**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549





**FORM
      10-QSB**





[X]
            Quarterly
                Report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For
                the quarterly period endedMarch
                31, 2007[
                ]
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition period __________to__________Commission
                File Number:000-52001





Delta
      Oil & Gas, Inc.


(Exact
      name of small business issuer as specified in its charter)





Colorado
            91-2102350(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)




2600
                144 4th Ave S.W , Calgary, Alberta T2P 3N4(Address
                of principal executive offices)





866-355-3644(Issuer’s
                telephone number)_______________________________________________________________(Former
                name, former address and former fiscal year, if changed since last
                report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      for such shorter period that the issuer was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days [X] Yes
      [
      ] No





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





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 45,630,506 common shares as of April 12,
      2007.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]




Table
          of Contents









TABLE
                OF CONTENTS
            PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Management’s
                Discussion and Analysis
            4Item
                3.
            Controls
                and Procedures
            12PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            14Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            14Item
                3.
            Defaults
                Upon Senior Securities
            14Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            14Item
                5.
            Other
                Information
            14Item
                6.
            Exhibits
            15


2
 Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**





**Item1.**  **Financial
      Statements**





Our
                unaudited consolidated financial statements included in this Form
                10-QSB
                are as follows:F-1
            Unaudited
                Consolidated Balance Sheet as of March 31,
                2007F-2
            Unaudited
                Consolidated Statements of Operations for the three
                months ended March 31, 2007 and 2006 and from inception on January
                9, 2001
                to March 31, 2007F-3
            Unaudited
                Consolidated Statements of Cash Flows for the three
                months ended March 31, 2007 and 2006 and from inception on January
                9, 2001
                to March 31, 2007F-4
            Notes
                to Unaudited Consolidated Financial
                Statements;








These
      unaudited consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and the SEC instructions to Form 10-QSB.
      In
      the opinion of management, all adjustments considered necessary for a fair
      presentation have been included. Operating results for the interim period ended
      March 31, 2007 are not necessarily indicative of the results that can be
      expected for the full year.


3
 Table
          of Contents


**DELTAOIL
&
GAS,
        INC.**
 (A
        Development Stage Company)
  **Consolidated
        Balance Sheets**
 (Stated
        in U.S. Dollars)
  **March
                    31,**
                  **2007**
              
              December
                    31,
                  2006**ASSETS****Current**Cash
                  and cash equivalents
              **$**
              **1,465,057**
              
              $
              1,668,758Accounts
                  receivable
              
              **68,505**
              
              
              88,451Prepaid
                  expenses
              
              **1,622**
              
              
              1,611**1,535,184**
              
              
              1,758,820**Natural
                  Gas And Oil Properties**Proved
                  property
              
              **757,882**
              
              
              812,717Unproved
                  property
              
              **1,997,714**
              
              
              1,816,007**2,755,596**
              
              
              2,628,724**Other
                  Equipment**Computer
                  equipment
              
              **3,492**
              
              
              3,492Less:
                  accumulated depreciation
              
              **(2,805)**
              
              
              (2,655)**687**
              
              
              837**$**
              **4,291,467**
              
              $
              4,388,381**LIABILITIES
                AND STOCKHOLDERS' EQUITY****LIABILITIES****Current**Accounts
                  payable and accrued liabilities
              **$**
              **1,008**
              
              $
              39,526**Long
                  Term**Asset
                  retirement obligation
              
              **40,635**
              
              
              40,635**41,643**
              
              
              80,161**STOCKHOLDERS'
                EQUITY****Share
                  Capital**Preferred
                  Shares, 25,000,000 shares authorized of $0.001
                par
                  value of which none have been issuedCommon
                      stock, 100,000,000 shares authorized of $0.001
                    par
                      value, 45,630,506 and 44,070,506 shares issued
                    and
                      outstanding, respectively
              
              **45,631**
              
              
              45,071Additional
                  paid-in capital
              
              **5,983,708**
              
              
              5,411,761Share
                  subscriptions receivable
              
              **-**
              
              
              -**Deficit
                  accumulated during the development stage**
              
              **(1,779,515)**
              
              
              (1,148,612)**4,249,824**
              
              
              4,308,220**$**
              **4,291,467**
              
              $
              4,388,381
  The
        accompanying notes are an integral part of these
        consolidated financial statements.


F-1
 Table
          of Contents
 **DELTAOIL
&
GAS,
          INC.**
 (A
          Development Stage Company)
  **Consolidated
          Statements of Operations**
 (Stated
          in U.S. Dollars)


**THREE
                    MONTHS ENDED**
                  **MARCH
                    31,**
              
              CUMULATIVE
                          PERIOD
                        FROM
                          INCEPTION
                        JANUARY
                          9, 2001
                        TO
                        MARCH
                          31,**2007**
              
              2006
              
              2007**Revenue**
              ****Natural
                  gas and oil sales
              **$**
              **147,504**
              
              $
              2,188
              
              $
              758,634Gain
                  on sale of oil property
              
              **-**
              
              
              -
              
              
              1,061,159**147,504**
              
              
              2,188
              
              
              1,819,793**Costs
                  And Expenses**Natural
                  gas and oil operating costs
              
              **35,744**
              
              
              761
              
              
              171,794General
                  and administrative
              
              **619,423**
              
              
              170,581
              
              
              2,026,615Depreciation
                  and depletion
              
              **133,979**
              
              
              153
              
              
              639,482Impairment
                  of natural gas and oil properties
              
              **-**
              
              
              -
              
              
              676,881Dry
                  well costs written off
              
              **-**
              
              
              -
              
              
              118,690Asset
                  retirement obligations
              
              **-**
              
              
              5,991
              
              
              40,635**789,146**
              
              
              177,486
              
              
              3,674,097**Net
                  Operating (Loss)**
              
              **(641,642)**
              
              
              (175,298)
              
              
              (1,854,304)**Other
                  Income**Forgiveness
                  of debt
              
              **-**
              
              
              -
              
              
              39,933Interest
                  income
              
              **10,739**
              
              
              3,964
              
              
              34,856**10,739**
              
              
              3,964
              
              
              74,789**Net
                  Income (Loss)**
              **$**
              **(630,903)**
              
              $
              (171,334)
              
              $
              (1,779,515)**Basic
                  (Loss) Per Common Share**
              **$**
              **(0.01)**
              
              $
              (0.00)**Weighted
                    Average Number OfCommon
                    Shares Outstanding**
              
              **45,281,839**
              
              
              44,269,263




The
        accompanying notes are an integral part of these
        consolidated financial statements.
 F-2
 Table
            of Contents
 **DELTAOIL
&
GAS,
            INC.**
 (A
            Development Stage Company)
  **Consolidated
            Statements of Cash Flows**
 (Stated
            in U.S. Dollars)
 **THREE
                        MONTHS ENDED**
                      **MARCH
                        31,**
                  
                  CUMULATIVE
                              PERIOD
                            FROM
                              INCEPTION
                            JANUARY
                              9, 2001
                            TO
                            MARCH
                              31,**2007**
                  
                  2006
                  
                  2007**Cash
                      Flows From Operating Activities:**Net
                      Income (loss) for the period
                  **$**
                  **(630,903)**
                  
                  $
                  (171,334)
                  
                  $
                  (1,779,515)Adjustments
                      to reconcile net loss to net cashused
                      in operating activities:Gain
                      on sale of property
                  
                  **-**
                  
                  
                  -
                  
                  
                  (1,061,159)Depreciation
                      and depletion
                  
                  **133,979**
                  
                  
                  153
                  
                  
                  639,482Impairment
                      of natural gas and oil properties
                  
                  **-**
                  
                  
                  -
                  
                  
                  676,881Interest
                      accrued on note payable
                  
                  **-**
                  
                  
                  -
                  
                  
                  -Dry
                      well costs written off
                  
                  **-**
                  
                  
                  -
                  
                  
                  118,690Stock-based
                      compensation expense
                  
                  **527,507**
                  
                  
                  5,991
                  
                  
                  1,093,493Changes
                      in operating assets and liabilities:Accounts
                      receivable
                  
                  **19,946**
                  
                  
                  1,966
                  
                  
                  (68,505)Accounts
                      payable and accrued liabilities
                  
                  **(38,518)**
                  
                  
                  (53,246)
                  
                  
                  1,008Asset
                      retirement obligations
                  
                  **-**
                  
                  
                  -
                  
                  
                  40,635Promissory
                      note payable
                  
                  **-**
                  
                  
                  536
                  
                  
                  -Prepaid
                      expenses
                  
                  **(11)**
                  
                  
                  (5,799)
                  
                  
                  (1,622)**Net
                      Cash Used in Operating Activities**
                  
                  **12,000**
                  
                  
                  (221,733)
                  
                  
                  (340,612)**Cash
                      Flows From Investing Activities:**Purchase
                      of other equipment
                  
