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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2009

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
OF 1934 
For the transition period from _______________ to
_______________

Commission file number 000-28305

Energy Quest Inc.(Exact
name of small business issuer as specified in its charter)

|Nevada                                           | 91-1880015                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|850 South Boulder Hwy., Suite 169                |                                     
|Henderson, Nevada                                | 89015 - 7564                        
|(Address of principal executive offices)         | (Zip Code)                          

(702) 568 4131(Issuer's telephone number)

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

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

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

|Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting  **company**[ x ]
|--------------------------- | --------------------- | ------------------------- | -----------------------------------

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 14, 2009, the registrants outstanding common stock
consisted of 9,555,270 shares.

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Table of Contents

|PART I - FINANCIAL INFORMATION | 2       
|------------------------------ | --------
|                               | ITEM 1. 
|                               | ITEM 2. 
|                               | ITEM 3. 
|                               | ITEM 4. 
|                               | ITEM 4T.
|PART II  OTHER INFORMATION    | 8       
|                               | ITEM 1. 
|                               | ITEM 2. 
|                               | ITEM 3. 
|                               | ITEM 4. 
|                               | ITEM 5. 
|                               | ITEM 6. 

1

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PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements.

Our unaudited interim consolidated financial statements are
stated in US dollars and are prepared in accordance with United States Generally
Accepted Accounting Principles. All dollar amounts in this report refer to US
dollars unless otherwise indicated. When we refer to Energy Quest, we, our or
us, we are referring to Energy Quest Inc.

Energy Quest Inc.(A Development Stage Company)

March 31, 2009

|                                                                                     | Index
|------------------------------------------------------------------------------------ | -----
|Consolidated Balance Sheets
      (Unaudited)                                        | F-1  
|Consolidated Statements of Operations and
      Other Comprehensive Loss (Unaudited) | F-2  
|Consolidated Statements
      of Cash Flows (Unaudited)                              | F-3  
|Notes to the Consolidated Financial Statements                                       | F-4  

2

---

|Energy Quest Inc.            
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|(Unaudited)                  

|                                                                        |  | March 31,  |   |  | December 31, |  
|----------------------------------------------------------------------- |  | ---------- | - |  | ------------ | -
|                                                                        |  | 2009       |   |  | 2008         |  
|                                                                        |  | $          |   |  | $            |  
|Assets                                                                  |  |            |   |  |              |  
|Current Assets                                                          |  |            |   |  |              |  
|Cash and cash equivalents                                               |  | 624        |   |  | 792          |  
|Total Current Assets                                                    |  | 624        |   |  | 792          |  
|Intangible Assets, net (Note 4)                                         |  | 2,889,037  |   |  | 2,927,078    |  
|Total Assets                                                            |  | 2,889,661  |   |  | 2,927,870    |  
|                                                                        |  |            |   |  |              |  
|Liabilities and Stockholders' Equity                                    |  |            |   |  |              |  
|Current Liabilities                                                     |  |            |   |  |              |  
|Accounts payable and accrued liabilities                                |  | 59,678     |   |  | 54,829       |  
|Amounts due to related parties (Note 5)                                 |  | 283,093    |   |  | 244,488      |  
|Note payable  related party                                            |  | 52,106     |   |  | 22,457       |  
|Note payable  other                                                    |  | -          |   |  | 6,755        |  
|Advances from
      former Shareholders                                 |  | 287,506    |   |  | 287,702      |  
|Total Liabilities                                                       |  | 682,383    |   |  | 616,231      |  
|Stockholders' Equity                                                    |  |            |   |  |              |  
|Preferred Stock                                                         |  |            |   |  |              |  
|Authorized: 1,000,000 shares, with a $0.01 par value; none
      issued |  |           |   |  |             |  
|Common Stock                                                            |  |            |   |  |              |  
|Authorized: 200,000,000 shares, with a $0.001 par value;                |  |            |   |  |              |  
|Issued: 9,555,270 shares                                                |  | 9,555      |   |  | 9,555        |  
|Additional Paid-in Capital                                              |  | 7,937,379  |   |  | 7,877,004    |  
|Accumulated Other Comprehensive Income                                  |  | 142        |   |  | 122          |  
|Deficit
      Accumulated During the Development Stage                  |  | (5,739,798 | ) |  | (5,575,042   | )
|Total Stockholders Equity                                              |  | 2,207,278  |   |  | 2,311,639    |  
|Total Liabilities
      and Stockholders Equity                        |  | 2,889,661  |   |  | 2,927,870    |  

