimate the
      value of producing properties for acquisition and divestiture and often cause
      disruption in the market for oil producing properties, as buyers and sellers
      have difficulty agreeing on the value of the properties. Price volatility also
      makes it difficult to budget for and project the return on acquisitions and
      development and exploitation of projects. We expect that commodity prices will
      continue to fluctuate significantly in the future.





Our
      Stock Price Could Decline. Our
      common stock is traded on the pink sheets. There can be no assurance that an
      active public market will continue for the common stock, or that the market
      price for the common stock will not decline below its current price. Such price
      may be influenced by many factors, including, but not limited to, investor
      perception of us and our industry and general economic and market conditions.
      The trading price of the common stock could be subject to wide fluctuations
      in
      response to announcements of our business developments or our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our common stock.
      Our stock price may decline as a result of future sales of our shares or the
      perception that such sales may occur.





Since
      we
      have not filed all reports required to be filed by us with the SEC, none of
      our
      shares of common stock are currently eligible to be resold pursuant to Rule
      144.
      However, some of our shares of outstanding common stock are required by contract
      to be registered under the Securities Act for resale by the holders. We are
      unable to estimate the amount, timing, or nature of future sales of outstanding
      common stock. Sales of substantial amounts of our common stock in the public
      market may cause the stock’s market price to decline.





We
      Could Be Subject to SEC Penalties For Not Filing All Of Our SEC
      Reports. We have
      not filed all of the annual and quarterly reports required to be filed by us
      with the SEC. We are working diligently to make all such filings, but until
      all
      such filings are made, it is possible that the SEC could take enforcement
      action, including the de-registration of our securities, against us. If the
      SEC
      were to take any such actions, it could adversely affect the liquidity of
      trading in our common stock and the amount of information about our Company
      that
      is publicly available.





14


Broke-Dealers
      Are Not Permitted To Solicit Trades In Our Common Stock .
      Our
      common stock is considered to be a “penny stock” because it meets one or more of
      the definitions in the Exchange Act Rule 3a51-1, The principal result or effect
      of being designated a “penny stock” is that securities broker-dealers cannot
      recommend the stock and may only trade in it on an unsolicited
      basis.





Risks
      Related to Broker-Dealer Requirements Involving Penny Stocks / Risks Affecting
      Trading and Liquidity .
      Section
      15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
      promulgated thereunder by the Commission require broker-dealers dealing in
      penny
      stocks to provide potential investors with a document disclosing the risks
      of
      penny stocks and to obtain a manually signed and dated written receipt of the
      document before effecting any transaction in a penny stock for the investor’s
      account. These rules may have the effect of reducing the level of trading
      activity in the secondary market, if and when one develops.





Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be “penny stock.”
Moreover, Commission Rule 15g-9 requires broker-dealers in penny stocks to
      approve the account of any investor for transactions in such stocks before
      selling any penny stock to that investor. This procedure requires the
      broker-dealer to (i) obtain from the investor information concerning his or
      her
      financial situation, investment experience and investment objectives; (ii)
      reasonably determine, based on that information, that transactions in penny
      stocks are suitable for the investor and that the investor has sufficient
      knowledge and experience as to be reasonably capable of evaluating the risks
      of
      penny stock transactions; (iii) provide the investor with a written statement
      setting forth the basis on which the broker-dealer made the determination in
      (ii) above; and (iv) receive a signed and dated copy of such statement from
      the
      investor, confirming that it accurately reflects the investor’s financial
      situation, investment experience and investment objectives. Pursuant to the
      Penny Stock Reform Act of 1990, broker-dealers are further obligated to provide
      customers with monthly account statements. Compliance with the foregoing
      requirements may make it more difficult for investors in our stock to resell
      their shares to third parties or to otherwise dispose of them in the market
      or
      otherwise.





**Reports
      to Security Holders**





We
      are a
      Nevada corporation and our common stock is registered under section 12(g) of
      the
      Securities Exchange Act of 1934, as amended. Our annual report on Form 10-KSB,
      quarterly reports on Form 10-QSB, current reports on From 8-K and amendments
      to
      those reports can be accessed at the SEC’s website at
      www.sec.gov.





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





**Office
      Leases**





We
      currently rent an office space on a month by month basis for administrative
      operations for $3,554.30 Cdn per month at 510 Royal Bank Building 10117 Jasper
      Avenue, Edmonton Alberta T5J 1W8. We have entered into a lease for office space
      in Calgary. The term of this lease is over five years with the total monthly
      rents estimated to be:





·
            December
                1, 2007 to November 30, 2009 $3,197.37 Cdn per
                month





·
            December
                1, 2009 to November 30, 2010 $3,519.03 Cdn per month (additional
                rent was
                calculated using $10.35 Cdn per square foot calculation for the 2007
                operating of the rental lease agreement, the landlord has the right
                to
                increase the additional rent for each operating
                year.





·
            December
                1, 2010 to November 30, 2012 $3,905.03 Cdn per (additional rent was
                calculated using $10.35 Cdn per square foot calculation for the 2007
                operating year of the rental lease agreement, the landlord has the
                right
                to increase the additional rent for each operating
                year.





**Oil
      and Gas Properties**





***Acreage***





On
      November 26, 2007 we entered into mediation with Signet and resolved our
      differences and certain collateral matters. The settlement included but is
      not
      limited to:





·
            the
                Farmout Agreement dated February 25, 2005, being effectively terminated
                concurrently with the execution of the settlement agreement;





·
            Signet
                being regarded as having earned the two sections on which the option
                wells
                were drilled and 4 additional sections as set out in the Settlement;




15




·
            Signet
                being required to reconvey registered title to 57.5 unearned sections
                of
                the Farmout Lands, as defined in the Farmout Agreement, back to the
                us;
                and





·
            our
                Company having the right to retest, at no cost to Signet, the option
                wells
                previously drilled.





We
      own an
      80% working interest in 51 contiguous sections of oil sands development leases
      and 6.5 sections of oil sands permits in the Sawn Lake heavy oil area in North
      Central Alberta. We have retained an additional 40% working interest in another
      12 sections of oil sands development leases of which Signet (Signet was
      subsequently acquired by Andora Energy Corporation) has earned 40% from Deep
      Well. The leases and permits cover 43,964 gross acres (17,792 gross
      hectares).





Andora
      will be the operator of the 12 sections earned by Signet. We will be the
      operator to 57.5 sections in which we own an 80% working interest.





On
      April
      2, 2008 our Company participated in a public offering of Crown Petroleum and
      Natural Gas Rights held by the Alberta Department of Energy, in which the
      Company successfully bid on 1 Petroleum and Natural Gas Rights parcel covering
      3,795 gross acres (1,536 gross hectares) for a total of 6 sections in the Ochre
      area . Our Company acquired an undivided 100% working interest in these 6
      sections located in the Peace River Oil Sands area, approximately 14 miles
      west
      of our Sawn Lake properties, increasing our land holdings in the Peace River
      area by 8%.





The
      following table summarizes our gross and net developed and undeveloped oil
      and
      natural gas rights under lease as of April 2, 2008.


**OIL
                  AND NATURAL GAS RIGHTS****as of April 2, 2008****Gross
                  Hectares**
              
              **Net
                  Hectares**
              
              **Gross
                  Acres**
              
              **Net
                  Acres****Developed
                  Acreage**Sawn
                  Lake - Peace River Oil Sands Area, Alberta, Canada
              
              
              None
              
              
              None
              
              
              None
              
              
              None**Total**
              
              
              None
              
              
              None
              
              
              None
              
              
              None**Undeveloped
                  Acreage**Sawn
                  Lake - Peace River Oil Sands Area, Alberta, Canada31
                  sections
              
              
              7,936
              
              
              6,349(1
              )
              
              19,610
              
              
              15,688(1
              )32
                  sections
              
              
              8,192
              
              
              5,325(2
              )
              
              20,242
              
              
              13,157(2
              )6.5
                  sections
              
              
              1,664
              
              
              1,331(1
              )
              
              4,112
              
              
              3,289(1
              )Ochre
                  - P&NG Licence within the Peace River Oil Sands Area, Alberta,
                  Canada6
                  sections
              
              
              1,536
              
              
              1,536
              
              
              3,795
              
              
              3,795**Total**
              
              
              19,328
              
              
              14,541
              
              
              47,759
              
              
              35,929
 (1)
                80%
                    working interest
 (2)
                  We
                      have an 80% working interest in 20 sections and a 40% working
                      interest in
                      another 12 sections


A
      developed acre is considered to mean those acres spaced or assignable to
      productive wells, a gross acre is an acre in which a working interest is owned,
      and a net acre is the result that is obtained when fractional ownership working
      interest is multiplied by gross acres. The number of net acres is the sum of
      the
      fractional working interests owned in gross acres expressed as whole numbers
      and
      fractions thereof.





Undeveloped
      acreage is considered to be those lease acres on which wells have not been
      drilled or completed to a point that would permit the production of commercial
      quantities of oil or natural gas, regardless of whether or not that acreage
      contains proved reserves, but does not include undrilled acreage held by
      production under the terms of a lease. As is customary in the oil and gas
      industry, we can generally retain our interest in undeveloped acreage by
      drilling activity that establishes commercial production sufficient to maintain
      the leases or by paying delay rentals during the remaining primary term of
      such
      a lease. The oil and natural gas leases in which we have an interest are for
      varying primary terms, and if production continues from our developed lease
      acreage beyond the primary term, we are entitled to hold the lease for as long
      as oil or natural gas is produced.




16





***Reserves,
      Production and Delivery Commitments***





Northern
      commenced oil and gas exploration activities in August 2004 with the first
      well
      being drilled on the project in September 2005. We did not engage in any
      production activities during the years ending September 30, 2005, 2004 and
      2003,
      nor did we have any proved or probable reserves at the end of such periods,
      and
      thus, were not required to provide any of the production data required by
      Statement of Financial Accounting Standards No. 69. We do not have any
      obligations under existing delivery commitment contracts or agreements calling
      for the provision of fixed and determinable quantities of oil and gas over
      the
      next three years, and have therefore not filed any information or reports with
      any federal authority or agency, containing estimates of total, proved developed
      or undeveloped net oil or gas reserves.





***Drilling
      Activity***





The
      following tables summarize the results of our drilling activities during the
      years ended September 30, 2007, 2006 and 2005.





**2007**
            
            **2006**
            
            **2005****Exploratory
                Wells year ended September 30**
            
            **Gross**
            
            **Net**
            
            **Gross**
            
            **Net**
            
            **Gross**
            
            **Net**Gas
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Oil
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Oil/Gas
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Evaluating
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Drilling
                at end of year
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Suspended
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Abandoned
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-****Total
                Exploratory Wells**
            
            
            -
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**








**2007**
            
            **2006**
            
            **2005****Development
                Wells year ended September 30**
            
            **Gross**
            
            **Net**
            
            **Gross**
            
            **Net**
            
            **Gross**
            
            **Net**Gas
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Oil
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Oil/Gas
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Evaluating
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Drilling
                at end of year
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Suspended
            
            
            **-**
            
            
            
            
            
            2
            
            
            0.8
            ******
            
            1
            
            
            0.4
            ******Abandoned
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-****Total
                Development Wells**
            
            
            **-**
            
            
            **-**
            
            
            **2**
            
            
            **0.8**
            
            
            **1**
            
            
            **0.4**


****** 40%
        working interest


***Present
      Activities***





A
      total
      of three horizontal wells were drilled on the Sawn Lake Property during 2005
      and
      2006 and a fourth location was prepared for drilling.





The
      1 st test
      well drilled under the Farmout Agreement (at surface location 1-36-091-13W5)
      was
      successfully drilled and cased in late October of 2005. This horizontal well
      was
      drilled to a total length of 1,583 meters with a vertical depth of 752 meters
      within the Bluesky oil sands zone. On March 23, 2006 Signet, announced that
      the
      first horizontal test well on our Sawn Lake property had been drilled and the
      reservoir had tested positive for cold flow crude oil pumping capability.
      Initial test results by third parties have concluded that the initial oil
      samples taken early in the flow period had been analyzed and determined to
      be
      10.7 degree API with 3.1% sulphur. As part of the November 15, 2005 settlement,
      we granted Signet a 40% interest in 6 sections, pertaining to the first well
      drilled at Sawn Lake. Currently the well has been suspended for further
      evaluation. Under the terms of the Farmout Agreement dated February 25, 2005,
      as
      amended, Signet has earned a 40% net working interest in the test well 1-36
      at
      the surface location 1-36-091-13W5 and five additional sections for a total
      of 6
      sections earned being: Township 91, Range 12 West of the 5 th ,
      section
      31; Township 91, Range 13 West of the 5 th ,
      section
      36; and Township 92, Range 13, sections 2, 11, 12 and 15, as a result of
      drilling the first test well of the Sawn Lake Heavy Oil Sands
      Project.





17


The
      2 nd well
      drilled under the Farmout Agreement (at surface location 4-32-091-12W5) began
      drilling on August 13, 2006. This was the first of three additional wells that
      Signet was to drill in accordance with the Farmout Agreement in the Bluesky
      Formation of the Sawn Lake area. This horizontal well was successfully drilled
      and cased in August 2006 to a total length of 1,461 meters with a vertical
      depth
      of 668 meters within the Bluesky oil sands zone. Subsequent to the drilling
      and
      logging operations, tubing was run in preparation for potential Bluesky oil
      production. As reported by Signet, the well evaluation of the log analysis
      confirmed 23 meters of net oil pay, average oil saturation of 78 percent, API
      gravity in the range of 6.7 to 7.6 degrees, permeability of up to 8 Darcies,
      average porosity of 30% and viscosity between 263,000 and 475,000 centistokes
      extrapolated at 20 degrees Celsius and between 4.6 and 5.35 centistokes
      extrapolated at 250 degrees Celsius. Signet reported to us that the initial
      production tests for cold flow pumping capability were negative, however, the
      well is suited for a thermal project. Currently the well has been suspended
      for
      further evaluation.





The
      3 rd well
      drilled under the Farmout Agreement (at surface location 7-30-091-12W5) began
      drilling on August 31, 2006. This was the second of three additional wells
      that
      Signet was to drill in accordance with the Farmout Agreement in the Bluesky
      Formation of the Sawn Lake area. This horizontal well was successfully drilled
      and cased in September 2006 to a total length of 1,437 meters with a vertical
      depth of 654 meters within the Bluesky oil sands zone. As reported by Signet,
      the well evaluation of the log analysis confirmed 22 meters of net oil pay,
      average oil saturation of 68 percent, API gravity in the range of 6.2 to 6.8
      degrees, permeability of up to 8 Darcies, average porosity of 30% and viscosity
      of 290,000 centistokes extrapolated at 18 degrees Celsius 7.93 centistokes
      extrapolated at 250 degrees Celsius. Signet reported to us that the initial
      production tests for cold flow pumping capability were negative, however, the
      well is suited for a thermal project. Currently the well has been suspended
      for
      further evaluation.





The
      proposed 4 th well to
      be drilled under the Farmout Agreement (at surface location 13-29-091-12W5)
      was
      not drilled since it
      was determined by Signet that it would not provide any additional geological
      information in its delineation of the Sawn Lake Reservoir beyond that of the
      two
      recently drilled wells in the same vicinity.





On
      October 12, 2006 the 4-32 and 7-30 wells along with the 1-36 well were
      suspended. Signet had undertaken a mapping of the reservoir to assist in its
      delineation for any future development of the Sawn Lake property. The first
      three wells were drilled in the most heavily documented portion of the Sawn
      Lake
      lands. Although, as indicated by Signet, the preliminary results from the last
      2
      wells indicated a lack of cold flow production from well 4-32 and 7-30, the
      compartmentalized nature of the reservoir and varying characteristics of these
      compartments may show different results with further evaluation.





In
      December 2006, we notified Signet that we were disputing Signet earning an
      additional 12 sections, as a result of drilling the 4-32 and 7-30 wells, because
      Signet failed to properly complete the wells by not conducting the production
      testing as reasonably required under the Farmout Agreement. The Farmout
      Agreement states that the sustained production test must be of sufficient
      duration to establish to the Farmor’s (therefore Deep Well’s) reasonable
      satisfaction the initial productivity of the earning well. Signet’s view was
      that it has earned the 12 sections pursuant to the terms of the Farmout
      Agreement. These 12 sections are subject to selection in accordance with the
      provisions of the Farmout Agreement. On November 26, 2007 we entered into
      mediation with Signet and resolved our differences on this and certain
      collateral matters. The settlement included, but is not limited to:





·
            the
                Farmout Agreement dated February 25, 2005, being effectively terminated
                concurrently with the execution of the settlement agreement;





·
            Signet
                being regarded as having earned the two sections on which the option
                wells
                were drilled and 4 additional sections as set out in the Settlement;
                and





·
            Signet
                being required to reconvey registered title to 57.5 unearned sections
                of
                the Farmout Lands, as defined in the Farmout Agreement, back to us;
                and





·
            our
                Company having the right to retest, at no cost to Signet, the option
                wells
                previously drilled.





Our
      Company’s current and near term development plan is to use the funds recently
      acquired to execute our Company’s plan of development for the Sawn Lake Project.
      The first stage of the plan will include updated well evaluation testing and
      project re-analysis and engineering study. To accomplish this, our Company
      recently purchased and interpreted seismic data for certain sections of the
      Sawn
      Lake project. This recent seismic acquisition and reprocessing is in addition
      to
      and focuses on different areas than the seismic previously acquired and
      reprocessed by Signet, the results of the Signet reprocessed seismic and the
      aeromagnetic data is now available to our Company by virtue of the November
      26,
      2007 settlement with Signet. Based on this newly acquired data, log analyses
      and
      information obtained from external public resources our Company’s operations
      team selected 6 locations to be drilled over the next 12 months. Our Company
      engaged Frontier Engineering and Consulting Ltd. (hereinafter referred to as
      “Frontier Engineering”) an engineering firm to assist us in project
      management and all coordinating aspects and stages of our Company’s drilling,
      completion and developing the Sawn Lake Project .
      Frontier Engineering has completed surveying of these 6 locations along with
      their respective environmental field reports. Our Company has also engaged
      Progress Land Services Ltd. (hereinafter referred to as “Progress Land”) to
      assist us in all regulatory compliance and surface rights with the appropriate
      governmental departments. Frontier Engineering is working closely with Progress
      Land and they are currently in the public consultation stage submitting
      notifications to the participants. Subject to regulatory approval, our Company
      expects to begin preparing these selected well sites for drilling over the
      next
      12 months. To assist in defining the Sawn Lake project these 6 locations have
      been selected to cover more surface area of the reservoir than previously
      drilled. As operator for these leases, our Company will also test the wells
      for
      cold flow capability to its satisfaction. The focus of our Company’s drilling
      program is to further define the heavy oil reservoir to determine the best
      technology under which oil can be produced from the Sawn Lake project in order
      to initiate production to generate an early positive cash flow.





18





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





**Deep
      Well Oil & Gas, Inc. vs. Surge Global Energy, Inc. -
      RESOLVED**





On
      October 13, 2005 Surge filed against us with a Notice of Motion filed in Court
      of Alberta, District of Calgary. The motion among other things, requested a
      declaration from us that Signet has complied with their obligations under a
      particular Farmout Agreement and a declaration that Signet has earned 50% of
      our
      interest in lands located at LSD 01-36-091-13-W5M.





On
      October 14, 2005 we served Surge with a lawsuit issued in the Alberta Court
      District of Calgary. The lawsuit among other things, seeks a declaration that
      the Farmout Agreement has been terminated, an order requesting Signet to
      reconvey to us title documents as defined in the Farmout Agreement, a
      declaration that Signet has failed to spud a test well pursuant to the terms
      of
      the Farmout Agreement, an order preventing Signet from entering the Farmout
      lands pending resolution to the lawsuit as well as other various declaratory
      and
      injunctive relief, including damages of $1,000,000 Cdn for trespass and punitive
      damages of $250,000 Cdn.





On
      October 21, 2005 our Company and Surge agreed to a consent order in the Court
      of
      Alberta, district of Calgary whereby both parties agreed to consolidate their
      actions. The consolidated action would continue under our action and would
      be
      tried at the same time.





On
      November 15, 2005 as part of a restructuring of Signet, both parties mutually
      agreed to dismiss their lawsuits against each other. The dismissals were part
      of
      the Farmout Amending and Farmout Acknowledgement Agreements entered into by
      our
      Company and Surge. The Farmout Amendment and Acknowledgement Agreement agreed
      to, upon Signet receiving a private placement for $8,550,000 Cdn in a
      convertible debenture and modify the February 25, 2005 Farmout Agreement. The
      significant amendments were to; 1.) Extend the earning period to February 25,
      2008; 2.) Extend the date for which Signet can spud an option well to September
      25, 2006; 3.) Recalculate the payment of the 2 nd portion
      of the prospect fee, being $1,000,000 to be paid by Signet to Northern and
      Deep
      Well Alberta and omit the conditions under which the $1,000,000 was paid, 4.)
      Signet issued to Northern and Deep Well Alberta 7,550,000 of its common shares
      giving us a beneficial interest in the Farmee of 31.47% before Signet issued
      shares under the private placement financing and 22.7% if the convertible
      debenture is converted on a fully diluted basis, and 5.) Our Company gave up
      its
      right to acquire shares in Surge US.





**I.G.M.
      Resources Corp. vs. Deep Well Oil & Gas, Inc. et al**





On
      March
      10, 2005 I.G.M. Resources Corp. (hereinafter referred to as “IGM”) filed against
      Classic, 979708 Alberta Ltd. (hereinafter referred to as “979708”), Deep Well,
      Nearshore, Steven P. Gawne, Rebekah Gawne, Gawne Family Trust, 1089144 Alberta
      Ltd., John F. Brown, Diane Lynn McClaflin, Cassandra Doreen Brown, Elissa
      Alexandra Brown, Brown Family Trust, Priority Exploration Ltd., Northern and
      Gordon Skulmoski a Statement of Claim in the Court of Queen’s Bench of Alberta
      Judicial District of Calgary. This suit is part of a series of lawsuits or
      actions undertaken by IGM against some of the other above
      defendants.





IGM
      was
      and still is a minority shareholder of 979708. 979708 was purportedly in the
      business of discovering, assembling and acquiring oil & gas prospects. In
      2002 and 2003, 979708 acquired oil and gas prospects in the Sawn Lake area
      of
      Alberta. On or about the 14 th of July
      2003 all or substantially all the assets of 979708 were sold to Classic. IGM
      claims the value of the assets sold was far in excess of the value paid for
      those assets. On April 23, 2004 Northern purchased some of Classic’s assets that
      are under dispute by IGM. On June 7, 2005 Deep Well acquired all of the common
      shares of Northern thereby giving Deep Well an indirect beneficial interest
      in
      the assets IGM is claiming an interest in.