                  **-**
                  
                  
                  -
                  
                  
                  (3,492)Sale
                      proceeds of natural gas and oil working interests
                  
                  **-**
                  
                  
                  -
                  
                  
                  1,500,000Investment
                      in natural gas and oil working interests
                  
                  **(260,701)**
                  
                  
                  (550,116)
                  
                  
                  (4,626,686)**Net
                      Cash Used in Investing Activities**
                  
                  **(260,701)**
                  
                  
                  (550,116)
                  
                  
                  (3,130,178)**Cash
                      Flows From Financing Activities:**Proceeds
                      from issuance of common stock
                  
                  **45,000**
                  
                  
                  256,500
                  
                  
                  4,935,847Shares
                      subscriptions received
                  
                  **-**
                  
                  
                  1,999,995
                  
                  
                  -Shares
                      subscriptions receivable
                  
                  **-**
                  
                  
                  16,000
                  
                  
                  -**Net
                      Cash Provided by Financing Activities**
                  
                  **45,000**
                  
                  
                  2,272,495
                  
                  
                  4,935,847**Net
                      Increase In Cash And Cash Equivalents**
                  
                  **(203,701)**
                  
                  
                  1,500,646
                  
                  
                  1,465,057**Cash
                      And Cash Equivalents At Beginning Of Period****(Excess
                      Of Checks Issued Over Funds On Deposit)**
                  
                  **1,668,758**
                  
                  
                  343,004
                  
                  
                  -**Cash
                      And Cash Equivalents At End Of Period**
                  **$**
                  **1,465,057**
                  
                  $
                  1,843,650
                  
                  $
                  1,465,057
 The
            accompanying notes are an integral part of these
            consolidated financial statements.
 F-3
 Table
                of Contents
 **DELTAOIL
&
GAS,
              INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
  **1.**
                    **BASIS
                        OF PRESENTATION**
  The
              unaudited consolidated financial statements as of March 31, 2007 included
              herein
              have been prepared without audit pursuant to the rules and regulations
              of the
              Securities and Exchange Commission. Certain information and footnote
              disclosures
              normally included in financial statements prepared in accordance with
              United
              States generally accepted accounting principles have been condensed
              or omitted
              pursuant to such rules and regulations. In the opinion of management,
              all
              adjustment (consisting of normal recurring accruals) considered necessary
              for a
              fair presentation have been included. It is suggested that these consolidated
              financial statements be read in conjunction with the December 31, 2006
              audited
              financial statements and notes thereto. The results of the operations
              for the
              three months ended March 31, 2007 are not indicative of the results
              that may be
              expected for the year.
  **2.**
                    **OPERATIONS**
  a)
                    Organization
 
 Delta
              Oil
& Gas, Inc. (“the Company”) was incorporated as a Colorado corporation on
              January 9, 2001.
  The
              Company is a development stage, independent natural gas and oil company
              engaged
              in the exploration, development and acquisition of natural gas and
              oil
              properties in the United States and Canada. The Company’s entry into the natural
              gas and oil business began on February 8, 2001.
  During
              the year ended December 31, 2004, the Company completed a forward stock
              split on
              the basis of 5 1⁄2 common shares for every one previously held common share,
              common shares outstanding have been adjusted retroactively.
  b)
                    Development
                        Stage Activities
 
 The
              Company is a development stage enterprise engaged in the exploration
              for and
              production of natural gas and oil in the United States and Canada.
 
 F-4
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
  **2.**
                    **OPERATIONS
                        (Continued)**
  The
              Company is subject to several categories of risk associated with its
              development
              stage activities. Natural gas and oil exploration and production is
              a
              speculative business, and involves a high degree of risk. Among the
              factors that
              have a direct bearing on the Company’s prospects are uncertainties inherent
              estimating natural gas and oil reserves, future hydrocarbon production,
              and cash
              flows, particularly with respect to wells that have not been fully
              tested and
              with wells having limited production histories; access to additional
              capital;
              changes in the price of natural gas and oil; availability and cost
              of services
              and equipment; and the presence of competitors with greater financial
              resources
              and capacity.
 
 c)
                    Going
                        Concern
  The
              accompanying financial statements have been prepared assuming that
              the Company
              will continue as a going concern.
  As
              shown
              in the accompanying consolidated financial statements, the Company
              has incurred
              a net loss of $1,779,515 since inception. To achieve profitable operations,
              the
              Company requires additional capital for obtaining producing oil and
              gas
              properties through either the purchase of producing wells or successful
              exploration activity. Management believes that sufficient funding will
              be
              available to meet its business objectives including anticipated cash
              needs for
              working capital and is currently evaluating several financing options.
              However,
              there can be no assurance that the Company will be able to obtain sufficient
              funds to continue the development of and, if successful, to commence
              the sale of
              its products under development. As a result of the foregoing, there
              exists
              substantial doubt the Company’s ability to continue as a going concern. These
              consolidated financial statements do not include any adjustments that
              might
              result from the outcome of this uncertainty.
 
 **3.**
                    **SIGNIFICANT
                        ACCOUNTING POLICIES**
  a)
                    Basis
                        of Consolidation
 
 The
              consolidated financial statements include the financial statements
              of the
              Company and its wholly-owned subsidiary, Delta Oil & Gas (Canada) Inc. All
              significant inter-company balances and transactions have been
              eliminated.
 
 F-5
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **3.**
                    **SIGNIFICANT
                        ACCOUNTING POLICIES
                        (Continued)**
  b)
                    Use
                        of Estimates
  The
              preparation of financial statements in conformity with accounting principles
              generally accepted in the United States requires management to make
              estimates
              and assumptions that affect the reported amounts of assets and liabilities,
              and
              disclosure of contingent assets and liabilities at the date of the
              financial
              statements, and the reported amounts of revenues and expenses during
              the
              reporting periods. Actual results could differ from those estimates.
              Significant
              estimates with regard to these financial statements include the estimate
              of
              proved natural gas and oil reserve quantities and the related present
              value of
              estimated future net cash flows there from.
 
 c)
                    Natural
                        Gas and Oil Properties
  The
              Company accounts for its oil and gas producing activities using the
              full cost
              method of accounting as prescribed by the United States Securities
              and Exchange
              Commission (“SEC”). Accordingly, all costs associated with the acquisition of
              properties and exploration with the intent of finding proved oil and
              gas
              reserves contribute to the discovery of proved reserves, including
              the costs of
              abandoned properties, dry holes, geophysical costs, and annual lease
              rentals are
              capitalized. All general corporate costs are expensed as incurred.
              In general,
              sales or other dispositions of oil and gas properties are accounted
              for as
              adjustments to capitalized costs, with no gain or loss recorded. Amortization
              of
              evaluated oil and gas properties is computed on the units of production
              method
              based on all proved reserves on a country-by-country basis. Unevaluated
              oil and
              gas properties are assessed at least annually for impairment either
              individually
              or on an aggregate basis. The net capitalized costs of evaluated oil
              and gas
              properties (full cost ceiling limitation) are not to exceed their related
              estimated future net revenues from proved reserves discounted at 10%,
              and the
              lower of cost or estimated fair value of unproved properties, net of
              tax
              considerations. These properties are included in the amortization pool
              immediately upon the determination that the well is dry.
  Unproved
              properties consist of lease acquisition costs and costs on well currently
              being
              drilled on the properties. The recorded costs of the investment in
              unproved
              properties are not amortized until proved reserves associated with
              the projects
              can be determined or until they are impaired.
 
 F-6
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 **3.**
                    ****SIGNIFICANT
                        ACCOUNTING POLICIES
                        (Continued)****
 d)
                    Asset
                        Retirement Obligations
  The
              Company has adopted Statement of Financial Accounting Standards No.
              143 (“SFAS
              143”), “Accounting for Asset Retirement Obligations”, which requires that asset
              retirement obligations (“ARO”) associated with the retirement of a tangible
              long-lived asset, including natural gas and oil properties, be recognized
              as
              liabilities in the period in which it is incurred and becomes determinable,
              with
              an offsetting increase in the carrying amount of the associated assets.
              The cost
              of tangible long-lived assets, including the initially recognized ARO,
              is
              depleted, such that the cost of the ARO is recognized over the useful
              life of
              the assets. The ARO is recorded at fair value, and accretion expense
              is
              recognized over time as the discounted are accreted to the expected
              settlement
              value. The fair value of the ARO is measured using expected future
              cash flow,
              discounted at the Company’s credit-adjusted risk-free interest
              rate.
 
 e)
                    Joint
                        Ventures
  All
              exploration and production activities are conducted jointly with others
              and,
              accordingly, the accounts reflect only the Company’s proportionate interest in
              such activities.
 
 f)
                    Revenue
                        Recognition
  Revenue
              from sales of crude oil, natural gas and refined petroleum products
              are recorded
              when deliveries have occurred and legal ownership of the commodity
              transfers to
              the customers. Title transfers for crude oil, natural gas and bulk
              refined
              products generally occur at pipeline custody points or when a tanker
              lifting has
              occurred. Revenues from the production of oil and natural gas properties
              in
              which the Company shares an undivided interest with other producers
              are
              recognized based on the actual volumes sold by the Company during the
              period.
              Gas imbalances occur when the Company’s actual sales differ from its entitlement
              under existing working interests. The Company records a liability for
              gas
              imbalances when it has sold more than its working interest of gas production
              and
              the estimated remaining reserves make it doubtful that the partners
              can recoup
              their share of production from the field. At March 31, 2007 and 2006,
              the
              Company had no overproduced imbalances.
 