The accompanying notes are an integral part of these unaudited
consolidated financial statements.

F-1

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|Energy Quest Inc.                                                       
|------------------------------------------------------------------------
|(A Development Stage Company)                                           
|Consolidated Statements of Operations and Other
      Comprehensive Loss
|(Unaudited)                                                             

|                                              |  |               |   |  |               |   |  | Period from            |  
|--------------------------------------------- |  | ------------- | - |  | ------------- | - |  | ---------------------- | -
|                                              |  | For the Three |   |  | For the Three |   |  | December 14, 2004      |  
|                                              |  | Months Ended  |   |  | Months Ended  |   |  | (Date of Inception) to |  
|                                              |  | March 31,     |   |  | March 31,     |   |  | March 31,              |  
|                                              |  | 2009          |   |  | 2008          |   |  | 2009                   |  
|                                              |  | $             |   |  | $             |   |  | $                      |  
|Revenue                                       |  |              |   |  |              |   |  | 5,164                  |  
|                                              |  |               |   |  |               |   |  |                        |  
|Expenses                                      |  |               |   |  |               |   |  |                        |  
|Consulting and management fees                |  | 102,875       |   |  | 94,725        |   |  | 4,557,772              |  
|General and administrative                    |  | 7,088         |   |  | 14,021        |   |  | 335,623                |  
|Professional fees                             |  | 16,720        |   |  | 54,782        |   |  | 394,623                |  
|Research and development                      |  |              |   |  | 5,000         |   |  | 46,111                 |  
|Depreciation, depletion, and impairment       |  | 37,500        |   |  |              |   |  | 135,577                |  
|Other                                         |  |              |   |  | 80,000        |   |  | 80,000                 |  
|                                              |  | 164,183       |   |  | 248,528       |   |  | 5,549,706              |  
|Loss before the following:                    |  | (164,183      | ) |  | (248,528      | ) |  | (5,544,542             | )
|                                              |  |               |   |  |               |   |  |                        |  
|Interest income                               |  |              |   |  | 754           |   |  | 2,085                  |  
|Interest expense                              |  | (573          | ) |  | (5,519        | ) |  | (9,245                 | )
|Gain on write-off of debt                     |  |              |   |  |              |   |  | 5,826                  |  
|Loss on write-off
      of loan receivable    |  |              |   |  |              |   |  | (193,922               | )
|                                              |  |               |   |  |               |   |  |                        |  
|Net loss                                      |  | (164,756      | ) |  | (253,293      | ) |  | (5,739,798             | )
|Other comprehensive income                    |  |               |   |  |               |   |  |                        |  
|Foreign currency
      translation adjustment |  | 20            |   |  | 46            |   |  | 142                    |  
|Total Comprehensive Loss                      |  | (164,736      | ) |  | (253,247      | ) |  | (5,739,656             | )
|Net Loss Per Share
       Basic and Diluted  |  | (0.02         | ) |  | (0.10         | ) |  |                        |  
|Weighted Average Shares Outstanding          |  |               |   |  |               |   |  |                        |  
|Basic and Diluted
      (rounded)             |  | 9,555,000     |   |  | 2,566,000     |   |  |                        |  

The accompanying notes are an integral part of these unaudited
consolidated financial statements.

