===============================================================

                        United States
             Securities and Exchange Commission
                    Washington, DC 20549

                          Form 20-F
                     2002 Annual Report

                         (Mark One)



     [ ]     REGISTRATION STATEMENT PURSUANT TO
                 SECTION 12(b) OR (g) of the
               Securities Exchange Act of 1934


                             OR



     [X]         ANNUAL  REPORT PURSUANT TO
                 SECTION 13 OR 15(d) of the
               Securities Exchange Act of 1934


                  FOR THE FISCAL YEAR ENDED
                       APRIL 30, 2002


                             OR



    FOR THE TRANSITION PERIOD FROM _______ TO __________



              COMMISSION FILE NUMBER:  0-30072


============================================================


                 Derek Resources Corporation

   (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                       NOT APPLICABLE

       (TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)


                  BRITISH COLUMBIA, CANADA

       (JURISDICTION OF INCORPORATION OR ORGANIZATION)


         SUITE 1550, 355 BURRARD STREET, VANCOUVER,
              BRITISH COLUMBIA, CANADA, V6C 2G8

          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)



          SECURITIES REGISTERED OR TO BE REGISTERED
           PURSUANT TO SECTION 12 (b) OF THE ACT.



                     TITLE OF EACH CLASS

          NAME ON EACH EXCHANGE ON WHICH REGISTERED



                            None


                             DNA



          Securities Registered or to be Registered
            Pursuant to Section 12(g) of the Act.


               COMMON SHARES WITHOUT PAR VALUE

                      (TITLE OF CLASS)


          Securities For Which There is a Reporting
      Obligation Pursuant to Section 15(d) of the Act.


                            NONE

                      (TITLE OF CLASS)


INDICATE THE NUMBER OF OUTSTANDING SHARES OF EACH OF THE
ISSUER'S CLASSES OF  CAPITAL OR COMMON STOCK AS of the close
of the Period Covered by  the Annual Report.


                  38,145,022 COMMON SHARES


Indicate by Check Mark Whether the Registrant (1) has Filed
All Reports Required To be Filed by Section 12 or 15( d) of
the Securities Exchange Act of 1934 During the Preceding 12
Months (or for such shorter period that the registrant was
required to file such reports), and (2) Has Been Subject to
Such Filing Requirements for the Past 90 Days.


                     Yes  [X]   No  [ ]


Indicate by Check Mark Which Financial Statement Item the
Registrant Has Elected to Follow.


                 Item 17  [X]   Item 18  [ ]


(Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Past Five Years)

Indicate by Check Mark Whether the Registrant Has Filed All
Documents and Reports Required to be Filed by Sections 12, 13
or 15(d) of the Securities Exchange Act of 1934 Subsequent to
the Distribution of Securities Under a Plan Confirmed by a
Court.


             Yes  [ ]   No  [ ]   Not Applicable  [X]

===============================================================


SECURITIES AND EXCHANGE COMMISSION


                          FORM 20-F

                      TABLE OF CONTENTS

Glossary of Terms                                             7
PART 1                                                        9
Item 1 - Identity of Directors, Senior Management and
 Advisers                                                     9
Item 2 - Offer Statistics and Expected Timetable              9
Item 3 - Key Information                                      9
Selected Financial Data                                       9
Capitalization and Indebtedness                              10
Reasons for the Offer and Use of Proceeds                    11
Risk Factors                                                 11
Item 4 - Information on the Company                          14
Introduction                                                 14
General Development of the Business of the Registrant        15
Business Overview                                            18
Organizational Structure                                     19
Property, Plants and Equipment                               19
The LAK Ranch Project, Wyoming, USA                          19
Location, Description and Acquisition                        19
History of the LAK Ranch Project                             23
Geology                                                      23
The Steam Assisted Gravity Drainage Process                  25
The Gas Assisted Gravity Drainage Process                    26
Operating Agreement                                          26
Bateman Agreements                                           27
Development Program                                          27
Litigation with Asdar Group                                  29
Item 5 - Operating and Financial Review and Prospects        30
Overview                                                     30
Operating Results                                            31
Liquidity and Capital Resources                              34
Research and Development, Patents and Licences, etc.         35
Trend Information                                            35
Item 6 - Directors, Senior Management and Employees          35
Directors and Senior Management                              35
Compensation                                                 38
Board Practices                                              40
Employees                                                    40
Share Ownership                                              40
Item 7 - Major Shareholders and Related Party Transactions   42
Major Shareholders                                           42
Related Party Transactions                                   43
Interests of Experts and Counsel                             45
Item 8 - Financial Information                               45
Consolidated Financial Statements and Other Financial
 Information                                                 45
Legal Proceedings                                            45
Dividend Policy                                              45
Significant Changes                                          46
Item 9 - The Offer and Listing                               47
Offer and Listings Details                                   47
Plan of Distribution                                         48
Markets                                                      48
Selling Shareholders                                         48
Dilution                                                     48
Expenses of the Issue                                        48
Item 10 - Additional Information                             49
Share Capital                                                49
Memorandum of Articles of Association                        49
Material Contracts                                           53
Exchange Controls                                            54
Taxation                                                     55
Canadian Federal Income Tax Consequences                     55
Dividends                                                    56
Capital Gains                                                56
United States Federal Income Tax Consequences                57
U.S. Holders                                                 57
Distributions on Common Shares of the Registrant             57
Foreign Tax Credit                                           58
Disposition of Common Shares of the Registrant               58
Other Considerations for U.S. Holders                        58
Foreign Personal Holding Company                             59
Foreign Investment Company                                   59
Passive Foreign Investment Company                           59
Controlled Foreign Corporation Status                        61
Elimination of Overlap Between Subpart F Rules and PFIC
 Provisions                                                  62
Dividends and Paying Agents                                  62
Statement by Experts                                         62
Documents on Display                                         62
Subsidiary Information                                       62
Item 11 - Quantitative and Qualitative Disclosures About
 Market Risk                                                 62
Item 12 - Description of Securities Other than Equity
 Securities                                                  62
Part II                                                      63
Item 13 - Defaults, Dividend Arrearages and Delinquencies    63
Item 14 - Material Modifications to the Rights of Security
 Holders and Use of Proceeds                                 63
Part III  63
Item 15 - Controls and Procedures                            63
Item 16 - Reserved                                           63
Part IV                                                      63
Item 17 - Financial Statements                               63
Item 18 - Financial Statements                               63
Item 19 - Exhibits                                           63
Signature Page                                               67



The  information contained in this Annual Report is  current
at  November  1,  2002  except where  a  different  date  is
specified.

Unless   otherwise  specified,  all  monetary  amounts   are
expressed in Canadian dollars.

Financial  information  is  presented  in  accordance   with
accounting   principles  generally   accepted   in   Canada.
Differences between accounting principles generally accepted
in  Canada  and in the United States, as applicable  to  the
Company  are  set  forth  in Note  11  to  the  accompanying
Consolidated   Financial  Statements  of   Derek   Resources
Corporation.

The  following table sets forth certain standard conversions
from the International System of Units (metric units) to the
Standard Imperial Units:


                            Conversion Table


To Convert From:
To:
                              Multiply By:

McF
Cubic metres
                                 28.174

Cubic metres
Cubic feet
                                 35.494

Bbls
Cubic metres
                                  0.159

Cubic metres
Bbls oil
                                  6.290

Feet
Metres
                                  0.305

Metres
Feet
                                  3.281

Miles
Kilometres
                                  1.609

Kilometres
Miles
                                  0.621

Acres
Hectares
                                  0.405

Hectares
Acres
                                  2.471



Forward-Looking Statements

Certain  of  the  information contained in  this  Form  20-F
Annual   Report  constitutes  "forward-looking   statements"
within  the meaning of Section 27A of the Securities Act  of
1933, as amended, and Section 21E of the Securities Exchange
Act   of  1934,  as  amended.  All  statements  other   than
statements  of historical facts included or incorporated  by
reference  in  this  report, including, without  limitation,
statements   regarding   the  company's   future   financial
position,  business strategy, budgets, projected  costs  and
plans  and  objectives of management for future  operations,
are   forward-looking  statements.   In  addition,  forward-
looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect,"
"intend," "project," "estimate," "anticipate," "believe," or
" continue" or the negative thereof or variations thereon or
similar terminology.  Although the Company believes that the
expectations  reflected  in such forward-looking  statements
are   reasonable,  it  can  give  no  assurance  that   such
expectations  will  prove to have been  correct.   Important
factors that could cause actual results to differ materially
from  the  company's expectations ("Cautionary  Statements")
are disclosed under "Item 3 - Key Information, Risk Factors"
and elsewhere in this Annual Report as well as those factors
disclosed in the Company's documents filed from time to time
with the British Columbia Securities Commission, the Alberta
Securities  Commission and the United States Securities  and
Exchange  Commission.   All  subsequent  written  and   oral
forward-looking statements attributable to the  Company,  or
persons  acting  on its behalf, are expressly  qualified  in
their  entirety  by the cautionary statements.  The  Company
assumes  no  duty  to  update or revise its  forward-looking
statements  based  on  changes  in  internal  estimates   or
expectations or otherwise.

GLOSSARY OF TERMS



Except as otherwise identified, the following terms, when
used herein, shall have the following meanings:

"API" refers to the American Petroleum Institute measure  of
the  specific  gravity of oil; the higher  the  number,  the
lighter the oil.

"bbls" refers to barrels of oil.

"bitumen" or "heavy oil" refers to the tar-like form of  oil
that   cannot  be  produced  by  conventional  means.   When
extracted  from  oil  sands, it can be upgraded  into  light
sweet crude and other oil products.

"centipoise" is a unit of measure of viscosity, which is the
resistance of a substance to flow under stress; 1 centipoise
= 0.01 poise.

"Common  Shares" means common shares in the capital  of  the
Company.

"Company" refers to Derek Resources Corporation.

"Derek USA" refers to the Company's wholly owned subsidiary,
Derek Resources (U.S.A.) Inc., a Delaware corporation.

"Exchange" refers to the TSX Venture Exchange.

"GAGD"  refers to the Gas Assisted Gravity Drainage  process
of  recovering  oil.  The GAGD process uses  a  lower  level
horizontal production well and an upper level horizontal gas
injection  well and recovers oil by gravity  drainage.   See
"Item 4 - Information on the Company, The LAK Ranch Project,
Wyoming, USA".

"gravity" refers the specific weight of oil measured on a
scale based on the weight of water.

"kPa" refers to kilopascal, a unit of measurement of
pressure.

"McF" refers to thousand cubic feet.

"md"  refers  to millidarcy, which is a unit of  measure  of
permeability.

"MMBTU" refers to million British Thermal Units.

"MMCF" refers to million cubic feet.

"permeability" is a measure of the ease with which  a  fluid
such as water or oil moves through a rock when the pores are
connected.

"porosity" is the percentage of the bulk volume of a rock or
soil  that  is  occupied by interstices, or  pores,  whether
isolated or connected.

"psi"  means  pounds per square inch, which  is  a  unit  of
measure of pressure.

"Registrant" refers to Derek Resources Corporation.