IGM
      seeks
      an order setting aside the transaction and returning the assets to 979708,
      compensation in the amount of $15,000,000 Cdn, a declaration of trust declaring
      that Classic, Northern and Deep Well Alberta, hold all of the assets acquired
      from 979708 and any property acquired by use of such assets or confidential
      information of 979708, in trust for the Plaintiff.


This
        lawsuit has been stayed pending the outcome of the other litigation by IGM
        against the other defendants. We believe the claims and demands against us
        are
        without merit and will vigorously defend them.


19





**Hardie
      & Kelly vs. Brown et al**





On
      June
      2, 2006 Hardie and Kelly, Trustee of the Estate of John Forbes Brown filed
      against John Forbes Brown, a bankrupt, Diane Lynn McClaflin, 1089144 Alberta
      Ltd., and Deep Well with an Amended Statement of Claim filed in the Court of
      Queen’s Bench of Alberta Judicial District of Calgary. John Forbes Brown was a
      former officer and then sub-contractor of Deep Well before and at the time
      he
      was assigned into bankruptcy on into July 12, 2004. The Plaintiff claims, in
      addition to other issues unrelated to Deep Well, that John Forbes Brown received
      4,812,500 Deep Well shares as a result of his employment in Deep Well and that
      John Forbes Brown improperly assigned these shares to the numbered company
      as a
      ruse entered into on the eve of insolvency by John Forbes Brown in order to
      facilitate the hiding of assets from his creditors and the trustee of his
      bankruptcy. The Plaintiff further claims that on August 23, 2004 John Forbes
      Brown advised the Plaintiff that he in fact owned the above shares and did
      not
      disclose this ownership in his bankruptcy statement of affairs filed. The
      Plaintiff further claims that John Forbes Brown would lodge the said shares
      with
      his lawyer until such time as these shares could be transferred to the
      Plaintiff. The Plaintiff further claims that unbeknownst to them John Forbes
      Brown surreptitiously removed the shares from his lawyer’s office and delivered
      them to Deep Well so that Deep Well could cancel them. The Plaintiff claims
      that
      Deep Well conspired with John Forbes Brown to defraud the creditors of John
      Forbes Brown by taking receipt and canceling the said shares. The Plaintiff
      claims that consideration paid by Deep Well for the said shares was invested
      in
      the home owned by John Forbes Brown and his wife. The Plaintiff seeks; 1.)
      An
      accounting of the proceeds and benefits derived by the dealings of the shares,
      2.) The home owned by John Forbes Brown and his wife, to be held in trust on
      behalf of the Plaintiff and an accounting of proceeds related to this trust,
      3.)
      The Plaintiff seeks damages from the Defendants because of their actions, 4.)
      A
      judgment for $15,612,645 Cdn, 5.) An order to sell John Forbes Brown’s home, and
      6.) Interest and costs.





We
      plan
      to vigorously defend ourselves against the Plaintiff’s claims.





**Menno
      Wiebe and Jacobean Resource International vs. Deep Well Oil & Gas, Inc. et
      al**





On
      October 23, 2006 Menno Wiebe and Jacobean Resources International served Deep
      Well, Doe individuals and Roe Corporations with a Complaint and Summons filed
      in
      the United States of America, District Court of Clark County, Nevada. The
      Complaint alleges a breach of contract in which the Plaintiffs are seeking
      monetary damages in excess of $10,000 plus an order directing Defendants to
      issue 56,500 shares of Deep Well stock to Plaintiffs. Mr. Menno Wiebe served
      as
      Director and Chief Operating Officer of Deep Well from July 6, 2004 until June
      29, 2005. Mr. Wiebe claims he was the Chief Operating Officer until October
      2005. Our Company believes that it has meritorious defences to the plaintiff’s
      claims and intends to enter into mediation, as called for in the contract with
      Menno Wiebe.





**Star
      Capital Inc. vs. Deep Well Oil & Gas, Inc. et al -
      RESOLVED**





On
      December 21, 2006 Deep Well, Deep Well Alberta and some of the directors of
      our
      Company in addition to other individuals were served with an Originating Notice
      of Motion, filed in the Court of Queen’s Bench of Alberta Judicial District of
      Calgary, by Star Capital Inc. whereby the Applicant claims that the Respondents;
      1.) Failed to provide shareholders with proper or any notice of Annual General
      Meetings, special meeting of shareholders, or both; 2.) Failed to hold Annual
      General Meetings in accordance with the provisions of the Alberta Business
      Corporations Act or, in the alternative, with the Nevada Revised Statutes;
      3.)
      Failed to appoint qualified auditors in accordance with the provisions of the
      Alberta Business Corporations Act or, in the alternative, the Nevada Revised
      Statutes; 4.) Failed to prepare and file audited financial statements in
      accordance with the provisions of the Alberta Business Corporations Act and
      the
      Alberta Securities Act or, in the alternative, the Nevada Revised Statutes;
      5.)
      Paid management fees in relation to either or both of Deep Well or Deep Well
      Alberta to directors, officers and third parties, including the individual
      Respondents themselves, that are unreasonable, oppressive and have been granted
      without proper regard for the interests of shareholders; 6.) In the case of
      the
      individual Respondents, engaged in wrongful self-dealing that is oppressive,
      prejudicial to, and unfairly disregards the interests of, shareholders; 7.)
      Issued capital stock of Deep Well, and instruments for the future purchase
      of
      such capital stock, in a manner that is oppressive, unfairly prejudicial to,
      and
      unfairly disregards the interests of shareholders; 8.) Failed to disclose,
      or
      failing to disclose in a timely manner, material information to the shareholders
      and the public, including, but not limited to, the fact of the transfer of
      assets from Deep Well to Deep Well Alberta and the existence of encumbrances
      of
      the oil sands assets, such as gross overriding royalties held by the Respondents
      Gary Tighe and Steve Gawne, which distorts the public market in the securities
      of the corporate Respondents and is otherwise oppressive, unfairly prejudicial
      to, and unfairly disregards the interests of shareholders, including the
      Applicant; 9.) Utilized majority shareholder approval for various transactions,
      including the appointment of directors, without calling annual or special
      meetings of shareholders, in a manner which is oppressive, unfairly prejudicial
      and unfairly disregards the minority shareholders and which is otherwise a
      breach of the fiduciary duties owed by the directors and officers to the
      corporations and to the minority shareholders.





20


On
      September 7, 2007, the claims of Star Capital Inc. against us were dismissed
      in
      their entirety pursuant to an Order granted by the court. Star Capital Inc.’s
      claims were originally filed with the Court of Queen’s Bench of Alberta in the
      Judicial District of Calgary pursuant to an Originating Notice of Motion which
      was filed on December 21, 2006 and a Amended Originating Notice which was filed
      on March 29, 2007 against Deep Well, Deep Well Alberta, Northern and some of
      the
      directors of Deep Well and its subsidiaries in addition to other individuals
      as
      set out in its Amended Originating Notice. An Amending Agreement and Mutual
      General Release was later implemented by the parties. Subsequent to this
      Amending Agreement and Mutual General Release, Star Capital Inc. filed an
      additional Originating Notice of Motion on February 26, 2008. The settlement
      of
      this further claim was completed in March of 2008, whereby the parties agreed
      upon a Full and Final Mutual Release.





**Signet
      Energy, Inc. vs. Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., Deep
      Well Oil & Gas (Alberta) Ltd. - RESOLVED**





On
      June
      1, 2007, Signet filed a Statement of Claim in the Alberta Court District of
      Calgary against our Company. The plaintiff claims that the defendants must
      pay
      all rentals and other payments required to maintain the farmout lands under
      the
      Farmout Agreement in good standing. The plaintiff further claims that they
      paid
      all rentals and other amounts required to maintain the farmout lands in good
      standing on behalf of the defendants and invoiced the defendants for the rental
      amounts and that the defendants refused or neglected to reimburse their
      proportionate share of the rental amounts and therefore the defendants have
      been
      enriched to the detriment of the plaintiff by the payment of the rental amounts.
      The plaintiff seeks 1.) payment in full of $63,269.12 in Canadian funds for
      the
      rental amounts owed, 2.) interest, 3.) costs of the action, and 4.) such further
      and other relief as the court deems just.





On
      June
      25, 2007, our Company served Signet with a Statement of Defence and Counterclaim
      issued in the Alberta Court District of Calgary. The defendants state in their
      defence that 1.) any and all such expenditures are required to be approved
      in
      advance, 2.) no such approval was given, and that the plaintiff has failed
      to
      properly account to the defendants for all such expenditures made, 3.) the
      amount for which the plaintiff is entitled to reimbursement is approximately
      $40,000 in Canadian funds, and 4.) if the plaintiff is indebted to the
      defendants in an amount in excess of the amount claimed by the plaintiff then
      the defendants are entitled to set off against any amounts that may be owed
      to
      the plaintiff. The defendants by counterclaim seek 1.) the proportionate share
      of fees and expenses incurred in preserving, protecting and advancing the rights
      of the parties to the farmout lands totaling $101,000 in Canadian funds, 2.)
      a
      declaration that the plaintiffs are entitled to set off the amount of any
      judgment in favor of the defendant by counterclaim against the amounts found
      to
      be owing to them, 3.) a declaration that the Farmout Agreement be terminated,
      4.) interest, 5.) such further and other relief as the court deems just, and
      6.)
      costs of the action.





On
      November 26, 2007, our Company entered into mediation with Signet and agreed
      to
      jointly discontinue and release the other with respect to the foregoing claims.
      The settlement includes but is not limited to:





·
            the
                Farmout Agreement dated February 25, 2005, being effectively terminated
                concurrently with the execution of the Settlement agreement;





·
            Signet
                being regarded as having earned the two sections on which the option
                wells
                were drilled and 4 additional sections as set out in the Settlement;





·
            Signet
                being required to reconvey registered title to 57.5 unearned sections
                of
                the Farmout Lands, as defined in the Farmout Agreement, back to us;
                and





·
            our
                Company having the right to retest, at no cost to Signet, the option
                wells
                previously drilled.





**Deep
      Well Oil & Gas, Inc. vs. Tamm Oil and Gas Corp.**





Since
      December 2007, Tamm Oil and Gas Corp. and its agents have issued multiple public
      statements claiming that Tamm has acquired, or agreed to acquire, a significant
      and controlling interest in our Company and our properties. We are not, and
      have
      not been, party to any of Tamm’s public statements or purported acquisitions of
      our shares of common stock, and we have commenced a lawsuit against Tamm
      alleging that Tamm has violated United States federal and Nevada state law
      in
      connection with Tamm’s recent public statements and activities related to our
      Company, our operations and Tamm’s ownership of our shares of common stock. On
      April 4, 2008, our Company commenced a lawsuit against Tamm Oil and Gas Corp.
      (hereinafter referred to as “Tamm”). Our Company filed a Complaint with the
      United States District Court for the District of Nevada alleging that Tamm
      has
      violated United States federal and Nevada state law in connection with Tamm’s
      recent public statements and activities related to our Company, its operations
      and the ownership of its common shares. Our Company is seeking:





1.)
            preliminary
                injunctive relief in the form to be sought upon the filing of the
                Complaint, to include and not be limited to an
                injunction:





a.)
            that
                Tamm issue appropriate disclosures and retract false and misleading
                statements concerning Deep Well in their prior representations through
                SEC
                filings, press releases, and all other appropriate
                means;




21




b.)
            prohibit
                Tamm from exercising the voting rights or any other rights granted
                through
                ownership of Deep Well shares on any shares acquired pursuant to
                their
                unlawful tender offer(s) for Deep Well shares; attempting otherwise
                to
                influence or control Deep Well or its
                management;





c.)
            prohibit
                Tamm from transferring their Deep Well shares and/or accepting transfer
                of
                any Deep Well shares acquired through their tender offer(s) for Deep
                Well
                shares;





d.)
            prohibit
                Tamm from acquiring any additional Deep Well shares and/or taking
                any
                other actions in furtherance of their tender offer(s) for Deep Well
                shares;





e.)
            prohibit
                Tamm from issuing any false, misleading or derogatory statements
                about
                Deep Well, relating to its investments in Deep Well, relating to
                its
                acquisition of Deep Well shares or relating to its control of any
                Deep
                Well assets;





f.)
            requiring
                that the transactions through which Tamm acquired Deep Well shares
                pursuant to the tender offer(s) for Deep Well shares be completely
                rescinded and unwound and that any transfers made pursuant to those
                acquisitions be reversed;





g.)
            requiring
                Tamm to comply with legal requirements in the making of any future
                tender
                offer or otherwise acquiring Deep Well
                shares;





2.)
            for
                a permanent injunction enforcing the terms of the preliminary injunction
                and permanently enjoining Tamm from conducting the tender offer indicated
                by the Announcement;





3.)
            for
                damages/or treble damages in an amount to be established at trial;





4.)
            for
                attorneys’ fees and costs; and





5.)
            for
                all such other further relief as the Court deems just and
                equitable.




**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





There
      was
      no matter submitted during the fiscal year 2005 covered by this report to a
      vote
      of security holders, through the solicitation of proxies or
      otherwise.





On
      June
      29, 2005, a majority of the shareholders of Deep Well, by written resolution,
      replaced the Deep Well’s Board of Directors, consisting of Mr. Steven P. Gawne,
      Mr. Curtis Sparrow, Mr. Leonard F. Bolger, Mr. Menno Wiebe and Dr. Horst A.
      Schmid, with a new Board of Directors, consisting of Mr. Cyrus Spaulding, Mr.
      Donald E. H. Jones and Dr. Horst A. Schmid. Dr. Horst A. Schmid was re-appointed
      to the Board as Chairman and appointed Chief Executive Officer and President.
      Mr. Cyrus Spaulding was appointed Chief Operating Officer on September 1, 2005.
      On July 1, 2005, Mr. Curtis Sparrow accepted a re-appointment to the Board
      for
      Directors. Mr. Curtis Sparrow continued to be Chief Financial Officer, Corporate
      Secretary and Treasurer of our Company.





**PART
      II**





**ITEM
      5.**  **MARKET
      FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER** **MATTERS**





The
      common stock of the Predecessor Company of Deep Well was originally listed
      on
      NASDAQ as of November 17, 1994, however the predecessor company no longer met
      listing criteria for NASDAQ and its common stock was delisted to the OTC
      Bulletin Board on September 16, 2002. Subsequent to this delisting, the
      Predecessor Company did not, on a timely basis, file a Form 10-Q for the quarter
      ended December 31, 2002 and accordingly, its stock was delisted to the pink
      sheets on March 25, 2003.





22


**Market
      Price Information for Common Stock**





Deep
      Well’s stock is currently quoted on the pink sheets under the trading symbol
      DWOG. The
      following table sets forth the high and low sales prices for Deep Well common
      stock as reported on the pink sheets for the periods indicated below. This
      table
      gives effect to both the 2-1 split of March 10, 2004 and the 3-1 split of May
      14, 2004. These quotations reflect inter-dealer prices, without retail mark-up,
      mark-down or commission and may not necessarily represent actual
      transactions:





**High
                (US$)**
            
            **Low
                (US$)**Fiscal
                2003First
                Quarter
            
            $
            0.24
            
            $
            0.12Second
                Quarter
            
            $
            0.13
            
            $
            0.01Third
                Quarter
            
            $
            0.03
            
            $
            0.002Fourth
                Quarter
            
            $
            0.002
            
            $
            0.0003Fiscal
                2004First
                Quarter
            
            $
            0.55
            
            $
            0.05Second
                Quarter
            
            $
            1.30
            
            $
            1.05Third
                Quarter
            
            $
            1.55
            
            $
            0.48Fourth
                Quarter
            
            $
            1.42
            
            $
            0.80Fiscal
                2005First
                Quarter
            
            $
            1.03
            
            $
            0.53Second
                Quarter
            
            $
            0.90
            
            $
            0.35Third
                Quarter
            
            $
            0.58
            
            $
            0.30Fourth
                Quarter
            
            $
            0.68
            
            $
            0.31Fiscal
                2006First
                Quarter
            
            $
            1.31
            
            $
            0.37Second
                Quarter
            
            $
            2.98
            
            $
            1.15Third
                Quarter
            
            $
            2.85
            
            $
            1.45Fourth
                Quarter
            
            $
            1.76
            
            $
            0.58Fiscal
                2007First
                Quarter
            
            $
            0.66
            
            $
            0.33Second
                Quarter
            
            $
            0.56
            
            $
            0.23Third
                Quarter
            
            $
            1.05
            
            $
            0.35Fourth
                Quarter
            
            $
            0.84
            
            $
            0.45Fiscal
                2008First
                Quarter
            
            $
            0.58
            
            $
            0.45Second
                Quarter
            
            $
            0.63
            
            $
            0.31





On
      February 27, 2004 the Board of Directors unanimously approved a forward stock
      split of Deep Well’s common stock at a ratio of two (2) shares for every one (1)
      share held. The forward split became effective on March 10, 2004. After the
      split, Deep Well had 12,337,156 shares of common stock issued and outstanding.
      Prior to the effective date of the split, Deep Well had 6,168,578 shares of
      common stock outstanding. In connection with the stock split Deep Well increased
      its authorized common shares in proportion to the forward stock split. Deep
      Well’s authorized common stock after the forward stock split consisted of
      100,000,000 shares of common stock. Prior to the split, Deep Well was authorized
      to issue 50,000,000 shares of common stock. In connection with the forward
      split, Deep Well amended its articles of incorporation with the state of Nevada.
      Deep Well did not obtain a shareholder vote of the forward stock split and
      a
      shareholder vote was not required by Nevada law.





On
      May 4,
      2004, our Board of Directors unanimously approved a forward stock split of
      our
      common stock at a ratio of three (3) shares for every one (1) share held. The
      forward split became effective on May 14, 2004. After the split, Deep Well
      had
      37,011,468 shares of common stock issued and outstanding. Prior to the effective
      date of the split, Deep Well had 12,337,156 shares of common stock outstanding.
      In connection with the stock split Deep Well increased its authorized common
      shares in proportion to the forward stock split. Deep Well’s authorized common
      stock after the forward stock split consisted of 300,000,000 shares of common
      stock. Prior to the split, Deep Well was authorized to issue 100,000,000 shares
      of common stock. In connection with the forward split, Deep Well amended its
      articles of incorporation with the state of Nevada. Deep Well did not obtain
      a
      shareholder vote of the forward stock split and a shareholder vote was not
      required by Nevada law.





On
      June
      7, 2005, Deep Well completed the acquisition of 6,069,625 shares of common
      stock, representing 100% of the outstanding common stock of Northern, pursuant
      to an Exchange Agreement, dated as of July 8, 2004, between Deep Well, Northern
      and all shareholders of Northern, as amended by an amending agreement dated
      April 25, 2005. In addition to the common stock of Northern, Deep Well was
      granted options to acquire 432,500 shares of preferred stock of Northern and
      the
      preferred shareholders of Northern have the ability to require Deep Well to
      acquire such shares. In accordance with the terms of the Agreements, common
      shareholders of Northern received three (3) shares of the Deep Well’s restricted
      common stock for each one (1) share of Northern’s common stock and preferred
      shareholders of Northern will receive thirty (30) shares of the Deep Well’s
      restricted common stock for each one (1) share of Northern’s preferred stock
      held by such shareholders.





23


On
      April
      4, 2007, our Company completed the acquisition of the preferred shares of
      Northern. From February 27, 2006 to April 4, 2007, our Company issued 12,960,000
      shares of its common stock to acquire all of the preferred stock of
      Northern.





**Holders
      of Record**





As
      of
      February 29, 2008 we had approximately 185 holders of record of our shares
      of
      common stock. Our Company estimates that investment dealers and other nominees
      hold common shares for approximately 3,280 beneficial holders.





**Dividends**





Our
      Company has not paid cash dividends since inception. Our Company intends to
      retain all of its earnings, if any, for use in its business and does not
      anticipate paying any cash dividends in the foreseeable future. The payment
      of
      any future dividends will be at the discretion of the Board of Director’s and
      will depend upon a number of factors, including future earnings, the success
      of
      our Company’s business activities, capital requirements, the general financial
      condition and future prospects of our Company, general business conditions
      and
      such other factors as the Board of Directors may deem relevant.





**Equity
      Compensation Plan Information**





The
      following table provides information as of September 30, 2005 with respect
      to
      shares of Deep Well common stock that may be issued under our existing equity
      compensation plans.





**Equity
                Compensation Plan Category**
            
            **(a)**
              **Number
                of Securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            
            **(b)**
              **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
            
            **(c)**
              **Number
                of Securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))**Equity
                compensation plans approved by security holders
            
            
            None
            
            
            None
            
            
            NoneEquity
                compensation plans not approved by security holders
            
            
            None
            
            
            None
            
            
            None**Total**
            
            
            **None**
            
            
            **None**
            
            
            **None**





**Stock
      Option Plan**





On
      November 28, 2005 the Board of Directors of Deep Well adopted the Deep Well
      Oil
& Gas, Inc. Stock Option Plan. The Stock Option Plan, which if administered
      by the Board, permits options to acquire shares of Deep Well’s common stock to
      be granted to directors, senior officers and employees of our Company, as well
      as certain consultants and other persons providing services to our Company.
      This
      Stock Option Plan was adopted to provide an incentive to the retention of
      directors, officers and employees as well as consultants our Company may wish
      to
      retain in the future. The maximum number of common shares that may be reserved
      for issuance under the Stock Option Plan may not exceed 10% of our Company’s
      issued and outstanding common shares, subject to adjustment as contemplated
      by
      the Stock Option Plan. The aggregate number of common shares with respect to
      which options may be granted to any one person (together with their associates)
      in any one year, together with all other incentive plans of our Company, may
      not
      exceed 500,000 common shares, and in total may not exceed 2% of the total number
      of common shares outstanding. On November 28, 2005, the Board granted 375,000
      options to acquire common shares to each director of Deep Well and granted
      187,500 options to acquire common shares to a director of a subsidiary of Deep
      Well. The exercise price of such options is $0.71 per share. In each case,
      the
      vesting of such director options will occur only if the holder of the options
      continues to provide services to us during the immediate annual period preceding
      the relevant vesting date. The options will terminate at the close of business
      five years from the date of grant. In addition, on November 28, 2005, the Board
      granted 390,000 options to acquire common shares to certain corporations
      providing consulting services to us. Each of such consultants are wholly owned
      by directors of our Company. The exercise price of such options is $0.71 per
      share. In each case, the vesting of such consultant options will occur only
      if
      the holder of the options continues to provide services to us on the relevant
      vesting date. The options will terminate at the close of business five years
      from the date of grant. No
      option
      granted under the Stock Option Plan may be exercised until the Stock Option
      Plan
      has been approved and ratified by the holders of a majority of the voting stock
      of our Company at a shareholders' meeting or by consent resolution of said
      majority shareholders.