 F-7
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **3.**
                    **SIGNIFICANT
                        ACCOUNTING POLICIES
                        (Continued)**
  g)
                    Cash
                        and Cash Equivalent
 
 Cash
              consists of cash on deposit with high quality major financial institutions,
              and
              to date has not experienced losses on any of its balances. The carrying
              amounts
              approximated fair market value due to the liquidity of these deposits.
              For
              purposes of the balance sheet and statements of cash flows, the Company
              considers all highly liquid instruments with maturity of three months
              or less at
              the time of issuance to be cash equivalents. At March 31, 2007 and
              2006, the
              Company had no cash equivalents.
 
 h)
                    Environmental
                        Protection and Reclamation Costs
 
 The
              operations of the Company have been, and may be in the future be affected
              from
              time to time in varying degrees by changes in environmental regulations,
              including those for future removal and site restorations costs. Both
              the
              likelihood of new regulations and their overall effect upon the Company
              may vary
              from region to region and are not predictable.
 
 The
              Company’s policy is to meet or, if possible, surpass standards set by relevant
              legislation, by application of technically proven and economically
              feasible
              measures. Environmental expenditures that relate to ongoing environmental
              and
              reclamation programs will be charged against statements of operations
              as
              incurred or capitalized and amortized depending upon their future economic
              benefits. The Company does not currently anticipate any material capital
              expenditures for environmental control facilities because all property
              holdings
              are at early stages of exploration. Therefore, estimated future removal
              and site
              restoration costs are presently considered minimal.
 
 i)
                    Foreign
                        Currency Translation
 
 United
              States funds are considered the Company’s functional currency. Transaction
              amounts denominated in foreign currencies are translated into their
              United
              States dollar equivalents at exchange rates prevailing at the transaction
              date.
              Monetary assets and liabilities are adjusted at each balance sheet
              date to
              reflect exchange rates prevailing at that date, and non-monetary assets
              and
              liabilities are translated at the historical rate of exchange. Gains
              and losses
              arising from restatement of foreign currency monetary assets and liabilities
              at
              each year-end are included in statements of operations.
 
 F-8
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **3.**
                    **SIGNIFICANT
                        ACCOUNTING POLICIES
                        (Continued)**
  j)
                    Other
                        Equipment
 
 Computer
              equipment is stated at cost. Provision for depreciation on computer
              equipment is
              calculated using the straight-line method over the estimated useful
              life of
              three years.
 
 k)
                    Impairment
                        of Long-Lived Assets
 
 In
              the
              event that facts and circumstances indicate that the costs of long-lived
              assets,
              other than oil and gas properties, may be impaired, an evaluation of
              recoverability would be performed. If an evaluation is required, the
              estimated
              future undiscounted cash flows associated with the asset would be compared
              to
              the asset’s carrying amount to determine if a write-down to market value or
              discounted cash flow value is required. Impairment of oil and gas properties
              is
              evaluated subject to the full cost ceiling as described under Natural
              Oil and
              Gas Properties.
 
 l)
                    Loss
                        Per Share
 
 In
              February 1997, the Financial Accounting Standards Board (“FASB”) issued
              Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS
              128”). Under SFAS 128, basic and diluted earnings per share are to be presented.
              Basic earnings per share is computed by dividing income available to
              common
              shareholders by the weighted average number of common shares outstanding
              in the
              period. Diluted earnings per share takes into consideration common
              shares
              outstanding (computed under basic earnings per share) and potentially
              dilutive
              common shares.
 
 m)
                    Income
                        Taxes
 
 The
              Company follows the liability method of accounting for income taxes
              under which
              deferred tax assets and liabilities are recognized for the future tax
              consequences of (i) temporary differences between the tax bases of
              assets and
              liabilities, and their reported amounts in the financial statements,
              and (ii)
              operating loss and tax credit carryforwards for tax purposes. Deferred
              tax
              assets are reduced by a valuation allowance when, based upon management’s
              estimates, it is more likely than not that a portion of the deferred
              tax assets
              will not be realized in a future period.
 
 F-9
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **3.**
                    **SIGNIFICANT
                        ACCOUNTING POLICIES
                        (Continued)**
  n)
                    Financial
                        Instruments
 
 The
              Company’s financial instruments consist of cash and cash equivalent, accounts
              receivable, accounts payable and accrued liabilities, and promissory
              note
              payable.
 
 It
              is
              management’s opinion that the Company is not exposed to significant interest or
              credit risks arising from these financial instruments. The fair value
              of these
              financial instruments is approximate their carrying values.
  o)
                    Comprehensive
                        Loss
  SFAS
              No.
              130, “Reporting Comprehensive Income,” establishes standards for the reporting
              and display of comprehensive loss and its components in the financial
              statements. As at March 31, 2007 and 2006, the Company has no items
              that
              represent a comprehensive loss and, therefore, has not included a schedule
              of
              comprehensive loss in the financial statements.
  p)
                    Stock-Based
                        Compensation
 
 The
              Company accounts for employee stock-based compensation using the intrinsic
              value
              method prescribed in Accounting Principles Board Opinion No. 25 - “Accounting
              for Stock Issued to Employees”, and related interpretations. Accordingly,
              compensation cost for stock options is measured as the excess, if any,
              of the
              fair value of the Company’s common stock at the date of the grant over the
              amount an employee must pay to acquire the common stock. Non-employee
              stock-based compensation is accounted for using the fair value method
              in
              accordance with SFAS No. 123 - “Accounting for Stock-Based Compensation”.
 
 F-10
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
  **4.**
                    ****NATURAL
                        GAS AND OIL
                        PROPERTIES****
  **a)**
                    **Proved
                        Properties**
 **Properties**
                      **December
                          31, 2006**
                      
                      **Addition**
                      
                      **Depletion
                          for the Period**
                      
                      **Write
                          down in carrying**
                        **Value**
                      
                      **March
                          31, 2007****USA
                          properties**
                      $
                      454,480
                      
                      $
                      78,692
                      
                      $
                      (52,463)
                      
                      $
                      -
                      
                      **$**
                      **480,709****Canada
                          properties**
                      
                      358,237
                      
                      
                      302
                      
                      
                      (81,366)
                      
                      
                      -
                      
                      
                      **277,173****Total**
                      **$**
                      **812,717**
                      
                      **$**
                      **78,994**
                      
                      **$**
                      **(133,829)**
                      
                      **$**
                      **-**
                      
                      $
                      **757,882**
  a)
                    Proved
                        Properties - Descriptions
  i.
                    Liberty
                        Valance, California, USA
  In
              February 2001, the Company acquired and 8.9% working interest in a
              gas well
              located in California at a cost of $90,000. The well commenced production
              in
              February 2001 following a redrill.
  On
              January 1, 2007, the Company assigned all of its right, title and interest
              to
              Lario Oil & Gas. Lario Oil & Gas agreed to assume all costs and
              liability associated with the plugging and abandonment of the well.
  ii.
                    Wordsworth
                        Prospect, Saskatchewan, Canada
  On
              April
              10, 2006, the Company entered into an agreement (the “Agreement”) with Petrex
              Energy Ltd., for a participation and Farmout agreement where the Company
              will
              participate for 15% gross working interest before payout (BPO) and
              7.5% gross
              working interest after pay out (APO) in a proposed four well horizontal
              drilling
              program in the Wordsworth area in Southeast Saskatchewan, Canada. As
              at December
              31, 2006, the Company had advanced $210,606 as its share of the costs
              in this
              Agreement. Currently there is one producing well on this
              prospect.
 F-11
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
  **4.**
                    ****NATURAL
                        GAS AND OIL PROPERTIES
                        (Continued)****  iii.
                      Owl
                          Creek Prospect, Oklahoma, USA
  In
                June
                2006, the Company entered into an agreement to accept the assignment
                of an
                undivided 20% working interest in a potential oil well known as the
                Powell #2
                and an option to purchase a 20% interest in all future wells drilled
                on the land
                surrounding Powell#2. In addition the Company has an option to participate
                in
                any lands of mutual interest that may be acquired in the future by
                the Owl creek
                participating partners. The Company paid $2,962 in this period for
                capital
                expenditure. As of March 31, 2007, the cost to the Company for this
                assignment
                was $371,949.
  In
                July
                2006, the Company also elected to participate in Isbill #1-36, it
                was abandoned
                during the year. Its costs amounted to $80,738 was moved to the cost
                pool of
                proved properties for depletion.
 