"SAGD"   refers  to  the  Steam  Assisted  Gravity  Drainage
approach  to  the thermal recovery of heavy  oil.  The  SAGD
process uses a lower level horizontal production well and an
upper level horizontal steam injection well and recovers oil
by  gravity  drainage.   See "Item 4 -  Information  on  the
Company, The LAK Ranch Project, Wyoming, USA".

"shale  out"  refers to the change in a porous sandstone  or
limestone when the clay content increases until porosity and
permeability disappear and the rock grades into claystone or
shale; also known as "pinch out".

"synclinal fold" is a fold of which the core contains the
stratigraphically younger rocks; it is generally concave
upward.

"WTI" refers to West Texas Intermediate, a reference point
for U.S. oil pricing.


                                 PART 1


ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS

See "Item 6 - Directors, Senior Management and Employees".


ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.


ITEM 3 - KEY INFORMATION
Selected Financial Data

Selected  financial data of the Company for the five  fiscal
years  ending April 30, 2002 are derived from the  financial
statements  of  the  Company  which  have  been  audited  by
PricewaterhouseCoopers LLP as indicated in  their  auditor's
reports  which are included elsewhere in this Annual Report.
The  selected financial data set forth for Fiscal  1998  and
1999  are  derived  from  the  Company's  audited  financial
statements, not included herein.

The  selected  financial data should be read in  conjunction
with   the   financial   statements  and   other   financial
information included elsewhere in the Annual Report.

The   Company   has   not  declared  any   dividends   since
incorporation in 1981 and does not anticipate that  it  will
do  so in the foreseeable future.  The present policy of the
Company  is  to  retain  future  earnings  for  use  in  its
operations and the expansion of its business.

Summary of Financial Data

The  following tables set forth selected financial data with
respect  to  the  Company on a consolidated  basis  for  the
periods indicated.  The information appearing below has been
derived  from  and  should be read in conjunction  with  the
consolidated financial statements of the Company  and  notes
thereto  as  well  as  the information appearing  under  the
heading  "Item  5  -  Operating  and  Financial  Review  and
Prospects".

The  financial statements of the Company and the  table  set
forth below have been prepared in accordance with accounting
principles  generally accepted in Canada ("Canadian  GAAP"),
which differ in certain respects from those principles  that
the   Company  would  have  followed  had  its  consolidated
financial  statements  been  prepared  in  accordance   with
accounting  principles  generally  accepted  in  the  United
States   ("U.S.  GAAP").   The  major  differences   between
Canadian   GAAP  and  U.S.  GAAP  that  would   affect   the
measurement  of  the Company's financial position,  loss  or
cash  flows  are  set forth in Note 11 to  the  accompanying
Consolidated Financial Statements of the Company.


                         SELECTED FINANCIAL DATA
                      (CDN$ except Per Share Data)


                          Years Ended April 30


                                                        2002
                                                        2001
                                                        2000
                                                        1999
                                                        1998

Revenues
                                                       1,024
                                                     131,435
                                                      19,824
                                                      39,583
                                                      12,083

Net Loss
                                                   1,062,580
                                                     826,342
                                                     675,731
                                                     528,589
                                                     352,490

Loss Per Share
                                                        0.03
                                                        0.04
                                                        0.09
                                                        0.14
                                                        0.13

Dividends per Share
                                                        0.00
                                                        0.00
                                                        0.00
                                                        0.00
                                                        0.00

Total Assets
                                                  14,012,260
                                                  12,503,031
                                                   2,071,694
                                                   1,159,765
                                                     766,487

Long Term Liabilities
                                                     506,000
                                                        0.00
                                                        0.00
                                                        0.00
                                                        0.00

Oil and Natural Gas Properties (included in Total Assets)
                                                  13,910,104
                                                  12,249,321
                                                   1,523,623
                                                   1,099,401
                                                     682,206

Deficit at End of Period
                                                  11,597,726
                                                  10,535,146
                                                   9,708,804
                                                   9,033,073
                                                   8,504,484








Share Capital






($)
                                                  22,464,255
                                                  20,357,250
                                                  11,575,653
                                                  10,053,113
                                                   8,484,253

Number of Securities (1)
                                                  38,145,022
                                                  31,447,621
                                                   9,958,379
                                                   6,805,129
                                                   3,356,122








US GAAP Shareholders' Equity (2)
                                                  10,998,529
                                                   9,919,604
                                                   2,001,849
                                                   1,094,040
                                                     624,769

US GAAP Net Loss (Earnings) (2)
                                                   1,062,580
                                                     859,859
                                                     675,731
                                                     560,279
                                                     352,490

US GAAP Loss (Earnings) Per Share (2)
                                                        0.03
                                                        0.04
                                                        0.09
                                                        0.15
                                                        0.13


NOTES:
1.   There are 42,076,522 Common Shares issued and
     outstanding as of the date of this Form 20-F Annual Report
2.   Refer to discussion in "Item 5 - Operating and
Financial Review and Prospects".

In  this  Annual  Report,  unless otherwise  specified,  all
monetary  amounts  are expressed in Canadian  dollars.   The
noon  buying  rates in New York City for cable transfers  in
foreign currencies as certified for customs purposes by  the
Federal  Reserve  Bank  of New York for  the  conversion  of
Canadian  dollars into United States dollars on November  1,
2002 was $0.6418.

The  following table sets out the average exchange rates for
the  five most recent financial years, calculated using  the
average of the exchange rates on the last day of each  month
in such periods:


                          Years Ended April 30


                                                        2002
                                                        2001
                                                        2000
                                                        1999
                                                        1998








Average for Period
                                                      0.6379
                                                      0.6616
                                                      0.6804
                                                      0.6624
                                                      0.7115


The following table sets out the high and low exchange rates
for each month during the previous six months:


                                                      Oct-02
                                                      Sep-02
                                                      Aug-02
                                                      Jul-02
                                                      Jun-02
                                                      May-02









High for Period
                                                      0.6407
                                                      0.6433
                                                      0.6442
                                                      0.6603
                                                      0.6619
                                                      0.6547

Low For Period
                                                      0.6272
                                                      0.6304
                                                      0.6264
                                                      0.6297
                                                      0.6452
                                                      0.6366


Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

Risk Factors

The following is a brief discussion of those distinctive  or
special  characteristics  of the  Company's  operations  and
industry  which may have a material impact on, or constitute
risk  factors in respect of, the Company's future  financial
performance.   Due  to the nature of the Company's  business
and  the  present  stage of development  on  the  LAK  Ranch
Project, the following risk factors apply:

Exploration and Development Risks

The  pilot plant at the LAK Ranch Project utilizes the  SAGD
recovery  process which falls under the category of improved
recovery pursuant to the definition found in Rule 4-10(a)(4)
of  Regulation  S-X.   As  a result,  the  Company  has  not
attributed  any  proved reserves to the LAK  Ranch  Project.
Technical  and economic information derived from  the  pilot
study will be used to estimate the amount of recoverable oil
for  the development of a commercial scale operation.  There
is  a  risk that the Company may not be able to economically
recover the oil in place.

The  Company has never brought any property in which it  had
an  interest  into  commercial  production.   As  such,  the
Company's  ability  to  meet  production,  timing  and  cost
estimates  for  properties  cannot  be  assured.   Technical
considerations,  delays in obtaining  government  approvals,
the  inability  to obtain financing or other  factors  could
cause  delays  in developing properties. Such  delays  could
materially adversely affect the financial performance of the
Company.

Oil and Gas Prices

The Company's principal business risks arise from the nature
of  crude oil and natural gas markets, uncertain results  of
capital expenditure programs and volatility of interest  and
exchange rate.

Factors  beyond  the control of the Company may  affect  the
marketability of any oil and gas discovered.  The prices  of
crude  oil  and  natural gas have experienced  volatile  and
significant price movements over short periods of time,  and
are  affected by numerous factors beyond the control of  the
Company,  including  international  economic  and  political
trends,   expectations  of  inflation,   currency   exchange
fluctuations  (specifically, the  U.S.  dollar  relative  to
other  currencies),  interest rates and global  or  regional
consumption  patterns, speculative activities and  increased
production  due to improved production methods.  The  prices
which  will  be available to the Company for  sales  of  its
production will be established by market forces which can be
affected  by  various factors, including  political  events,
economic  conditions and production costs in major producing
regions  and governmental policies with respect to  holdings
by  a  nation or its citizens.  The market for crude oil  is
influenced by global supply and demand considerations and by
the  supply  management practices of  the  world's  dominant
producers  concentrated  in  the Organization  of  Petroleum
Exporting  Countries  (OPEC).  The  natural  gas  market  is
primarily  influenced by North American  supply  and  demand
profile  and by competing fuels.  There can be no  assurance
that the price of oil or gas will be such that the Company's
leases can be produced at a profit.

Title Matters

While  the Company has diligently investigated title to  all
its  property interests, this should not be construed  as  a
guarantee of title.  The properties may be subject to  prior
unregistered agreements or transfers or native  land  claims
and title may be affected by undetected defects.

Enforcement of Judgments

The  ability  of  investors to enforce judgments  of  United
States  courts based upon the civil liability provisions  of
the  United  States  federal  securities  laws  against  the
Company and the directors and officers of the Company may be
limited  due to the fact that the Company and these  persons
reside  outside of the United States and, in respect of  the
directors and officers, their assets are located outside the
United  States.  There is uncertainty as to whether Canadian
courts would:  (i) enforce judgments of United States courts
obtained  against the Company or its directors and  officers
predicated upon the civil liability provisions of the United
States  federal securities laws, or (ii) entertain  original
actions  brought in Canadian courts against the  Company  or
such persons predicated upon the federal securities laws  of
the  United States, as such laws may conflict with  Canadian
laws.  In  Canada, civil rights are within  the  legislative
jurisdiction  of  the  Provinces, and  in  the  Province  of
British  Columbia, in which the Company and the majority  of
its  directors and officers are resident, does not have laws
for the reciprocal enforcement of judgments of United States
courts.

"Penny Stock" Rules

The  Common  Shares  are "penny stock"  as  defined  by  the
Securities  and  Exchange  Commission.   Penny  stocks   are
generally  equity securities with a price of  less  than  US
$5.00  (other than securities registered on certain national
securities  exchanges  or  quoted  on  the  NASDAQ  National
Market,  provided that current price and volume  information
with  respect to transactions in such securities is provided
by  the  exchange or system).  The Securities  and  Exchange
Commission  has  adopted  rules that regulate  broker-dealer
practices  in connection with transactions in penny  stocks.
The  penny stock rules require a broker-dealer, prior  to  a
transaction in a penny stock not otherwise exempt  from  the
rules,  to  deliver a standardized risk disclosure  document
prepared  by  the  Securities and Exchange  Commission  that
provides  information about penny stocks and the nature  and
level of risks in the penny stock market.  The broker-dealer
also  must  provide the customer with current bid and  offer
quotations  for  the  penny stock, the compensation  of  the
broker-dealer  and  its salesperson in the  transaction  and
monthly account statements showing the market value of  each
penny  stock  held in the customer's account.  The  bid  and
compensation  information  must be  given  to  the  customer
orally   or   in  writing  before  or  with  the  customer's
confirmation.   In addition, the penny stock  rules  require
that  prior to a transaction in a penny stock not  otherwise
exempt  from  such  rules,  the broker-dealer  must  make  a
special  written  determination that the penny  stock  is  a
suitable  investment  for  the  purchaser  and  receive  the
purchaser's  written  agreement to the  transaction.   These
disclosure requirements may have the effect of reducing  the
level  of  trading activity in the secondary  market  for  a
stock that is subject to the penny stock rules and therefore
make it more difficult to sell those shares.