24


On
      September 28, 2007 the
      Board
      of Directors of our Company granted options
      under the stock option plan to a certain employee to acquire 36,000 common
      shares of our Company at the exercise price of $0.47 per common share, of which
      8,000 shall be vested immediately and 28,000 shall be vested at a rate of 2,000
      common shares per month commencing September 30, 2007 so long as the employee
      continues to provide employment services on such vesting dates.





On
      October 1, 2007 we entered into a Consulting Agreement, effective September
      20,
      2007, with R.N. Dell Energy Ltd. (hereinafter referred to as “Contractor”). On
      September 28, 2007 under the terms of the Consulting Agreement, the Board of
      Directors of our Company granted options
      to the Contractor to acquire 240,000 common shares of our Company at the
      exercise price of $0.47 per common share (being the closing price as of the
      day
      before the effective date) which shall be vested at a rate of 20,000 common
      shares per month commencing October 31, 2007 so long as the Contractor continues
      to provide consulting services on such vesting dates.





**Sales
      of Unregistered Securities**





On
      March
      10, 2005, Deep Well closed on a transaction pursuant to a certain Securities
      Purchase Agreement (“SPA“), with two accredited investors for an aggregate
      purchase price of $750,000 pursuant to which we sold an aggregate of (i)
      1,875,000 shares of Deep Well’s common stock, par value $0.001 per share, at a
      purchase price of $0.40 per share, and (ii) 750,000 warrants, of which each
      of
      the warrants is exercisable from March 10, 2005 until March 9, 2010, at an
      exercise price equal to $0.50 per share. Deep Well issued the aforementioned
      securities to the investors pursuant to Rule 506 of Regulation D as promulgated
      under the Securities Act of 1933, as amended, and/or Section 4(2) of the Act.
      In
      connection with the SPA, a finder's fee of $75,000 was paid and 37,500 warrants
      were issued. The exercise price of the warrants will be adjusted from time
      to
      time upon the occurrence of certain events, as provided in the warrants, and
      as
      a result of the issuance of common stock on May 25, 2007 and pursuant to the
      SPA
      and Form of Warrant dated March 10, 2005 entered into by and among our Company
      and the investors (the “Warrant Holders”) our Company issued an adjustment to
      the Warrant Holders and the commission holder of the warrants associated with
      the finder’s fee. The original warrant dated March 10, 2005 contained a price
      adjustment if our Company sells, issues or grants additional shares of its
      common stock at a price per share less than the exercise price. In the event
      of
      a price adjustment, the number of shares exercisable under the warrant would
      also increase. Therefore, the exercise price of the original warrant has been
      adjusted from $0.50 to $0.40 per common share. Our Company has granted the
      Warrant Holders and the holder of the warrants associated with the finder’s fee
      new warrants to purchase an additional 196,875 common shares for a total of
      984,375 shares of our Company's common stock at an adjusted exercise price
      of
      $0.40 per share under the same terms as the original warrant Deep Well entered
      into a Registration Rights Agreement (“RRA”) with the investors, dated as of
      March 10, 2005, pursuant to which Deep Well was obligated to prepare and file
      a
      registration statement no later than 45 days after the closing date registering
      the number of shares of our common stock which was at least equal to (i) the
      aggregate number of shares of common stock issued under the SPA plus (ii) 125%
      of the aggregate number of shares of common stock issuable upon exercise of
      the
      warrants. Deep Well must use its reasonable best efforts to cause the
      registration statement to become effective as soon as practicable following
      the
      filing, but in no event later than 120 days after the closing date. If the
      registration statement is not filed within 45 days after the closing date or
      declared effective within the time specified in the preceding paragraph, Deep
      Well was required to make payments to the investors equal to 2% of the purchase
      price and an additional 2% of the purchase price for each subsequent 30-day
      period as to which the registration statement was not filed or declared
      effective. Effective on January 22, 2007, our Company entered into a Settlement
      Agreement and Release of All Claims (the “Settlement Agreement”) with the
      investors who were in receipt of the above issued shares with respect to
      allegations made by the investors that our Company had breached the SPA and
      the
      RRA.





The
      Settlement Agreement provides, without any party acknowledging any liability,
      for:





·
            the
                amendment of the SPA to delete certain restrictions on our Company’s
                ability to enter into any future financings;·
            the
                termination of the RRA; and·
            the
                issuance to the Investors of an aggregate of 1,600,000 (one million
                six
                hundred thousand) shares of common stock of our Company (the “Shares”),
                including the granting of certain piggyback registration rights related
                thereto; and·
            the
                full and final settlement of all existing or potential claims between
                our
                Company and the Investors arising under the SPA and the
                RRA.





On
      August
      12, 2005 pursuant to subscription agreements, our Company closed a private
      placement to three investors of an aggregate of 500,000 units at a price of
      $0.40 per unit, for total proceeds of $200,000. Each unit consists of one common
      share and one common share purchase warrant, with each warrant entitling its
      holder to acquire one share of our common stock at an exercise price of $0.60.
      The exercise price of the warrants will be adjusted from time to time upon
      the
      occurrence of certain events, as provided in the warrants. The warrants expire
      on August 12, 2008. The units were issued pursuant to Regulation S. In addition,
      on August 12, 2005, pursuant to a Debt Settlement Agreement, one holder of
      $84,378.40 of our indebtedness exchanged its indebtedness for 210,946 units
      at a
      deemed exchange price of $0.40 per unit. Each unit consists of one common share
      and one common share purchase warrant, with each warrant entitling its holder
      to
      acquire one common share of Deep Well, at an exercise price of $0.60. The
      exercise price of the warrants will be adjusted from time to time upon the
      occurrence of certain events, as provided in the warrants. The warrants expire
      on August 12, 2008. The units were issued pursuant to Regulation S under the
      Securities Act of 1933, as amended.





25


On
      October 11, 2005 pursuant to subscription agreements, our Company closed a
      private placement to three investors of an aggregate of 3,150,000 units at
      a
      price of $0.40 per unit, for total gross proceeds of $1,260,000. Each unit
      consists of one common share and one common share purchase warrant, with each
      warrant entitling its holder to acquire one share of our common stock at an
      exercise price of $0.60 per common share. The exercise price of the warrants
      will be adjusted from time to time upon the occurrence of certain events, as
      provided in the warrants. The warrants expire on October 11, 2008. In connection
      with the private placement, a finder’s fee of $36,000 was paid, resulting in
      total net proceeds to our company from the private placement of $1,224,000.
      The
      units were issued pursuant to Regulation S under the Securities Act of 1933,
      as
      amended.





On
      January 13, 2006 pursuant to subscription agreements, our Company closed a
      private placement to three investors of an aggregate of 51,200 units at a price
      of $1.50 per unit, for total gross proceeds of $76,800. Each unit consists
      of
      one common share and one common share purchase warrant, with each warrant
      entitling its holder to acquire one share of our common stock at an exercise
      price of $2.25 per common share. The exercise price of the warrants will be
      adjusted from time to time upon the occurrence of certain events, as provided
      in
      the warrants. The warrants expire on January 13, 2009. The units were issued
      pursuant to Regulation S. In addition, on January 13, 2006, pursuant to a Debt
      Settlement Agreement, one holder of $38,293 of our indebtedness exchanged its
      indebtedness for 21,800 units at a deemed exchange price of $1.50 per unit.
      Each
      unit consists of one common share and one common share purchase warrant, with
      each warrant entitling its holder to acquire one common share of Deep Well,
      at
      an exercise price of $2.25. The exercise price of the warrants will be adjusted
      from time to time upon the occurrence of certain events, as provided in the
      warrants. The warrants expire on January 13, 2009. In connection with the
      private placement, a finder’s fee of $7,680 was paid, resulting in total net
      proceeds to our company from the private placement of $69,120. The units were
      issued pursuant to Regulation S under the Securities Act of 1933, as
      amended.





On
      February 23, 2006 pursuant to an exercised option agreement our Company entered
      into on June 7, 2005, our Company issued 4,707,750 Deep Well common shares
      in
      exchange for 156,925 of the outstanding preferred shares of Northern. The common
      shares were issued pursuant to Section 4(2) of the 1933 Act.





On
      June
      13, 2006 further pursuant to an exercised option agreement our Company entered
      into on June 7, 2005, our Company issued 2,867,250 Deep Well common shares
      in
      exchange for 95,575 of the outstanding preferred shares of Northern. The common
      shares were issued pursuant to Section 4(2) of the 1933 Act.





On
      July
      28, 2006 a warrantholder of our Company acquired 100,000 common shares upon
      exercising warrants at an exercise price of $0.60 per common share for total
      gross proceeds to our Company of $60,000. The common shares were issued pursuant
      to Section 4(2) of the 1933 Act.





On
      September 11, 2006 a warrantholder of our Company acquired 50,000 common shares
      upon exercising warrants at an exercise price of $0.60 per common share for
      total gross proceeds to our Company of $30,000. The common shares were issued
      pursuant to Section 4(2) under the 1933 Act.





On
      April
      4, 2007 Northern became a 100% wholly owned subsidiary of Deep Well as a result
      of our Company issuing 5,400,000 common shares of Deep Well, in exchange for
      the
      last remaining 180,000 outstanding preferred shares of Northern. On June 7,
      2005, Deep Well entered into certain share exchange agreements (the
“Agreements”) with the shareholders of Northern pursuant to which Deep Well
      previously acquired 100% of the issued and outstanding common shares of
      Northern. In addition, pursuant to the Agreements, Deep Well received options
      to
      acquire, in exchange for shares of common stock of Deep Well, 100% of the issued
      and outstanding preferred shares of Northern, while the holders of such
      preferred shares received the right to require our Company to purchase such
      preferred shares in exchange for shares of common stock of Deep Well. As of
      April 4, 2007 all of the holders of such preferred shares of Northern have
      exercised their options in exchange for restricted shares of common stock of
      Deep Well. In accordance with the terms and conditions of the Agreements, Deep
      Well has now completed the acquisition of acquiring 100% of the preferred shares
      of Northern in exchange for 12,975,000 shares of common stock of Deep Well.
      The
      shares of common stock of Deep Well issued in exchange for the Northern
      preferred shares were issued pursuant to Section 4(2) of the 1933
      Act.





26


On
      May
      25, 2007 pursuant to subscription agreements, our Company completed a private
      placement of 5,000,000 units at a price of $0.40 per unit for gross proceeds
      of
      $2,000,000. Each unit consists of one common share and one common share purchase
      warrant, with each warrant entitling its holder to acquire one share of our
      common stock at a price of $0.60 per share. The exercise price of the warrants
      will be adjusted from time to time upon the occurrence of certain events, as
      provided in the warrants. The warrants expire on May 25, 2010. In connection
      with the private placement a finder's fee of $150,000 was paid. The units were
      issued pursuant to Regulation S under the Securities Act of 1933, as amended.





On
      June
      22, 2007 pursuant to subscription agreements, our Company completed a private
      placement of 8,333,333 units at a price of $0.60 per unit for $5,000,000. Each
      unit consists of one common share and one common share purchase warrant and
      another twelve one-hundredths common share purchase warrant ("Special Warrant").
      Each warrant entitles the holder to purchase one additional common share at
      a
      price of $0.90 per common share for a period of three years from the date of
      closing. Each Special Warrant entitles the holder to purchase a common share
      at
      a price of $1.20 for a period of five years from the date of closing. The
      exercise price of the warrants and the Special Warrants will be adjusted from
      time to time upon the occurrence of certain events, as provided in the warrants
      and Special Warrants. The warrants expire on June 22, 2010 and the Special
      Warrants expire on June 22, 2012. In connection with the private placement
      a
      finder's fee of $300,000 was paid. The units were issued pursuant to Regulation
      S under the Securities Act of 1933, as amended.





On
      July
      11, 2007 pursuant to subscription agreements, our Company completed a private
      placement of 323,333 units at a price of $0.60 per unit for $194,000. Each
      unit
      consists of one common share and one common share purchase warrant and another
      twelve one-hundredths common share purchase warrant (“July Special Warrant”).
      Each warrant entitles the holder to purchase one additional common share at
      a
      price of $0.90 per common share for a period of three years from the date of
      closing. Each July Special Warrant entitles the holder to purchase a common
      share at a price of $1.20 for a period of five years from the date of closing.
      The exercise price of the warrants and the July Special Warrants will be
      adjusted from time to time upon the occurrence of certain events, as provided
      in
      the warrants and July Special Warrants. The warrants expire on July 11, 2010
      and
      the July Special Warrants expire on July 11, 2012. In connection with the
      private placement a finder’s fee of $9,700 was paid. The units were issued
      pursuant to Regulation S under the Securities Act of 1933, as amended.





In
      September 2007 our Company issued an adjustment to two existing warrantholders.
      The original warrant dated March 10, 2005 contained a price adjustment in the
      event that our Company sold, issued or granted additional shares of its common
      stock at a price per share less than the exercise price of the warrant. In
      the
      event of a price adjustment, the number of shares exercisable under the warrant
      would also increase. Therefore, the exercise price of the original warrant
      has
      been adjusted from $0.50 to $0.40 per common share. our Company has granted
      the
      warrantholders and the commission holder of the warrants associated with the
      finder’s fee, new warrants to purchase an additional 196,875 common shares for a
      total of 984,375 shares of our Company's common stock at an adjusted exercise
      price of $0.40 per share under the same terms as the original warrant. The
      warrants were issued pursuant to Section 4(2) of the 1933 Act.





27


**ITEM
      6.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





*You
      should read the following discussion and analysis in conjunction with our 2005
      audited consolidated financial statements. All statements contained herein
      that
      are not historical facts, including, but not limited to, statements regarding
      our Company’s current business strategy, our Company’s projected sources and
      uses of cash, and our Company’s plans for future development and operations, are
      based upon current expectations. These statements are forward-looking in nature
      and involve a number of risks and uncertainties. Actual results may differ
      materially. Among the factors that could cause actual results to differ
      materially are the following: the availability of sufficient capital to finance
      our Company’s business plans on terms satisfactory to our Company; competitive
      factors; changes in labor, equipment and capital costs; changes in regulations
      affecting our Company’s business; future acquisitions or strategic partnerships;
      general business and economic conditions; and factors described from time to
      time in the reports filed by our Company with the Securities and Exchange
      Commission. Our Company cautions readers not to place undue reliance on any
      such
      forward-looking statements, which statements are made pursuant to the Private
      Litigation Reform Act of 1995 and, as a result, are pertinent only as of the
      date made.*





*Our
      financial statements and information are reported in U.S. dollars and are
      prepared based upon American generally accepted accounting
      principals.*





**General
      Overview**





We
      are an
      emerging independent junior oil and gas exploration and development company
      headquartered in Edmonton, Alberta, Canada. Our Company’s immediate corporate
      focus is to develop the existing land base that it presently controls in the
      Peace River Oil Sands area in North Central Alberta. Our principal office is
      located at 510 Royal Bank Building, 10117 Jasper Avenue, Edmonton, Alberta
      T5J
      1W8, our telephone number is (780) 409-8144 and our fax number is (780)
      409-8146. Our Company also has an exploration office in Calgary, Alberta. Deep
      Well Oil & Gas, Inc. is a Nevada corporation and trades on the pink sheets
      under the symbol DWOG. We maintain a website at www.deepwelloil.com.





**Operations**





Our
      Company currently owns an 80% working interest in 51 contiguous sections of
      oil
      sands development leases, 40% working interest in an additional 12 sections
      of
      oil sands development leases and an 80% working interest in 6.5 sections of
      oil
      sands permits in the Sawn Lake heavy oil area in North Central Alberta. These
      leases and permits cover 43,964 gross acres or 17,792 gross hectares. The
      remaining working interest partners are Andora with a 10% working interest
      and
      1132559 Alberta Ltd. with a 10% working interest. Andora is 53.5% owned by
      Pan
      Orient who was the previous owner of their 10% working interest. Signet has
      now
      merged with a wholly owned subsidiary of Andora, therefore Signet’s 40% working
      interest in the 12 sections earned in the Sawn Lake project is now owned and
      controlled by Andora.





On
      February 25, 2005, we entered into a Farmout Agreement with Signet. This
      agreement allowed Signet to earn up to a 40% working interest in the farmout
      lands (50% of our Company’s share). Among other things the agreement called for
      Signet to drill 10 wells, pay our Company a $2,000,000 prospect fee and give
      us
      33.33% of the outstanding shares of Surge on the day the agreement was signed.
      On November 15, 2005, our Company and Signet amended the Farmout Agreement
      and
      further agreed to acknowledge the original Farmout Agreement. In accordance
      with
      the Farmout Agreement, Signet was to drill 10 wells, based on a rolling option
      to drill, prior to February 25, 2008, at no cost to our Company, to fully earn
      its 40% working interest in the project. In addition, our Company owned
      7,550,000 common shares of Signet. Under the Farmout Agreement, notice to our
      Company of Signet’s intent to drill the next option well was due by December 16,
      2006, and accordingly, since such notice was not provided Signet’s right to earn
      additional interest in the Sawn Lake acreage from our Company had expired.
      In
      December 2006, our Company notified Signet that it was disputing Signet earning
      an additional 12 sections, as a result of drilling the 4-32 and 7-30 wells,
      because Signet failed to properly complete the wells by not conducting the
      production testing as reasonably required under the Farmout Agreement. The
      Farmout Agreement stated that the sustained production test must be of
      sufficient duration to establish to the Farmor’s (therefore Deep Well’s)
      reasonable satisfaction the initial productivity of the earning well. Signet’s
      view was that it had earned the 12 sections pursuant to the terms of the Farmout
      Agreement. These 12 sections were subject to selection in accordance with the
      provisions of the Farmout Agreement. On November 26, 2007 our Company entered
      into mediation with Signet and resolved their differences on this and certain
      collateral matters. The settlement included, but is not limited to:





·
            the
                Farmout Agreement dated February 25, 2005, being effectively terminated
                concurrently with the execution of the settlement agreement;





·
            Signet
                being regarded as having earned the two sections on which the option
                wells
                were drilled and 4 additional sections as set out in the settlement;




28




·
            Signet
                being required to reconvey registered title to 57.5 unearned sections
                of
                the Farmout Lands, as defined in the Farmout Agreement, back to us;
                and





·
            Our
                Company having the right to retest, at no cost to Signet, the option
                wells
                previously drilled.





**Events
      since the last 10-KSB** filed on
      February 23, 2007





·
            On
                April 4, 2007 our Company completed the acquisition of 100% of Northern
                Alberta Oil Ltd.’s preferred
                shares.





·
            On
                May 25, 2007 our Company raised $2,000,000 through a private
                placement.





·
            On
                June 22, 2007 our Company raised $5,000,000 through a private
                placement.





·
            On
                July 11, 2007 our Company raised $194,000 through a private
                placement.





·
            On
                September 11, 2007 our Company exercised its dissenting rights at
                Signet’s
                special meeting of shareholders held in Calgary, Alberta with respect
                to
                the proposed arrangement between Signet and
                Andora.





·
            On
                October 1, 2007 our Company retained the consulting services of Mr.
                Edward
                A. Howard a Geologist and Palynologist to assist in the exploitation
                and
                development of the Company’s Sawn Lake
                Project.





·
            On
                October 15, 2007 our Company retained the consulting services of
                Mr.
                Ferdinand Brathwaite, an Engineering Technologist to assist in the
                exploitation and development of the Company’s Sawn Lake
                Project.





·
            On
                November 26, 2007 our Company resolved the pending litigation issues
                with
                Signet relating to the lawsuit and counterclaim referred to in Item
                3
                Legal Proceedings.





·
            On
                January 24, 2008 Signet transferred registered title to 57.5 sections
                back
                to our Company giving us an 80% working interest in 57.5
                sections.





·
            In
                March of 2008 our Company and Star Capital Inc. entered into a Full
                and
                Final Mutual Release whereby all the parties settled the claims filed
                against our Company.





·
            On
                April 2, 2008 our Company successfully bid on 1 Petroleum and Natural
                Gas
                Rights parcel for a total of 6 sections in the Ochre area covering
                3,795
                gross acres (1,536 gross hectares) with a net working interest of
                100%,
                increasing our land holdings in the Peace River Oil Sands area by
                8%.





**Plan
      of Operations over the next 12 months**





Our
      Company’s current and near term development plan is to use the funds recently
      acquired to execute our Company’s plan of development for the Sawn Lake Project.
      The first stage of the plan will include updated well evaluation testing and
      project re-analysis and engineering study. To accomplish this our Company
      recently purchased and interpreted seismic data for certain sections of the
      Sawn
      Lake project. This recent seismic acquisition and reprocessing is in addition
      to
      and focuses on different areas than the seismic previously acquired and
      reprocessed by Signet, the results of the Signet reprocessed seismic and the
      aeromagnetic data is now available to our Company by virtue of the November
      26,
      2007 settlement with Signet. Based on this newly acquired data, log analyses
      and
      information obtained from external public resources our Company’s operations
      team selected 6 locations to be drilled over the next 12 months. Our Company
      engaged Frontier Engineering and Consulting Ltd. (hereinafter referred to as
      “Frontier Engineering”) an engineering firm to assist us in project
      management and all coordinating aspects and stages of our Company’s drilling,
      completion and developing the Sawn Lake Project .
      Frontier Engineering has completed surveying of these 6 locations along with
      their respective environmental field reports. Our Company has also engaged
      Progress Land Services Ltd. (hereinafter referred to as “Progress Land”) to
      assist us in all regulatory compliance and surface rights with the appropriate
      governmental departments. Frontier Engineering is working closely with Progress
      Land and they are currently in the public consultation stage submitting
      notifications to the participants. Subject to regulatory approval, our Company
      expects to begin preparing these selected well sites for drilling over the
      next
      12 months. To assist in defining the Sawn Lake project these 6 locations have
      been selected to cover more surface area of the reservoir than previously
      drilled. As operator for these leases, our Company will also test the wells
      for
      cold flow capability to its satisfaction. The focus of our Company’s drilling
      program is to further define the heavy oil reservoir to determine the best
      technology under which oil can be produced from the Sawn Lake project in order
      to initiate production to generate an early positive cash flow.