 iv.
                      Todd
                          Creek, Alberta, Canada
  In
                January 2005, the Company acquired a 20% working interest in 13.75
                sections
                (8,800 acres) of land in Todd Creek, Alberta, Canada, at a cost of
                $597,263. One
                of the well 13-28-9-2W5M has production since October 2006.
 v.
                    Palmetto
                        Point Prospect, Mississippi, USA
  On
              February 21, 2006, the Company entered into an agreement (the “Agreement”) with
              0743608 B.C. Ltd., (“Assignor”) a British Columbia, Canada based oil and gas
              exploration company, in order to accept an assignment of the Assignor’s ten
              percent (10%) gross working and revenue interest in a ten-well drilling
              program
              (the “Drilling Program”) to be undertaken by Griffin & Griffin Exploration
              L.L.C., (“Griffin”) a Mississippi based exploration company. Under the terms of
              the Agreement, the Company paid the Assignor $425,000 as payment for
              the
              assignment of the Assignor’s 10% gross working and revenue interest in the
              Drilling Program. The Company also entered into a joint Operating Agreement
              directly with Griffin on February 24, 2006.
  As
              of
              March 31, 2007, five wells were found to be proved wells, and two wells
              were
              written off.
  On
              August
              4, 2006, the Company elected to participate in additional two wells
              program in
              Mississippi owned by Griffin & Griffin Exploration and paid
              $70,000.
  F-12
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
  **4.**
                    ****NATURAL
                        GAS AND OIL PROPERTIES
                        (Continued)****
  v.
                    Palmetto
                        Point Prospect, Mississippi, USA
                        (Continued)
  The
              Drilling Program on the acquired property interests was initiated by
              Griffin in
              May 2006 and was substantially completed by Griffin by December 31,
              2006. The
              prospect area owned or controlled by Griffin on which the ten wells
              were
              drilled, is comprised of approximately 1,273 acres in Palmetto Point,
              Mississippi.
 
 vi.
                    Mississippi
                        II, USA
 
 In
              August
              2006, the Company entered into a joint venture agreement with Griffin &
Griffin Exploration, LLC. to acquire an interest in a drilling program
              comprised
              of up to 50 natural gas and/or oil wells.  The area in which the proposed
              wells are to be drilled is comprised of approximately 300,000 gross
              acres of
              land located between Southwest Mississippi and North East Louisiana.
              The
              proposed wells will be targeting the Frio and Wilcox Geological
              formations. The
              Company has
              agreed to pay 10% of all prospect fees, mineral leases, surface leases
              and
              drilling and completion costs to earn a net 8% share of all production
              zones to
              the base of the Frio formation and 7.5% of all production to the base
              of the
              Wilcox formation. In January 2007, the well CMR USA 39-14 was found
              to be
              proved. The cost of $35,125 was added to the proved properties cost
              pool. Also,
              Dixon#1 was abandoned
              in January 2007, its costs amounted to $40,605 was moved to the proved
              properties cost pool for depletion.
 
 **b)**
                    **Unproved
                        Properties**
  **Properties**
                    **December
                        31, 2006**
                    
                    **Addition**
                    
                    **Cost
                        added to**
                      **capitalized
                        cost**
                    
                    **March
                        31, 2007****USA
                        properties**
                    $
                    497,500
                    
                    $
                    257,437
                    
                    $
                    (75,730)
                    
                    **$**
                    **679,207****Canada
                        properties**
                    
                    1,318,507
                    
                    
                    -
                    
                    
                    -
                    
                    
                    **1,318,507****Total**
                    $
                    1,816,007
                    
                    $
                    257,437
                    
                    $
                    (75,730)
                    
                    **$**
                    **1,997,714**
  F-13
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **4.**
                    ****NATURAL
                        GAS AND OIL PROPERTIES
                        (Continued)****
  b)
                    Unproved
                        properties - Description
                        (Continued)
  i.
                    Todd
                        Creek, Alberta, Canada
  In
              January 2005, the Company acquired a 20% working interest in 13.75
              sections
              (8,800 acres) of land in Todd Creek, Alberta, Canada, at a cost of
              $597,263. The
              Company paid $314,959 (CDN$352,376) on October 27, 2006 for well 13-33-8-2W5M.
              It was abandoned and the cost was moved to the proved properties cost
              pool for
              depletion. As at March 31, 2007, a cash call of $257,674 has been paid
              as share
              of costs for a proposed drilling program.
 
 ii.
                    Hillspring,
                        Alberta, Canada
  In
              January 2005, the Company acquired a 10% working interest in 1 section
              (64
              acres) of land in Hillspring, Alberta, Canada, at a cost of $414,766.
 
 iii.
                    Cache
                        Slough Prospect, California, USA
  In
              May
              2005, the Company entered into a participation agreement with Production
              Specialties Company (“PSC”) where the Company has been granted the right to earn
              a 68% working interest in a test well and a 12.50% working interest
              in certain
              lands located in Solano County, California, by paying 18.75% of the
              test well
              operations. During the year a cash call of $438,841 has been paid as
              share of
              costs for a proposed drilling program.
  Following
              these payments, the Company will be responsible for 12.5% of all additional
              expenditures for drilling and production on the property and be entitled
              to
              receive 8.5% of all revenue generate by the property, which is 12.5%
              of this
              California company’s 68% interest.
  On
              November 16, 2006, the Company assigned all of its interest in exchange
              for a
              cash amount of $1,500,000.
 
 F-14
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **4.**
                    ****NATURAL
                        GAS AND OIL PROPERTIES
                        (Continued)****
  Unproved
              Properties - Description (Continued)
  iv.
                    Strachan
                        Prospect, Alberta, Canada
  In
              September 2005, the Company entered into a participation and farmout
              agreement
              with Odin Capital Inc. (“Odin”) where the Company will participate for 4% share
              of the costs of drilling a test well in certain lands located in the
              Leduc
              formation, Alberta, Canada. In exchange for the participation costs,
              the Company
              will earn interests in certain petroleum and natural gas wells ranging
              from
              1.289% to 4.0%. As at March 31, 2007, the Company has advanced $347,431
              as its
              share of the costs in the Leduc formation property.
  v.
                    Palmetto
                        Point Prospect, Mississippi, USA
  On
              February 21, 2006, the Company entered into an agreement (the “Agreement”) with
              0743608 B.C. Ltd., (“Assignor”) a British Columbia based oil and gas exploration
              company, in order to accept an assignment of the Assignor’s ten percent (10%)
              gross working and revenue interest in a ten-well drilling program (the
“Drilling
              Program”) to be undertaken by Griffin & Griffin Exploration L.L.C.,
              (“Griffin”) a Mississippi based exploration company. Under the terms of the
              Agreement, the Company paid the Assignor $425,000 as payment for the
              assignment
              of the Assignor’s 10% gross working and revenue interest in the Drilling
              Program. The Company also entered into a joint Operating Agreement
              directly with
              Griffin on February 24, 2006.
  The
              Drilling Program on the acquired property interests was initiated by
              Griffin in
              May 2006 and was substantially completed by Griffin by December 31,
              2006. The
              prospect area owned or controlled by Griffin on which the ten wells
              were
              drilled, is comprised of approximately 1,273 acres in Palmetto Point,
              Mississippi.
  As
              of
              March 31, 2007, five wells were found to be proved wells, three wells
              are
              awaiting testing and two wells were written off. The Company is awaiting
              results
              on the other two wells.
  On
              August
              4, 2006, the Company elected to participate in additional two wells
              program in
              Mississippi owned by Griffin & Griffin Exploration and paid $70,000.
  F-15
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 **** **4.**
                    ****NATURAL
                        GAS AND OIL PROPERTIES
                        (Continued)****
  Unproved
              Properties (Continued)
  vi.
                    Mississippi
                        II, USA
  In
              August, 2006, the Company entered into a joint venture agreement with
              Griffin & Griffin Exploration, LLC. to acquire an interest in a drilling
              program comprised of up to 50 natural gas and/or oil wells.  The area in
              which the proposed wells are to be drilled is comprised of approximately
              300,000
              gross acres of land located between Southwest Mississippi and North
              East
              Louisiana. The proposed wells will be targeting the Frio and Wilcox
              Geological
              formations. The
              Company has
              agreed to pay 10% of all prospect fees, mineral leases, surface leases
              and
              drilling and completion costs to earn a net 8% share of all production
              zones to
              the base of the Frio formation and 7.5% of all production to the base
              of the
              Wilcox formation. In January 2007, the well CMR USA 39-14 was found
              to be
              proved. The cost of $35,125 was added to the proved properties cost
              pool. Also,
              Dixon#1 was abandoned
              in January 2007, its costs amounted to $40,605 was moved to the proved
              properties cost pool for depletion. Finally two further wells, TEC
              #1 and
              Buffalo River are awaiting testing.
 
 vii.
                    Owl
                        Creek Prospect, Oklahoma, USA
  In
              June
              2006, the Company entered into an agreement to accept the assignment
              of an
              undivided 20% working interest in a potential oil well known as the
              Powell #2
              and an option to purchase a 20% interest in all future wells drilled
              on the land
              surrounding Powell#2. In addition the Company has an option to participate
              in
              any lands of mutual interest that may be acquired in the future by
              the Owl creek
              participating partners.
  In
              January 2007, the Company elected to participate in Isbill #2 well.
              The Company
              has a total cost of $157,437 for its 20% of working interest.
 