Additional Funding Requirements.

The Company has limited financial resources, and there is no
assurance  that additional funding will be available  to  it
for  further development of its properties or to fulfill its
obligations  under any applicable agreements.   The  Company
has relied on external financing, including the issuance  of
equity  securities, to fund its activities to date and  will
continue  to  require external financing for the foreseeable
future.  The  exploration and development of  the  Company's
properties  depends  upon the Company's  ability  to  obtain
financing  through  any  or all of the  joint  venturing  of
projects, debt financing, equity financing or other means.

At April 30, 2002, the Company had a working capital deficit
of  $2,488,985.  Revenue from oil and gas sales from the LAK
Ranch  Project  is  not sufficient to fully  meet  its  cash
requirements  and  ongoing commitments and  the  Company  is
dependent on its shareholders and creditors to support it as
a  going concern.  While the Company has been successful  in
obtaining financing from shareholders and directors  in  the
past, there is no assurance the Company will continue to  be
successful  in  raising  necessary  financing.  Accordingly,
there  is substantial doubt about the ability of the Company
to continue as a going concern.

Management  is  actively  pursuing  additional  sources   of
financing  and  is pursuing a partnership  with  an  outside
source  to  develop the LAK Ranch Project.  At  the  present
time,  the  LAK Ranch oil production plant is idle  until  a
partner  or substantial financing can be found.   Subsequent
to April 30, 2002, the Company exchanged common shares for a
portion of the notes payable outstanding at April 30,  2002,
extended repayment terms on notes payable not exchanged  and
completed  a private placement of 3,917,500 units  at  $0.10
per  unit for proceeds of $391,750.  See "Item 8 - Financial
Information, Significant Changes".

Environmental and Other Regulatory Requirements

The  current or future operations of the Company,  including
development   activities  and  commencement  of   commercial
production on its properties, requires permits from  various
governmental authorities and such operations are and will be
subject  to  laws  and  regulations  governing  prospecting,
development,  production, exports, taxes, labour  standards,
occupational health, waste disposal, toxic substances,  land
use, environmental protection, restrictions and prohibitions
on  releases or emissions of various substances produced  in
association with certain oil and gas operations, safety  and
other  matters.  Companies engaged in  the  development  and
operation  of oil and gas properties and related  facilities
generally   experience  increased  costs   and   delays   in
production  and other schedules as a result of the  need  to
comply  with  applicable laws, regulations and permits,  the
extent  of  which  cannot be predicted.   There  can  be  no
assurance  that approvals and permits required  to  commence
commercial  production on its properties will  be  obtained.
Additional  permits  and  studies,  which  may  include  the
environmental impact studies conducted before permits can be
obtained,  may  be  necessary  prior  to  operation  of  the
properties in which the Company has interests and there  can
be  no assurance that the Company will be able to obtain  or
maintain  all  necessary permits that  may  be  required  to
commence   construction,   development   or   operation   or
production  facilities at these properties  on  terms  which
enable   operations   to   be  conducted   at   economically
justifiable costs.

Failure  to  comply  with applicable laws,  regulations  and
permitting  requirements may result in  enforcement  actions
thereunder,   including  orders  issued  by  regulatory   or
judicial  authorities  causing operations  to  cease  or  be
curtailed,  and  may  include corrective measures  requiring
capital  expenditures, installation of additional  equipment
or   remedial  actions.  Parties  engaged  in  oil  and  gas
operations  may  be required to compensate  those  suffering
loss  or  damage by reason of the production activities  and
may  have  civil or criminal fines or penalties imposed  for
violations of applicable laws or regulations.

Amendments   to  current  laws,  regulations   and   permits
governing  operations and activities of petroleum companies,
or  more  stringent  implementation thereof,  could  have  a
material  adverse impact on the Company and cause  increases
in  capital expenditures or production costs or reduction in
levels  of production at producing properties or abandonment
or delays in development of new oil and gas properties.

The   Company  and  its  consultants  maintain  a  corporate
insurance  program  consistent  with  industry  practice  to
protect  against  losses  due to accidental  destruction  of
assets,   well  blowouts,  pollution  and  other   operating
accidents  or disruptions.  The Company also has operational
and    emergency   response   procedure   and   safety   and
environmental  programs in place to  reduce  potential  loss
exposure.   To  the  best  of the Company's  knowledge,  the
Company  is  currently  operating  in  compliance  with  all
applicable environmental regulations.

The Company has insurance in amounts that it considers to be
adequate  to protect itself against certain risks of  mining
and  processing. However, the Company may become subject  to
liability for hazards against which it cannot insure  itself
or  which  it  may  elect not to insure against  because  of
premium  costs or other reasons. In particular, the  Company
is  not  insured for environmental liability  or  earthquake
damage.

Limited Operating History: Losses

The Company has experienced, on a consolidated basis, losses
in  all  years of its operations.  There can be no assurance
that  the Company will operate profitably in the future,  if
at  all.   At  April  30,  2002, the Company's  deficit  was
$11,597,726.

Limited History as Operator

Historically,  the Company has participated as  an  interest
holder  in oil and gas wells which were successfully brought
into  production by others.  Prior to the LAK Ranch Project,
it has never acted as operator.

Key Employees.

The  Company  depends on a number of key  employees:   Barry
C.J.  Ehrl,  President  &  Chief Executive  Officer  of  the
Company;  Frank  R.  Hallam,  Chief  Financial  Officer  and
Director  of  the  Company; Paul B.  Trost,  Vice-President,
Operations of the Company's U.S. subsidiary, Derek  USA  and
George   Pouska,   Field  Manager  of  the  Company's   U.S.
subsidiary,  Derek USA. The loss of any  one  of  the  named
employees could have an adverse effect on the Company.  With
the  exceptions of Barry C.J. Ehrl and Frank R. Hallam  (see
"Item  6  - Directors, Senior Management and Employees"  and
"Item   7   -   Major   Shareholders   and   Related   Party
Transactions"), the Company has not entered into  management
contracts  with the named employees.  The Company  does  not
maintain key man insurance on any of its management.

Conflicts of Interest

Certain  of  the Company's directors and officers  serve  as
directors or officers of other reporting companies  or  have
significant shareholdings in other reporting companies  and,
to  the extent that such other companies may participate  in
ventures in which the Company may participate, the directors
of   the  Company  may  have  a  conflict  of  interest   in
negotiating  and concluding terms respecting the  extent  of
such   participation.   See  "Item  6  -  Directors,  Senior
Management  and Employees" and "Item 7 - Major  Shareholders
and Related Party Transactions".

Currency Fluctuations

The Company's operations at the LAK Ranch Project are in the
United  States  and  the  expenses of  such  operations  are
payable  in  U.S.  dollars  while the  Company's  functional
currency  is  the  Canadian dollar.   The  majority  of  the
Company's  financings to date have been in Canadian  dollars
and  will  continue  to  be  in  Canadian  dollars  for  the
foreseeable future.  Accordingly, the Company is subject  to
the  risk  of  fluctuations in the relative  values  of  the
Canadian  and  U.S. dollars.  Although this has  not  had  a
materially  adverse  affect  on  the  Company's  results  of
operations  to  date,  this may have  a  materially  adverse
affect on the Company's results of operations in the future.
The  Company  is  required  to  recognize  foreign  currency
translation  gains  or  losses in the determination  of  net
earnings  and  losses, except for exchange gains  or  losses
relating to non-current monetary assets or liability,  which
are  deferred and amortized over the remaining life  of  the
asset or liability.

Price Fluctuations:  Share Price Volatility

In recent years, the securities markets in the United States
and Canada have experienced a high level of price and volume
volatility,  and  the  market price of  securities  of  many
petroleum  companies have experienced wide  fluctuations  in
price  which  have  not  necessarily  been  related  to  the
operating  performance, underlying asset values or prospects
of  such  companies.  In particular, the per share price  of
the  Company's Common Shares fluctuated from a high of $0.49
to  a  low of $0.06 within the twelve month period preceding
the  date of this Form 20-F Annual Report.  There can be  no
assurance  that  continual fluctuations in  price  will  not
occur.

Shares Reserved for Future Issuance: Dilution

As  at  November 1, 2002, there were 2,568,000 stock options
and  12,010,234 share purchase warrants outstanding pursuant
to  which  Common Shares may be issued in the future,  which
will   result   in   further  dilution  to   the   Company's
shareholders.

Dividend Record and Policy

The  Company  has not paid any dividends since incorporation
and  it  has no plans to pay dividends for some  time.   The
directors  of  the  Company  will  determine  if  and   when
dividends should be declared and paid in the future based on
the  Company's financial position at the relevant time.  All
of  the Common Shares are entitled to an equal share of  any
dividends declared and paid.

ITEM 4 - INFORMATION ON THE COMPANY
Introduction

The  Company was incorporated under the Company Act (British
Columbia)  on  April  6, 1981 under  the  name  Cove  Energy
Corporation. The Company changed its name to Cove  Resources
Corporation  on  May  13,  1988  and  to  Consolidated  Cove
Resources  Corporation ("Consolidated Cove") on  August  11,
1992.  The Company is a reporting issuer in British Columbia
and  Alberta.  The Common Shares trade on the Exchange under
the  symbol  "DRS".  On January 4, 2001, the  Common  Shares
commenced  trading  on the NASD OTC Bulletin  Board  Service
under the symbol "DRKRF".

The address of the head office of the Company is Suite 1550,
355 Burrard Street, Vancouver, British Columbia, Canada, V6C
2G8.  The telephone number of the head office of the Company
is  (604) 331-1757 or toll free (888) 756-0066.  The address
for  service  and the registered and records office  of  the
Company  is Tupper Jonsson & Yeadon, Suite 1710 - 1177  West
Hastings  Street, Vancouver, British Columbia, Canada.   The
Company's website is www.derekresources.com.

The  Company  is a natural resource company engaged  in  the
acquisition,  exploration and development  of  oil  and  gas
properties.  It  has an interest in one principal  property,
the  LAK Ranch Project in Wyoming, USA.  The pilot plant  at
the  LAK  Ranch  Project utilizes the SAGD recovery  process
which  falls  under  the category of improved  recovery  and
pursuant  to  the  definition found in  Rule  4-10(a)(4)  of
Regulation  S-X. As a result, the Company has not attributed
any proved reserves to the LAK Ranch Project.  Technical and
economic  information derived from the pilot study  will  be
used  to  estimate  the amount of recoverable  oil  for  the
development of a commercial scale operation.  There  can  be
no  assurance  that the identified oil deposit  at  the  LAK
Ranch  Project  will  ever qualify as a commercially  viable
operation.