**Reorganization
      and Raising Capital**





On
      February 19, 2003 our Company filed a Petition for Relief under Chapter 11
      of
      the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the
      Eastern District of New York titled In re: Allied Devices Corporation, et al.,
      Chapter 11, Case No. 03-80962-511 “the Bankruptcy Action”. On September 10,
      2003, after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge
      Melanie L. Cyganowski issued an “Order Confirming Liquidating Plan of
      Reorganization” in the Bankruptcy Action. In conjunction with that Bankruptcy
      Order, our Company’s liabilities, among other things, were paid off and
      extinguished.





During
      the fiscal years 2005, 2006 and 2007 we financed our business operations through
      private offerings of our common stock and realized gross proceeds of $9,480,000
      from these private placement offerings. In these offerings we sold units
      comprised of common stock and warrants to purchase additional common stock,
      and
      as a result we had an aggregate of 19,463,787 outstanding warrants from these
      offerings with exercise prices ranging from $0.40 to $2.25, as at September
      30,
      2007. If all of the warrants sold in the offerings are exercised per their
      terms, we may realize aggregate proceeds of approximately $14,822,127. However,
      the warrant holders have complete discretion as to when, or if, the warrants
      are
      exercised before they expire and we cannot guarantee that the warrant holders
      will exercise any of the warrants.





29


Our
      Company has the funds anticipated to complete its near term business plan. We
      anticipate that, if needed, we will raise funds during the next twelve months
      through private placements of our common stock under exemptions from the
      registration requirements provided by Canadian, United States and state and
      provincial securities laws. The purchasers and manner of issuance will be
      determined according to our financial needs and the available exemptions. We
      also note that if we issue more shares of our common stock, then our
      stockholders may experience dilution in the value per share of their common
      stock. We may not be able to raise sufficient funding from stock sales for
      long
      term operations and, if so, we may be forced to delay our business plans until
      adequate funding is obtained. We believe debt financing will not be an
      alternative for funding in the exploration stage of our Company due to the
      risky
      nature of business. The lack of tangible assets, until such time as an
      economically viability can be demonstrated, places debt financing beyond the
      credit-worthiness required by most lenders.





**Significant
      Changes in Number of Employees**





Our
      Company currently has two full time employees, three part time office staff
      and
      five prime subcontractors. For
      further information on subcontractors see “Compensation Arrangements for
      Executive Officers” under item 10 “Executive Compensation” described in this
      report. We
      expect
      to hire from time to time more employees, independent consultants and
      contractors during the stages of implementing our plans.





Mr.
      Menno
      Wiebe replaced Mr. John Brown as Chief Operating Officer on July 6, 2004. Mr.
      Menno Wiebe served as Chief Operating Officer of our Company from July 6, 2004
      until June 29, 2005. Mr. Wiebe is claiming $37,985.76 Cdn in his claim against
      our Company. None of this amount was paid as of the 2005 year end. Mr. Cyrus
      Spaulding replaced Mr. Menno Wiebe as Chief Operating Officer on September
      1,
      2005.





Mr.
      Cyrus
      James Spaulding, was an independent contractor under his consulting company,
      Trebax Projects Ltd. (“Trebax”). He resigned from his position as Chief
      Operating Officer of our Company, effective September 21, 2007. As of the
      effective date Trebax’s existing consulting agreement has been
      terminated.





Effective
      September 20, 2007 our Company entered into a Consulting Agreement with R.N.
      Dell Energy Ltd., whose primary consultant is Mr. Edward A. Howard, to assist
      our Company in the further exploitation and development of Deep Well’s Sawn Lake
      project. Mr. Edward A. Howard, a Geologist and Palynologist has over 40 years
      of
      heavy oil experience. Most recently Mr. Howard was Vice President Exploration
      and Development for Signet (recently acquired by Andora). Signet was the Farmee
      which had the right to earn acreage from Deep Well. Signet’s rights, under the
      Farmout Agreement to drill to earn more acreage, has since expired and as of
      November 26, 2007 the Farmout Agreement has been terminated. At Signet Mr.
      Howard was responsible for the planning and execution of the Sawn Lake drilling
      program. Mr. Howard has also worked with several companies in the heavy oil
      sector including Sceptre Resources (taken over by CNRL) at their Tangleflags
      field and Shell Canada at their Peace River Project. Mr. Howard was credited
      with the discovery and early development of the first successful Steam Assisted
      Gravity Drainage heavy oil extraction project for Sceptre at the Tangleflags
      field. While at Shell from 1967 to 1977 Mr. Howard was instrumental in
      developing Shell’s Peace River strategy from the early inception through to the
      Pilot Plant stage. This project continues to be one of the most successful
      in
      situ oil sands producers. Also Mr. Howard has implemented noteworthy Cyclical
      Stream Simulation projects in Alberta. Some of these projects have proven to
      increase primary and secondary recovery by 50% - 60%. Mr. Howard’s extensive
      experience with the primary and secondary recovery of heavy oil as well as
      his
      direct knowledge of the Peace River oil sands area, specifically the Sawn Lake
      project will be a great benefit to Deep Well.





Effective
      October 15, 2007 our Company entered into a Consulting Agreement with Picoplat
      Consulting Inc., whose primary consultant is Mr. Ferdinand Brathwaite to assist
      our Company in the exploitation and development of Deep Well’s Sawn Lake
      project. Mr. Ferdinand Brathwaite is an Engineering Technologist, who has
      substantial knowledge and expertise related to oil and gas recovery in the
      Western Sedimentary Basin.





**Off
      Balance Sheet Arrangements**





Our
      Company does not have any off-balance sheet arrangements.




30


**MADSEN
                & ASSOCIATES, CPA’S INC.**
            684
                East Vine St. #3Certified
                Public Accountants and Business Consultants
            Murray,
                Utah 84107Telephone
                801-268-2632Fax
                801-262-3978




Board
      of
      Directors


Deep
      Well
      Oil & Gas, Inc.


Edmonton,
      Alberta, Canada





**REPORT
      OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS**





We
      have
      audited the accompanying consolidated balance sheet of Deep Well Oil & Gas,
      Inc. and Subsidiary (exploration stage company) at September 30, 2005 and the
      statements of operations, stockholders’ equity, and cash flows for the years
      ended September 30, 2005 and 2004 and the period September 10, 2003 (date of
      inception of exploration stage) to September 30, 2005. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Deep Well Oil & Gas, Inc. at
      September 20, 2005 and the statements of operations, and cash flows for the
      years ended September 30, 2005 and 2004 and the period September 10, 2003 (date
      of inception of exploration stage) to September 30, 2005 in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. The Company will need additional working capital
      for its planned activity and to service its debt, which raises substantial
      doubt
      about its ability to continue as a going concern. Management’s plans in regard
      to these matters are described in the notes to the financial statements. These
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




/s/
      Madsen & Associates, CPA’s Inc.





Salt
      Lake
      City, Utah


February
      10, 2008





31


**DEEP
      WELL OIL & GAS, INC. (AND SUBSIDIARY)**


**(Exploration
      Stage Company)**


**Consolidated
      Balance Sheet**


**September
      30, 2005 and 2004**





**2005**
            
            2004ASSETS**Current
                Assets**Cash
            
            **$**
            **135,879**
            
            $
            499,765Accounts
                receivable
            
            
            **48,727**
            
            
            17,879Prepaid
                expenses
            
            
            **27,901**
            
            
            34,641**212,507**
            
            
            552,285**Loan
                receivable - related parties**(Note 7)
            
            
            **11,604**
            
            
            119,790**Oil
                and gas properties**(Note 4)
            
            
            **5,315,252**
            
            
            111,392**Equipment
                - net**
            
            
            **602**
            
            
            —**$**
            **5,539,965**
            
            $
            783,467LIABILITIES**Current
                Liabilities**Accounts
                payable
            
            **$**
            **211,716**
            
            $
            64,500Accounts
                payable - related parties (Note 7)
            
            
            **215,718**
            
            
            128,525Note
                and accrued interest payable (Note 5)
            
            
            **43,160**
            
            
            111,306**470,594**
            
            
            304,331**Convertible
                debenture and accrued interest**(Note 6)
            
            
            **1,021,463**
            
            
            1,004,890**Loan
                payable - related parties**(Note 7)
            
            
            **294,487**
            
            
            —**1,786,544**
            
            
            1,309,221SHAREHOLDERS’
                EQUITY**Common
                stock:**(Note
                8)**Authorized:
                300,000,000 shares at $0.001 par value****Issued
                and outstanding: 52,031,289 shares****(September
                2004 - 31,236,468)**
            
            
            **52,031**
            
            
            31,236**Additional
                paid in capital**
            
            
            **3,512,054**
            
            
            18,764**Capital
                stock subscriptions received (12,975,000 shares)**
            
            
            **2,027,639**
            
            
            —**Deficit
                (dated September 10, 2003)**
            
            
            **(1,838,303**
            **)**
            
            (575,754
            )**3,753,421**
            
            
            (525,754
            )**$**
            **5,539,965**
            
            $
            783,467





See
      accompanying notes to the financial statements




Approved
                on behalf of the Board/s/
                Horst A. Schmid
            
            
            /s/
                Curtis SparrowDirector
            
            
            Director




32


**DEEP
      WELL OIL & GAS, INC. (AND SUBSIDIARY)**


**(Exploration
      Stage Company)**


**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**For
      the Years Ended September 30, 2005 and 2004 and the Period September 10,
      2003**


**(Inception
      of Exploration Stage) to September 30, 2005**





**2005**
            
            2004
            
            September
                10, 2003 to September 30, 2005**Revenue**
            
            $
            —
            
            $
            —
            
            $
            —**Expenses**Administrative
            
            
            **1,172,417**
            
            
            544,199
            
            
            1,766,616**Net
                loss from operations**
            
            
            **(1,172,417**
            **)**
            
            (544,199
            )
            
            (1,766,616
            )**Other
                income and expenses**Interest
                income
            
            
            **13,478**
            
            
            —
            
            
            13,478Interest
                expense
            
            
            **(103,610**
            **)**
            
            (6,421
            )
            
            (110,031
            )Settlement
                of debt
            
            
            —
            
            
            24,866
            
            
            24,866**Net
                loss**
            
            $
            **(1,262,549**
            **)**
            $
            (525,754
            )
            $
            (1,838,303
            )**Net
                loss per common share**Basic
                and diluted
            
            $
            **(0.03**
            **)**
            $
            (0.02
            )**Weighted
                average outstanding shares **-
                stated in 1,000’s****Basic
            
            
            **38,117**
            
            
            31,236




See
      accompanying notes to the financial statements




33


**DEEP
      WELL OIL & GAS, INC. (AND SUBSIDIARY)**


**(Exploration
      Stage Company)**


**CONSOLIDATED
      STATEMENT OF SHAREHOLDERS’ EQUITY**


**For
      the Period September 10, 2003 (Inception of Exploration Stage) to September
      30,
      2005**





CapitalCommon
                Shares
            
            Additional
            
            StockPaid
                in
            
            Subscriptions
            
            AccumulatedShares
            
            Amount
            
            Capital
            
            Received
            
            Deficit
            
            Total**Balance
                at****September
                10, 2003**(Note 1)
            
            
            991,912
            
            $
            992
            
            $
            (992
            )
            $
            —
            
            $
            —
            
            $
            —**Issuance
                of common stock****pursuant
                to bankruptcy****agreement
                September 10, 2003**
            
            
            36,019,556
            
            
            36,019
            
            
            13,981
            
            
            —
            
            
            —
            
            
            50,000**Net
                operating loss for****the
                period September 10****to
                September 30, 2003**
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (50,000
            )
            
            (50,000
            )**Return
                and cancellation****of
                common shares**
            
            
            (5,775,000
            )
            
            (5,775
            )
            
            5,775
            
            
            —
            
            
            —
            
            
            —**Net
                operating loss for the****year
                ended September 30, 2004**
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (525,754
            )
            
            (525,754
            )**Balance
                at****September
                30, 2004**
            
            
            31,236,468
            
            
            31,236
            
            
            18,764
            
            
            —
            
            
            (575,754
            )
            
            (525,754
            )**Issuance
                of common stock****Private
                placement March 10, 2005****-
                Shares**
            
            
            1,875,000
            
            
            1,875
            
            
            527,940
            
            
            —
            
            
            —
            
            
            529,815**-
                Warrants (787,500)**(Note
                8)
            
            
            —
            
            
            —
            
            
            205,185
            
            
            —
            
            
            —
            
            
            205,185**Share
                exchange June 7, 2005****-
                Shares**
            
            
            18,208,875
            
            
            18,209
            
            
            2,476,497
            
            
            —
            
            
            —
            
            
            2,494,706**-
                Conversion rights of preferred****shares
                of subsidiary**
            
            
            —
            
            
            —
            
            
            —
            
            
            1,777,639
            
            
            —
            
            
            1,777,639**Private
                placement August 12, 2005****-
                Shares**
            
            
            710,946
            
            
            711
            
            
            151,638
            
            
            —
            
            
            —
            
            
            152,349**-
                Warrants (710,946)**(Note
                8)
            
            
            —
            
            
            —
            
            
            132,030
            
            
            —
            
            
            —
            
            
            132,030**Common
                stock subscription received**
            
            
            —
            
            
            —
            
            
            —
            
            
            250,000
            
            
            —
            
            
            250,000**Net
                operating loss for the****year
                ended September 30, 2005**
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,262,549
            )
            
            (1,262,549
            )**Balance
                at September 30, 2005**
            
            
            52,031,289
            
            $
            52,031
            
            $
            3,512,054
            
            $
            2,027,639
            
            $
            (1,838,303
            )
            $
            3,753,421




See
      accompanying notes to the financial statements





34


**DEEP
      WELL OIL & GAS, INC.** **(AND
      SUBSIDIARY)**


**(Exploration
      Stage Company)**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**For
      the Years Ended September 30, 2005 and 2004 and the Period September 10,
      2003**


**(Inception
      of Exploration Stage) to September 30, 2005**





**2005**
            
            2004
            
            September
                10, 2003 to September 30, 2005**CASH
                PROVIDED BY (USED IN):****Operating
                Activities**Net
                loss
            
            $
            **(1,262,549**
            **)**
            $
            (525,754
            )
            $
            (1,838,303
            )Items
                not affecting cash:Bad
                debts
            
            
            **170,084**
            
            
            —
            
            
            170,084Commission
                withheld from loan proceeds
            
            
            —
            
            
            121,000
            
            
            121,000Net
                changes in non-cash working capital (note 9)
            
            
            **25,477**
            
            
            151,816
            
            
            177,293**(1,066,988**
            **)**
            
            (252,938
            )
            
            (1,369,926
            )**Investing
                Activities**Loan
                related parties
            
            
            **(525,512**
            **)**
            
            (14,905
            )
            
            (540,417
            )Purchase
                of equipment
            
            
            **(333**
            **)**
            
            —
            
            
            (333
            )Purchase
                of oil and gas properties
            
            
            —
            
            
            (111,392
            )
            
            (111,392
            )Cash
                from acquisition of subsidiary
            
            
            **11,141**
            
            
            —
            
            
            11,141**(514,704**
            **)**
            
            (126,297
            )
            
            (641,001
            )**Financing
                Activities**Note
                payable advance
            
            
            **(68,146**
            **)**
            
            —
            
            
            (68,146
            )Convertible
                debenture advance
            
            
            **16,573**
            
            
            —
            
            
            16,573Proceeds
                from issuance of common stock
            
            
            **1,269,379**
            
            
            —
            
            
            1,319,379Proceeds
                from debenture net of commissions
            
            
            —
            
            
            879,000
            
            
            879,000**1,217,806**
            
            
            879,000
            
            
            2,146,806**Increase
                (decrease) in cash**
            
            
            **(363,886**
            **)**
            
            499,765
            
            
            135,879**Cash,
                beginning of year**
            
            
            **499,765**
            
            
            —
            
            
            —**Cash,
                end of year**
            
            $
            **135,879**
            
            $
            499,765
            
            $
            135,879**Supplemental
                cash flow information:**Interest
                expense
            
            $
            **103,610**
            
            $
            6,421





See
      accompanying notes to the financial statements





35


**DEEP
      WELL OIL & GAS, INC. (AND SUBSIDIARY)**


**(Exploration
      Stage Company)**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2005**




**Note
      1.** **NATURE
      OF BUSINESS AND GOING CONCERN**





**Nature
      of Business**





The
      Company, and its former subsidiaries, were engaged in the manufacture and
      distribution of standard and custom precision mechanical assemblies and
      components throughout the United States.





On
      February 19, 2003, the Company filed a petition for bankruptcy in the United
      States Bankruptcy Court under Chapter 11 in the Eastern District of New York
      titled “Allied Devices Corporation, Case No. 03-80962-511”. The Company emerged
      from bankruptcy pursuant to a Bankruptcy Court Order entered on September 10,
      2003 with no remaining assets or liabilities.





The
      terms
      of the bankruptcy settlement included: (1) a reverse common stock split of
      30
      shares of outstanding stock for 1 share; (2) increasing the authorized common
      capital stock from 25,000,000 to 50,000,000 shares with a par value of $.001;
      (3) a change in the name of the Company from “Allied Devices Corporation” to
“Deep Well Oil & Gas, Inc.”, and (4) the authorization for the issuance of
      2,000,000 post split restricted common shares and 4,000,000 post split common
      shares in exchange for $50,000, which was paid into the bankruptcy court by
      the
      recipients of the shares.





Restated
      and amended articles of incorporation completing the terms of the bankruptcy
      have been filed in the state of Nevada.





Upon
      emergence from Chapter 11 proceedings, the Company adopted fresh-start reporting
      in accordance with the American Institute of Certified Public Accountants
      Statement of Position 90-7, Financial Reporting by Entities in Reorganization
      Under the Bankruptcy Code (SOP 90-7). In connection with the adoption of
      fresh-start reporting, a new entity was deemed created for financial reporting
      purposes. For financial reporting purposes, the Company adopted the provisions
      of fresh-start reporting effective September 10, 2003. All periods presented
      prior to September 10, 2003, including the financial information contained
      in
      these financial statements, reflect the Predecessor Company. In adopting the
      requirements of fresh-start reporting as of September 10, 2003, the company
      was
      required to value its assets and liabilities at fair value and eliminate any
      accumulated deficit as of September 10, 2003. The Company emerged from Chapter
      11 proceedings with no assets and liabilities pursuant to the Bankruptcy Order.
      Because the current business, heavy oil and gas exploration, has no relevance
      to
      the Predecessor Company, there is no basis for financial comparisons between
      the
      Company’s current operations and the Predecessor Company.





Subsequent
      to the bankruptcy on February 27, 2004, the Company completed a forward stock
      split of two shares for each outstanding share.





This
      report has been prepared showing the name “Deep Well Oil & Gas, Inc.” and
      the post split common stock, with $.001 par value, from inception. The
      accumulated deficit has been restated to zero and dated September 10, 2003,
      with
      the statement of operations to begin on that date.





**Going
      Concern**





These
      financial statements have been prepared on the basis of accounting principles
      applicable to a going concern, which presumes that the Company will be able
      to
      realize its assets and discharge its liabilities in the normal course of
      business for the foreseeable future.





The
      Company intends to seek business opportunities that will provide a profit;
      however, the Company does not have the working capital necessary to be
      successful in this effort, which raises substantial doubt about its ability
      to
      continue as a going concern. Continuation of the Company as a going concern
      is
      dependent upon obtaining additional working capital and the management of the
      Company has developed a strategy, which it believes will accomplish this
      objective through short-term related party loans and additional equity funding,
      which will enable the Company to operate for the coming year.





These
      financial statements do not include any adjustments to the amounts and
      classification of assets and liabilities that may be necessary should the
      Company be unable to continue as a going concern.




36





**Note
      2.** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





**Basis
      of Presentation**





These
      consolidated financial statements are expressed in U.S. dollars and are prepared
      in accordance with accounting principles generally accepted in the United States
      of America (“U.S. GAAP”).





**Basis
      of Consolidation**





These
      consolidated financial statements include the accounts of (i) Deep Well Oil
      & Gas (Alberta) Ltd., incorporated under the Business Corporations Act
      (Alberta), Canada on September 15, 2005 and (ii) Northern Alberta Oil Ltd.,
      from
      the date of acquisition, being June 7, 2005, incorporated under the Business
      Corporations Act (Alberta), Canada. As of September 30, 2005, Deep Well owned
      100% of the Northern common shares but did not own any of the Northern preferred
      shares. All inter-company balances and transactions have been eliminated. The
      Company has recorded “Capital stock subscriptions” ($1,777,639) which relates to
      the Northern preferred shares for which Deep Well has exclusive rights to call
      in the future. The information furnished includes the financial results of
      Northern, with effect from June 7, 2005 (see Note 3 - “Business Combination” to
      the Notes to the Consolidated Financial Statements).





**Foreign
      Currency Translation**





The
      Company translates integrated foreign operations into the functional currency
      of
      the parent. Monetary assets and liabilities denominated in foreign currencies
      are translated into U.S. dollars at rates of exchange in effect at the date
      of
      the balance sheet. Non-monetary items are translated at the rate of exchange
      in
      effect when the assets are acquired or obligations incurred. Revenues and
      expenses are translated at average rates in effect during the period, with
      the
      exceptions of amortization, which is translated at historic rates. Exchange
      gains and losses are charged to operations.





Part
      of
      the transactions of the Company were completed in Canadian dollars and have
      been
      translated to US dollars as incurred, at the exchange rate in effect at the
      time, and therefore, no gains or losses are recognized from the translations.
      US
      dollars are considered to be the functional currency.





**Accounting
      Methods**





The
      Company recognizes income and expenses based on the accrual method of
      accounting.





**Dividend
      Policy**





The
      Company has not yet adopted a policy regarding payment of
      dividends.





**Financial
      and Concentrations Risk**





The
      Company does not have any concentration or related financial credit risk except
      that cash is maintained in banks over the insured amounts of $100,000, however,
      the amounts are maintained in banks of high quality.





**Income
      Taxes**





The
      Company utilizes the liability method of accounting for income taxes. Under
      the
      liability method deferred tax assets and liabilities are determined based on
      the
      differences between financial reporting and the tax bases of the assets and
      liabilities and are measured using the enacted tax rates and laws that will
      be
      in effect, when the differences are expected to reverse. An allowance against
      deferred tax assets is recorded, when it is more likely than not, that such
      tax
      benefits will not be realized.