 F-16
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **5.**
                    **NATURAL
                        GAS AND OIL EXPLORATION
                        RISK**
  a)
                    Exploration
                        Risk
  The
              Company’s future financial condition and results of operations will depend
              upon
              prices received for its natural gas and oil production and the cost
              of finding
              acquiring, developing and producing reserves. Substantially all of
              its
              production is sold under various terms and arrangements at prevailing
              market
              prices. Prices for natural gas and oil are subject to fluctuations
              in response
              to changes in supply, market uncertainty and a variety of other factors
              beyond
              its control. Other factors that have a direct bearing on the Company’s prospects
              are uncertainties inherent in estimating natural gas and oil reserves
              and future
              hydrocarbon production and cash flows, particularly with respect to
              wells that
              have not been fully tested and with wells having limited production
              histories;
              access to additional capital; changes in the price of natural gas and
              oil;
              availability and cost of services and equipment; and the presence of
              competitors
              with greater financial resources and capacity.
 
 b)
                    Distribution
                        Risk
  The
              Company is dependent on the operator to market any oil production from
              its wells
              and any subsequent production which may be received from other wells
              which may
              be successfully drilled on the Prospect. It relies on the operator’s ability and
              expertise in the industry to successfully market the same. Prices at
              which the
              operator sells gas/oil both in intrastate and interstate commerce,
              will be
              subject to the availability of pipe lines, demand
 and
              other
              factors beyond the control of the operator. The Company and the operator
              believe
              any oil produced can be readily sold to a number of buyers.
 
 c)
                    Credit
                        Risk
  A
              substantial portion of the Corporation’s accounts receivable is with joint
              venture partners in the oil and gas industry and is subject to normal
              industry
              credit risks.
 
 d)
                    Foreign
                        Operations Risk
  The
              Company is exposed to foreign currency fluctuations, political risks,
              price
              controls and varying forms of fiscal regimes or changes thereto which
              may impair
              its ability to conduct profitable operations as it operates internationally
              and
              holds foreign denominated cash and other assets.
 
 F-17
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **6.**
                    **ASSET
                        RETIREMENT OBLIGATIONS**
  The
              Company determined that the net effect of the ARO calculation to the
              Company’s
              income statement for the year ended December 31, 2006 is $40,635, (2005:
              $0).
              The ARO is calculated using the 5% value of proved properties as at
              December 31,
              2006. The Company has not increased its ARO during this quarter, since
              the
              amount accrued to date is sufficient.
 
 **7.**
                    **SHARE
                        CAPITAL**
  **i.**
                    **Common
                        Stock**
                      
                      On
                        January 11, 2006, the Company issued 75,000 common shares
                        for exercise of
                             stock options at $0.80 per share.
                      
                      On
                        January 24, 2006, the Company issued 230,000 common shares
                        for exercise of
                        stock options at $0.80 per share.
                      
                      On
                        January 25, 2006, the Company issued 12,500 common shares
                        for exercise of
                        stock options at $1.00 per share.
                      
                      On
                        April 25, 2006, the Company issued 727,271 common shares
                        pursuant to a
                        private placement at $2.75 per share.
                      
                      On
                        January 23, 2007, the Company issued 60,000 common shares
                        for exercise of
                        stock options at $0.75 per share.
                      
                      On
                        March 1, 2007, the Company issued 500,000 common shares to
                        its President
                        & CEO as part of his compensation package. The price of the
                        share as
                        of March 1, 2007 was $0.92.
                      
                      **Preferred
                        Stock**
                      
                      The
                        Company did not issue any preferred stock during the quarter
                        ended March
                        31, 2007 (December 31, 2006 -
                        $Nil).
  **ii.**
                    **Stock
                        Options**
  Compensation
              expense related to stock options granted is recorded at their fair
              value as
              calculated by the Black-Scholes option pricing model. Options exercised
              of
              $67,507 was recorded during the three month ended March 31, 2007 (Year
              ended
              December 31, 2006 - $195,719) related to options granted during the
              year ended
              December 31, 2006. The changes in stock options are as follows:
  **NUMBER**
                      
                      WEIGHTED
                        AVERAGE
                        EXERCISE
                          PRICEBalance outstanding, December
                          31,
                          2006
                      
                      300,000
                      
                      $
                      0.95Granted
                      
                      300,000
                      
                      
                      0.75Exercised
                      
                      (60,000)
                      
                      
                      (0.75)Balance
                        outstanding, March 31, 2007
                      
                      540,000
                      
                      $
                      0.75
 
 F-18
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **7.**
                    **SHARE
                        CAPITAL (continued)**
  The
              following table summarized information about the stock options outstanding
              at
              March 31, 2007:
 
 **OPTIONS
                        OUTSTANDING**
                    
                    **OPTIONS
                        EXERCISABLE****EXERCISE**
                      **PRICE**
                    **NUMBER
                        OF**
                      **SHARES**
                    **REMAINING
                        CONTRACTUAL**
                      **LIFE
                        (YEARS)**
                    
                    **NUMBER
                        OF**
                      **SHARES**$
                        0.75
                      $
                        0.75
                    240,000
                      300,000
                    1.97
                      2.84
                    
                    176,000
                      75,000
 
 **iii.**
                    **Common
                        Stock Share Purchase
                        Warrants**
  As
              at
              March 31, 2007, share purchase warrants outstanding for the purchase
              of common
              shares as follows:
  **WARRANTS
                        OUTSTANDING****EXERCISE**
                      **PRICE**
                    **NUMBER
                        OF**
                      **SHARES**
                    **EXPIRY**
                      **DATE**$
                        1.50
                      $
                        3.00
                    2,483,985
                      727,271
                    February
                        1, 2010
                      April
                        30, 2009
  **8.**
                    ****RELATED
                        PARTIES****
  During
              the period ended March 31, 2007, the Company paid $Nil (March 31, 2006
              - $5,197)
              for management fees and $25,606 consulting fees (March, 2006 - $nil)
              to a
              director and a company in which the officer has a substantial interest,
              of the
              Company. Amounts paid to related parties are based on exchange amounts
              agreed
              upon by those related parties.
  On
              March
              1, 2007, the Company issued 500,000 common shares to its President
& CEO as
              part of his compensation package. The price of the share as of March
              1, 2007 was
              $0.92. Total cost of $460,000 was included in the stock compensation
              expense.
 
 F-19
 Table
                    of Contents
 **DELTA
              OIL & GAS, INC.**
 **(A
              Development Stage Company)**
 
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
              31, 2007**
 **(Stated
              in U.S. Dollars)**
 
 **9.**
                    **COMMITMENT
                        AND CONTRACTURAL
                        OBLIGATIONS**
  A
              lease
              agreement for the Vancouver, Canada, office commenced March 1, 2005
              and
              terminated on February 28, 2006, and is on a month-to-month basis.
              The lease
              agreement provides a fixed rental fee of $1,295 per month plus additional
              charges for services supplied by the landlord or incurred on behalf
              of the
              client in the previous month.
  On
              March
              1, 2005, the Company also rented an office in Calgary, Canada on a
              month to
              month basis for $243 per month.


F-20
 Table
          of Contents




**Item2.     Management’s
      Discussion and
      Analysis**





**Forward-Looking
      Statements**





Certain
      statements, other than purely historical information, including estimates,
      projections, statements relating to our business plans, objectives, and expected
      operating results, and the assumptions upon which those statements are based,
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
      and Section 21E of the Securities Exchange Act of 1934. These
      forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
      similar expressions. We
      intend
      such forward-looking statements to be covered by the safe-harbor provisions
      for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and are including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking
      statements are based on current expectations and assumptions that are subject
      to
      risks and uncertainties which may cause actual results to differ materially
      from
      the forward-looking statements. Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse affect on
      our
      operations and future prospects on a consolidated basis include, but are not
      limited to: changes in economic conditions, legislative/regulatory changes,
      availability of capital, interest rates, competition, and generally accepted
      accounting principles. These risks and uncertainties should also be considered
      in evaluating forward-looking statements and undue reliance should not be placed
      on such statements. We
      undertake no obligation to update or revise publicly any forward-looking
      statements, whether as a result of new information, future events or otherwise. Further
      information concerning our business, including additional factors that could
      materially affect our financial results, is included herein and in our other
      filings with the SEC.