F-2

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|Energy Quest Inc.                    
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Cash Flows
|(Unaudited)                          

|                                                             |  |               |   |  |               |   |  | Accumulated from       |  
|------------------------------------------------------------ |  | ------------- | - |  | ------------- | - |  | ---------------------- | -
|                                                             |  | For the Three |   |  | For the Three |   |  | December 14, 2004      |  
|                                                             |  | Months Ended  |   |  | Months Ended  |   |  | (Date of Inception) to |  
|                                                             |  | March 31,     |   |  | March 31,     |   |  | March 31,              |  
|                                                             |  | 2009          |   |  | 2008          |   |  | 2009                   |  
|                                                             |  | $             |   |  | $             |   |  | $                      |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Cash Flows Used In Operating Activities                      |  |               |   |  |               |   |  |                        |  
|Net loss                                                     |  | (164,756      | ) |  | (253,293      | ) |  | (5,739,798             | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Adjustments to reconcile net loss to net cash used in        |  |               |   |  |               |   |  |                        |  
|operating activities:                                        |  |               |   |  |               |   |  |                        |  
|Stock-based compensation                                     |  | 60,375        |   |  |              |   |  | 2,547,238              |  
|Shares issued for expenses                                   |  |              |   |  |              |   |  | 1,516,193              |  
|Write-off on restricted cash                                 |  |              |   |  | 80,000        |   |  | 80,000                 |  
|Loss on write-off of loan receivable                         |  |              |   |  |              |   |  | 193,922                |  
|Amortization of intangible assets                            |  | 37,500        |   |  |              |   |  | 135,577                |  
|Gain on write-off of debt                                    |  |              |   |  |              |   |  | (5,826                 | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Changes in operating assets and
      liabilities:           |  |               |   |  |               |   |  |                        |  
|Prepaid expenses and other current assets                    |  |              |   |  | (754          | ) |  |                       |  
|Accounts payable and accrued liabilities                     |  | 4,902         |   |  | 49            |   |  | 30,134                 |  
|Due to related
      parties                                 |  | 38,970        |   |  | 83,118        |   |  | 560,216                |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Net Cash Used in
      Operating Activities                  |  | (23,009       | ) |  | (90,880       | ) |  | (682,344               | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Investing Activities                                         |  |               |   |  |               |   |  |                        |  
|Loan receivable                                              |  |              |   |  |              |   |  | (193,922               | )
|Net cash acquired on business acquisition                    |  |              |   |  |              |   |  | 565                    |  
|Change in restricted cash                                    |  |              |   |  |              |   |  | (80,000                | )
|Purchase of
      intangible assets                          |  |              |   |  |              |   |  | (25,000                | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Net Cash Used In
      Investing Activities                  |  |              |   |  |              |   |  | (298,357               | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Financing Activities                                         |  |               |   |  |               |   |  |                        |  
|Proceeds from issuance of common stock                       |  |              |   |  | 93,000        |   |  | 454,144                |  
|Proceeds from notes payable                                  |  | 29,649        |   |  |              |   |  | 534,969                |  
|Re-payment of note payable                                   |  | (6,808        | ) |  |              |   |  | (6,808                 | )
|                                                             |  |               |   |  |               |   |  |                        |  
|Net Cash Provided By Financing Activities                    |  | 22,841        |   |  | 93,000        |   |  | 982,305                |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Effect of Exchange Rate Changes on Cash                      |  |              |   |  | 46            |   |  | (980                   | )
|                                                             |  |               |   |  |               |   |  |                        |  
|(Decrease) increase in Cash and Cash
      Equivalents       |  | (168          | ) |  | 2,166         |   |  | 624                    |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Cash and Cash Equivalents, beginning                         |  | 792           |   |  | 1,733         |   |  |                       |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Cash and Cash Equivalents, end                               |  | 624           |   |  | 3,899         |   |  | 624                    |  
|                                                             |  |               |   |  |               |   |  |                        |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Supplemental Disclosures                                     |  |               |   |  |               |   |  |                        |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Cash paid for taxes                                          |  |              |   |  |              |   |  |                       |  
|Cash paid for interest                                       |  |              |   |  |              |   |  |                       |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Non-Cash Financing and Investing Activities                  |  |               |   |  |               |   |  |                        |  
|                                                             |  |               |   |  |               |   |  |                        |  
|Common stock issued for intangible assets                    |  |              |   |  |              |   |  | 3,000,204              |  
|Common stock issued for stock payable                        |  |              |   |  |              |   |  | 161,550                |  
|Common stock issued for amounts due to
      related parties |  |              |   |  |              |   |  | 328,022                |  
|Common stock
      issued for subscription receivable        |  |              |   |  |              |   |  | 120,750                |  