**Revenue
      Recognition**





The
      Company is in the business of exploring for, developing, producing and selling
      crude oil and natural gas. Crude oil revenue is recognized when the product
      is
      taken from the storage tanks on the lease and delivered to the purchaser.
      Natural gas revenues are recognized when the product is delivered into a third
      party pipeline downstream of the lease. Occasionally the Company may sell
      specific leases and the gain or loss associated with these transactions will
      be
      shown separately from the profit or loss from the operations or sales of oil
      and
      gas products.




37





**Advertising
      and Market Development**





The
      Company expenses advertising and market development costs as
      incurred.





**Basic
      and Diluted Net Income (Loss) Per Share**





Basic
      net
      income (loss) per share amounts are computed based on the weighted average
      number of shares actually outstanding. Diluted net income (loss) per share
      amounts are computed using the weighted average number of common shares and
      common equivalent shares outstanding as if shares had been issued on the
      exercise of the common share rights unless, the exercise becomes antidilutive
      and then only the basic per share amounts are shown in the report.





**Financial
      Instruments**





Fair
      Values





The
      fair
      values of the Corporation’s accounts receivables, loan receivable - related
      parties, accounts payable, accounts payable - related parties, note and accrued
      interest payable and convertible debenture approximate their carrying values
      due
      to the short-term nature of these financial instruments.





Interest
      Rate Price Risk





The
      interest rate price risk is due to fixed interest rates on the convertible
      debenture and loan payable.





**Environmental
      Requirements**





At
      the
      report date environmental requirements related to the mineral claims acquired
      are unknown and therefore an estimate of any future cost cannot be
      made.





**Recent
      Accounting Pronouncements**





The
      Company does not expect that the adoption of other recent accounting
      pronouncements will have a material impact on its financial
      statements.





**Estimates
      and Assumptions**





Management
      uses estimates and assumptions in preparing financial statements in accordance
      with generally accepted accounting principles. Those estimates and assumptions
      affect the reported amounts of the assets and liabilities, the disclosure of
      contingent assets and liabilities, and the reported revenues and expenses.
      Actual results could vary from the estimates that were assumed in preparing
      these financial statements.





**Note
      3.** **BUSINESS
      COMBINATION**





On
      June
      7, 2005, Deep Well completed its acquisition of Northern Alberta Oil Ltd. by
      way
      of a share exchange agreement where by Deep Well would acquire all the
      outstanding common shares of Northern by giving up newly issued restricted
      shares of Deep Well common stock. In addition Deep Well also has the exclusive
      option to acquire all of the preferred shares of Northern through a similar
      share exchange. As consideration Northern shareholders will receive three (3)
      shares of Deep Well common stock for every one (1) share of Northern common
      stock and each preferred Northern stock holder will receive thirty (30) shares
      of Deep Well common stock for every one (1) preferred Northern share held.
      The
      Northern preferred shares convert into 12,975,000 Deep Well common
      shares.





The
      acquisition of Northern allows Deep Well to consolidate its oil sands holdings
      in the Sawn Lake Oil Sands Project in North - Central Alberta,
      Canada.





The
      acquisition of Northern Alberta Oil Ltd. has been accounted for using the
      purchase method in accordance with SFAS No. 141 "Business Combinations" ("SFAS
      No. 141). Under the purchase method of accounting, the assets and liabilities
      of
      Northern are recorded at their fair values at the acquisition date. The
      financial statements and reported results of operations of Deep Well issued
      after the completion of the acquisition reflect these fair values, with the
      results of Northern being included within the Consolidated Statement of
      Operations from June 7, 2005.




38





As
      per
      SFAS No. 141 the measurement of the consideration is based on the fair value
      of
      the consideration given or the fair value of the net assets acquired, whichever
      is more clearly evident and, thus, more reliably measurable. In this case the
      quoted market price of the equity security issued (Deep Well shares) to effect
      the business combination has been used to estimate the fair value of the net
      assets of the entity after recognizing the possible effects of price
      fluctuations, quantities traded, issue costs, and the like. In this case the
      Company examined two private placements on March 10, 2005 and August 12, 2005
      to
      determine if discount to the share price would be needed. Both of the private
      placements consisted of shares and attached warrants therefore the Black Scholes
      pricing model was used to determined how to allocate the private placement
      proceeds to the shares and warrants. The results showed that a discount rate
      between 37% and 65% would need to be used. The Deep Well share price on June
      7,
      2005 was $0.39 and with a discount rate of 65% the price per share would be
      $0.14.





Included
      in the consideration is the possible conversion of each Northern preferred
      share
      into 30 Deep Well shares. This contingent consideration was determinable at
      the
      date of acquisition and has been included as part of the consideration given
      up
      as it was determined, beyond a reasonable doubt, that these shares would be
      converted in the future. The exchange agreement stipulated that Deep Well had
      the option to 'call' the shares after 35 months and the preferred shareholders
      had the option to 'put' those shares to Deep Well anytime within 36 months.
      It
      was Deep Well's intention to 'call' the shares if the preferred shareholders
      did
      not exercise their 'put' within the 36 months. At June 30, 2005 the preferred
      shares had not been converted but the amount has been recorded as a "Provision
      for conversion of preferred share rights of subsidiary" and included in
      Shareholders' Equity.





Total
      consideration, including the option to acquire Northern preferred shares in
      a
      share exchange was approximately $4.3 million at the price of $0.14 per share
      of
      Deep Well’s common stock, as analyzed below:





**$’000**6,069,625
                of Northern common shares exchanged 3 for 1 at $0.14
            
            $
            2,495432,500
                of Northern preferred shares exchanged 30 for 1 at $0.14
            
            
            1,777$
            4,272





The
      following table present the Deep Well’s allocation of the purchase price to the
      assets acquired and liabilities assumed, based on their fair
      values.





**$’000**ASSETS**Current
                Assets:**Cash
            
            $
            11Accounts
                receivable
            
            
            18Prepaid
            
            
            16Total
                current assets
            
            
            45Loans
                receivable - related parties
            
            
            241Oil
                and gas properties
            
            
            5,205Total
                assets
            
            
            5,491LIABILITIES**Current
                Liabilities:**Accounts
                payable
            
            
            124Accounts
                payable - related parties
            
            
            96Loan
                payable
            
            
            11Loan
                payable - related parties
            
            
            988Total
                liabilities
            
            
            1,219Net
                assets acquired
            
            $
            4,272





39




**Supplemental
      Disclosure of Pro Forma Information**





The
      following unaudited pro forma consolidated results of operations have been
      prepared as if the acquisition of Northern had occurred at October 1,
      2003:





**For
                the Year Ended September 30, 2005**
            
            For
                the Year Ended September 30, 2004Revenue
            
            **$**
            —
            
            $
            —Net
                loss
            
            **$**
            (1,772,457
            )
            $
            (2,362,361
            )Earnings
                per share (“EPS”)-
                basic and dilutive net loss per share
            
            **$**
            (0.03
            )
            $
            (0.05
            )





The
      unaudited pro forma financial information above reflects the following pro
      forma
      adjustment applied using the principles of Article 11 of Regulation S-X under
      the Securities Exchange Act of 1934:





(i)
            an
                adjustment to the weighted average number of shares used in the pro
                forma
                EPS calculation to reflect the issuance of 18.2 million common shares
                on
                the share exchange, as if the share exchange took place on October
                1,
                2003.





The
      pro
      forma information is presented for informational purposes only and is not
      necessarily indicative of the results of operations that actually would have
      been achieved had the acquisition been consummated as of that time, nor is
      it
      intended to be a projection of future results.





**Note
      4.** **OIL
      AND GAS PROPERTIES**





The
      Company has acquired an 80% interest in six oil and gas properties, which after
      a farmout agreement entered into on February 25, 2005, the Company's interest
      could be reduced to 40%. The six properties are located in North Central
      Alberta, Canada with a life of 15 years. The terms include certain commitments
      related to oil sand leases which require the payments of rents as long as the
      leases are non-producing. As of September 30, 2005, the payments due under
      this
      commitment are as follows:





2006
            
            $
            18,9442007
            
            $
            18,9442008
            
            $
            18,9442009
            
            $
            18,944Subsequent
            
            $
            179,967





The
      Government of Alberta owns this land and Deep Well has acquired the rights
      to
      perform oil and gas activities on these lands. The leases are for 15 years
      and
      if Deep Well meets the conditions of the 15-year leases Deep Well will then
      be
      permitted to drill on and produce oil from the land into
      perpetuity.





The
      Company follows the successful efforts method of accounting for costs of oil
      and
      gas properties. Under this method, acquisition costs of oil and gas properties
      and costs of drilling and equipping development wells are capitalized. Costs
      of
      drilling exploratory wells are initially capitalized and, if subsequently
      determined to be unsuccessful, are charged to expenses. All other exploration
      costs, including geological and geophysical costs and carrying and maintenance
      cost, are charged to exploration expenses when incurred. Producing properties,
      non-producing and unproven properties are assessed annually, or more frequently
      as economic events indicate, for potential impairment.





This
      consists of comparing the carrying value of the asset with the asset's expected
      future undiscounted cash flows without interest costs. Estimates of expected
      future cash flows represent management's best estimate based on reasonable
      and
      supportable assumptions. Proven oil and gas properties are reviewed for
      impairment on a field-by-field basis. In addition, management evaluates the
      carrying value of non-producing properties and may deem them impaired for lack
      of drilling activities. No impairment losses were recognized for the year ended
      September 30, 2005 (2004 - $nil).




40





Capitalized
      costs of proved oil and gas properties are depleted using the unit-of-production
      method when the property is placed in production.





Substantially
      all of the Company's oil and gas activities are conducted jointly with others.
      The accounts reflect only the Company's proportionate interest in such
      activities.





**Note
      5.** **NOTES
      AND ACCRUED INTEREST PAYABLE**





The
      Company has loans outstanding of $43,160 due on demand bearing interest at
      12%,
      which includes accrued interest payable to September 30, 2005.





**Note
      6.** **CONVERTIBLE
      DEBENTURE**





**2005**
            
            2004Convertible
                debenture
            
            **$**
            **1,021,463**
            
            $
            1,004,890





A
      $1,000,000 unsecured convertible debenture was issued during the fiscal 2004
      year. The convertible debenture bears interest at 8.5% per annum and is due
      on
      September 6, 2007. The debenture is convertible at the option of the debenture
      holder into fully paid, conversion shares which consist of one common share
      and
      one common stock purchase warrant.





Each
      warrant is convertible to one common share. The common shares have a par value
      of $0.001 and the warrants are convertible as follows:





·
            October
                6, 2004 to September 6, 2005 at $1.00 per
                warrant





·
            September
                7, 2005 to September 6, 2006 at $1.50 per
                warrant





·
            September
                7, 2006 to September 6, 2007 at $2.00 per
                warrant





If
      at any
      time during the term of the debenture the average bid and ask price of the
      Company’s common shares is three dollars ($3.00) per share or more for thirty
      (30) consecutive calendar days, the Company will have the option to convert
      the
      outstanding debenture into common stock at the price set forth
      above.





No
      value
      has been recognized on the conversion rights because the market rate of Deep
      Well shares was less then the conversion rate. The convertible debenture was
      fully paid in October 2005.





**Note
      7.** **SIGNIFICANT
      TRANSACTIONS WITH RELATED PARTIES**





Officer,
      directors, their families, and their controlled entities, have acquired 25%
      of
      the Company’s outstanding common capital stock. Accounts payable - related
      parties of $215,718 results from directors fees and expenses paid for the
      Company. Accounts payable - related parties and loan payable - related parties
      are unsecured, non-interest bearing and have no fixed terms of
      repayment.





The
      Company has demand loans due from related parties of $11,604, which bear no
      interest.





**Note
      8.** **SHARE
      CAPITAL**





On
      February 27, 2004, the Board of Directors unanimously approved a forward stock
      split of common stock at a ratio of two (2) shares for every one (1) share
      held.
      The forward split became effective March 10, 2004. After the split, the Company
      had 12,337,156 shares of common stock issued and outstanding. Prior to the
      effective date of the split, the Company had 6,168,578 shares of common stock
      outstanding.





In
      connection with the stock split the Company increased its authorized common
      shares in proportion to the forward stock split. The Company authorized common
      stock after the forward stock split consists of 100,000,000 shares of common
      stock. Prior to the split, the Company was authorized to issue 50,000,000 shares
      of common stock. In connection with the forward split, the Company amended
      its
      articles of incorporation with the state of Nevada. The Company did not obtain
      a
      shareholder vote of the forward stock split and a shareholder vote was not
      required by Nevada law.





On
      May 7,
      2004, the Company filed a Form 8-K that reported that on May 4, 2004, the Board
      of Directors unanimously approved a forward stock split of the common stock
      at a
      ratio of three (3) shares for every one (1) share held. The forward split became
      effective on May 14, 2004. After the split, the Company had 37,011,468 shares
      of
      common stock issued and outstanding. Prior to the effective date of the split,
      the Company had 12,337,156 shares of common stock outstanding. In connection
      with the stock split, the Company increased the authorized common shares in
      proportion to the forward stock split. The authorized common stock after the
      forward stock split consists of 300,000,000 shares of common stock. Prior to
      the
      split, the Company was authorized to issue 100,000,000 shares of common stock.
      In connection with the forward split, the articles of incorporation were amended
      with the State of Nevada. The Company did not obtain a shareholder vote of
      the
      forward stock split and a shareholder vote was not required by Nevada
      law.




41





On
      March
      10, 2005, Deep Well closed on a transaction pursuant to a certain Securities
      Purchase Agreement ("SPA"), with two accredited investors pursuant to which
      we
      sold an aggregate of (i) 1,875,000 shares of Deep Well's common stock, par
      value
      $0.001 per share, at a purchase price of $0.40 per share, and (ii) 750,000
      warrants to purchase shares of Deep Well common stock, for an aggregate purchase
      price of $750,000. Each of the warrants is exercisable from March 10, 2005
      until
      March 9, 2010, at an exercise price equal to $0.50 per share. In connection
      with
      the SPA, a finder's fee of $75,000 was paid and 37,500 warrants were issued.
      The
      exercise price of the warrants will be adjusted from time to time upon the
      occurrence of certain events, as provided in the warrants, and as a result
      of
      the issuance of common stock on May 25, 2007 and pursuant to the SPA and Form
      of
      Warrant dated March 10, 2005 entered into by and among the Company and the
      investors (the "Warrant Holders"), the Company issued an adjustment to the
      Warrant Holders. The original warrant dated March 10, 2005 contained a price
      adjustment if the Company sells, issues or grants additional shares of its
      common stock at a price per share less than the exercise price. In the event
      of
      a price adjustment, the number of shares exercisable under the warrant would
      also increase. Therefore, the exercise price of the original warrant has been
      adjusted from $0.50 to $0.40 per common share. The Company has granted the
      Warrant Holders new warrants to purchase 984,375 shares of the Company's common
      stock at an adjusted exercise price of $0.40 per share under the same terms
      as
      the original warrant. In addition, Deep Well entered into a Registration Rights
      Agreement ("RRA") with the investors, dated as of March 10, 2005, pursuant
      to
      which Deep Well is obligated to prepare and file a registration statement no
      later than 45 days after the closing date registering the number of shares
      of
      our common stock which is at least equal to (i) the aggregate number of shares
      of common stock issued under the SPA plus (ii) 125% of the aggregate number
      of
      shares of common stock issuable upon exercise of the warrants. Deep Well must
      use its reasonable best efforts to cause the registration statement to become
      effective as soon as practicable following the filing, but in no event later
      than 120 days after the closing date. If the registration statement is not
      filed
      within 45 days after the closing date or declared effective within the time
      specified in the preceding paragraph, Deep Well is required to make payments
      to
      the investors equal to 2% of the purchase price and an additional 2% of the
      purchase price for each subsequent 30-day period as to which the registration
      statement has not been filed or declared effective. Effective on January 22,
      2007, and filed on form 8-K on January 31, 2007, the Company entered into a
      Settlement Agreement and Release of All Claims (the "Settlement Agreement")
      with
      the investors who were in receipt of the above issued shares with respect to
      allegations made by the investors that the Company had breached the SPA and
      the
      RRA.





The
      Settlement Agreement provides, without any party acknowledging any liability,
      for:





·
            the
                amendment of the SPA to delete certain restrictions on the Company’s
                ability to enter into any future
                financings;





·
            the
                termination of the RRA;





·
            the
                issuance to the Investors of an aggregate of 1,600,000 (one million
                six
                hundred thousand) shares of common stock of the Company (the “Shares”),
                including the granting of certain piggyback registration rights related
                thereto; and





·
            the
                full and final settlement of all existing or potential claims between
                the
                Company and the Investors arising under the SPA and the
                RRA.





On
      August
      12, 2005, the Company completed a private placement of 500,000 units at a price
      of $0.40 per unit, for $200,000. Each unit consists of one common share and
      one
      common share purchase warrant, with each warrant entitling its holder to acquire
      one share of its common stock at an exercise price of $0.60. The exercise price
      of the warrants will be adjusted from time to time upon the occurrence of
      certain events, as provided in the warrants. The warrants expire on August
      12,
      2008. In addition, on August 12, 2005, pursuant to a Debt Settlement Agreement,
      one holder of $84,378.40 of the Company's indebtedness exchanged its debt for
      210,946 units at a price of US$0.40 per unit. Each unit consists of one common
      share and one common share purchase warrant, with each warrant entitling the
      holder to acquire one common share of the Company at US$0.60 per share. The
      exercise price of the warrants will be adjusted from time to time upon the
      occurrence of certain events, as provided in the warrants. The warrants expire
      on August 12, 2008.




42




**Note
      9.** **CHANGES
      IN NON-CASH WORKING CAPITAL**





**2005**
            
            2004Accounts
                receivable
            
            $
            (12,435
            )
            $
            (17,879
            )Prepaid
                expenses
            
            
            **22,786**
            
            
            (34,641
            )Accounts
                payable
            
            
            **15,126**
            
            
            204,336$
            25,477
            
            $
            151,816





**Note
      10.**  **INCOME
      TAXES**





As
      of
      September 30, 2005, the Company has approximately $1,260,646 of net operating
      losses expiring through 2025 that may be used to offset future taxable income
      but are subject to various limitations imposed by rules and regulations of
      the
      Internal Revenue Service. The net operating losses are limited each year to
      offset future taxable income, if any, due to the change of ownership in the
      Company's outstanding shares of common stock. In addition, at September 30,
      2005, the Company had an unused Canadian net operating loss carry-forward of
      approximately $2,105,897, expiring through 2010. These operating loss
      carry-forwards may result in future income tax benefits of approximately
      $1,149,229; however, because realization is uncertain at this time, a valuation
      reserve in the same amount has been established. Deferred income taxes reflect
      the net tax effects of temporary differences between the carrying amounts of
      assets and liabilities for financial reporting purposes and the amounts used
      for
      income tax purposes.





The
      components of the net deferred tax asset, the statutory tax rate, the effective
      rate and the elected amount of the valuaiton allowance are as
      follows:





**Year
                Ended September 30, 2005**
            
            Year
                Ended September 30, 2004Statutory
                and effective tax rateDomesticStatutory
                U.S. federal rate
            
            
            **35**
            **%**
            
            35
            %Foreign
            
            
            **33.62**
            **%**
            
            —Income
                taxes recovered at the statutory and effective tax rateDomesticStatutory
                U.S. federal rate
            
            $
            287,113
            
            $
            184,014Foreign
            
            
            **148,676**
            
            
            —Timing
                differences:Non-deductible
                expenses
            
            
            (63,060
            )
            
            (31
            )Financing
                fees
            
            
            **18,472**
            
            
            —Other
                deductible charges
            
            
            **736**
            
            
            —Benefit
                of tax losses not recognized in the year
            
            
            (391,937
            )
            
            (183,983
            )Income
                tax recovery (expense) recognized in the year
            
            $
            —
            
            $
            —




43





The
      approximate tax effects of each type of temporary difference that gives rise
      to
      deferred tax assets are as follows:





**September
                30, 2005**
            
            September
                30, 2004Deferred
                income tax assetsNet
                operating loss carry-forwards
            
            $
            1,149,229
            
            $
            183,492Oil
                and gas properties
            
            
            **151,605**
            
            
            —Finance
                fee deductible in future years
            
            
            **244,096**
            
            
            —Valuation
                allowance
            
            
            (1,544,930
            )
            
            (183,492
            )Net
                deferred income tax assets
            
            $
            —
            
            $
            —




**Note
      11.**  **SUBSEQUENT
      EVENT**





On
      November 15, 2005, the Company's subsidiary received an additional 6.5 sections
      which consisted of oil sand permit rights and Petroleum & National Gas
      licenses (P&NG).





On
      November 15, 2005, the Company, and its subsidiary, entered into an agreement
      to
      amend a farmout agreement with Signet Energy Inc., a private company, owned
      by
      Surge Global Energy, Inc. Under this new amended farmout agreement Signet Energy
      Inc., as operator, assumed the farmout obligations, including completing, at
      its
      expense, the drilling of 10 wells to earn up to a 40% working interest in the
      Sawn Lake Oil Sands Project.





On
      November 15, 2005, as part of the settlement of a legal action the Company,
      its
      subsidiary, and Surge, agreed to amend a farmout agreement signed on February
      25, 2005, between the Company and Surge, that had previously been terminated
      by
      the Company (disclosed on Form 8-K on September 29, 2005). The amendments to
      the
      agreement provided that; (1) all conditions of the farmout agreement will be
      deemed to have been satisfied on September 25, 2005; (2) the earning period
      (i.e. the period during which Signet has to drill 10 wells) under the agreement
      will be extended until February 25, 2008; (3) Signet will have until September
      25, 2006 to drill an option well; (4) an additional 6.5 sections of land will
      be
      added to the land subject to the agreement; (5) Signet will pay the Company
      $1,000,000 US on November 15, 2005 in satisfaction of the prospect fee
      outstanding, instead of after drilling the second well as stated in the farmout
      agreement, and (6) no shares of Surge Global Energy Inc. will be issued to
      the
      Company. Instead, the Company or its subsidiaries will receive 7,550,000 common
      shares of Signet Energy Inc., bringing the Company's ownership in its farmout
      partner to approximately 17% as of September 30, 2006.