General Development of the Business of the Registrant

The four fiscal years ending April 30, 1997 were a period of
re-organization  and the Company, although  not  technically
inactive, did not acquire any new properties or carry on any
active  business.  During the year  ended  April  30,  1994,
Consolidated  Cove suspended exploration activities  on  its
existing  properties  and  wrote off  all  mineral  property
interests  totalling  $2,255,264.  During  the  years  ended
April  30, 1994, 1995, 1996, and 1997, Consolidated Cove  or
the   Company   raised  $125,000,  $104,000,  $250,000   and
$645,000,  respectively, by way of private  placements,  and
used  these  funds to meet its ongoing expenses.   Creditors
and  shareholder lenders were issued shares to  settle  debt
totalling  $337,657, $52,672, $174,500 and  nil  during  the
years   ended   April  30,  1994,  1995,  1996   and   1997,
respectively.

May  11,  1995,  the  Company consolidated  its  issued  and
outstanding  share capital on a 1 for 4.6 basis and  changed
its  name from Consolidated Cove to its current name,  Derek
Resources Corporation.

In  its fiscal year ended April 30, 1998, the Company  began
and  continues to actively pursue a program of  acquisition,
exploration and development of oil and gas properties.

Pursuant to an option agreement dated September 24, 1997, as
amended  April  21,  1998 and December 11,  1998  (the  "LAK
Agreement")   between  the  Company   and   Rising   Phoenix
Development  Group Ltd. ("Rising Phoenix"), the Company  was
granted  an option to purchase from Rising Phoenix up  to  a
75%  working  interest in two tracts of land (the  "Original
LAK  Property")  and  up to a 37.5% interest  in  two  other
tracts  of land (the "Adjoining Property") in Weston County,
Wyoming.  See "Item 4 - Information on the Company, The  LAK
Ranch Project, Wyoming, USA".

During  the  year ended April 30, 1998 ("Fiscal 1998"),  the
Company issued an aggregate of 1,290,000 special warrants at
a  price of $0.50 per special warrant for gross proceeds  of
$645,000.   The proceeds of the private placement were  used
for  acquisition  and exploration costs  at  the  LAK  Ranch
Project  and  for  general working capital.   During  Fiscal
1999,  all  1,290,000 special warrants were  converted  into
1,290,000  units, each unit comprising of one  Common  Share
and  one  share purchase warrant.  During Fiscal  1998,  the
Company also issued 607,499 Common Shares on the exercise of
607,499 previously issued warrants resulting in net proceeds
to  the  Company of $179,450.  During the same  period,  the
issuance  of 375,000 performance escrow shares at $0.01  per
share  to Barry Ehrl, President, C.E.O. and director of  the
Company resulted in gross proceeds to the Company of $3,750.
See   "Item  7  -  Major  Shareholders  and  Related   Party
Transactions".

During  the  year ended April 30, 1999 ("Fiscal 1999"),  the
Company issued an aggregate of 1,940,300 special warrants at
prices  ranging from $0.40 to $0.50 per special warrant  for
gross proceeds of $817,310.  297,500 of the special warrants
were  converted  into Common Shares while 1,642,500  special
warrants  were  converted into 1,642,500  units,  each  unit
comprising  of  one  Common Share  and  one  share  purchase
warrant.   Another  142,000 Common  Shares  were  issued  by
private placements at $0.50 per share for gross proceeds  of
$71,000.   The proceeds of the private placements were  used
for  acquisition  and exploration costs  at  the  LAK  Ranch
Project and for general working capital.  Debt in the amount
of  $6,300  was  settled by the issuance  of  15,000  Common
Shares at a deemed price of $0.42 per share.  Revenues  from
oil  and gas royalties totalled $3,471 and the Company  sold
certain  of  its oil and gas leases in Canada,  realizing  a
gain on sale of $36,609.

In  December 1999, the Company acquired federal  oil  leases
totalling  1,028  acres adjacent to the LAK  Ranch  Project.
The new ground, which increased the acreage at the LAK Ranch
Project  to  7,388 acres, is west and south of the  existing
property.  The new ground was acquired by application for an
annual  rental  payment of $1,543.50 and  is  subject  to  a
Federal Overriding Royalty of 12.5%.  During the same month,
the Company obtained a source water permit for the LAK Ranch
Project,   became  licensed  with  the  Wyoming  State   Gas
Commission as an operator and posted a US $25,000 bond  with
the State.

During  the  year ended April 30, 2000 ("Fiscal 2000"),  the
Company  issued 2,300,000 special warrants  at  a  price  of
$0.50  per special warrant for gross proceeds of $1,150,000.
In  connection  thereof,  an  aggregate  of  74,250  special
warrants  were issued by the Company in payment of  finder's
fees.   The Company also completed another private placement
of  64,000 special warrants at a price of $0.75 per  special
warrant for gross proceeds of $48,000.  Also during the same
period,  the  Company issued 267,500 Common  Shares  on  the
exercise of 267,500 previously issued warrants resulting  in
gross  proceeds  to  the Company $145,040.   Another  30,000
Common  Shares were issued on the exercise of  30,000  stock
options for gross proceeds to the Company of $14,900.

The  Company  entered into an agreement dated June  9,  2000
(the   "Agency  Agreement")  with  Yorkton  Securities  Inc.
("Yorkton") pursuant to which Yorkton was appointed  to  act
as  Agent  for a best efforts brokered private placement  of
7,050,000  units  at  a price of $0.42 per  unit  for  gross
proceeds  of  $2,961,000.  Each unit shall comprise  of  one
Common  Share  and one share purchase warrant entitling  the
holder thereof to purchase one additional Common Share at an
exercise  price  of  $0.53 per share  for  two  years.   The
Company agreed to pay the Agent a commission of 7.5% of  the
gross proceeds of the offering and to issue Agent's warrants
equal to 10% of the total offering exercisable for two years
at   $0.53  per  share.   The  proceeds  from  this  private
placement were used for working capital purposes and for the
development of the LAK Ranch Project.

On  June  14,  2000, Company officials appeared  before  the
Wyoming  Oil  and  Gas Commission and approval  to  commence
drilling  on  the LAK Ranch Project was granted.   Effective
June  13,  2000,  the Company, through its U.S.  subsidiary,
Derek  USA,  entered  into  a drilling  contract  with  CAZA
Drilling   Inc.  of  Denver,  CO  ("CAZA")  for  the   first
injector/producer  well pair on the LAK Ranch  Project.   An
escrowed  deposit  of  US $315,000 was  established  by  the
Company  on CAZA's behalf.  A rig was mobilized on  the  LAK
Ranch Project on June 19, 2000 and drilling of Well Derek #1
commenced.

By  July  10, 2000, Well Derek #1 was completed at  a  total
measured  length of 3,213 feet.  The horizontal  section  of
the  well  extended  a total of 1,810 feet  and  encountered
1,639 gross feet of Newcastle sandstone reservoir rock.  The
Company  estimated that 1,200 net feet of this gross footage
was of good to excellent quality reservoir sand and that 400
net  feet  was  of fair quality reservoir sand.   A  slotted
liner  was successfully installed in the horizontal  section
of  Well  Derek #1.  On July 15, 2000, the second (injector)
well  of  the  horizontal well pair,  Well  Derek  2-I,  was
spudded.  Well Derek 2-I was completed on July 29, 2000 at a
total measured length of 3,210 feet.  The horizontal section
of  the  well was emplaced an average of 24 feet  vertically
above Well Derek #1.

By  October 17, 2000 all major pieces of equipment  for  the
surface  facility were sourced, minor site  preparation  was
underway  and  the  route for the natural gas  pipeline  was
being  laid  out.  By November 14, 2000, grading and  survey
work  at  the  LAK  Ranch Project site was nearly  complete.
Construction and installation of concrete footings was being
carried  out. Installation of a 4-inch natural gas pipeline,
which  will  be  about 30,000 feet in length had  commenced.
This  pipeline  is capable of supplying up to  1.5  MMCF  of
natural  gas  to the project on a daily basis.  The  Company
estimated  that this pipeline would provide sufficient  fuel
to  operate steam generation equipment able to supply  steam
to  approximately 4 to 6 well pairs.  By the end of November
2000, an oil treatment plant, or "heater-treater" and  a  22
million  BTU  leased  steam generator, complete  with  water
treatment plant, pre-fabricated steel building and ancillary
equipment, arrived at the LAK Ranch site.

By December 19, 2000, the Company had spent US $3,868,144 on
construction of the pilot plant facility to meet the earn-in
requirements of the LAK Agreement.

As of January 9, 2001, a 33,000-foot long 4-inch natural gas
pipeline  had  been  installed to  the  site  and  completed
sections  of  the  pipeline had been  pressure  tested.   By
February  12,  2001,  the LAK Ranch  plant  was  essentially
complete and acid treatment had been initiated on the  steam
blow-down wells.  Steam generation and injection to the SAGD
well  pair had commenced at the beginning of March 2001  and
breakthrough  communication  between  the  two   wells   was
achieved on March 18, 2001.  SAGD operations began on  March
19,  2001, permitting steam to be injected through the upper
well and condensed steam and oil to be collected through the
lower, producing well.

During Fiscal 2001, the Company's interest in the LAK  Ranch
Project was challenged by the optionor, Asdar Group.   Asdar
Group filed a lawsuit against the Company claiming that  the
Company has not earned its interest in the LAK Ranch Project
and  must therefore relinquish its ownership to Asdar Group.
See "Litigation with Asdar Group" on page 29.

During  Fiscal 2001, the Company issued 19,137,865 units  at
$0.42  per  unit  for  gross proceeds of  $8,037,903,  which
included  the  Yorkton  brokered placement.   In  connection
thereof,  an additional aggregate of 410,377 units,  705,000
share purchase warrants and $308,656 was paid by the Company
as  finder's  fees  and other costs.  The  proceeds  of  the
private  placements  in  Fiscal  2001  were  used  for   the
construction  of the pilot plant facility at the  LAK  Ranch
Project  and for general working capital.  The Company  also
issued  1,811,500 Common Shares on the exercise of 1,811,500
previously issued share purchase warrants resulting in gross
proceeds to the Company of $973,470.  Another 72,000  Common
Shares  were  issued on the exercise of  stock  options  for
gross proceeds to the Company of $35,380.

On  September 18, 2000, the Company entered into a Letter of
Intent  ("LOI") with MTARRI, Inc. ("MTARRI") to  purchase  a
51%  working  interest in the Morton  Project.   The  Morton
Project is located approximately six miles south of Douglas,
Wyoming,  in Converse County and covers approximately  1,880
acres.  Dr. Paul Trost, Vice-President, Operations of  Derek
USA, is also President of MTARRI.  Pursuant to the terms  of
the  LOI,  the Company agreed to make a cash payment  of  US
$19,890  to MTARRI upon the execution of the LOI (paid)  and
assume 51% or US $306,000 of the estimated US $600,000  cost
to  construct  a pilot project to be completed before  April
2001.   Upon the successful completion of the pilot project,
the  Company would then have the option to vest its interest
in  the Morton Project by assuming 51% or US $198,900 of the
total  US  $390,000 acquisition cost due to  the  underlying
vendor over the next four years.  The Company would then  be
required  to  cover 51% of all project costs on  an  ongoing
basis.  MTARRI would be the operator.