The accompanying notes are an integral part of these unaudited
consolidated financial statements.

F-3

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|Energy Quest Inc.                            
|---------------------------------------------
|(A Development Stage company)                
|Notes to the Consolidated Financial Statement

|1. | Basis of Presentation
|-- | ---------------------

The accompanying unaudited interim consolidated financial
statements of Energy Quest, Inc. (Energy Quest), have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission, and should be
read in conjunction with the audited consolidated financial statements and notes
thereto contained in Energy Quests Annual Report filed with the SEC on Form
10-K. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been
reflected herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. Notes to
the consolidated financial statements which substantially duplicate the
disclosure contained in the audited consolidated financial statements for fiscal
2008 as reported in the Form 10-K have been omitted, with the exception of the recently accepted accounting policy in footnote 2.

Reclassifications

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

|2. | Going Concern
|-- | -------------

These consolidated financial statements have been prepared on
the assumption that the company is a going concern, meaning it will continue in
operation for the foreseeable future and will be able to realize assets and
discharge liabilities in the ordinary course of operations. Different bases of
measurement may be appropriate when a company is not expected to continue
operations for the foreseeable future. The companys continuation as a going
concern is dependent upon its ability to attain profitable operations and
generate funds there-from, and/or raises equity capital or borrowings sufficient
to meet current and future obligations. Management plans to raise equity
financings over the next twelve months to finance operations. There is no
guarantee that the company will be able to complete any of these objectives. The
company has incurred losses from operations since inception and at March 31,
2009, has a working capital deficiency and an accumulated deficit that creates
substantial doubt about the companys ability to continue as a going
concern.

|3. | Financial Instruments and Fair Value Measures
|-- | ---------------------------------------------

The Statement of Financial Accounting Standards (“SFAS”) No. 157 “Fair Value Measurements” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. SFAS No. 157 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

F-4

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|Energy Quest Inc.                            
|---------------------------------------------
|(A Development Stage company)                
|Notes to the Consolidated Financial Statement

Financial instruments consist principally of cash, accounts payable, and amounts due to/from related parties. Pursuant to SFAS No. 157, the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Financial instruments that potentially subject the company to concentrations of credit risk consist primarily of cash in excess of federally insured amounts. To date, the company has not incurred a loss relating to this concentration of credit risk.

The company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the company does not use derivative instruments to reduce its exposure to foreign currency risk.

|4. | Intangible Assets
|-- | -----------------

| | a. | On December 24, 2004, the company purchased an integrated gasification production system from the CEO of the company. The technology combines modern gasification with gas turbine technologies to produce synthetic gas, hydrogen or electricity. The company intends to further develop the technology to make it commercially viable and intends to then sell or license the technology. The company purchased the asset by issuing 10,000,000 (500,000 post reverse stock split) common shares of the company and a $25,000 payment. If by January 2006 the company had not raised a minimum of $1,000,000 by way of equity private placements, it had the option, until June 30, 2007, of cancelling the 500,000 shares issued and subject to escrow, in consideration for the transfer to 975110 Alberta Ltd. of 100% of the interest in all of the enhanced gasification intellectual property and a small gasification unit. During the year ended December 31, 2007, the 500,000 common shares were released from escrow. At March 31, 2009, the total cost of $24,614 is recorded as an intangible asset.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b. | On May 5, 2008, the company issued 2,000,000 shares of common stock with a fair value of $3,000,000 for a one time payment for the purchase of two patents acquired under a purchase/assignment agreement entered into in March 2008. The shares were valued on the closing date of the agreement. At March 31, 2009, the total cost of $3,000,000 is recorded as an intangible asset, net of accumulated amortization of $135,577. Amortization expense for the three months ended March 31, 2009 and March 31, 2008 was $37,500 and $0, respectively.  Amortization is calculated based on the expected legal useful life of 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|5. | Related Party Transactions
|-- | --------------------------