**Sales
      of Unregistered Securities**





On
      October 11, 2005 the Company completed a private placement of 3,150,000 units
      at
      a price of $0.40 per unit for $1,260,000. Each unit consists of one common
      share
      and one common share purchase warrant, with each warrant entitling its holder
      to
      acquire one share of its common stock at a price of $0.60 per share. The
      exercise price of the warrants will be adjusted from time to time upon the
      occurrence of certain events, as provided in the warrants. The warrants expire
      on October 11, 2008. In connection with the placement a finder's fee of $36,000
      was paid.





On
      January 13, 2006, the Company completed a private placement of 51,200 units
      at a
      price of $1.50 per unit, for $76,800. Each unit consists of one common share
      and
      one common share purchase warrant, with each warrant entitling its holder to
      acquire one share of its common stock at an exercise price of $2.25 per common
      share. The exercise price of the warrants will be adjusted from time to time
      upon the occurrence of certain events, as provided in the warrants. The warrants
      expire on January 13, 2009. In addition, on January 12, 2006, pursuant to a
      Debt
      Settlement Agreement, one holder of $38,293 of the Company's indebtedness
      exchanged its debt for 21,800 units at a price of US$1.50 per unit. Each unit
      consists of one common share and one common share purchase warrant, with each
      warrant entitling its holder to acquire one common share of the Company at
      a
      price of US$2.25. The exercise price of the warrants will be adjusted from
      time
      to time upon the occurrence of certain events, as provided in the warrants.
      The
      warrants expire on January 13, 2009. In connection with the private placement,
      a
      finder's fee of $7,680 was paid.





On
      February 23, 2006, pursuant to an exercise option agreement the Company entered
      into on June 7, 2005, the Company issued 4,707,750 of its common shares in
      exchange for 156,925 of the outstanding preferred shares of Northern Alberta
      Oil
      Ltd. (subsidiary).




44





On
      June
      13, 2006 pursuant to an exercise option agreement the Company entered into
      on
      June 7, 2005, the Company issued 2,867,250 common shares in exchange for 95,575
      of the outstanding preferred shares of Northern Alberta Oil Ltd.
      (subsidiary).





On
      July
      28, 2006 a warrant holder of the Company acquired 100,000 common shares, upon
      exercising warrants, at an exercise price of $0.60 per share for
      $60,000.





On
      September 11, 2006 a warrant holder of the Company exercised 50,000 warrants
      for
      50,000 common shares at an exercise price of $0.60 per common share for
      $30,000.





On
      April
      4, 2007, pursuant to an exercise option agreement the Company entered into
      on
      June 7, 2005, the Company issued 5,400,000 common shares, in exchange for
      180,000 of the outstanding preferred shares of Northern Alberta Oil Ltd.
      (subsidiary).





As
      of
      April 4, 2007, all Northern preferred shares have been converted into Deep
      Well
      common shares resulting in Deep Well owning 100% of Northern preferred
      shares.





On
      May
      25, 2007, the Company completed a private placement of 5,000,000 units at a
      price of $0.40 per unit for $2,000,000. Each unit consists of one common share
      and one common share purchase warrant, with each warrant entitling its holder
      to
      acquire one share of our common stock at a price of $0.60 per share. The
      exercise price of the warrants will be adjusted from time to time upon the
      occurrence of certain events, as provided in the warrants. The warrants expire
      on May 25, 2010. In connection with the private placement a finder's fee of
      $150,000 was paid.





On
      June
      22, 2007, the Company completed a private placement of 8,333,333 units at a
      price of $0.60 per unit for $5,000,000. Each unit consists of one common share
      and one common share purchase warrant and another twelve one-hundredths common
      share purchase warrant ("Special Warrant"). Each warrant entitles the holder
      to
      purchase one additional common share at a price of $0.90 per common share for
      a
      period of three years from the date of closing. Each Special Warrant entitles
      the holder to purchase a common share at a price of $1.20 for a period of five
      years from the date of closing. The exercise price of the warrants and the
      Special Warrants will be adjusted from time to time upon the occurrence of
      certain events, as provided in the warrants. The warrants expire on June 22,
      2010 and the Special Warrants expire on June 22, 2012. In connection with the
      private placement a finder's fee of $300,000 was paid.





On
      July
      11, 2007, the Company completed a private placement of 323,333 units at a price
      of $0.60 per unit for $194,000. Each unit consists of one common share and
      one
      common share purchase warrant and another twelve one-hundredths common share
      purchase warrant ("Special Warrant"). Each warrant entitles the holder to
      purchase one additional common share at a price of $0.90 per common share for
      a
      period of three years from the date of closing. Each Special Warrant entitles
      the holder to purchase a common share at a price of $1.20 for a period of five
      years from the date of closing. The exercise price of the warrants and the
      Special Warrants will be adjusted from time to time upon the occurrence of
      certain events, as provided in the warrants. The warrants expire on July 11,
      2010 and the Special Warrants expire on July 11, 2012. In connection with the
      private placement a finder's fee of $9,700 was paid.





**Compensation
      to Directors**





On
      November 28, 2005, the Company adopted a stock-based compensation plan, under
      which each director would receive 75,000 shares upon becoming a director and
      an
      additional 100,000 shares for each year or part of a year served as a director.
      Directors of subsidiaries, who are not already directors of the Company, would
      receive 37,500 shares upon becoming a director and an additional 50,000 shares
      for each year or part of a year served as a director.





Since
      the
      acquisition of Northern Alberta Oil Ltd. the Company and Northern have entered
      into the following contracts with the following companies for the services
      of
      their officers:





1)
            Portwest
                Investments Ltd., a company owned 100% by Dr. Horst A. Schmid for
                providing services to the Company as Chief Executive Officer and
                President
                for $12,500 Cdn per month.





2)
            Concorde
                Consulting, a company owned 100% by Mr. Curtis J. Sparrow for providing
                services as Chief Financial Officer to the Company for $15,000 Cdn
                per
                month.





3)
            Trebax
                Projects Ltd., a company 100% owned by Mr. Cyrus Spaulding for providing
                services as Chief Operating Officer for the Company for $130 Cdn
                per
                hour.




45




4)
            Brave
                Consulting, a company 50% owned by Mr. David Roff for providing consulting
                services to the Company for $8,000 Cdn per month. As of August 2007
                the
                amount has increased to $12,000 per
                month.





On
      November 28, 2005, the Board granted 390,000 options to each of the first three
      companies, listed above, to be vested one third each year over three years,
      to
      acquire a total of 1,170,000 common shares of the Company at an options price
      of
      $0.71 with an expiration date of five years from November 28, 2005.





**Note
      12.**  **LEGAL
      ACTIONS**





**I.G.M.
      Resources Corp vs. Deep Well Oil & Gas, Inc., et
      al**





On
      March
      10, 2005, I.G.M. Resources Corp. ("IGM") filed against Classic Energy Inc.,
      979708 Alberta Ltd., Deep Well, Nearshore Petroleum Corporation, Mr. Steven
      P.
      Gawne, Rebekah Gawne, Gawne Family Trust, 1089144 Alberta Ltd., John F. Brown,
      Diane Lynn McClaflin, Cassandra Doreen Brown, Elissa Alexandra Brown, Brown
      Family Trust, Priority Exploration Ltd., Northern Alberta Oil Ltd. and Gordon
      Skulmoski a Statement of Claim in the Court of Queen's Bench of Alberta Judicial
      District of Calgary. This suit is a part of a series of lawsuits or actions
      undertaken by IGM against some of the other above defendants.





IGM
      was
      and still is a minority shareholder of 979708 Alberta Ltd. ("979708"). 979708
      was in the business of discovering, assembling and acquiring oil and gas
      prospects. In 2002 and 2003, 979708 acquired oil and gas prospects in the Sawn
      Lake area of Alberta. On or about the 14 th of July,
      2003 all or substantially all the assets of 979708 were sold to Classic Energy
      Inc. IGM claims the value of the assets sold was far in excess of the value
      paid
      for those assets. On April 23, 2004 Northern Alberta Oil Ltd., purchased Classic
      Energy Inc.'s assets some of which are under dispute by IGM. On June 7, 2005
      Deep Well acquired all of the common shares of Northern Alberta Oil Ltd. thereby
      giving Deep Well an indirect beneficial interest in the assets IGM is claiming
      an interest in.





IGM
      seeks
      an order setting aside the transaction and returning the assets to 979708,
      compensation in the amount of $15,000,000 Cdn, a declaration of trust declaring
      that Classic Energy Inc., Northern Alberta Oil Ltd. and Deep Well Oil & Gas,
      Inc., hold all of the assets acquired from 979708 and any property acquired
      by
      use of such assets, or confidential information of 979708, in trust for the
      Plaintiff.





This
      lawsuit has been stayed pending the out come of the other litigation by IGM
      against the other defendants. The Company believes the claims are without merit
      and will vigorously defend them.





**Hardie
      & Kelly vs. Brown et al**





On
      June
      2, 2006, Hardie and Kelly, Trustee of the Estate of John Forbes Brown filed
      against John Forbes Brown, a bankrupt, Diane Lynn McClaflin, 1089144 Alberta
      Ltd., and Deep Well an Amended Statement of Claim in the Court of Queen's Bench
      of Alberta Judicial District of Calgary. John Forbes Brown was a former officer
      and then sub-contractor of Deep Well before and during the time he was assigned
      into bankruptcy on July 12, 2004. The Plaintiff claims, in addition to other
      issues unrelated to Deep Well, that John Forbes Brown received a 4,812,500
      Deep
      Well shares as a result of his employment in Deep Well and that John Forbes
      Brown improperly assigned these shares to the numbered company as a ruse entered
      into on the eve of insolvency by John Forbes Brown in order to facilitate the
      hiding of assets from his creditors and the trustee of his bankruptcy. The
      Plaintiff further claims that on August 23, 2004 John Forbes Brown advised
      the
      Plaintiff that he in fact owned the above shares and did not disclose this
      ownership in his bankruptcy statement of affairs filed. The Plaintiff further
      claims that John Forbes Brown would lodge the said shares with his lawyer until
      such time as these shares could be transferred to the Plaintiff. The Plaintiff
      further claims that unbeknownst to them John Forbes Brown surreptitiously
      removed the shares from his lawyer's office and delivered them to Deep Well
      so
      that Deep Well could cancel them. The Plaintiff claims that Deep Well conspired
      with John Forbes Brown to defraud the creditors of John Forbes Brown by taking
      receipt and cancelling the said shares. The Plaintiff claims that consideration
      paid by Deep Well for the said shares was invested in the home owned by John
      Forbes Brown and his wife. The Plaintiff seeks; (1) an accounting of the
      proceeds and benefits derived by the dealings of the shares; (2) the home owned
      by John Forbes Brown and his wife, to be held in trust on behalf of the
      Plaintiff and an accounting of proceeds related to this trust; (3) the Plaintiff
      seeks damages from the Defendants because of their actions; (4) a judgement
      for
      $15,612,645 Cdn; (5) an order to sell John Forbes Brown's home; and (6) interest
      and costs.





Deep
      Well
      believes it did not conspire with John Forbes Brown to defraud John Forbes
      Brown's creditors and further Deep Well did not receive nor give John Forbes
      Brown any consideration in regards to the cancelling of said shares. The Company
      plans to vigorously defend itself against the Plaintiff's claims.




46




**Menno
      Wiebe and Jacobean Resource International vs. Deep Well Oil & Gas, Inc., et
      al**





On
      October 23, 2006, Menno Wiebe and Jacobean Resources International served Deep
      Well, Doe individuals and Roe Corporations with a Complaint and Summons filed
      in
      the United States of America, District Court of Clark County, Nevada. The
      Complaint alleges a breach of contract in which the Plaintiffs are seeking
      monetary damages in excess of $10,000 plus an order directing Defendants to
      issue 56,500 shares of Deep Well stock to Plaintiffs. The Company believes
      that
      it has meritorious defenses to the Plaintiff's claims and intends to enter
      into
      mediation, as called for in the contract with Menno Wiebe.




47




**ITEM
              8.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL****DISCLOSURE**





On
      August
      10, 2004 Deep Well (“the Registrant”) changed accountants from Madsen &
Associates, CPA’s Inc. to Deloitte & Touche LLP. The Registrant decided to
      dismiss Madsen & Associates, CPA’s Inc. as its independent accountants.
      Madsen & Associates, CPA’s Inc. report on the financial statements for the
      period from September 10, 2003 to September 30, 2003 as contained in Form
      10-K/A, Amendment Number 2, which was filed on May 13, 2004, was not subject
      to
      an adverse or qualified opinion or a disclaimer of opinion and were not modified
      as to uncertainty, audit scope or accounting principles for the period from
      September 10, 2003 to September 30, 2003 or for either of the past two years.
      Madsen & Associates, CPA’s Inc. report on the financial statements for the
      period from September 10, 2003 to September 30, 2003 raises substantial doubt
      about the Registrant’s ability to continue as a going concern and that
      continuation of the Registrant as a going concern is dependent upon obtaining
      additional working capital. The decision to change accountants was approved
      by
      the Registrant’s Board of Directors; and during the period from our engagement
      of Madsen & Associates, CPA’s Inc. on February 9, 2004 to the date we
      dismissed Madsen & Associates, CPA’s Inc. on August 10, 2004, there were no
      disagreements with Madsen & Associates, CPA’s Inc. related to accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure, which disagreements if not resolved to the satisfaction of Madsen
      & Associates, CPA’s Inc. would have caused Madsen & Associates, CPA’s
      Inc. to make reference to the subject matter of the disagreement in connection
      with its report. On August 10, 2004, the Registrant engaged Deloitte &
Touche LLP as its independent accountants. The Registrant did not consult with
      Deloitte & Touche LLP. its new independent accountants, regarding any matter
      prior to its engagement; and the Registrant has provided to Madsen &
Associates, CPA’s Inc., its former accountant, a copy of the disclosures and the
      Registrant has requested a letter from Madsen & Associates, CPA’s Inc.
      addressed to the Commission, confirming certain statements made by the
      Registrant. Changes in the Registrant’s certifying accountant, Letter of Madsen
& Associates, CPA’s Inc. has been filed on Form 8-K on August 16, 2004, and
      incorporated herein by reference as exhibit 16.1.





Effective
      April 22, 2005 Deloitte & Touche LLP (the “Predecessor Accountant”) resigned
      as the independent auditors for the Company. Madsen & Associates (the
“Successor Accountant”) was appointed as the Company’s new independent
      accountants. The Company’s Board of Directors approved this action on April 22,
      2005. During the last two fiscal years ended September 30, 2004 and 2003 and
      the
      subsequent periods to April 22, 2005 (i) there were no disagreements between
      the
      Company and Deloitte & Touche LLP on any matter of accounting principles or
      practices, financial statement disclosure or auditing scope or procedure which,
      if not resolved to the satisfaction of Deloitte & Touche LLP would have
      caused Deloitte & Touche LLP to make reference to the matter in its reports
      on the Company’s financial statements, and (ii) Deloitte & Touche LLP’s
      reports did not contain an adverse opinion or a disclaimer of opinion, or was
      qualified or modified as to uncertainty, audit scope, or accounting principles.
      During the last two most recent fiscal years ended September 30, 2004 and 2003
      and the subsequent periods to April 22, 2005, there were no reportable events
      as
      the term described in Item 304(a)(1)(iv) of Regulation S-B. The Company has
      not
      previously consulted with the Successor Accountant regarding the application
      of
      accounting principles to a specific completed or contemplated transaction or
      the
      type of audit opinion that might be rendered on the Company’s financial
      statements. Changes in registrant’s certifying accountant, Letter of Deloitte
& Touche LLP has been filed on Form 8-K on August 10, 2005, and incorporated
      herein by reference as exhibit 16.2.





**ITEM
      8A.**  **CONTROLS
      AND PROCEDURES**





**Disclosure
      Controls and Procedures**





An
      evaluation of the effectiveness of our “disclosure controls and procedures” (as
      such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934), as amended was carried out by our management with the
      participation of our principal executive officer and principal financial
      officer, as of the end of our fiscal year ended September 30, 2005. Based upon
      that evaluation, our principal executive officer and principal financial officer
      have concluded that as of the end of that fiscal year, our disclosure controls
      and procedures were not effective to ensure that information required to be
      disclosed by us in reports that we file or submit under the Exchange Act is
      (i)
      recorded, processed, summarized and reported within the time periods specified
      in SEC rules and forms and (ii) accumulated and communicated to our management,
      including our principal executive officer and principal financial officer,
      to
      allow timely decisions regarding required disclosure.





**Changes
      in Internal Control Over Financial Reporting**





During
      the fiscal year ended September 30, 2005, there were changes and improvements
      in
      our internal control over financial reporting that have materially affected,
      or
      are reasonably likely to materially affect, our internal control over financial
      reporting. The most significant changes being the formalization and
      centralization of the accounts payable functions and the implementation of
      better multi-currency accounting software.




48




**ITEM
      8B.**  **OTHER
      INFORMATION**





Deep
      Well
      reported all information that was required to be disclosed during the fourth
      quarter of the fiscal year covered by this Form 10-KSB in its report on Form
      10-KSB for the year ended September 30, 2004 that was filed on February 23,
      2007. Subsequent events not reported on Form 8-K during the fourth quarter
      of
      this fiscal year covered by this Form 10-KSB but reported in such report on
      Form
      10-KSB are as follows:





On
      July
      1, 2005 our Company entered into a Consulting Agreement with Portwest
      Investments Ltd., a company owned 100% by Dr. Horst A. Schmid for providing
      services as Chief Executive Officer and President for $12,500 Cdn per
      month





On
      July
      1, 2005 our Company entered into a Consulting Agreement Concorde Consulting,
      a
      company owned 100% by Mr. Curtis Sparrow for providing services as Chief
      Financial Officer for $15,000 Cdn per month.





On
      October 30, 2005 our Company entered into a Service Agreement, effective
      September 1, 2005, with Trebax Projects Ltd., a company 100% owned by Mr. Cyrus
      Spaulding for providing services as Chief Operating Officer for $130 Cdn per
      hour.





On
      July
      14, 2005 our Company and Surge mutually agreed to amend the Farmout Agreement
      dated February 25, 2005, to extend the date to spud the first well until
      September 25, 2005




49


**PART
      III**





**ITEM
      9.**  **DIRECTORS
      AND EXECUTIVE OFFICERS OF THE REGISTRANT**





**Directors
      and Executive Officers**





The
      executive officers and directors of Deep Well are as follows:





**From
                October 1, 2004 to June 29, 2005****Name**
            
            **Age**
            
            **Position/Office**Mr.
                Steven P. Gawne
            
            55
            
            Director
              President
                and Chief Executive OfficerMr.
                Curtis Sparrow
            
            47
            
            Director
              Chief
                Financial Officer, Secretary and TreasurerDr.
                Horst A. Schmid
            
            71
            
            Director
                and Chairman of the BoardMr.
                Leonard F. Bolger
            
            73
            
            DirectorMr.
                Menno Wiebe
            
            56
            
            Director
              Chief
                Operating Officer (July 6, 2004 until June 29, 2005)Mr.
                John F. Brown
            
            50
            
            Chief
                Operating Officer (February 9, 2004 until June 7, 2004)





**As
                at September 30, 2005****Name**
            
            **Age**
            
            **Position/Office**Dr.
                Horst A. Schmid
            
            72
            
            Director
                and Chairman of the Board
              President
                and Chief Executive OfficerMr.
                Curtis Sparrow
            
            48
            
            Director
              Chief
                Financial Officer, Secretary and TreasurerMr.
                Cyrus Spaulding
            
            49
            
            Director
              Chief
                Operating OfficerMr.
                Donald E. H. Jones
            
            52
            
            Director





**As
                at September 30, 2006****Name**
            
            **Age**
            
            **Position/Office**Dr.
                Horst A. Schmid
            
            73
            
            Director
                and Chairman of the Board
              President
                and Chief Executive OfficerMr.
                Curtis Sparrow
            
            49
            
            Director
              Chief
                Financial Officer, Secretary and TreasurerMr.
                Cyrus Spaulding
            
            50
            
            Director
              Chief
                Operating OfficerMr.
                Donald E. H. Jones
            
            53
            
            DirectorMr.
                David Roff
            
            35
            
            Director





**As
                at September 30, 2007****Name**
            
            **Age**
            
            **Position/Office**Dr.
                Horst A. Schmid
            
            74
            
            Director
                and Chairman of the Board
              President
                and Chief Executive OfficerMr.
                Curtis Sparrow
            
            50
            
            Director
              Chief
                Financial Officer, Secretary and TreasurerMr.
                Cyrus Spaulding
            
            51
            
            DirectorMr.
                Donald E. H. Jones
            
            54
            
            DirectorMr.
                David Roff
            
            36
            
            Director





50





**Biographies
      of Directors and Executive Officers**





Brief
      biographies of the executive officers and directors of Deep Well are set forth
      below. All directors hold office until the next Annual Stockholders’ Meeting or
      until their death, resignation, retirement, removal, disqualification or until
      their successors have been elected and qualified. Vacancies in the existing
      Board may be filled by majority vote of the remaining directors. Officers of
      our
      Company serve at the will of the Board of Directors. As of September 30, 2005
      there are no written employment contracts outstanding, but these are consulting
      contracts as disclosed herein.





Dr.
      Horst
      A. Schmid has served as Director and Chairman of the Board since February 6,
      2004 to present. Since June 29, 2005 to present he has been the Chief Executive
      Officer and President of Deep Well. From September 1996 to present, Dr. Schmid
      has been Director, President and Chief Executive Officer of Portwest Investment
      Ltd., a private firm, located in Edmonton, Alberta, Canada. Prior to that,
      Dr.
      Schmid spent 15 years as Cabinet Minister for the Government of Alberta and
      10
      years as Commissioner General for Trade and Tourism. During that time he was
      involved in numerous successful overseas negotiations for the Alberta Oil &
Gas Industry, achieving major contracts for Alberta Equipment/Production/Service
      Companies. Dr. Schmid has also served as independent Director and Chairman
      of
      Aspire Capital Inc. since 1998. Dr. Schmid also serves as a Director and
      Chairman of the Board of Directors of Calstar Oil & Gas Ltd. He is the
      recipient of many Canadian and International Awards for his accomplishments.
      Dr.
      Schmid received an Honorary Law Degree from the University of Alberta.