The Morton Project lies within the Powder River Basin.  Over
the last 15 years, a total of 25 wells have been drilled  by
other  companies into the Sussex Sand reservoir  within  the
Morton  field.   A  total  of 17 of these  wells  are  still
producing at rates of 1 - 3 barrels of oil per day.  The low
production  rate  is  due to the lack  of  any  water  drive
mechanism and too low reservoir pressure.  In January  2001,
the  Company  commenced drilling with the  spudding  of  the
first  well on the Morton Project and by February 21,  2001,
the first well was complete (1,650 feet) and the second well
was  at a depth of 830 feet.  The planned total depth of the
second well was 1,750 feet. The first well was planned to be
part  of  a low temperature oxidation improved oil  recovery
pilot  test facility to be conducted within a 40 acre parcel
located in the existing 2000 foot deep Morton oilfield.

Due  to  the  commencement of litigation against  Asdar  and
ongoing  costs at the LAK Ranch Project, management felt  it
was necessary to sell its interest in the Morton Project  in
order  to  focus  its  financial  resources  at  LAK  Ranch.
Pursuant to a letter agreement dated April 30, 2001  between
the   Company  and  First  Echelon  Ventures  Inc.   ("First
Echelon"), the Company sold its rights and interests in  the
Morton  Project to First Echelon for the sum of US $100,000.
This sum represents the Company's project related costs plus
a  small  profit  of  $11,729.  In addition,  First  Echelon
agreed  to assume all of the Company's responsibilities  set
out in the LOI.

Through an Assignment of a Federal Lease dated July 6,  2001
from  Edel P. Smith and Accidental Oil Company, the  Company
acquired an additional 80 acres for US $7,500 upon execution
of  the Assignment and an additional payment of US $7,875 on
January  1, 2002.  This new ground is subject to  a  Federal
Overriding Royalty of 12.5% and a 5% overriding royalty.

The  Company produced and sold oil at the LAK Ranch  Project
for  the  months of April, May and June 2001  but  suspended
pilot  production operations in mid-June 2001  in  order  to
install  additional wastewater disposal system  which  would
allow the plant to operate at 100% of its steaming capacity.
The Company restarted pilot plant operations in October 2001
and  produced  and  sold  oil for  the  months  of  October,
November  and  December 2001 and the first part  of  January
2002.

The following summarizes all oil production and sales by the
Company:

Month/Year
                                Oil Sold
                                (Barrels)
                                 Average
                              Gravity (API)
                                 Average
                               Price/Bbl.
                                  (US$)
                                  Gross
                                  Value
                                  (US$)

April 2001
                                 1096.61
                                  21.4
                                $25.0001
                               $27,415.32

May 2001
                                 1586.50
                                  20.8
                                $25.3986
                               $40,294.80

June 2001
                                 473.04
                                  19.6
                                $25.2197
                               $11,929.91

October 2001
                                 484.41
                                  20.4
                                $18.4675
                                $8,945.82

November 2001
                                 698.31
                                  20.8
                                $17.1111
                               $11,948.85

December 2001
                                 693.23
                                  19.9
                                $16.5214
                               $11,453.13

January 2002
                                 331.17
                                  20.1
                                $15.8500
                                $5,249.04


Pilot  plant  operations were suspended in January  of  2002
pending  the grant of a surface water discharge permit  from
the  State  of Wyoming.  This permit was granted on  January
31,   2002.   Pilot  plant  operations  were  not  restarted
subsequent to January, 2002 as the Company decided  to  seek
further  funding  for the project before recommencing  pilot
plant operations.

All of the oil produced on the LAK Ranch Project to date has
been sold to one customer, Equiva Trading Company ("Equiva")
of  Denver,  CO  pursuant  to  a  Lease  Purchase  Agreement
executed  between  the parties on May 17,  2001.   Effective
September 1, 2002, Equiva assigned this agreement  to  Shell
Trading (US) Company.

During Fiscal 2002, the Company issued 5,653,051 units at an
average  price  of  $0.316  per unit  for  net  proceeds  of
$1,790,115.   In  connection  thereof,  183,050  units  were
issued  as  finder's  fees.  The  proceeds  of  the  private
placements  in  Fiscal 2002 were used to settle  short-terms
notes and accounts payable and for general working capital.

Notes payable issued during Fiscal 2002 totalled US
$1,217,521 (Cdn $1,923,570).  Proceeds from these issuances
were used primarily to cover outstanding construction and
operating expenses at the Company's LAK Ranch Project. See
Note 4 to the financial statements. During the year, the
Company repaid some of the principal and accrued interest on
these notes payable; US $138,000 in exchange for 731,300
common shares and US $78,600 for cash.  At April 30, 2002,
the principal outstanding on notes payable totalled US $
1,009,605 (Cdn $1,585,080) and interest accrued on notes
payable totalled US $75,860 (Cdn $119,100).

At  October  21, 2002, the outstanding warrants and  options
represented  a  total of 19,554,162 shares  issuable  for  a
maximum  of  $9,297,474 if these warrants  and  options  are
ultimately exercised in full. The exercise of these warrants
and   options  is  completely  at  the  discretion  of   the
respective  holders and the Company has  had  no  indication
that any of these warrants or options may be exercised.

Business Overview

The  Company  is a natural resource company engaged  in  the
acquisition,  exploration and development  of  oil  and  gas
properties.   It  has  an  interest,  indirectly,   in   one
principal property:  the LAK Ranch Project.  The pilot plant
at  the LAK Ranch Project utilizes the SAGD recovery process
which  falls  under  the category of improved  recovery  and
pursuant  to  the  definition found in  Rule  4-10(a)(4)  of
Regulation S-X.  As a result, the Company has not attributed
any proved reserves to the LAK Ranch Project.  Technical and
economic  information derived from the pilot study  will  be
used  to  estimate  the amount of recoverable  oil  for  the
development  of a commercial scale operation.   There  is  a
risk  that  the  Company  may not be  able  to  economically
recover the oil in place.

Exploration  on  the  Company's LAK  Ranch  Project  is  not
affected  by  seasonal changes.  To conduct its exploration,
the  Company  is dependent on sub-contractors for  equipment
and  supplies.  These are generally available  but  vary  in
price and immediacy of availability subject to demand.

Revenue from the LAK Ranch Project is not sufficient to meet
its  cash  requirements  and the  Company  is  dependent  on
external  financing to support it as a going  concern.   Its
ability  to continue operations is dependent on the  ability
of the Company to obtain additional financing.  See "Item  3
- Key Information - Risk Factors".

For  the  three  years ended April 30, 2002,  the  Company's
revenues  from oil and gas sales, the sale of  oil  and  gas
leases and interest paid on deposits were as follows:


                                                  Year Ended
                                              April 30, 2002
                                                  Year Ended
                                              April 30, 2001
                                                  Year Ended
                                              April 30, 2000

Oil and Gas Sales - Net of Royalties
                                                      $1,024
                                                     $10,221
                                                      $4,546

Gain on Sale of Oil and Gas Leases
                                                           -
                                                     $11,729
                                                           -

Interest (net of bank charges)
                                                           -
                                                    $109,485
                                                     $15,278

Totals
                                                      $1,024
                                                    $131,435
                                                     $19,824

Organizational Structure

The  Company has a wholly owned subsidiary, Derek  Resources
(U.S.A.) Inc. incorporated by the Company under the laws  of
the State of Delaware on August 18, 1981 under the name Cove
Energy  Inc.  On December 18, 2000, Cove Energy Inc. changed
its name to Derek Resources (U.S.A.) Inc. The registered and
records  offices of Derek USA are located at  No.  100  West
Tenth  Street, Wilmington, Delaware.  The principal business
address  of  Derek USA is Suite 1550 - 355  Burrard  Street,
Vancouver,   British  Columbia,  Canada,   V6C   2G8.    The
authorized  share  capital of Derek USA  consists  of  2,000
common  shares without par value of which one  common  share
issued  and  outstanding is registered in the  name  of  the
Company.
Property, Plants and Equipment

The  Company's  executive  offices  are  located  in  rented
premises  of approximately 1,000 square feet at Suite  1550,
355  Burrard  Street, Vancouver, British Columbia  V6C  2G8,
telephone (604) 331-1757.  The Company began occupying  this
facility  in  October  2002  on  a  two-year  lease  at   an
approximate  cost  of $31,000 per year.   It  is  considered
adequate  for current needs.  The Company shares this  space
with  Sydney Resource Corporation, a company in which  Barry
C.J. Ehrl,, President, CEO and Director of the Company, is a
director  and  officer.   See "Item 6  -  Directors,  Senior
Management  and Employees" and "Item 7 - Major  Shareholders
and Related Party Transactions".


The LAK Ranch Project, Wyoming, USA

Location, Description and Acquisition

The  LAK  Ranch  Project is comprised of  the  Original  LAK
Property  and  the Adjoining Property, both  of  which  were
acquired from Rising Phoenix Development Group Ltd. ("Rising
Phoenix")  pursuant  to  an option  agreement,  as  well  as
property  leased  directly from the federal  government  and
property  leased directly from Edel P. Smith and  Accidental
Oil  Company.   Pursuant to the terms of the  LAK  Agreement
described  below,  Rising Phoenix exercised  its  option  to
acquire a 25% interest in the additional leases.

The LAK Ranch Project is located in the northeast corner  of
the  Powder  River  Basin,  Weston  County,  Wyoming  in   a
relatively  flat  terrain  at an elevation  of  4,400  feet.
Geographically, the LAK Ranch Project is located four  miles
east  of Newcastle, Wyoming adjacent to a paved road  (Route
16).  See Figure 1 which is attached hereto as Exhibit 10.3.
Supplies  and  oilfield services are readily available  from
Newcastle.

The LAK Ranch Project area is on a cattle ranch.  Terrain is
flat  and  consists  of grasses and shrubs.   Water  can  be
easily  accessed through either a purchase option or by  the
development of the existing groundwater sources (the Madison
Formation). The area is not within 50 miles of any  national
parks, wilderness areas or national monuments.