| | a. | As at March 31, 2009, $16,629 (December 31, 2008 -
      $16,994) is owed to a company with a common director. This amount is
      unsecured, non-interest bearing and has no terms of repayment.                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                     
| | b. | As at March 31, 2009, $10,357 (December 31, 2008 -
      $5,213) is owed to a related party consultant for expenses paid on behalf
      of the company.                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                     
| | c. | On November 5, 2007, the company received $21,000 in
      exchange for a promissory note payable. The note bears interest at 6% per
      annum, calculated annually, and is due on demand. As at March 31, 2009,
      accrued interest of $1,767 (December 31, 2008 - $1,457) is
  recorded.                     
| |    |                                                                                                                                                                                                                                                                                                                     
| | d. | During the three month period ended March 31, 2009, the
      company recorded $37,500 (2008 - $37,500) for management services provided
      by the President of the company. At March 31, 2009, $255,797 (December 31,
      2008 - $222,281) is included in due to related parties.                             
| |    |                                                                                                                                                                                                                                                                                                                     
| | e. | During the three month period ended March 31, 2009, the
      company recorded $Nil (2008 - $32,500) for management services provided by
      the former Treasurer of the company.                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                     
| | f. | During the three month period ended March 31, 2009, the
      company received $29,649 in proceeds from a related consultant. At March
      31, 2009, this amount is included in note payable  related party. There
      were no such proceeds received during the three month period ended March
      31, 2008.

F-5

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|6. | Note Payable  other
|-- | --------------------

On October 28, 2008, the company received $6,684 (CDN$ 8,000)
in exchange for a promissory note payable. The note bears interest at 6% per
annum, calculated annually, and is due on demand. As at March 31, 2009, accrued
interest of $124 (December 31, 2008 - $71) is recorded. The company paid the
amount in full during the three month period ended March 31, 2009. There were no
similar payments made during the three month period ended March 31, 2008.

|7. | Commitments
|-- | -----------

On July 1, 2008, the company signed an agreement with a
consultant for consulting services for a period of one year. The company will
pay the consultant $241,500, which is the fair value of the 57,500 shares
issued. During the year ended December 31, 2008, $120,750 was charged to
consulting fees. The company issued the shares on July 1, 2008. However, per
companys understanding of the transaction, the company treated the shares as
not issued until vested. At December 31, 2008 $120,750 is treated as vested and
the other $120,750 is treated as unvested and not reflected in the financial
statements because the shares are forfeitable. During the quarter ended March
31, 2009, $60,375 was treated as vested and was treated as stock-based
compensation. On July 1 2008, Company also agreed to issue 50,000 common shares
of the company with a fair value of $7,500, which is included in accrued
liabilities.

|8. | Warrants
|-- | --------

During the first quarter of 2009, there were no warrants
issued, exercised, expired, or forfeited. A summary of the warrants with
expiration dates of April 28, 2009, is presented below:

WeightedAverageNumber
    
    Exercise PriceBalance, December 31, 2008
    107,700
    
    $ 2.00Issued
    
    
    Exercised
    
    
    Forfeited / Expired
    
    
    Balance, March 31, 2009
    107,700
    
    $ 2.00


F-6

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ITEM 2. Management Discussion and Analysis of Financial
Condition and Results of Operations.