**Overview**





We
      were
      incorporated under the laws of the State of Colorado on January 9, 2001 under
      the name Delta Oil & Gas, Inc. We are engaged in the exploration,
      development, acquisition and operation of oil and gas properties. Because oil
      and gas exploration and development requires significant capital and our assets
      and resources are limited, we participate in the oil and gas industry through
      the purchase of small interests in either producing wells or oil and gas
      exploration and development projects.





**Business
      of Issuer**





We
      are an
      exploration company focused on developing North American oil and natural gas
      reserves. Our current focus is on the exploration of our land portfolio
      comprised of working interests in highly prospective acreage in Palmetto Point,
      Mississippi; Southern Saskatchewan, Canada; the Southern Alberta Foothills
      area
      in Canada; and Garvin and McClain counties in Oklahoma.


4
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Liberty
      Valance Well





On
      February 7, 2001, we acquired an 8.9% working interest in a production gas
      well
      called the Liberty Valance RD1 Gas Unit (“Liberty Valance” or the “well”). The
      well was located in the Rancho Capay Gas Field in Glenn County, California.
      We
      acquired this well for $90,000.





Based
      upon a reserve report, reserves in the Liberty Valance Well were estimated
      at
      1,032 (MCF) on December 31, 2006 translating in an estimate of $123 for the
      standardized measure of discounted cash flows remaining from reserves as of
      December 31, 2006. The operator of the well markets each non−operator's share of
      gas production from the well and deducts all royalty burdens and operating
      expenses prior to the distribution of revenues. The Liberty Valance well
      generated revenue of $2,870 during the year ended December 31, 2006. On January
      1, 2007, we sold our remaining interest in the Liberty Valance Well for
      forgiveness of abandonment costs associated with the well.





Todd
      Creek Prospect and Hillspring Prospect





On
      November 26, 2004, through our wholly-owned Canadian subsidiary, Delta Oil
&
Gas (Canada), Inc., we entered into two agreements (the "Agreements") with
      Win
      Energy Corporation, ("Win"), an Alberta based Oil & Gas Exploration Company,
      in order to acquire an interest in lands and leases owned by Win. On or about
      January 25, 2005, we paid Win the full purchase price set forth in the
      Agreements and acquired a working interest in two prospective properties known
      as Todd Creek and Hillspring. Both properties are located approximately 90
      miles
      south of Calgary, Alberta in the Southern Alberta Foothills belt.




Todd
      Creek Prospect





On
      January 25, 2005, we acquired a 20% working interest in 13.75 sections of land
      (8800 acres) in Todd Creek for the purchase price of $597,263. We also have
      an
      option to acquire an additional 15% interest in 7 additional sections of land
      (4,480 acres). This option terminated on December 31, 2006.





Included
      in the acquisition is a test well that has been drilled and cased. Under the
      terms of this agreement, Win shall assume all costs of drilling and completing
      or abandoning the test well up to gross costs of $1,330,000. Thereafter, we
      will
      assume responsibility for 20% of all costs, risks, and expenses relating to
      the
      test well. As at March 31, 2007, we paid cash call of $257,674 as our share
      of
      costs for the proposed drilling program.




During
      the second quarter of 2005, a well located in Todd Creek property was drilled
      to
      a specifically targeted depth. This well is located in 13-28-9-2W5 in Alberta,
      Canada and we will refer to this well as the “13-28 well.” The 13-28 well was
      evaluated and tested. The operator encountered gas reservoirs and concluded
      that
      this well is a potential gas well. This well was tied into a newly constructed
      gas processing plant and production commenced in September 2006. The revenue
      received from this well was $14,123 for the three months ended March 31, 2007.


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In
      January 2007, we completed the drilling of a second well in the Todd Creek
      Prospect located in 13-33-8-2 in Alberta, Canada and we will refer to this
      well
      as the “13-33 well.” Independent reserves reports we commissioned indicate that
      no economic hydrocarbons are present and therefore we have transferred the
      well
      costs to proved reserves and subsequently depleted the cost in accordance with
      our accounting policy.




Hillspring
      Prospect





On
      January 25, 2005, we acquired a 10% working interest in one section of land
      (640
      acres) in Hillspring for the purchase price of $414,766. It is now anticipated
      that a test well will be drilled on our property interest in 2007.




Our
      acquisition of an interest in Hillspring Prospect included an option to acquire
      an additional 10% working interest in 1.25 sections in the immediate area for
      the sum of $207,833 (US dollars). This option expired on July 1, 2005, but
      was
      later extended to December 29, 2006, and we decided not to extend this option
      further.





Strachan
      Prospect





On
      September 23, 2005, we entered into a Farmout Agreement (“Agreement”) with Odin
      Capital Inc. (“Odin”), a Calgary, Alberta corporation. A former member of our
      board of directors, Mr. Philipchuk, maintains a 50% ownership interest in Odin.
      Odin has the right to acquire an oil and gas leasehold interests in certain
      lands located in Section 9, Township 38, Range 9, West of the 5 th Meridian, Alberta, Canada (“Section 9”) upon incurring expenditures for drilling
      and testing on the property. In exchange for us paying 4.0000% of all costs
      associated with drilling, testing, and completing the test well on the property
      which we refer to as the Leduc formation test well, we will have
      earned:





a)
            in
                the Spacing Unit for the Earning
                Well:





i)
            a
                2.000% interest in the petroleum and natural gas below the base of
                the
                Mannville excluding natural gas in the Leduc formation;
                and





ii)
            a
                4.000% interest in the natural gas in the Leduc formation before
                payout
                subject to payment of the Overriding Royalty which is convertible
                upon
                payout at royalty owners option to 50% of our Interest;
                and





b)
            a
                1.600% interest in the rights below the base of the Shunda formation
                in
                Section 10, Township 38, Range
                9W5M.





c)
            a
                1.289% interest in the rights below the base of the Shunda formation
                in
                Section 15 and 16, Township 38, Range 9W5M, down to the base of the
                deepest formation penetrated.





On
      October 6, 2005, drilling commenced Leduc formation test well. Under the terms
      of the Agreement, we advanced 110% of the anticipated costs prior to drilling.
      The total costs advanced


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by
      us
      prior to drilling were $347,431. The well was drilled to the targeted depth
      of
      13,650 feet. Based on results indicating the presence of a potential gas well,
      the operator inserted casing into the total depth of the well and will perform
      a
      full testing program. We are awaiting information from the operator as to when
      the full testing program will be completed. If the additional testing returns
      positive results, this well will be tied a nearby pipeline to accommodate the
      natural gas production.





Palmetto
      Point Prospect - 12 Wells





On
      February 21, 2006, we entered into an agreement (the “Agreement”) with 0743608
      B.C. Ltd., (“Assignor”) a British Columbia based oil and gas exploration
      company, in order to accept an assignment of the Assignor’s ten percent (10%)
      gross working and revenue interest in a ten-well drilling program (the “Drilling
      Program”) to be undertaken by Griffin & Griffin Exploration L.L.C.,
      (“Griffin”) a Mississippi based exploration company. Under the terms of the
      Agreement, we paid the Assignor $425,000 as payment for the assignment of the
      Assignor’s 10% gross working and revenue interest in the Drilling Program. We
      also entered into a Joint Operating Agreement directly with Griffin on February
      24, 2006.




The
      Initial Drilling Program on ten (10) wells on the acquired property interest
      has
      been completed by Griffin. The prospect area owned or controlled by Griffin
      on
      which the initial ten wells was drilled, is comprised of approximately 1,273
      acres in Palmetto Point, Mississippi. To date, ten wells have been drilled,
      4 of
      which are producing, 1 of which is expected to produce but is currently awaiting
      a compressor, 3 of which are expected to produce but are waiting on pipeline
      completion rigs and 2 of which were not commercially viable and were plugged
      and
      abandoned. We elected to participate in an additional two well program which
      has
      also been completed. With respect to the two additional wells at this same
      location, it appears that these well contains reserves suitable for commercial
      production. These wells are waiting to be tied into a nearby pipeline. Total
      revenue received from these wells for the three months ended March 31, 2007
      was
      $7,262





Palmetto
      Point Prospect - 50 wells





During
      the fiscal quarter ended September 30, 2006, we entered into a joint venture
      agreement to acquire an interest in a drilling program comprising of up to
      50
      natural gas and/or oil wells. The area in which the proposed wells are to be
      drilled in approximately 300,000 gross acres location between Southwest
      Mississippi and Northeastern Louisiana. Drilling commenced in the first week
      of
      September 2006. The site of the first 20 proposed wells are located within
      range
      to tie into existing pipeline infrastructure should the wells be suitable for
      commercial production. The drilling program is being conducted by Griffin in
      its
      capacity as operator. We have agreed to pay 10% of all prospect fees, mineral
      leases, surface leases, and drilling and completion costs to earn a net 8%
      share
      of all production zones to the base of a geological formation referred to as
      the
      Frio formation and 7.5% of all production to the base of a geological formation
      referred to as the Wilcox formation. The cost during the quarter ending
      September 30, 2006 amounted to $100,000. During the fourth quarter of fiscal
      2006, we made additional payments of $300,000 to be employed in the further
      development of prospects on lands in Mississippi and Louisiana in accordance
      with the terms of the operating agreement.