Mr.
      Steven P. Gawne served as Deep Well’s President and Chief Executive Officer and
      a Director from February 6, 2004 until June 29, 2005. Since March 1998, Mr.
      Gawne has been the President and Director of Nearshore Petroleum Corporation,
      a
      private corporation registered in Alberta, Canada that conducts business in
      oil
      and gas exploration. From March 2001 to present, Mr. Gawne has been the
      President of Priority Exploration Ltd., a private corporation registered in
      Alberta, Canada that also conducts business in oil and gas exploration. From
      September 1998 to January 2000, Mr. Gawne was a Director and Vice President
      of
      Exploration of ENN Hydrocarbons, Ltd., a private corporation registered in
      Alberta, Canada that conducts business in oil and gas exploration in Alberta,
      Canada. Mr. Gawne attended the University of Waterloo located in Waterloo,
      Ontario and majors in Geology.





Mr.
      Curtis Sparrow served as Director of Deep Well from February 6, 2004 until
      June
      29, 2005. On July 1, 2005, Mr. Sparrow accepted a reappointment back to the
      Board of Directors. From February 9, 2004 to present Mr. Sparrow has been the
      Chief Financial Officer, Corporate Secretary and Treasurer of Deep Well. Since
      before May 1994, Mr. Sparrow has been a self-employed management consultant.
      Mr.
      Sparrow has been involved in the oil and gas industry in various capacities
      for
      over 25 years. He held directorships and senior officer positions with junior
      exploration and development companies before becoming a self-employed
      consultant. He has since participated in the marketing side of the oil and
      gas
      industry, and was part of an acquisition team formed to assess and develop
      a bid
      for a multi-billion dollar integrated oil company. His experience also includes
      corporate and project management, international businesses and mining. Mr.
      Sparrow received his Bachelor of Science Degree in Engineering and Masters
      Degree in Business Administration from the University of Alberta in May 1978
      and
      May 1992, respectively. Mr. Sparrow is also a registered Professional
      Engineer .





Mr.
      Menno
      Wiebe served as Director and Chief Operating Officer of Deep Well from July
      6,
      2004 until June 29, 2005. Early in his career Mr. Wiebe participated in the
      evaluation of the heavy oil sands in the Fort McMurray, Alberta, area as a
      geologist with Hudson’s Bay Oil and Gas Company Limited. From 1975 to 1983, Mr.
      Wiebe served roles as a chief geologist and a senior staff geologist with
      Occidental Petroleum Corporation in postings in Libya, Scotland and the United
      States. In 1983 Mr. Wiebe joined Bow Valley Industries (SEA) Ltd. and served
      4
      years in the Jakarta, Indonesia, office as the Exploration Manager, directing
      extensive drilling programs in the Java Sea and North Sumatra, Indonesia. Mr.
      Wiebe then joined Husky Oil International Inc. as its regional representative
      for exploration operations in Indonesia. In 1991, Mr. Wiebe joined Hall-Houston
      Oil Company, a U.S. based private exploration company, as Vice-President and
      General Manager, representing the company, and establishing and staffing an
      office, in Kuala Lumpur, Malaysia for its exploration projects in that region.
      In 1991, Mr. Wiebe joined Pertacal Energy Inc., an oil & gas exploration
      company with projects in the UK, France and Yemen, serving in a variety of
      capacities, including as a consultant, Vice President, President, Chief
      Executive Officer and a director. Mr. Wiebe obtained his Bachelor of Science
      Degree in Geology from the University of Manitoba in 1970 and a Masters in
      Business Administration from the University of Warwick in 1993.





Mr.
      Leonard F. Bolger served as a Director of Deep Well from February 6, 2004 until
      June 29, 2005. From January 2000 to present, Mr. Bolger has been the Co-Chairman
      of Alberta Energy Research Institute. From March 1990 to present, Mr. Bolger
      has
      been the Chairman of the Board of Advatech Canada International, Inc., a private
      housing export and construction firm located in Calgary, Canada. Prior to 1990,
      Mr. Bolger had 31 years of oil and gas related experience. Mr. Bolger received
      a
      Bachelors Degree in Engineering from the University of Toronto in May
      1954.





Mr.
      Cyrus
      Spaulding has been Deep Well’s Director from June 29, 2005 to present Early in
      his career he joined Husky Oil Operations Ltd. as a reservoir engineering
      technologist where he provided data analysis on secondary recovery schemes
      for
      heavy oil projects. In the mid 1990’s he joined Colt Engineering Corporation as
      the lead engineer for the Amoco Primrose Commercial SAGD project. He is a
      registered Professional Engineer with over 17 years experience in the oil and
      gas industry. He has worked on projects in Canada as well as overseas. His
      experience includes gas plants, hydrocarbon liquids fractionation plants, heavy
      oil pilot plants and heavy oil commercial plants. He has also worked with a
      major oil and gas company in Alberta providing forecasting and analysis on
      heavy
      oil projects. Mr. Spaulding is a graduate of Lakehead University. Mr. Spaulding
      served the Company as Chief Operating Officer from September 1, 2005 to
      September 21, 2007.




51





Mr.
      Donald E. H. Jones has been a Director of Deep Well from June 29, 2005 to
      present. Mr. Jones brings over 30 years of broad oil, natural gas and
      petrochemical experience to the Company. His experience spans the manufacturing
      and service sectors, as well as engineering and project management in the EPC
      environment. He has also worked at a senior management level for companies
      with
      both new and established oil and gas properties. At one time, Mr. Jones was
      Project Manager, including field construction, commissioning, and optimization
      for a SAGD Pilot Facilities which laid the ground work for commercial scale
      production and processing of heavy oil. A graduate of the University of Calgary,
      Mr. Jones is a registered Professional Engineer. He has significant domestic
      and
      international experience having worked in Canada, Africa, Russia, Kazakhstan,
      South East Asia and Columbia, where he is currently manager for a Calgary based
      exploration and development Company.





Mr.
      David
      Roff is currently serving as a Director of Deep Well since his reappointment
      on
      April 3, 2006. He was the former President and Sole Director of Deep Well from
      September 10, 2003 until February 6, 2004. Mr. Roff is the co-president of,
      Brave Consulting, a private consulting and investment corporation and has held
      this position since 2001. Brave Consulting was engaged by Deep Well in July
      2005
      until the present to advise on investment strategies and governance. Mr. Roff
      has extensive experience working with small cap public companies for ten years.
      Prior to that, Mr. Roff was a management consultant for Coopers & Lybrand
      Consulting where he advised large financial institutions, investment fund
      complexes and other organizations on technology and internal control strategies.
      Mr. Roff is a Chartered Accountant with a B.A. degree from the University of
      Western Ontario.





**Family
      Relationships**





There
      are
      no family relationships among the executive officers and directors.





**Significant
      Employees**





Other
      than the current executive officers of our Company the following are expected
      to
      make a significant contribution to our Company:





Effective
      September 20, 2007 our Company has retained the consulting services of Mr.
      Edward A. Howard to assist in the further exploitation and development of Deep
      Well’s Sawn Lake project. Mr. Howard is a Geologist and Palynologist with over
      40 years of heavy oil experience. Most recently Mr. Howard was Vice President
      Exploration and Development for Signet (recently acquired by Andora). Signet
      was
      the Farmee which had the right to earn acreage from Deep Well. Signet’s rights,
      under the Farmout Agreement to drill to earn more acreage, has since expired
      and
      as of November 26, 2007 the Farmout Agreement has been terminated. At Signet
      Mr.
      Howard was responsible for the planning and execution of the Sawn Lake drilling
      program. Mr. Howard has also worked with several companies in the heavy oil
      sector including Sceptre Resources (taken over by CNRL) at their Tangleflags
      field and Shell Canada at their Peace River Project. Mr. Howard was credited
      with the discovery and early development of the first successful Steam Assisted
      Gravity Drainage heavy oil extraction project for Sceptre at the Tangleflags
      field. While at Shell from 1967 to 1977 Mr. Howard was instrumental in
      developing Shell’s Peace River strategy from the early inception through to the
      Pilot Plant stage. This project continues to be one of the most successful
      in
      situ oil sands producers. Also Mr. Howard has implemented noteworthy Cyclical
      Stream Simulation projects in Alberta. Some of these projects have proven to
      increase primary and secondary recovery by 50% - 60%. Mr. Howard’s extensive
      experience with the primary and secondary recovery of heavy oil as well as
      his
      direct knowledge of the Peace River oil sands area, specifically the Sawn Lake
      project will be a great benefit to Deep Well.





**Involvement
      in Certain Legal Proceedings**





No
      bankruptcy petition has been filed by or against any business of which any
      director was a general partner or executive officer either at the time of the
      bankruptcy or within two years prior to that time.





No
      current director has been convicted in a criminal proceeding and is not subject
      to a pending criminal proceeding (excluding traffic violations and other minor
      offences).




52





No
      current director has been subject to any order, judgments, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities.





No
      current director has been found by a court of competent jurisdiction (in a
      civil
      action), the Commission or the Commodity Futures Trading Commission to have
      violated a federal or state securities or commodities law, that has not been
      reversed, suspended, or vacated.





**Audit
      Committee Financial Expert**





We
      do not
      have an independent audit committee financial expert, on our Board of Directors.
      We believe that the cost related to retaining an audit committee financial
      expert at this time is prohibitive and that, because, of our limited operations
      the services of an independent audit committee financial expert are not
      warranted at this time.





**Identification
      of Audit Committee**





On
      February 9, 2004 our Board of Directors, in accordance with Section 3(a)(58)(A)
      of the Securities Exchange Act of 1934 as amended, appointed an audit committee.
      The Board of Directors has designated an audit committee to oversee management’s
      conduct of our accounting and financial reporting processes. The audit committee
      reviews our financial reports and other financial information disclosed to
      the
      public, the government and various regulatory bodies, our system of internal
      accounting, our financial controls, and the annual independent audit of our
      financial statements. The audit committee also oversees compliance with legal
      and regulatory requirements. On February 9, 2004 to August 14, 2004, the audit
      committee members were Mr. Curtis Sparrow and Mr. Leonard F. Bolger. Mr. Leonard
      F. Bolger served as Chair of the audit committee. On August 14, 2004 the Board
      of Directors determined that it was necessary to ratify the members of the
      Audit
      Committee and therefore the Board of Directors approved the appointment of
      Dr.
      Horst A. Schmid and Mr. Leonard F. Bolger as the only two independent members
      of
      the Audit Committee.





On
      February 9, 2004 the Board of Directors appointed a compensation committee,
      a
      corporate governance committee and a corporate environmental policy
      committee.





**Section
      16 (a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act requires the Company’s officers, directors and persons
      who beneficially own more than 10% of a registered class of the Company’s equity
      securities to file reports of ownership and changes in ownership with the
      Securities and Exchange Commission, and to furnish to the Company copies of
      such
      reports. Based solely on the review of copies of the forms received, by the
      Company, during the September 30, 2005 fiscal year, filings of Form 3 as
      required under Section 16(a)(2) of the Securities Exchange Act of 1934 by Mr.
      Cyrus Spaulding and Mr. Donald E. H. Jones were late. In addition, the filing
      of
      Form 4 as required under Section 16(a)(2) of the Securities Exchange Act of
      1934
      by for Mr. Curtis Sparrow was late.





**Code
      of Ethics**





As
      of
      September 30, 2005 our Company had not yet adopted a formal code of ethics
      governing its executive officers and directors. We
      have
      not adopted a code of ethics because we have minimal operations. Our
      Board
      of Directors will address this issue in the fu ture
      to
      determine the adoption of a code of ethics. In the meantime, our management
      intends to promote honest and ethical conduct, full and fair disclosure in
      our
      reports to the SEC, and compliance with applicable governmental laws and
      regulations.




53




**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





**Summary
      Compensation Table**





The
      following table provides information about the compensation paid to, earned
      or
      received during the last three fiscal years ended September 30, 2005, 2004
      and
      2003 by the executive officers listed below (the “Named Executive
      Officers”).




**Long
                Term Compensation****Annual
                Compensation**
            
            
            **Awards**
            
            
            **Payouts****Name
                and Principal Position**
            
            
            **Year**
            
            
            **Salary**
            
            
            **Bonus**
            
            
            **Other**
            
            
            **Restricted
                Stock Award (s)**
            
            
            **Securities
                Underlying Options/ SARs**
            
            
            **LTIP
                  Payouts**
            
            
            **All
                Other Compensation**Mr.
                Steven P. Gawne(1)
            
            
            2005
            (2)
            $
            135,000.00
                Cdn
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -President
                and
            
            
            2004
            (3)
            
            99,704.96
                US
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Chief
                Executive Officer
            
            
            2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Dr.
                Horst A. Schmid(4)
            
            
            2005
            (5)
            $
            53,500.00
                Cdn
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -President
                and
            
            
            2004
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Chief
                Executive Officer
            
            
            2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Mr.
                Curtis Sparrow
            
            
            2005
            (6)
            $
            180,000.00
                Cdn
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -Chief
                Financial Officer
            
            
            2004
            (7)
            
            68,471.64
                US
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Mr.
                Menno Wiebe(8)
            
            
            2005
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -Chief
                Operating Officer
            
            
            2004
            (9)
            
            37,985.76
                Cdn
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Mr.
                Cyrus Spaulding(10)
            
            
            2005
            (11)
            $
            20,800.00
                Cdn
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -Chief
                Operating Officer
            
            
            2004
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Mr.
                David Roff(12)
            
            
            2005
            (13)
            $
            12,000.00
                CdnPresident
                and Chief
            
            
            2004
            (12)
            
            Nil
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -Executive
                Officer from
            
            
            2003
            (12)
            
            Nil
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -September
                10, 2003 to February6,
                2004




(1)Mr. Steven P. Gawne had served our Company as President and Chief
                Executive Officer from February 6, 2004 until June 29, 2005.(2)As
                of September 30, 2005, Nearshore Petroleum Corporation, a company
                owned
                50% by Mr. Steven P. Gawne and 50% by his wife, Rebekah Gawne accrued
                the
                above fee for Mr. Gawne’s services. This fee and other amounts were not
                paid because of disputes with Mr. Steven P. Gawne.(3)As
                of September 30, 2004, Nearshore Petroleum Corporation, a company
                owned
                50% by Mr. Steven P. Gawne and 50% by his wife, Rebekah Gawne accrued
                the
                above fee for Mr. Gawne’s services. $22,053.15 of these fees remained
                unpaid as of the year end. Mr. Steven P. Gawne ceased to be an officer
                and
                director of the company on June 29, 2005. Mr. Steven P. Gawne and
                Nearshore Petroleum Corporation also received compensation from Northern
                Alberta Oil Ltd. during fiscal 2004 of $100,000 Cdn and $243,425
                Cdn
                respectively, which is not included above. Nearshore also claimed
                a
                royalty in Northern’s Lands of 6.5% within 4 townships of north central
                Alberta.(4)Dr. Horst A. Schmid has served our Company as Director and Chairman
                of the
                Board since February 6, 2004 to present. From June 29, 2005 to present
                he
                has been the President and Chief Executive Officer of our
                Company.(5)As
                of September 30, 2005, Portwest Investments Ltd., a company owned
                100% by
                Dr. Horst A. Schmid, accrued the above fees for Dr. Schmid’s services
                provided to our Company. As of the 2005 year end our Company owed
                Portwest
                Investments Ltd. $5,684.90 Cdn. Dr. Schmid also accrued a director’s fee
                for his services on the Board of Directors as Chairman of the Board
                of our
                Company.(6)As
                of September 30, 2005, Concorde Consulting, a company owned 100%
                by Mr.
                Curtis Sparrow, accrued the above fees for Mr. Sparrow’s services provided
                to our Company. As of the 2005 year end our Company owed Concorde
                Consulting $141,829.75 Cdn. Mr. Sparrow also accrued a director’s fee for
                his services on the Board of Directors as Director of our Company.(7)As
                of September 30, 2004, Concorde Consulting, a company owned 100%
                by Mr.
                Curtis Sparrow, accrued the above fees for Mr. Sparrow’s services provided
                to our Company, but none of these fees were paid as of the September
                30,
                2004 year end. Mr. Curtis Sparrow also accrued a director’s fee for his
                services on the Board of Directors of our Company, but none of these
                fees
                were paid as of the September 30, 2004 year end.(8)Mr. Menno Wiebe served as Chief Operating Officer of our Company
                from July
                6, 2004 until June 29, 2005.




54




(9)Mr.
                Wiebe is claiming the above amount in his claim against our Company.
                None
                of this amount was paid as of the year end.(10)Mr. Cyrus Spaulding served as Chief Operating Officer of our Company
                from
                September 1, 2005 until September 21, 2007.(11)As
                of September 30, 2005, Trebax Projects Ltd., a company owned 100%
                by Mr.
                Cyrus Spaulding, accrued the above fees for Mr. Spaulding’s services
                provided to our Company. None of these fees were owed as of September
                30,
                2005. Mr. Spaulding also accrued a director’s fee for his services on the
                Board of Directors of our Company, but none of these fees were paid
                as of
                the September 30, 2005 year end.(12)Mr. David Roff was the former President and Sole Director of our
                Company
                from September 10, 2003 until February 6, 2004.(13)Mr. David Roff was not an executive officer in the fiscal year 2005.
                Mr.
                Roff was reappointed as Director on April 3, 2006. Brave Consulting,
                a
                company 50% owned by Mr. David Roff, has been a consultant to Deep
                Well
                since July 15, 2005. Brave Consulting, a private corporation 50%
                owned by
                Mr. Roff and the other 50% is owned by non-related third party, was
                paid a
                fee of $4,000 Cdn per month from July 2005 until October 2005. None
                of
                these fees were owed as of September 30,
                2005.





The
      Board
      is continually reviewing all compensation paid to executives of our Company.





**Compensation
      of Directors**





On
      November 28, 2005 our Company adopted a cash compensation plan where each
      director is paid the amount of $500 for each meeting of the Board of Directors
      or committee meetings that they attend, or resolution participated in, plus,
      we
      reimburse each director for actual expenses incurred in connection with Board
      meeting attendance. The Chairman of the Board is paid $1,000 for each Board
      meeting plus expenses incurred in connection with Board meeting attendance.
      None
      of these Director’s fees were paid in the September 30, 2005 year
      end.





During
      fiscal year end 2005 there were no stock options granted to any of the named
      directors or executive officers.





On
      November 28, 2005 our Company adopted a stock-based compensation plan, under
      which each director of Deep Well was awarded options to acquire 75,000 shares
      upon becoming a director and an additional 100,000 shares for each year or
      part
      of a year served as a director. Directors of subsidiaries, who are not already
      directors of Deep Well, were awarded options to acquire 37,500 shares upon
      becoming a director and an additional 50,000 shares for each year or part of
      a
      year served as a director. The exercise price of the above options is $0.71
      per
      share. For further information see our Company’s Form 8-K filed with the SEC
      March 3, 2006.





No
      named
      directors or executive officers exercised any stock options during fiscal years
      2004, 2005, 2006 or 2007.





**Compensation
      Arrangements for Executive Officers**





Our
      Company has entered into the following contracts with the following companies
      for services of certain officers and/or directors of our Company:





1.
            Portwest
                Investments Ltd., a company owned 100% by Dr. Horst A. Schmid for
                providing services as Chief Executive Officer and President for $12,500
                Cdn per month.





2.
            Concorde
                Consulting, a company owned 100% by Mr. Curtis Sparrow for providing
                services as Chief Financial Officer for $15,000 Cdn per
                month.





3.
            Trebax
                Projects Ltd., a company 100% owned by Mr. Cyrus Spaulding for providing
                services as Chief Operating Officer for $130 Cdn per
                hour.





4.
            Brave
                Consulting, a company 50% owned by Mr. David Roff, a former President
                of
                the Company, has been a consultant to Deep Well since July 15, 2005.
                Brave
                Consulting, a private corporation 50% owned by Mr. Roff and the other
                50%
                is owned by a non-related third party, was paid a fee of $4,000 Cdn
                per
                month from July 2005 until October 2005. From November 2005 until
                July
                2007, Brave Consulting was paid a fee of $8,000 Cdn per month. From
                August
                2007 until present, Brave Consulting is being paid a fee of $12,000
                Cdn
                per month.





On
      November 28, 2005 the Board granted 390,000 options to acquire common shares
      to
      the above corporations providing consulting services to our Company or its
      subsidiary. Each of such consulting contractors is a corporation wholly owned
      by
      directors or executive officers of our Company. For further information see
      our
      Company’s Form 8-K filed with the SEC March 3, 2006.




55




**ITEM
              11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND****RELATED
                STOCKHOLDER MATTERS**





The
      following table sets forth the number and percentage of the shares of our
      Company’s Common Stock owned of record and beneficially by each person or entity
      owning more than 5% of such shares and by all executive officers, officers
      and
      directors, as a group at September 30, 2005:





**SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS**
              **As
                of September 30, 2005**




**Name
                and Address of Beneficial Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares Beneficially Owned**
            
            **Percentage
                of Class Beneficially Owned**(1)
            
            **Nature
                of Ownership**Nearshore
                Petroleum Corporation(2)
              Suite
                3175, 246 Stewart Green SW
              Calgary,
                Alberta T3H 3C8 Canada
            
            
            Common
            
            
            4,875,000
            
            
            9.4%
            (2)
            
            IndirectC.
                Ruiz Tighe(3)
              89
                Arbour Ridge Heights NW
              Calgary,
                Alberta T3G 3Z2 Canada
            
            
            Common
            
            
            4,057,000
            
            
            7.8
            %
            
            Direct/IndirectNorcan
                Management Inc.
              12220
                Stony Plain Road
              Edmonton,
                AB T5N 3Y4
            
            
            Common
            
            
            3,225,600
            
            
            6.2
            %
            
            Direct




(1)Based on 52,031,289 common shares outstanding on September 30,
                2005.(2)Mr. Steven P. Gawne’s indirect beneficial ownership consists of Nearshore
                Petroleum Corporation owning 4,875,000 shares. Nearshore Petroleum
                Corporation is a private corporation registered in Alberta, Canada,
                which
                is 50% owned and controlled by Mr. Steven P. Gawne and 50% owned
                and
                controlled by his wife, Rebekah Gawne. As a result of Mr. Steven
                P.
                Gawne’s and Nearshore’s ownership of 100,000 each of preferred shares of
                Northern which as a result of the June 7, 2005 acquisition on Northern
                by
                our Company at Mr. Gawne’s or Nearshore’s option can each convert to
                3,000,000 shares of Deep Well common stock each. This means that
                Mr.
                Steven P. Gawne’s indirect beneficial ownership will consist of Nearshore
                Petroleum Corporation owning 7,875,000 shares and Mr. Gawne owning
                3,000,000 shares directly, for a total of 10,875,000 being 20.9%
                of our
                Company once the Northern preferred shares are
                converted.(3)C.
                Ruiz Tighe beneficially and indirectly owns 3,040,000 shares of our
                common
                stock held by 1004731 Alberta Ltd., a corporation registered in Alberta,
                Canada, which is 100% owned by C. Ruiz Tighe. C. Ruiz Tighe directly
                holds
                1,017,000 shares of our common
                stock.