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.

These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs, and risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our consolidated financial statements which
have been prepared in conformity with accounting principles generally accepted
in the United States. It should be read in conjunction with our financial
statements and the notes thereto included elsewhere herein.

The following discussion should be read in conjunction with our
consolidated financial statements, including the notes thereto, appearing
elsewhere in this Form 10-Q. The discussions of results, causes and trends
should not be construed to imply any conclusion that these results or trends
will necessarily continue into the future.

Overview

We are engaged in the development and production of
hydrogen-enriched alternative fuels. We plan to employ gasification technologies
and catalytic conversion processes to produce clean fuels. We design, build,
lease and in some cases operate the gasification technologies with broad
potential application within the energy field. Our various technologies allow
for the use of steam for reformation of coal and other carbonaceous feedstocks,
conversion of waste solid fuel sources into gaseous form and allow for
incineration of waste in an environmentally friendly manner.

We have one wholly-owned subsidiary, Syngas Energy Corp., and
its principal business involves an integrated gasification production system
technology that combines modern gasification with turbine technologies to
produce synthetic gas, hydrogen or electricity.

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Liquidity and Capital Resources

As of March 31, 2009, we had cash of $624 and a working capital
deficiency of $681,759. As of March 31, 2009 our accumulated deficit was
$5,739,798. For the three months ended March 31, 2009 our net loss was $164,756
compared to $253,293 during the same period in 2008. This decrease was due
mostly to lower professional fees.

Our loss was funded by proceeds from shareholder loans. During
the three months ended March 31, 2009, we raised in net proceeds $22,841 through
financing activities and our cash position decreased by $168.

We used net cash of $23,009 in operating activities for the
three months ended March 31, 2009 compared to net cash of $90,880 in operating
activities for the same period in 2008. We did not use any money in investing
activities for the three months ended March 31, 2009 nor did we use any money
for investing activities during the same period in 2008. The effect of exchange
rates on cash was a decrease in cash of $nil for the three months ended March
31, 2009 compared to an increase of $46 during three months ended March 31,
2008.

During the three months ended March 31, 2009 our monthly cash
requirement was approximately $7,670, compared to approximately $30,293 for the
same period in 2008. We expect to require a total of approximately $26,585,000
to fully carry out our business plan over the next twelve months beginning June
2009 as set out in this table:

|Description                                           |   | Estimated Expense | 
|----------------------------------------------------- | - | ----------------- | 
|Marketing our gasification technologies               | $ | 200,000           | 
|Continued improvement of our PyStR and               |   |                   | 
|other technologies                                    | $ | 1,200,000         | 
|Further commercializing our gasification              |   |                   | 
|technologies                                          | $ | 400,000           | 
|Manufacturing of Modular Bio-energy units             | $ | 400,000           | 
|Payment of accounts payable and accrued               |   |                   | 
|liabilities                                           | $ | 250,000           | 
|General and administrative expenses                   | $ | 500,000           | 
|Professional fees                                     | $ | 100,000           | 
|Consulting fees                                       | $ | 200,000           | 
|Investor relations expenses                           | $ | 100,000           | 
|Patent application costs (including legal
      fees) | $ | 100,000           | 
|Heavy Oil Upgrader
      Plant (Northern Alberta Oil) | $ | 23,135,000        | 
|Total                                                 | $ | 26,585,000        | 

We intend to meet our cash requirements for the next 12 months
through external sources: a combination of debt financing and equity financing
through private placements. We are currently not in good short-term financial
standing. We anticipate that we may not generate any revenues in the near future
and we will not have enough positive internal operating cash flow until we can
generate substantial revenues, which may take the next few years to fully
realize. There is no assurance we will achieve

4

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profitable operations. We have historically financed our
operations primarily by cash flows generated from the sale of our equity
securities and through cash infusions from officers and outside investors in
exchange for debt and/or common stock.