Exhibit 10.3 - Figure 1 - LAK Ranch Project
Original LAK Property and Adjoining Property

Pursuant to an option agreement dated September 24, 1997, as
amended  April  21,  1998 and December 11,  1998  (the  "LAK
Agreement")  between  Rising Phoenix and  the  Company,  the
Company  was  granted  an  option to  purchase  from  Rising
Phoenix up to a 75 % working interest in two tracts of  land
(the  "Original  LAK Property") and up to  a  37.5%  working
interest  in  two  other  tracts  of  land  (the  "Adjoining
Property").   A  working interest is a right which  requires
proportional  participation in both the  costs  and  profits
related  to  a  project  like the LAK  Ranch  Project.   The
following  table sets forth details of the  leases  for  the
Original LAK Property and the Adjoining Property:

Description of Property      Working Interest


Tract A


Township  44 North                 75%
Range 60 West, 6th P.M.
Weston  County, Wyoming


Section 6:
SW1/4, NE1/4,
E1/2NW1/4,
W1/2SE1/4


Section 7:
W1/2, W1/2E1/2


Section 18:
S1/2SW1/4, NW1/4


Section 19:
W1/2W1/2, NE1/4NW1/4


Township  44 North
Range 61 West, 6th P.M.
Weston  County, Wyoming


Section 1:
SE1/4


Section 11:
SE1/4, E1/2NE1/4, S1/2SW1/4


Section 12:
All


Section 13:
W1/2, S1/2SE1/4


Section 14:
All


Section 22
NE1/4


Section 23
N1/2, SE, E1/2SW1/4


Section 24
N1/2, SE1/4, E1/2SW1/4


Section 25
NW1/4NE1/4, N1/2NW1/4,
SW1/4NW1/4, NW1/4SW1/4


Section 26
E1/2NE1/4, NE1/4SE1/4


Section 30
W1/2NW1/4


Tract B


Township  44 North
Range 61 West, 6th P.M.
Weston  County, Wyoming
                                   75%

Section 24:
SE1/4SE1/4


Section 24:
NE1/4SE1/4


Section 25:
S1/2SW1/4, NE1/4SW1/4,
NW1/4SE1/4, E1/2NE1/4,
SW1/4NE1/4, SE1/4NW1/4



Tract C

                                  37.5%
Township  44 North
Range 60 West, 6th P.M.
Weston  County,
Wyoming


Section 18:
N1/2SW1/4


Township  44 North
Range 61 West, 6th P.M.
Weston  County, Wyoming


Section 13:
NE1/4, N1/2SE1/4


Tract D


Township  44 North                37.5%
Range 61 West, 6th P.M.
Weston  County, Wyoming


Section 22:
SE1/4


Section 27:
W1/2E1/2



Pursuant  to  the  terms of the LAK Agreement,  the  Company
acquired its interest in the Original LAK Property  and  the
Adjoining Property by making payments totalling US  $500,000
by  December 15, 1998 (US $150,000 to Rising Phoenix and  US
$350,000  to  Petrospec),  incurring  expenditures   of   US
$100,000 by December 15, 1997 and incurring not less than US
$3.5 million (CDN $5.25 million) in expenditures by December
31,  2000  to  install a pilot plant facility.   After  such
time,  Rising  Phoenix  and  the  Company  would  share  any
additional  expenditure in proportion to their ownership  of
the  LAK Ranch Project. If the Company failed to fulfill the
terms  of  the LAK Agreement by December 31, 2000, it  would
lose  any  and  all  rights to the  LAK  Ranch  Project.  By
December  19,  2000, the Company had spent US $3,868,144  on
the  LAK  Ranch Project to meet the earn-in requirements  of
the LAK Agreement.

Additional Property Leased from the Federal Government

In  December 1999, the Company acquired federal  oil  leases
totalling 1,028 acres adjacent to the Original LAK  Property
and the Adjoining Property.  The new ground, which increased
the acreage at the LAK Ranch Project to 7,388 acres, is west
and  south  of  the existing property.  The new  ground  was
acquired by application for an annual rental payment  of  US
$1,543.50 and is subject to a Federal Overriding Royalty  of
12.5%.   The  following  table sets  forth  details  of  the
federal oil leases:

Description of Property           Working Interest


Township  44 North
Range 61 West, 6th P.M.
Weston  County, Wyoming


Section 10:
SW1/4NE1/4


Section 10:
W1/2SE1/4,  SE1/4SE1/4,
(Excluding  13.77 acres
in railroad right-of-way
WyW0119068)


Section 15:
W1/2E1/2, E1/2 W1/2,                 100%
NW1/4NW1/4, SW1/4SW1/4


Section 15:
E1/2E1/2   (Excluding
23.87 acres in railroad
right-of-way WyW0119068)


Section 25
NE1/4SE1/4, S1/2S1/4


Section 26:
NW1/4NE1/4, E1/2SW1/4


Section 26:
E1/2NW1/4,  SE1/4SE1/4
(Excluding 14.23 acres
in railroad right-of-way
WyW0119068)



Additional Property Leased from Edel P. Smith and Accidental
Oil Company

Through an Assignment of a Federal Lease dated July 6, 2001,
as  amended July 10, 2001, (the "Assignment") from  Edel  P.
Smith  and  Accidental Oil Company, the Company acquired  an
additional  80  acres for US $7,500 upon  execution  of  the
Assignment and an additional payment of US $7,875 on January
1, 2002.  This new ground is subject to a Federal Overriding
Royalty of 12.5% and a 5% overriding royalty.  The following
table sets forth the details of the additional lease:

Description of Property       Working Interest


Township  44 North
Range 61 West, 6th P.M.
Weston  County, Wyoming


Section 1:
SW1/2SW1/4                         100%



Royalties and Lease Payments

Prior  to  entering into the LAK Agreement with the Company,
Rising  Phoenix  had entered into an option agreement  dated
November 12, 1996 (the "Petrospec Agreement") with Petrospec
to  acquire a 100% interest in the Original LAK Property and
the  Adjoining Property in consideration for the payment  of
US  $370,000,  the  payment  of  gross  over-riding  royalty
interests  of  1.625% to Paul B. Trost and 2% to  Petrospec,
respectively,  as well as the completion of a pilot  project
estimated to cost US $80,000.  Rising Phoenix made  payments
totalling  US  $20,000  and  the  balance  of  the  payments
totalling  US $350,000 were made by the Company to Petrospec
pursuant to the terms of the LAK Agreement.

Pursuant  to  an  agreement dated May 3,  1999  (the  "First
Royalties  Agreement")  among the Company,  Petrospec,  Paul
Trost  and Rising Phoenix, the Company has agreed  to  issue
100,000 Common Shares to each of Petrospec and Paul Trost in
ten  annual tranches of 10,000 Common Shares each to acquire
varying portions of the overriding royalty interests held by
Petrospec  and  Paul Trost totalling 1.05% pursuant  to  the
terms  of the Petrospec Agreement.  As at the date  of  this
Form  20-F  Annual Report, 200,000 Common  Shares  had  been
issued  to each of Paul Trost and Petrospec pursuant to  the
First Royalties Agreement.

Pursuant to an agreement dated November 9, 1999 (the "Second
Royalties  Agreement") among the Company, Sheri Tietjen  and
Donald  B.  Roberts, the Company has agreed to  acquire  (a)
1.6875% of the overriding royal interests from Sheri Tietjen
by  paying US $25,000 and issuing 50,000 Common Shares;  and
(b)  1.6875% of the overriding royalty interests from Donald
B.  Roberts  by paying US $25,000 and issuing 50,000  Common
Shares.  In order to vest its acquisitions pursuant  to  the
Second  Royalty Agreement, the Company will be  required  to
produce  a  minimum of 600 barrels per day for at least  six
continuous  months  before the seventh  anniversary  of  the
closing  of  this purchase. The Company has also  agreed  to
return  the 1.6875% royalty to Sheri Tietjen and the 1.6875%
royalty Donald B. Roberts upon the earlier of completion  of
the  LAK Ranch Project or the twentieth anniversary  of  the
closing of the Second Royalties Agreement.

The Company's interests in the Original LAK Property and the
Adjoining  Property  were recorded  in  the  Weston  County,
Wyoming records on December 21, 1998.  Pursuant to the terms
of  the  LAK  Agreement, the Original LAK Property  and  the
Adjoining  Property  is subject to gross overriding  royalty
interests as follows:


As to the Original LAK Property:        As to the Adjoining Property:

Name of Owner   Royalty Interest        Name of Owner   Royalty Interest
-------------   ----------------        -------------   ----------------

Lisa Stewart             6.2500%        Lisa Stewart             3.1250%

Sheri Tietjen            3.0000%        Sheri Tietjen            1.7500%

Donald B. Roberts        3.0000%        Donald B. Roberts        1.7500%

Paul B. Trost (1)        1.1538%        Paul B. Trost (1)        0.4073%

Petrospec                1.4200%        Petrospec                0.5012%

Rick Jeffs               1.0000%        Rick Jeffs               1.0000%

The Company              4.4262%        The Company              2.7165%

Asdar Group (2)          0.7000%        Asdar Group (2)          0.7000%
-------------   ----------------        -------------   ----------------

Total                   20.9500%        Total                   11.9500%


NOTES:

(1)   Paul  B. Trost is currently Vice-President, Operations
      of the Company's U.S. subsidiary, Derek USA

(2)  See Litigation with Asdar Group on page 29.

Between  May  3  and October 30, 2001, the  Company  granted
additional  royalties of US $0.1360838  per  barrel  of  oil
produced to certain lenders and debt holders:

1.                     On  May 3, 2001, the Company  entered
into a loan agreement with Westerton Management Corp. for US
$56,500.   This  loan bears interest at a rate  of  10%  per
annum  and  was  repayable  in full  on  January  31,  2002.
Westerton Management Corp. was granted an overriding royalty
of  US  $0.02  per barrel of oil produced at the  LAK  Ranch
Project.

2.                     On  May 9, 2001, the Company  entered
into a loan agreement with Marble Hall Investments Ltd.  for
US  $75,000.  This loan bears interest at a rate of 10%  per
annum and was repayable in full on January 31, 2002.

3.                     On  May 9, 2001, the Company  entered
into a loan agreement with Wet Coast Management Corp. for US
$75,000.   This  loan bears interest at a rate  of  10%  per
annum  and  is  repayable in full on January 31,  2002.  Wet
Coast Management Corp. was granted an overriding royalty  of
US  $0.03  per  barrel  of oil produced  at  the  LAK  Ranch
Project.

4.                     On  June 6, 2001, the Company entered
into  a  loan  agreement with Spartan Establishment  for  US
$100,000.   This  loan  bears interest  at  10%  per  annum,
payable monthly, plus an overriding royalty of US $0.01  per
barrel  of oil produced at the LAK Ranch Project and matures
on May 31, 2003 but does not bear a conversion right.

5.                     On June 21, 2001, the Company entered
into  an agreement with Bateman Project Holdings Limited  of
Johannesburg, South Africa pursuant to which Bateman  agreed
to  defer  US $471,183 of debt payable by the Company  until
May  31,  2002. The Company granted a permanent gross  over-
riding royalty in the amount of US $0.0471 per barrel of oil
produced  net  to  the  Company's  interest.   See  "Bateman
Agreements" on page 27.

6.                     On June 27, 2001, the Company entered
into  a  loan  agreement in the amount of US  $100,000  with
Cristina Casati.  The loan bears interest at a rate  of  10%
per annum, plus an additional overriding royalty of US $0.01
per  barrel  of oil produced at the LAK Ranch Project.   The
loan may be converted in whole or in part into Common Shares
for  $0.75 per share at any time until May 31, 2003 at which
time it is repayable in full.

7.                     On June 28, 2001, the Company entered
into  a  loan  agreement in the amount of  US  $50,000  with
Savannah Consulting Ltd. The loan bears interest at  a  rate
of  10% per annum, plus an additional overriding royalty  of
US  $0.005  per  barrel of oil produced  at  the  LAK  Ranch
Project.  The loan may be converted in whole or in part into
Common Shares for $0.75 per share at any time until May  31,
2002 at which time it was repayable in full.

8.                     On June 28, 2001, the Company entered
into  a loan agreement in the amount of US $50,000 with John
F.P.  Lush.   The loan bears interest at a rate of  10%  per
annum,  plus an additional overriding royalty of  US  $0.005
per  barrel  of oil produced at the LAK Ranch Project.   The
loan may be converted in whole or in part into Common Shares
for  $0.75 per share at any time until May 31, 2002 at which
time it was repayable in full.