**SECURITY
                OWNERSHIP OF MANAGEMENT**
              **As
                of September 30, 2005**




**Name
                and Address of Beneficial Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares Beneficially Owned**
            
            **Percentage
                of Class Beneficially Owned**(1)
            
            **Nature
                of Ownership**Dr.
                Horst A. Schmid(2)
              Director
                and Chairman of the Board
              Suite
                510, 10117 Jasper Avenue
              Edmonton,
                Alberta T5J 1W8 Canada
            
            
            Common
            
            
            1,950,000
            
            
            3.7
            %
            
            IndirectMr.
                Curtis Sparrow
              Director,
                Chief Financial Officer, Corporate Secretary and Treasurer
              Suite
                510, 10117 Jasper Avenue
              Edmonton,
                Alberta T5J 1W8 Canada
            
            
            —
            
            
            None
            
            
            —
            
            
            —Mr.
                Cryus Spaulding(3)
              Director
                and Chief Operating Officer
              416
                Scenic View Bay
              Calgary,
                Alberta T3L 1Z4 Canada
            
            
            Common
            
            
            650,000
            
            
            1.2
            %
            
            IndirectMr.
                Donald E. H. Jones(4)
              Director
              Calle
                113, Numero 7-21
              Officina
                706, Edificio Teleport, Torre A
              Bogota,
                Colombia
            
            
            —
            
            
            None
            
            
            —
            
            
            —All
                Officers and Directors as a Group
            
            
            Common
            
            
            2,600,000
            
            
            4.9
            %
            
            Indirect




(1)Based on 52,031,289 common shares outstanding on September 30,
                2005.


(2)Our Chairman of the Board Dr. Horst A. Schmid’s indirect beneficial
                  ownership consists of Portwest Investment Ltd. owning 1,950,000
                  common
                  shares. Portwest Investment Ltd. is a private corporation registered
                  in
                  Alberta, Canada, which is owned and controlled by Dr. Horst A.
                  Schmid.(3)Mr. Cyrus Spaulding was appointed Director and Chief Operating
                  Officer on
                  September 1, 2005. Mr. Spaulding’s indirect beneficial ownership consists
                  of 150,000 common shares through his spouse, Barbara Spaulding,
                  as of
                  September 30, 2005, and 250,000 common shares acquired indirectly
                  through
                  his spouse from an August 12, 2005 private placement which included
                  warrants to purchase another 250,000 common shares of our
                  Company.(4)Mr. Donald E. H. Jones was appointed Director on June 29,
                  2005.


56




**Changes
      in Control**





Since
      December 2007, Tamm Oil and Gas Corp. and its agents have issued multiple public
      statements claiming that Tamm has acquired, or agreed to acquire, a significant
      and controlling interest in our Company and our properties. We are not, and
      have
      not been, party to any of Tamm’s public statements or purported acquisitions of
      our shares of common stock, and we have commenced a lawsuit against Tamm
      alleging that Tamm has violated United States federal and Nevada state law
      in
      connection with Tamm’s recent public statements and activities related to our
      Company, our operations and Tamm’s ownership of our shares of common stock. For
      more information about the foregoing, you should refer to “Item 3. Legal
      Proceedings” in this Form 10-KSB.





**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





For
      the
      year ending September 30, 2005 Nearshore Petroleum Corporation, which is 50%
      owned and controlled by Mr. Steven P. Gawne and 50% owned and controlled by
      his
      wife, Rebekah Gawne, invoiced our Company $135,000 Cdn for the services of
      Mr.
      Steven Gawne. During the year ending Sept 30, 2005, Mr. Steven Gawne and
      Nearshore Petroleum Corporation also claimed compensation from Northern during
      fiscal 2005 of $135,000 Cdn. Nearshore Petroleum Corporation also claims a
      royalty payable by Northern of 6.5% within properties which Northern acquired
      leases.





On
      June
      7, 2005, in connection with our Company's acquisition of Northern, our Company
      entered into Put Call Option Agreements with each of Northern’s preferred
      shareholders. Pursuant to these agreements, our Company was given the right
      to
      acquire the preferred stock of Northern held by the preferred stockholders,
      and
      such stockholders were given the right to require our Company to purchase such
      shares. The option agreements provide that upon exchange, the preferred
      stockholders of Northern will receive thirty shares of our Company's common
      stock for each share of Northern’s preferred stock held by such stockholders.
      Four out of the six option agreements were entered into with affiliates of
      our
      Company: Mr. Steven Gawne, Nearshore Petroleum Corporation, Edmonton
      International Airport Hotel Ltd. (“Edmonton”) (a company wholly owned by Curtis
      Sparrow) and 1072438 Alberta Ltd. (“1072438”) (a company wholly owned by Mr.
      Moses Ling). “Edmonton” received the preferred shares in lieu of debts owed to
      them. “Edmonton” subsequently sold the resulting preferred Northern shares to a
      party unrelated to our Company as disclosed in a Form 4 filed on March 20,
      2006.
      On February 23, 2006, Mr. Steven P. Gawne and Nearshore partially exercised
      their rights under the option agreements, and our Company issued 300,000 Deep
      Well common shares to each of Mr. Gawne and Nearshore in exchange for 20,000
      of
      the outstanding preferred shares of Northern. The common shares were issued
      pursuant to Section 4(2) of the 1933 Act.





On
      August
      12, 2005 Barbara Spaulding, the wife of Mr. Cyrus Spaulding our current director
      and Chief Operating Officer, subscribed for 250,000 units of our Company,
      pursuant to a private placement transaction, for an aggregate price of $100,000.
      Each unit consists of one common share and one common share purchase warrant,
      with each warrant entitling its holder to acquire one share of our common stock
      at an exercise price of $0.60. The exercise price of the warrants will be
      adjusted from time to time upon the occurrence of certain events, as provided
      in
      the warrants. The warrants expire on August 12, 2008. The units were issued
      pursuant to Regulation S. As of the date of this report Barbara Spaulding
      directly owns 250,000 common shares of our Company and an additional 250,000
      warrants to purchase common shares.




57




**ITEM
      13.**  **EXHIBITS
      AND REPORTS ON FORM 8-K** ****





**Exhibit
                No.**
            
            **Description**2.1
            
            
            Liquidating
                Plan of Reorganization of Allied Devices Corporation, now known as
                Deep
                Well Oil & Gas, Inc. filed with Form 10-K/A on January 28, 2004, and
                incorporated herein by reference2.2
            
            
            Order
                and Plan of Reorganization of the U.S. Bankruptcy Court in and for
                the
                Eastern District of New York, In re: Allied Devices Corporation,
                Chapter
                11, Case No. 03-80962-511, dated September 10, 2003 filed with Form
                10K/A
                on January 28, 2004, and incorporated herein by
                reference3.1
            
            
            Restated
                and Amended Articles of Incorporation filed with and accepted by
                the
                Secretary of State of Nevada on October 22, 2003 filed with Form
                10-K/A on
                January 28, 2004, and incorporated herein by reference3.2
            
            
            Amended
                Articles of Incorporation filed with the State of Nevada on February
                27,
                2004 filed with Form 8-K on March 5, 2004, and incorporated herein
                by
                reference3.3
            
            
            Amended
                Articles of Incorporation filed with the State of Nevada on May 5,
                2004
                filed with Form 8-K on May 7, 2004, and incorporated herein by
                reference3.4
            
            
            Registrant’sBy-laws, filed with Form 10-KSB on February 23, 2007, and incorporated
                herein by reference4.1
            
            
            Form
                of Warrant issued pursuant to the Securities Purchase Agreement and
                Registration Rights Agreement dated March 10, 2005, filed with Form
                8-K on
                March 14, 2005, and incorporated herein by reference4.2
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated August
                12,
                2005 by and among our Company with three investors related to the
                Private
                Placement offering, and Debt Settlement Agreement, filed with Form
                8-K on
                August 17, 2005, and incorporated herein by reference4.3
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated October
                11,
                2005 by and among our Company with three investors related to the
                Private
                Placement offering, filed with Form 8-K on October 19, 2005, and
                incorporated herein by reference4.4
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated January
                13,
                2006 by and among our Company with three investors related to the
                Private
                Placement offering, and Debt Settlement Agreement, filed with Form
                8-K on
                March 6, 2006, and incorporated herein by reference4.5
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated May
                25,
                2007 by and among our Company with one investor related to the Private
                Placement offering, and filed with Form 8-K on June 13, 2007, and
                incorporated herein by reference4.6
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated June
                22,
                2007 by and among our Company with one investor related to the Private
                Placement offering, filed with Form 8-K on July 5, 2007, and incorporated
                herein by reference4.7
            
            
            Form
                of Special Warrant issued pursuant to the Subscription Agreement
                dated
                June 22, 2007 by and among our Company with one investor related
                to the
                Private Placement offering, filed with Form 8-K on July 5, 2007,
                and
                incorporated herein by reference4.8
            
            
            Form
                of Warrant issued pursuant to the Subscription Agreement dated July
                11,
                2007 by and among our Company with two investor related to the Private
                Placement offering, and filed with Form 10-QSB on October 30, 2007
                and
                incorporated herein by reference4.9
            
            
            Form
                of Special Warrant issued pursuant to the Subscription Agreement
                dated
                July 11, 2007 by and among our Company with two investor related
                to the
                Private Placement offering, and filed with Form 10-QSB on October
                30, 2007
                and incorporated herein by reference4.10
            
            
            Form
                of adjusted Warrant issued in September 2007 pursuant to the original
                Warrant dated March 10, 2005 by and among our Company with two investors
                related to the Securities Purchase Agreement and Registration Rights
                Agreement, and filed with Form 10-QSB on October 30, 2007 and incorporated
                herein by reference10.1
            
            
            Gross
                Overriding Royalty Agreement dated December 12, 2003 between Mikwec
                Energy
                Canada Limited (now known as Northern Alberta Oil Ltd.), and Nearshore
                Petroleum Corporation, filed with Form 10-KSB on February 23, 2007,
                and
                incorporated herein by reference10.2
            
            
            Joint
                Operating Agreement dated April 26, 2004 between Mikwec Energy Canada
                Limited (now known as Northern Alberta Oil Ltd.), and Maxen Petroleum
                Inc.
                (now known as Pan Orient Energy Corp.), filed with Form 10-KSB on
                February
                23, 2007, and incorporated herein by reference10.3
            
            
            Consulting
                Agreement by and between Deep Well and Menno Wiebe dated June 8,
                2004,
                filed with Form 10-KSB on February 23, 2007, and incorporated herein
                by
                reference




58




10.4
            
            
            Exchange
                Agreement between our Company and Mikwec Energy Canada Limited (now
                known
                as Northern Alberta Oil Ltd.), dated as of July 8, 2004, and filed
                with
                Form 8-K on November 5, 2004 and incorporated herein by reference.
                Form of
                Amending Agreement, dated as of April 25, 2005 and Form of Termination,
                Option and Put Agreement, both filed with Form 8-K on June 10, 2005,
                and
                incorporated herein by reference.10.5
            
            
            Employment
                Letter Agreement by and between Deep Well and John Brown dated November
                15, 2004, filed with Form 10-KSB on February 23, 2007, and incorporated
                herein by reference10.6
            
            
            Joint
                Operating Agreement dated December 9, 2004 between our Company and
                1132559
                Alberta Ltd., filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference10.7
            
            
            Farmout
                Agreement dated February 25, 2005 by and between the Deep Well Oil
&
                Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc.,
                Surge
                Global Energy (Canada) Ltd. (now known as Andora Energy Corporation
                formerly known as Signet Energy, Inc.), filed with Form 10-KSB on
                February
                23, 2007, and incorporated herein by reference10.8
            
            
            Assumption
                of Liabilities and Indemnity Agreement dated February 28, 2005 by
                and
                between Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd. and Surge
                Global Energy (Canada) Ltd. (now known as Andora Energy Corporation
                formerly known as Signet Energy, Inc.), filed with Form 10-KSB on
                February
                23, 2007, and incorporated herein by reference10.9
            
            
            Termination
                Agreement dated February 28, 2005 by and between Nearshore Petroleum
                Corporation, Northern Alberta Oil Ltd. and Surge Global Energy (Canada)
                Ltd. (now known as Andora Energy Corporation formerly known as Signet
                Energy, Inc.), filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference10.10
            
            
            Farmout
                Amending Agreement dated March 3, 2005 by and between our Company,
                Deep
                Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global
                Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global
                Energy
                (Canada) Ltd.), filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference10.11
            
            
            Two
                Farmout Amending Agreements dated March 10, 2005 by and between our
                Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and
                Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as
                Surge
                Global Energy (Canada) Ltd.), filed with Form 10-KSB on February
                23, 2007,
                and incorporated herein by reference10.12
            
            
            Form
                of Securities Purchase Agreement and Registration Rights Agreement
                dated
                March 10, 2005, by and among our Company and each of Provident Premier
                Master Fund, Ltd. and Grey K Fund LP, filed with Form 8-K on March
                14,
                2005, and incorporated herein by reference10.13
            
            
            Form
                of Amending Agreement dated as of April 25, 2005, filed with Form
                8-K on
                June 10, 2005, and incorporated herein by reference10.14
            
            
            Form
                of Termination, Option and Put Agreement, filed with Form 8-K on
                June 10,
                2005, and incorporated herein by reference10.15
            
            
            Consulting
                agreement by and between Northern and Portwest Investments Ltd.,
                dated
                July 1, 2005, filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference.10.16
            
            
            Consulting
                agreement by and between Northern and Concorde Consulting, dated
                July 1,
                2005, filed with Form 10-KSB on February 23, 2007, and incorporated
                herein
                by reference.10.17
            
            
            Farmout
                Amending Agreement dated July 14, 2005 by and between our Company,
                Deep
                Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global
                Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global
                Energy
                (Canada) Ltd.), filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference.10.18
            
            
            Form
                of Subscription Agreement dated August 12, 2005 by and among our
                Company
                with three investors related to the Private Placement offering, and
                Debt
                Settlement Agreement, filed with Form 8-K on August 17, 2005, and
                incorporated herein by reference10.19
            
            
            Consulting
                agreement by and between the Northern and Trebax Projects Ltd., effective
                September 1, 2005, filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference.10.20
            
            
            Form
                of Subscription Agreement dated October 11, 2005, by and among our
                Company
                with three investors related to the Private Placement offering, filed
                with
                Form 8-K on October 19, 2005, and incorporated herein by
                reference10.21
            
            
            Farmout
                Amending Agreement dated November 15, 2005 by and between our Company,
                Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global
                Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global
                Energy
                (Canada) Ltd.), filed with Form 10-KSB on February 23, 2007, and
                incorporated herein by reference




59




10.22
            
            
            Farmout
                Acknowledgement Agreement dated November 15, 2005 by and between
                our
                Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and
                Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as
                Surge
                Global Energy (Canada) Ltd.), filed with Form 10-KSB on February
                23, 2007,
                and incorporated herein by reference10.23
            
            
            Deep
                Well Oil & Gas, Inc. Stock Option Plan (“The Plan”), effective
                November 28, 2005, filed with Form 8-K on March 3, 2006, and incorporated
                herein by reference10.24
            
            
            Sample
                Stock Option Agreements with all Directors, filed with Form 10-KSB
                on
                February 23, 2007, and incorporated herein by reference10.25
            
            
            Sample
                Stock Option Agreements with all Contractors, filed with Form 10-KSB
                on
                February 23, 2007, and incorporated herein by reference filed
                herewith10.26
            
            
            Sample
                Indemnity Agreement with all Directors, filed with Form 10-KSB on
                February
                23, 2007, and incorporated herein by reference10.27
            
            
            Form
                of Subscription Agreement dated January 13, 2006 by and among our
                Company
                with three investors related to the Private Placement offering, and
                Debt
                Settlement Agreement, filed with Form 8-K on March 6, 2006, and
                incorporated herein by reference10.28
            
            
            Settlement
                Agreement & Release of All Claims, dated as of January 29, 2007, by
                and among our Company and Grey K Fund LP, Grey K Offshore Fund Ltd.,
                Provident Premier Master Fund Ltd., Atlas Master Fund Ltd. and Gemini
                Master Fund, Ltd., filed with Form 8-K on January 31, 2007, and
                incorporated herein by reference10.29
            
            
            Form
                of Non-Qualified Stock Option Agreement issued to Director on April
                3,
                2006, filed with Form 10-KSB on February 23, 2007, and incorporated
                herein
                by reference10.30
            
            
            Form
                of Subscription Agreement dated May 25, 2007 by and among our Company
                with
                one investor, filed with Form 8-K on June 13, 2007, and incorporated
                herein by reference10.31
            
            
            Form
                of Subscription Agreement dated June 22, 2007 by and among our Company
                with one investor, filed with Form 8-K on July 5, 2007, and incorporated
                herein by reference10.32
            
            
            Form
                of Subscription Agreement dated July 11, 2007 by and among our Company
                with two investors, and filed with Form 10-QSB on October 30, 2007
                and
                incorporated herein by reference10.33
            
            
            Order
                granted by the court dated September 7, 2007 between our Company
                and Star
                Capital Inc., and filed herewith10.34
            
            
            Form
                of Agreement dated as of September 10, 2007 between our Company and
                Star
                Capital Inc., and filed herewith10.35
            
            
            Form
                of Amending Agreement dated as of September 10, 2007, between our
                Company
                and Star Capital Inc., and filed herewith10.36
            
            
            Consulting
                agreement by and between our Company and R.N. Dell Energy Ltd., effective
                September 20, 2007, and filed with Form 10-QSB on October 30, 2007
                incorporated herein by reference10.37
            
            
            Non-Qualified
                Stock Option Agreement issued to R.N. Dell Energy Ltd. effective
                September
                20, 2007, and filed with Form 10-QSB on October 30, 2007 incorporated
                herein by reference10.38
            
            
            Non-Qualified
                Stock Option Agreement issued to Employee effective September 20,
                2007 and
                filed with Form 10-QSB on October 30, 2007 incorporated herein by
                reference10.39
            
            
            Consulting
                agreement by and between our Company and Picoplat Consulting Inc.,
                effective October 15, 2007, and filed herewith10.40
            
            
            Minutes
                of Settlement dated November 26, 2007 by and between Deep Well Oil
&
                Gas, Inc. and its subsidiaries and 1350826 Alberta Ltd. and Andora
                Energy
                Corporation, filed with Form 8-K on December 14, 2007, and incorporated
                herein by reference16.1
            
            
            Changes
                in registrant’s certifying accountant, Letter of Madsen & Associates,
                CPA’s Inc. filed with Form 8-K on August 16, 2004, and incorporated herein
                by reference16.2
            
            
            Changes
                in registrant’s certifying accountant, Letter of Deloitte & Touche LLP
                filed with Form 8-K on August 10, 2005, and incorporated herein by
                reference21.1
            
            
            Subsidiaries
                of Registrant, filed herewith31.1
            
            
            Certification
                of President and Chief Executive Officer Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed herewith31.2
            
            
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002, filed herewith32.1
            
            
            Certification
                of President and Chief Executive Officer Pursuant to Section 906
                of the
                Sarbanes-Oxley Act of 2002, filed herewith32.2
            
            
            Certification
                of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002, filed herewith




60




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





The
      following table is a summary of the fees billed to us by Sellers & Andersen,
      LLC, Madsen & Associates and Deloitte & Touche LLP for professional
      services for the fiscal years ended September 30, 2005 and September 30, 2004:





**Fee
                Category**
            
            **Fiscal
                2005 Fees**
            
            **Fiscal
                2004 Fees**Audit
                Fees
            
            $
            9,085
            
            $
            29,328.94Audit
                Related Fees
            
            
            Nil
            
            
            8,646.42Tax
                Fees
            
            
            Nil
            
            
            1,016.63All
                Other Fees
            
            
            **-**
            
            
            **-**Total
                Fees
            
            $
            9,085
            
            $
            38,991.99





**Audit
      Fees**





Our
      board
      of directors appointed Madsen & Associates, CPA’s Inc. as independent
      auditors to audit our financial statements for the fiscal year ending September
      30, 2005 and September 30, 2004.





**Audit
      Related Fees**





The
      aggregate fees billed for
      assurance and related services by the independent auditors that are reasonably
      related to the performance of the audit or review of our financial statements
      and are not reported above under “Audit Fees” are for consultation regarding our
      correspondence with the SEC and other accounting consulting.





**Tax
      Fees**





For
      the
      fiscal years ended September 30, 2005 and 2004, the aggregate fees billed for
      tax compliance are stated above. The taxes are now done by the independent
      third
      party, chartered accounting firm stated below.





**All
      Other Fees**





None.
      However, we paid an independent third party, chartered accounting firm fees
      of
      $91,942.81 Cdn relating to the preparation of the annual financial statements
      included in this 10-KSB were audited by Madsen & Associates, CPA’s
      Inc.





**Audit
      Committee Pre-Approval Policies and Procedures**





The
      Securities and Exchange Commission has adopted rules that require that before
      Madsen & Associates, CPA’s Inc. is engaged by us or our subsidiaries to
      render any audit or permitted non-audit service, the engagement be:





·
            our
                board of directors acting as our audit committee approved;
                or





·
            entered
                into pursuant to pre-approval policies and procedures established
                by the
                audit committee, provided the policies and procedures are detailed
                as to
                the particular service, the audit committee is informed of each service,
                and such policies and procedures do not include delegation of the
                audit
                committee’s responsibilities to
                management.





Our
      Company has considered the nature and amount of the fees billed by Madsen &
Associates, CPA’s Inc., and believes that the provision of the services for
      activities unrelated to the audit is compatible with maintaining Madsen &
Associates, CPA’s Inc. independence.




61


**SIGNATURES**





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




**DEEP
                WELL OIL & GAS, INC.**By
            /s/
                Horst A. SchmidDr.
                Horst A. SchmidChairman
                of the BoardDate
                    April 21, 2008




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.


By
              /s/
                    Horst A. SchmidDr.
                    Horst A. SchmidChief
                    Executive Officer and President(Principal
                  Executive Officer)Date
                      April 21, 2008
  By
                  /s/
                          Curtis SparrowMr.
                          Curtis SparrowChief
                          Financial Officer(Principal
                        Financial and Accounting Officer)DateApril
                        21, 2008
  62