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We
      have
      drilled four wells of which one well was abandoned (Dixon #1) and the remaining
      three wells, Redbug #1 (CMR USA), Faust #1 (TEC#1) and Buffalo River are
      awaiting completion and connection to the nearby pipeline for production. Total
      revenue received from these wells for the three months ended March 31, 2007
      was
      $3,792





Wordsworth
      Prospect (formerly “Texalta”)





On
      April
      10, 2006, we entered into a farmout, option and participation letter agreement
      (“FOP Agreement”) where we acquired a 15% working interest in certain leasehold
      interests located in southeast Saskatchewan, Canada referred to as the
      Wordsworth area for the purchase price of $152,724. We are responsible for
      our
      proportionate share of the costs associated with drilling, testing, and
      completing the first test well on the property. In exchange for us paying our
      proportionate share of the costs associated with drilling, testing, and
      completing the first test well on the property, we earned a 15% working interest
      before payout and a 7.5% working interest after payout on the Wordsworth
      prospect. Payout refers to the return of our initial investment in the property.
      In addition, we also acquired an option to participate and acquire a working
      interest in a vertical test well drilled to 1200 meters to test the
      Mississippian (Alida) formation in LSD 13 of section 24, township 7, range
      3
      W2.





During
      June 2006, the first well was drilled to a horizontal depth of 2033 meters
      in
      the Wordsworth prospect. The initial drilling of this well and subsequent
      testing revealed that this well contains oil reserves suitable for commercial
      production. In June 2006, this initial well was producing as a flowing oil
      well.
      Revenue generated from this well for the three months ended March 31, 2007
      was
      $50,139.





Based
      on
      the results from the first test well, we expect a second well to be drilled
      by
      the end of the second quarter of 2007.





Owl
      Creek Prospect (formerly “Brinx”)





On
      June
      1, 2006, we entered into an Assignment Agreement with Brinx Resources, Ltd.,
      (“Brinx”) a Nevada Oil & Gas Exploration Company, in order to acquire a
      working interest in lands and leases owned by Brinx. The purchase price of
      $300,000 for the assignment and options to acquire future interests has been
      paid in full. We paid a further $68,987 for our proportion of costs associated
      with the completion of the first well. The lands are located in Garvin &
McClain Counties, Oklahoma and we refer to the lands as the “Owl Creek
      Prospect.”





Pursuant
      to the terms of the Assignment Agreement, we acquired a 20% working interest
      in
      an oil well drilled at the Owl Creek Prospect and we refer to the “Powell #2.”
The Powell #2 was drilled to total depth of 5,617 feet on May 18, 2006 and
      underwent testing. Based upon the positive result of the testing on the Powell
      #2 well, this well was completed and commercial production has commenced. Under
      the terms of the Assignment Agreement, we are responsible for our proportionate
      share of the costs of completion and tie-in for production of the Powell #2
      well. Initially after the well was completed, the Powell #2 well began flowing
      natural oil and gas under its own pressure without the assistance of a pump.
      The
      flow rates of the Powell #2 well


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have
      fluctuated significantly. Revenue generated from this well for the three months
      ended March 31, 2007 was $76,603.




Based
      upon the positive results of the Powell #2 well, an additional well we refer
      to
      as the “Isbill #1-36” was drilled and reached its targeted depth in September
      2006. However, test results showed that the well will not be commercially
      viable, therefore the well was abandoned and all costs were transferred to
      proved reserves and subsequently depleted in accordance with the our accounting
      policy.





We
      were
      also granted an option to earn a 20% working interest in any future wells to
      be
      drilled on the 1,120 acres of land in Garvin & McClain Counties, USA which
      make up the Owl Creek Prospect. Lastly, we received an option to earn a 20%
      working interest in any future wells to be drilled on any land of mutual
      interest acquired by the Owl Creek participants in and around the same area.
      The
      working interest in future wells is earned by paying 20% of the costs of
      drilling and completing each additional well.





In
      January 2007, we commenced drilling of another well we will refer to as the
      “Isbill#2-36” well. Our 20% working interest in the Isbill#2-36 well cost
      $157,437. The Isbill#2-36 well was drilled to approximately 5,900 feet and
      encountered two potential pay zones and is a direct offset well to the Powell
      #2
      which is currently producing.





2006-3
      Drilling Program - 5 Wells





On
      April
      17, 2007, we entered into an agreement with Ranken Energy Corporation to
      participate in a five well drilling program at Garvin and Murray Counties,
      Oklahoma (the “2006-3 drilling Program”) The leases secured and/or lands to be
      pooled for this drilling program total approximately 820 net acres. We have
      agreed to take a 10% working interest in this program.  To
      date,
      we have paid the sum of $113,700and anticipate that our total costs to
      successfully complete this drilling program will be approximately $618,330.





**Results
      of Operations for the three months ended March 31, 2007 and
      2006**





For
      the
      three months ended March 31, 2007, our revenues generated from natural gas
      and
      oil sales increased to $147,504 from revenue of $2,188 for the three months
      ended March 31, 2006. Prior to the three months ended June 30, 2006, our Liberty
      Valance well was our only producing property. The increase in revenue is
      attributable to royalties received from the Wordsworth and Owl Creek prospects
      commencing in the third quarter of 2006.





We
      incurred costs and expenses in the amount of $789,146 for the three months
      ended
      March 31, 2007, compared to costs and expenses of $177,486 for the same
      reporting period in the prior year. The increase in expenses was caused by
      an
      increase in general and administrative expenses as a result of stock based
      compensation paid to our executive officers. We reported depreciation and
      depletion expenses of $133,979 during the three months ended March 31, 2007.
      Stock-based compensation of $527,507 was a significant component of our general
      and administrative expenses for the three months ended March 31, 2007. Our
      costs
      and expenses for the three months ended March 31, 2006 consisted of general
      and
      administrative expenses of $170,581,


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natural
      gas and oil operating costs of $761, and depreciation and depletion of $153.





We
      reported other income of $10,739 for the three months ended March 31, 2007
      and
      other income of $3,964 for the three months ended March 31, 2006. Other income
      during the three months ended March 31, 2007 and 2006 consisted solely of
      interest income.





Net
      loss
      for the three months ended March 31, 2007 was $630,903, compared to a net loss
      of $171,334 for the three months ended March 31, 2006.





There
      are
      material events and uncertainties which could cause our reported financial
      information to not to be indicative of future operating results or financial
      condition. Our inability to successfully identify, execute or effectively
      integrate future acquisitions may negatively affect our results of operations.
      The success of any acquisition depends on a number of factors beyond our
      control, including the ability to estimate accurately the recoverable volumes
      of
      reserves, rates of future production and future net revenues attainable from
      the
      reserves and to assess possible environmental liabilities. Drilling for oil
      and
      natural gas may also involve unprofitable efforts, not only from dry wells
      but
      also from wells that are productive but do not produce sufficient net reserves
      to return a profit after deducting operating and other costs. In addition,
      wells
      that are profitable may not achieve our targeted rate of return. Our ability
      to
      achieve our target results are also dependent upon the current and future market
      prices for crude oil and natural gas, costs associated with producing oil and
      natural gas and our ability to add reserves at an acceptable cost. We do not
      operate the properties in which we have an interest and we have limited ability
      to exercise influence over operations for these properties or their associated
      costs. Our dependence on the operator and other working interest owners for
      these projects and our limited ability to influence operations and associated
      costs could materially adversely affect the realization of our returns on
      capital in drilling or acquisition activities and our targeted production growth
      rate. As a result, our historical results should not be indicative of future
      operations.




**Liquidity
      and Capital Resources**





As
      of
      March 31, 2007, we had total current assets of $1,535,184 and total current
      liabilities in the amount of $1,008. As a result, we had working capital of
      $1,534,176 as of March 31, 2007.





The
      revenue we currently generate from natural gas and oil sales does exceed our
      cash operating expenses. We primarily relied on prior financing activities
      including issuance of common stocks and units as well as share subscription
      receipts to fund our operations for the three months ended March 31, 2007.
      During the three months ended March 31, 2007, we received $45,000 from the
      exercise of options.





We
      will
      require additional funds to expand our acquisition, exploration and production
      of natural oil and gas properties. Our management anticipates that current
      cash
      on hand is sufficient to fund our continued operations at the current level
      for the next twelve months. Additional capital will be required to effectively
      expand our operations and implement our overall business strategy. It is
      uncertain whether we will be able to obtain financing when sought. If we are
      unable to obtain additional financing, the full implementation of our ability
      to
      expand our operations will be impaired.