9.                     On  October  30,  2001,  the  Company
entered  into  a  letter agreement with Western  Industrial,
Inc.,   an  unrelated  party,  pursuant  to  which   Western
Industrial agreed to defer payment of US $89,838.35 of  debt
payable  by  the  Company until August 31, 2002.   The  loan
bears  interest  at  a  rate  of  10%  per  annum,  plus  an
additional overriding royalty of US $0.0089838 per barrel of
oil  produced  at the LAK Ranch Project.  The  loan  may  be
converted  in whole or in part into Common Shares for  $0.75
per share at any time until August 31, 2002 at which time it
was repayable in full.

In  order  to  maintain the Original LAK  Property  and  the
Adjoining Property leases in an active state, minimum  shut-
in  royalties for the 2000 calendar year totalling US$11,368
were  paid  to  Sheri  Tietjen (as to US$2,784),  Donald  B.
Roberts  (as to US$2,784) and Lisa Stewart (as to US$5,800).
Shut-in royalties are monies paid to mineral interest owners
(lessors)  by  the mineral interest lessee(s)  during  those
time  periods  when  no  production  of  oil  is  occurring.
Alternatively,  when production of oil is  minimum  and  the
income  to  the  lessors falls below  a  predetermined  base
level,  shut-in royalties of a certain minimal dollar  mount
must  be  paid  annually to the mineral interest  owners  in
order  to  maintain the lease in good standing.   A  surface
lease fee of US $600 per year is payable to True Ranches,  a
cattle ranch which operates on the property covering the LAK
Ranch Project.  The Company is required to post a US $25,000
operator  bond  with the State of Wyoming for  liability  or
damage to the leases. An annual rental payment of $1.50  per
acre is payable for the first five years of the federal  oil
leases.  Thereafter, the annual rental payment is $2.00  per
acre.

History of the LAK Ranch Project

Approximately  26 holes were drilled by other  companies  on
the  LAK Ranch Project to define the location of the oil and
in previous attempts to produce it. Companies such as Texaco
and  Conoco have previously explored the LAK Ranch  Project.
Conoco  conducted  a steam pilot flood  and  found  the  oil
responded  favorably to steam recovery. Parrent  Engineering
conducted  a four-well solvent flood and was also successful
in  mobilizing the oil, however solvent costs rendered  this
approach  marginally economic.  In the  1980's,  Surtek,  an
enhanced  oil recovery specialist firm, conducted  extensive
laboratory core floods and installed a five-well pilot  test
for  its alkaline polymer-surfactant chemical flood.   Again
the  initial results were favourable but a drop in  the  oil
price precluded continued operation.

Geology

Oil   has  been  produced  from  at  least  four  geological
formations  in  the Powder River Basin.  On  the  LAK  Ranch
Project,  the  Newcastle sandstone formation hosts  the  oil
reservoir  of  interest. Oil is already being produced  from
the  Newcastle  sandstone formation at a location  10  miles
southwest of the LAK Ranch Project.

On  the  northern  and  eastern margins  of  the  LAK  Ranch
Project,  the  Newcastle  sandstone  formation  outcrops  on
surface  and  forms almost a right angle bend near  the  LAK
Ranch  Project headquarters.  On the east flank of  the  LAK
Ranch Project, the Newcastle sandstone formation dips (forms
an  angle with the horizontal) 25 to 45 degrees to the west.
On the northern edge of the LAK Ranch Project, the Newcastle
sandstone  formation dips to the south at 20 to 45  degrees.
The  change  in dip of the Newcastle sandstone formation  at
various  locations on the LAK Ranch Project  indicates  that
the   Newcastle  sandstone  formation  forms  a   geological
structure  known  as  a  syncline or synclinal  fold.   This
synclinal   fold   structure  and   related   dipping   (not
horizontal) oil reservoir would aid oil recovery on the  LAK
Ranch  Property  in that heated oil will flow  more  readily
under the force of gravity down into the collection well  if
the reservoir is dipping rather than horizontal.

Oil  has migrated upward from the center of the Powder River
Basin  and  can  be  observed as oil staining  in  Newcastle
sandstone outcrops on surface.

At  the  LAK  Ranch  Project area, the  Newcastle  sandstone
formation averages 45 feet in thickness and consists of a 12
to  16  foot  thick upper layer and a 20 to 50+  foot  thick
lower layer. These two sandstone layers are separated by a 6
to  20  foot thick shale layer.  Based on Surtek's  previous
drilling  and  coring operations, both the upper  and  lower
sandstone  layers  average  22% porosity,  have  an  average
permeability of 780 md and average oil saturations of 65%.

In  December 1997, the Company drilled four wells along  the
projected horizontal well path to verify the presence of the
sands,  their  thickness, porosities and  permeabilities  as
well  as  the presence of oil in the sands at the LAK  Ranch
Project.  During the drilling of these four wells, the  sand
intervals  were core drilled and a solid piece of  sandstone
three  inches  in  diameter  was  extracted  from  the  sand
intervals.  This core sample was then utilized to  determine
the  reservoir  characteristics. The log data  on  the  four
wells is summarized below:

<table>
<caption>

             <c>             <c>              <c>            <c>             <c>

                               Upper Marine Sand              Lower Alluvial Sand

Well            Location                          Average                        Average
                                   Net Pay        Porosity        Net Pay        Porosity
                                    (Ft)            (%)            (Ft)            (%)
----------    -------------     ---------------    --------      ---------         -------
LAK 1-1         1-1-44N-61W          14              17             29              15
LAK 12-9       9-12-44N-61W          13              14             46              17
LAK 12-10     10-12-44N-61W          15              14             22             16.5
LAK 12-11     11-12-44N-61W           0          Shale Out          26             14.8

</table>

The core analysis on the four wells is summarized below:



Well          Permeability       Porosity       Oil Saturation

                 Range             Range            Range

                  (md)              (%)              (%)
----------    -------------     ---------------    --------

LAK 1-1         2 to 350          8.2 to 29.6      40 to 58
LAK 12-9      148 to 1,122       24.6 to 29.0      35 to 53
LAK 12-10     945 to 2,196       18.0 to 22.9      31 to 68
LAK 12-11          -1                 -1              -1



NOTES:

(1)  Core not yet analyzed.

Core  porosities as measured by an independent  third  party
laboratory  consistently showed higher porosities  than  did
the  density  gamma  logs as measured  downhole.   The  core
porosities typically exceeded downhole porosities by 4  -  7
porosity  units. No explanation was given by the laboratory,
however  the  Company recognizes that if  the  downhole  log
porosities  are  correct,  less oil  may  be  available  for
recovery.  One  of the purposes of the pilot project  is  to
conduct  a  volumetric  balance  and  further  define   this
problem.

Reservoir  permeabilities  of 10  to  100  millidarcies  are
considered good and reservoir permeabilities of 100 to 1,000
millidarcies are considered very good.  The four wells  were
drilled  with  fresh water which flushed oil from  the  core
samples. Therefore an oil saturation of 72% was used for  an
original saturation figure.

Dr.  John  Donnelly  conducted  investigations  designed  to
examine  the viability of utilizing thermal recovery methods
to   exploit  the  Newcastle  Formation  on  the  LAK  Ranch
Property.  Data from drilling carried out by the Company  on
the  LAK  Ranch Property, combined with information gathered
from  numerous  other wells in the area  of  the  LAK  Ranch
Property,  led  Dr.  Donnelly to  the  conclusion  that  the
potential  oil  reservoir underlying the  LAK  Property  was
dipping   (not  horizontal).   A  dipping  (not  horizontal)
reservoir would allow heated oil to flow under the force  of
gravity  down into the collection well, where the oil  would
be pumped to the surface.

Dr. Donnelly's computer simulation assumed a horizontal well
approximately 500 metres long and located in  the  sand  and
used  to  inject steam.  A second horizontal well, also  500
metres long and located in the same sand but below the first
well by approximately 20 feet was also simulated and used as
the  oil  producer.  Results of the simulation model  showed
the  LAK Ranch oil could be economically recovered by  these
horizontal wells and with the injection of steam.   Based on
the   computer   model   and  Dr.  Donnelly's   professional
experience   with  this  type  of  oil  recovery   employing
horizontal   wells   and  steam  injection,   his   computer
simulation showed each well pair would theoretically recover
potentially  economic  quantities of  oil  over  an  11-year
operating  period.  Since each well pair would  produce  the
oil  from  a  20-acre  area, numerous well  pairs  would  be
required  to  produce the oil from the  entire  field.   The
accepted   industry   terminology   for   this    type    of
steam/horizontal  well  recovery method  is  Steam  Assisted
Gravity Drainage or SAGD.

Crude  at  the LAK Ranch Project is a napthenic-based  crude
oil, contains no sulfur and flows readily when heated to  70
o  F and above.  On May 17, 2001 the Company entered into  a
Lease   Purchase  Agreement  with  Equiva  Trading   Company
("Equiva"), the trading arm of Texaco, to sell the Company's
crude  oil  production  to Equiva.  This  Agreement  may  be
cancelled  by  either  party following thirty  days  advance
written  notice.   Equiva  agreed to  purchase  all  of  the
Company's  crude oil production at the Equiva  posted  price
for Wyoming Sweet (other) in effect on the date of delivery,
adjusted for gravity delivered, plus an additional US  $1.00
per  barrel.   This price is the equivalent  of  West  Texas
Intermediate (WTI) plus US $0.50.

The Steam Assisted Gravity Drainage Process

Due  to the gravity of the oil at the LAK Ranch Project  and
its  relatively  high in-place viscosity (at  the  reservoir
temperature  of  48o F), production of oil  by  conventional
means  has  historically been uneconomic due to the  adverse
mobility  ratio  between the viscous oil and  water.  Recent
Canadian  development of the SAGD process  for  recovery  of
heavy oils appears to be suited for economic recovery of oil
at the LAK Ranch Project.

SAGD  is a technique developed by the Alberta Department  of
Energy,  formerly AOSTRA, in connection with  nine  industry
partners:  Amoco  Canada, Chevron Canada,  Chinese  National
Petroleum   Corporation  (CNPC  Canada),  Gibson   Petroleum
Company  Limited, Imperial Oil, Japex Oil Sands Ltd.,  Petro
Canada, Shell Canada and Suncor Inc.  SAGD was developed  in
the   Underground  Test  Facility  (the  "UTF")  near   Fort
McMurray,  Alberta.   The  UTF was an  experimental  bitumen
production  facility initiated by the Alberta Department  of
Energy more than a decade ago to pioneer a unique oil  sands
recovery  technology to unlock a large portion of  Alberta's
oil  sands  buried too deep for surface mining.   Sperry-Sun
pioneered the development of technologies for drilling  SAGD
wells to improve recovery and reduce field development costs
for  heavy oil projects.  SAGD is not a patented process and
no licensing fees are applicable.

The  SAGD  approach  to the thermal recovery  of  heavy  oil
depends on long horizontal wells placed at the base  of  the
reservoir.   Steam  is  introduced  into  the  base  of  the
reservoir.  Because of the low density of gaseous steam,  it
rises  in the reservoir and heats the formation.  The heated
oil  and  water  (both condensed steam and heated  formation
water)  in  the formation drain down to the horizontal  well
from  which they are produced to surface.  The mechanism  by
which   the   process  proceeds  within  the  reservoir   is
illustrated in Figure 2 which is attached hereto as  Exhibit
10.4.