These consolidated financial statements have been prepared on
the assumption that the company is a going concern, meaning it will continue in
operation for the foreseeable future and will be able to realize assets and
discharge liabilities in the ordinary course of operations. Different bases of
measurement may be appropriate when a company is not expected to continue
operations for the foreseeable future. The companys continuation as a going
concern is dependent upon its ability to attain profitable operations and
generate funds there-from, and/or raises equity capital or borrowings sufficient
to meet current and future obligations. Management plans to raise equity
financings over the next twelve months to finance operations. There is no
guarantee that the company will be able to complete any of these objectives. The
company has incurred losses from operations since inception and at March 31,
2009, has a working capital deficiency and an accumulated deficit that creates
substantial doubt about the companys ability to continue as a going
concern.

On September 4, 2007, we entered into a 0% convertible
debenture due September 4, 2012 with Jain Vasant whereby Mr. Vasant agreed to
loan us $120,000,000. At any time after September 4, 2012 and until September 4,
2017 Mr. Vasant has the right to convert all, or a portion of, the principal
amount of the convertible debenture into our common shares at a conversion price
of $50.00 per share. Pursuant to the convertible debenture the funds will be
transferred to us within 10 business days after the convertible debenture
documents are successfully posted on Euroclear. As of May 11, 2009, the
transaction has not yet closed and we have not yet received any funds. We
anticipate closing the agreement shortly.

Once the $120,000,000 debenture transaction is closed, we will
have enough capital to meet our cash requirements over the next twelve months.
However, we cannot guarantee that the agreement will be successfully closed on a
timely basis. If the agreement fails to close, we intend to raise the balance of
our cash requirements (approximately $26,585,000) from private placements,
loans, or possibly a registered public offering (either self-underwritten or
through a broker-dealer) within the next few months. At this time we do not have
any commitments from any broker-dealer to provide us with financing. There is no
guarantee that we will be successful in raising any capital. There is no
assurance that we will be able to obtain such additional funds on favorable
terms, if at all. If we fail in raising capital, our business may fail and we
may curtail or cease our operations.

Results of Operations for the three months ended March 31,
2009 compared to the three months ended March 31, 2008 and from inception to
March 31, 2009.

Limited Revenues

Since our inception on December 14, 2004 to March 31, 2009, we
have earned limited revenue of $5,164. As of March 31, 2009, we have an
accumulated deficit of $5,739,798 and we did not earn any revenues during the
three months ending on March 31, 2009. At this time, our ability to generate any
significant revenues continues to be uncertain. Our financial statements contain
an additional explanatory paragraph in Note

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2, which identifies issues that raise substantial doubt about
our ability to continue as a going concern. Our financial statements do not
include any adjustment that might result from the outcome of this
uncertainty.

Net Loss

We incurred a net loss of $164,756 for the three months ended
March 31, 2009, compared to a net loss of $253,293 for the same period in 2008.
This decrease in net loss is mostly due to lower consulting, management and
professional fees. From inception on December 14, 2004 to March 31, 2009, we
have incurred a net loss of $5,739,798. Our basic and diluted loss per share was
$0.02 for the three months ended March 31, 2009, and $0.10 for the same period
in 2008.

Expenses

Our total operating expenses decreased from $248,528 to
$164,183 for the three months ended March 31, 2009 compared to the same period
in 2008. This decrease in expenses is mostly due to lower professional fees.
Since our inception on December 14, 2004 to March 31, 2009, we have incurred
total operating expenses of $5,549,706.

Our consulting and management fees increased $8,150 from
$94,725 to $102,875 for the three months ended March 31, 2009 compared to the
same period in 2008. This increase was largely due to higher payments made to
our consultant. Since our inception on December 14, 2004 until March 31, 2009 we
have spent $4,557,772 on consulting and management fees.