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Operating
      activities used $12,000 in cash for the three months ended March 31, 2007.
      Our
      net loss of $630,903 was the primary component of our negative operating cash
      flow. Investing activities during the three months ended March 31, 2007
      primarily consisted of $260,701 for the investment in natural gas and oil
      properties. Cash flows provided by financing activities during the three months
      ended March 31, 2007 primarily consisted of $45,000 related to the issuance
      of
      common stock.





The
      underlying drivers that resulted in material changes and the specific inflows
      and outflows of cash for the three months ended March 31, 2007 are as
      follows:





·
            Property
                acquisition costs, and


·
            Financing
                from the issuance of common stock.





**Off
      Balance Sheet Arrangements**





As
      of
      March 31, 2007, there were no off balance sheet arrangements.





**Going
      Concern**




As
      shown
      in the accompanying financial statements, we have incurred a net loss of
      $1,779,515 since inception. To achieve profitable operations, we require
      additional capital for obtaining producing oil and gas properties through either
      the purchase of producing wells or successful exploration activity. Our
      management believes that sufficient funding will be available to meet our
      business objectives including anticipated cash needs for working capital and
      is
      currently evaluating several financing options. However, there can be no
      assurance that we will be able to obtain sufficient funds to continue the
      development of and, if successful, to commence the sale of our products under
      development. As a result of the foregoing, there exists substantial doubt about
      our ability to continue as a going concern.





**Critical
      Accounting Policies**





In
      December 2001, the SEC requested that all registrants list their most “critical
      accounting polices” in the Management Discussion and Analysis. The SEC indicated
      that a “critical accounting policy” is one which is both important to the
      portrayal of a company’s financial condition and results, and requires
      management’s most difficult, subjective or complex judgments, often as a result
      of the need to make estimates about the effect of matters that are inherently
      uncertain. We believe that the following accounting policies fit this
      definition.





**Joint
      Ventures**





All
      exploration and production activities are conducted jointly with others and,
      accordingly, the accounts reflect only our proportionate interest in such
      activities.


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**Natural
      Gas and Oil Properties**





We
      account for our oil and gas producing activities using the full cost method
      of
      accounting as prescribed by the United States Securities and Exchange Commission
      (“SEC”). Accordingly, all costs associated with the acquisition of properties
      and exploration with the intent of finding proved oil and gas reserves
      contribute to the discovery of proved reserves, including the costs of abandoned
      properties, dry holes, geophysical costs, and annual lease rentals are
      capitalized. All general corporate costs are expensed as incurred. In general,
      sales or other dispositions of oil and gas properties are accounted for as
      adjustments to capitalized costs, with no gain or loss recorded. Amortization
      of
      evaluated oil and gas properties is computed on the units of production method
      based on all proved reserves on a country-by-country basis. Unevaluated oil
      and
      gas properties are assessed at least annually for impairment either individually
      or on an aggregate basis. The net capitalized costs of evaluated oil and gas
      properties (full cost ceiling limitation) are not to exceed their related
      estimated future net revenues from proved reserves discounted at 10%, and the
      lower of cost or estimated fair value of unproved properties, net of tax
      considerations. These properties are included in the amortization pool
      immediately upon the determination that the well is dry.





Unproved
      properties consist of lease acquisition costs and costs on well currently being
      drilled on the properties. The recorded costs of the investment in unproved
      properties are not amortized until proved reserves associated with the projects
      can be determined or until they are impaired.





**Revenue
      Recognition**





Revenue
      from sales of crude oil, natural gas and refined petroleum products are recorded
      when deliveries have occurred and legal ownership of the commodity transfers
      to
      the customers. Title transfers for crude oil, natural gas and bulk refined
      products generally occur at pipeline custody points or when a tanker lifting
      has
      occurred. Revenues from the production of oil and natural gas properties in
      which we share an undivided interest with other producers are recognized based
      on the actual volumes sold by us during the period. Gas imbalances occur when
      our actual sales differ from its entitlement under existing working interests.
      We record a liability for gas imbalances when we have sold more than our working
      interest of gas production and the estimated remaining reserves make it doubtful
      that the partners can recoup their share of production from the field. At March
      31, 2007 and 2006, we had no overproduced imbalances.





**Item3.     Controls
      and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of March 31, 2007. This evaluation was carried
      out
      under the supervision and with the participation of our Chief Executive Officer,
      Mr. Douglas Bolen, and our Chief Financial Officer, Mr. Kulwant Sandher. Based
      upon that evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that, as of March 31, 2007, our disclosure controls and procedures
      are
      effective. There have been no changes in our internal controls over financial
      reporting during the quarter ended March 31, 2007.


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





Limitations
      on the Effectiveness of Internal Controls





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures are effective at that reasonable assurance level. Further, the design
      of a control system must reflect the fact that there are resource constraints,
      and the benefits of controls must be considered relative to their costs. Because
      of the inherent limitations in all control systems, no evaluation of controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within the Company have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty, and
      that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future conditions.
      Over time, control may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may deteriorate.


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**PART
      II - OTHER INFORMATION**





**Item1.     Legal
      Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





**Item2.     Unregistered
      Sales of Equity
      Securities and Use of Proceeds**





The
      information set forth below relates to our issuances of securities without
      registration under the Securities Act during the reporting period which were
      not
      previously included in a Current Report on Form 8-K.





On
      January 18, 2007, we granted to Kulwant Sandher, in connection with services
      to
      be rendered and his appointment as our Chief Financial Officer, options to
      purchase 300,000 shares of our common stock at the exercise price of $0.75
      per
      share with the options vesting quarterly over a one year period and exercisable
      for a period of three years from the date of issuance or expiring on January
      17,
      2010. These shares and options were issued pursuant to Section 4(2) of the
      Securities Act of 1933, as amended. We did not engage in any general
      solicitation or advertising.





On
      March
      1, 2007, we issued to Douglas Bolen 500,000 shares of our common stock in
      consideration for services rendered pursuant to the a consulting agreement
      with
      Last Mountain Management, Inc. (“LMM”). Douglas Bolen, our Chief Executive
      Officer, is the sole shareholder, officer, and director of LMM. These shares
      were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended.
      We did not engage in any general solicitation or advertising.





**Item3.     Defaults
      upon Senior
      Securities**





None





**Item4.     Submission
      of Matters to a Vote
      of Security Holders**





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the quarterly period ended March
      31, 2007.





**Item5.     Other
      Information**





None


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**Item6.      Exhibits**





Exhibit
                Number
            Description3.1
            Articles
                of Incorporation, as amended13.2
            By-laws,
                as amended110.1
            Agreement
                to Acquire Interest in Todd Creek210.2
            Agreement
                to Acquire Interest in Hillspring210.3
            Amendment
                to Todd Creek and Hillspring Agreements210.4
            Farmout
                Agreement relating to Cache Slough Prospect310.5
            Farmout
                Agreement with Odin Capital Inc. relating to Leduc formation test
                well410.6
            Drilling
                Program Agreement between Griffin & Griffin Exploration L.L.C. and
                0743608 B.C. Ltd.510.7
            Assignment
                Agreement between Delta Oil & Gas, Inc. and 0743608 B.C. Ltd510.8
            Assignment
                Agreement of Interests in Cache Slough Prospect710.9
            Assignment
                and Assumption Agreement for Owl Creek Prospect810.10
            Consulting
                Agreement with Last Mountain Management, Inc.914.1
            Code
                of Ethics631.1
            Certification
                of Chief Executive Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant
                to Section 906 of the Sarbanes-Oxley Act of
                2002





1 Incorporated
      by reference to Registration Statement on Form SB-2 filed on February 13,
      2002


2 Incorporated
      by reference to current report on Form 8-K filed on February 15,
      2005


3 Incorporated
      by reference to current report on Form 8-K filed on September 29,
      2005


4 Incorporated
      by reference to current report on Form 8-K filed on May 26, 2005


5 Incorporated
      by reference to current report on Form 8-K filed on February 27,
      2006


6 Incorporated
      by reference to annual report on Form 10-KSB for the year ended December 31,
      2004


7 Incorporated
      by reference to quarterly report on Form 10-QSB for the period ended September
      30, 2006 filed on November
      20, 2006


8 Incorporated
      by reference to current report on Form 8-K filed on June 2, 2006


9 Incorporated
      by reference to Amended Registration Statement on Form 10-SB filed on February
      27, 2007


15
 Table
          of Contents


**SIGNATURES**





In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.





**Delta
                Oil & Gas, Inc.**Date:
            May
                7, 2007By:      
                /s/ Douglas Bolen
              Douglas
                Bolen
              Title:**Chief
                Executive Officer and
                Director**