Our general and administrative expenses consist of bank
charges, travel, meals and entertainment, office maintenance, communication
expenses (internet, fax, and telephone), courier, postage costs, office
supplies. Our general and administrative expenses decreased $6,933 from $14,021
to $7,088 for the three months ended March 31, 2009 compared to the same period
in 2008. Since our inception on December 14, 2004 until March 31, 2009 we have
spent $335,623 on general and administrative expenses.

We did not spend any money on research and development expenses
for the three months ended March 31, 2009 compared to $5,000 spent on research
and development during the three months ended March 31, 2008. Since our
inception on December 14, 2004 until March 31, 2009 we have spent $46,111 on
research and development. Going forward, we anticipate that we will spend
approximately $1,600,000 on research and development during the next 12
months.

Our professional fees, consisting primarily of legal,
accounting and auditing fees, decreased by $38,062 to $16,720 for the three
months ended March 31, 2009 from $54,782 for the same period in 2008, mainly due
to decreased legal and auditing services provided in the three month periods
ended March 31, 2009.

Inflation

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The amounts presented in the financial statements do not
provide for the effect of inflation on our operations or financial position. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation adjustments.

Off-Balance Sheet Arrangements

As of March 31, 2009, we had no off-balance sheet transactions
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. Quantitative and Qualitative Disclosure About Market
Risks.

Not applicable.

ITEM 4. Control and Procedures

Not applicable

ITEM 4T. Control and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. Under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and our Chief Financial Officer (CFO),
we carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this quarterly report (the Evaluation
Date). Based upon that evaluation, the CEO and CFO has concluded that as of
the Evaluation Date, our disclosure controls and procedures were not effective
in timely alerting them to the material information relating to us (or our
consolidated subsidiaries) required to be included in our periodic filings with
the SEC, subject to the various limitations on effectiveness set forth below
under the heading, Limitations On The Effectiveness Of Internal Controls, such
that the information relating to us, required to be disclosed in Securities and
Exchange Commission (SEC) reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and (ii) is accumulated and communicated to our management, including our
CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure.

(b) Changes in internal control over financial reporting. There
were no changes in our internal control over financial reporting during the
fiscal quarter ended March 31, 2009 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

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Limitations On The Effectiveness Of Internal Controls

Our management, including the CEO and CFO, does not expect that
our disclosure controls and procedures or our internal control over financial
reporting will necessarily prevent all fraud and material error. An internal
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of the 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, and/or the degree of
compliance with the policies or procedures may deteriorate.

PART II  OTHER INFORMATION

ITEM 1. Legal Proceedings.

As of May 14, 2009 there are no material pending legal
proceedings, other than ordinary routine litigation incidental to our business,
to which we or any of our subsidiaries are a party or of which any of our
properties is the subject. Also, our management is not aware of any legal
proceedings contemplated by any governmental authority against us.

ITEM 2. Unregistered Sales of Equity Securities.

None.

ITEM 3. Defaults Upon Senior Securities.

None.

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

None.

ITEM 5. Other Information.

None.

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ITEM 6. Exhibits.

|Number | Description                                                                                                                                                      
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                  
|31.1   | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                               
|       |                                                                                                                                                                  
|31.2   | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                               
|       |                                                                                                                                                                  
|32.1   | Certification
        of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|       |                                                                                                                                                                  
|32.2   | Certification
        of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on our behalf by
the undersigned thereunto duly authorized.

|                   | ENERGY QUEST INC.                        
|------------------ | -----------------------------------------
|                   | (REGISTRANT)                             
|                   |                                          
|Date: May 15, 2009 | /s/
      Wilf Ouellette                 
|                   | Wilf Ouellette                           
|                   | President, Chief
      Executive Officer,
|                   | Director                                 
|                   | (Authorized Officer
      for Registrant)
|                   |                                          
|Date: May 15, 2009 | /s/
      Vasant K, Jain                 
|                   | Vasant K, Jain                           
|                   | Chief Financial
      Officer, Director, 
|                   | Principal Accounting
      Officer       

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