See Exhibit 10.3 - Figure 2 - SAGD Process

The steam is injected into the reservoir from either another
horizontal well or alternatively a series of vertical wells.
As  the  oil and water is withdrawn from the reservoir,  the
steam chamber expands both upwards and sideways.  The upward
growth  proceeds in a random but rapid manner  until  it  is
limited by the top of the reservoir.  In contrast, the steam
chamber  expands  sideways and downwards in  a  very  stable
manner.

At  a  later  stage  in the process, when  the  chamber  has
reached the top of the reservoir, the rate of oil production
is controlled by the lateral expansion of the steam chamber.
This is illustrated in Figure 2.  The similarity between the
situation  shown in the lower diagram in Figure  2  and  the
coning  of  gas in conventional operations is apparent.   If
the   oil  and  water  are  removed  too  quickly  from  the
horizontal production well, then the steam chamber  will  be
drawn   down  into  the  well  and  bypassing  will   occur.
Essentially the only drive mechanism to move the oil to  the
well  is  gravity.  The process is ineffective with vertical
producing well because of the relatively low flows that  can
be  achieved  under  these conditions.  However,  with  long
horizontal wells, economic production rates can be achieved.

The SAGD process has not been used in a commercial operation
to  date.   The success of the process has been demonstrated
at  a  pre-commercial pilot plant in the Athabasca oil sands
near  the  large  mining projects operated by  Syncrude  and
Suncor.  Variations of the process have also been tested  by
Esso at Cold Lake, Amoco at Wolf Lake and Primrose, Shell at
Peace  River  and Sceptre at Tangleflags.  A  modified  SAGD
process  consisting  of a horizontal producer  with  several
vertical injectors is being successfully operated by Chevron
in  California to produce heavy oil from thin-bedded steeply
dipping sand at a cost of US $6 per barrel.

The Gas Assisted Gravity Drainage Process

The  Upper Marine Sand is separated from the Lower  Alluvial
Sand by a shale/siltstone barrier.  This upper sand will  be
heated during SAGD oil recovery from the main (lower)  sand.
This  pre-heating  of  the upper sand  will  supplement  the
performance of a GAGD oil recovery system which will be used
to recover oil from the upper sand.

The   GAGD   process  involves  using  a  lower   horizontal
production well and an upper horizontal injection well, with
a  gravity  drainage recovery system.  The GAGD  process  is
similar to the SAGD process except for the following:

1.   A  non-condensable gas such as natural gas, flue gas or
     carbon dioxide is injected instead of steam;

2.   The  injection well will be placed up-structure, as far
     as  the  region heated by the underlying SAGD injection
     extends at the time recovery operations will commence in
     the upper sand;

3.   GAGD  recovery  operations will commence after  thermal
     recovery of the lower sand has heated a sufficient
     volume of the upper sand; for the LAK Ranch Project this
     is expected to take approximately three years;

4.   Instead  of  using steam trap control  to  control  the
     production rate from the production well (as in the case
     of the SAGD process), the production rate will be
     controlled as follows:

     1.   The fluid production rate is fixed initially at a
          level which is expected to result in sufficiently
          delayed gas coming down to the production well; the
          optimum delay is determined by site-specific
          economic sensitivity tests;

     (b)  Once gas coning results in gas production rates
          reaching a predetermined value, the withdrawal
          rate is controlled based on maintaining this
          predetermined gas production rate approximately
          constant; the predetermined value should be a low
          rate, less than the rate required to replace the
          voidage as oil is produced; and

     (c)  The  fluids  produced using the GAGD process  will
          contain  very  little water (unless the  reservoir
          has  a  mobile  water  saturation),  and  the  gas
          production  rate  will  be low;  hence  processing
          costs  for the produced fluids are expected to  be
          comparable to primary production costs.

Operating Agreement

Derek  and  Rising  Phoenix entered into  a  Model  Form  of
Operating  Agreement (the "Operating Agreement")  dated  for
reference April 21, 1998 setting out the terms of the  joint
venture  between the parties and appointing the  Company  as
operator of the LAK Ranch Project.  Pursuant to the terms of
the Operating Agreement, the Company is entitled to charge a
drilling  well  rate  of US $5,000 per  well  which  can  be
prorated  for  less than a full month, or a  producing  well
rate  of  US  $1,000  per month to compensate  for  overhead
costs.   The Company is also entitled to charge  a  fee  for
construction,  installation or  expansion  of  fixed  assets
required for the development and operation of the LAK  Ranch
Project.   This  fee  is  either be negotiated  between  the
parties  prior to the commencement of construction or  shall
be  based  on the following rates for any major construction
project:

1.   5% of the first US $100,000;

2.   4% of costs in excess of US $100,000 but less than US
     $1,000,000; and

3.   3% of costs in excess of US $1,000,000.

Should  the Company fail to contribute in whole or in  part,
its  proportion of future exploration and development costs,
the  Company's  interest in the LAK Ranch Project  would  be
diluted  out  on  a  well  by well basis.   Conversely,  the
Company's  interest in the LAK Ranch Project would  increase
on  a  well  by well basis in the event that Rising  Phoenix
failed  to contribute, in whole or in part, their proportion
of future exploration or development costs.

During  Fiscal 2001, Rising Phoenix's interest  in  the  LAK
Ranch  Project  was ultimately assigned to Asdar  Group  who
became the Company's joint venture partner in the LAK  Ranch
Project.  Pursuant  to  the terms of a Settlement  Agreement
dated  November  21,  2001,  Asdar  Group  relinquished  its
interest  in  the  LAK Ranch Project to  the  Company.   See
"Litigation with Asdar Group" on page 29.

Bateman Agreements

On March 20, 2000, a Memorandum of Understanding dated March
20,  2000  (the "MOU") was executed between the Company  and
Bateman   International  BV  of  the  Netherlands  ("BIBV").
Pursuant  to  the terms of the MOU, BIBV agreed  to  provide
professional   project   management,  engineering,   design,
procurement  and  construction management  services  to  the
Company for a fee of 5% of the total cost of the pilot plant
as  it relates to the surface facility, subject to a minimum
of US $150,000 and reimbursement of costs.  BIBV also agreed
to  purchase  892,857 special warrants at $0.42 per  special
warrant  for US $250,000, the proceeds of which the  Company
advanced to BIBV as prepayment for its services pursuant  to
the   MOU.   The  MOU  was  formalized  by  an  Engineering,
Procurement  and  Construction  Management  Agreement  dated
August  21, 2000 between the Company and Bateman Engineering
Inc. ("Bateman") of Denver, CO.

On  June  21, 2001, a letter agreement was executed  between
the Company and Bateman Project Holdings Limited ("BPHL") of
Johannesburg, South Africa pursuant to which Bateman  agreed
to  defer  US $471,183 of debt payable by the Company  until
May 31, 2002.  Any amounts incurred in excess of US $471,183
would  be  due and payable in the normal course of business.
In  consideration, Bateman would receive interest of 10% per
annum  commencing  June  15, 2001 with  both  principal  and
interest  due  on  May 31, 2002.  In addition,  the  Company
granted a permanent gross over-riding royalty in the  amount
of  US  $0.0471  per  barrel of  oil  produced  net  to  the
Company's interest. As security for the amount deferred, the
Company  granted a lien in favour of Bateman, first  on  the
surface  equipment owned by the Company and located  on  the
LAK  Ranch  Project  and secondly, if  required  to  satisfy
amounts outstanding on the repayment date, on the LAK  Ranch
Project  itself.   The Company was not  able  to  repay  the
principal and interest on May 31, 2002.  On August 21, 2002,
BPHL agreed to settle one half of the total debt outstanding
in  exchange for common shares of the Company at a price  of
$0.10  per  share with the remaining amount  payable  to  be
secured  by way of a new note issued by the Company  bearing
interest  at  10%  per annum and maturing on  September  30,
2003.   BPHL will have the right, after August 21, 2003,  to
convert any unpaid principal and interest into Common Shares
at an exercise price of $0.10 per share.

Development Program

Management  of  the  Company  reviewed  engineering  reports
prepared by other companies who have previously attempted to
put   the  LAK  Ranch  Project  into  production.   A  known
reservoir of oil exists in the Newcastle sand under the  LAK
Ranch  Project,  however  a  pilot  test  was  necessary  to
determine the economic viability of using SAGD technology on
this reservoir.

During  the year ended April 30, 2001, the Company completed
the  construction  of a pilot plant to test  the  production
potential  on  the LAK Ranch Project using SAGD  technology.
Dr.  John Donnelly designed the pilot plant described  below
and  ran  computer simulation models on the reservoir.   Dr.
Donnelly  has field demonstrated his ability to successfully
design and engineer an SAGD recovery process as evidenced by
the on going Black Rock heavy oil recovery project operating
near Cold Lake, Alberta.

The  total  cost of constructing and starting  up  the  SAGD
pilot  plant was budgeted at approximately $6.0 million  (US
$4.0  million).  The pilot project required the drilling  of
two  horizontal wells in the sand and injecting steam in the
upper  well  and collecting and producing the oil  from  the
lower well from the lower sand.  Surface facilities will  be
required to produce the steam and separate the produced oil,
steam  and water, together with water supply wells and water
disposal wells. Two additional horizontal wells will also be
drilled in an overlying sand, located approximately 14  feet
above the lower sand.  Oil from this sand will experience  a
decrease in its viscosity due to the fugitive heat loss from
the   steamflooding   of   the   underlying   sand   located
approximately 14 feet lower.  Oil recovery from the upper or
overlying sand will be augmented by the injection of exhaust
gases from the steam boiler to provide an energy source  and
push  the  oil to the lower horizontal recovery well.   This
recovery  method  for  the upper  sand  is  called  the  Gas
Assisted  Gravity  Drainage process, or  GAGD.   Under  full
field  development,  each 20-acre area  would  contain  four
horizontal  wells,  two in the lower  sand  where  steam  is
injected  and two in the upper sand where the fugitive  heat
loss from the lower sand will decrease the viscosity of  the
oil  sufficiently to allow recovery.  Both of these recovery
methods are highly dependent on the influence of the gravity
drainage  of  the  oil  due  to the  tilted  nature  of  the
reservoirs.

On  June  14,  2000, Company officials appeared  before  the
Wyoming  Oil  and  Gas Commission and approval  to  commence
drilling  on  the LAK Ranch Project was granted.   Effective
June  13,  2000,  the Company, through its U.S.  subsidiary,
Derek  USA,  entered  into  a drilling  contract  with  CAZA
Drilling   Inc.  of  Denver,  CO  ("CAZA")  for  the   first
injector/producer  well pair on the LAK Ranch  Project.   An
escrowed  deposit  of  US $315,000 was  established  by  the
Company  on CAZA's behalf.  A rig was mobilized on  the  LAK
Ranch Project on June 19, 2000 and drilling of Well Derek #1
commenced.

By  July  10, 2000, Well Derek #1 was completed at  a  total
measured  length of 3,213 feet.  The horizontal  section  of
the  well  extended  a total of 1,810 feet  and  encountered
1,639 gross feet of Newcastle sandstone reservoir rock.  The
Company  estimated that 1,200 net feet of this gross footage
was of good to excellent quality reservoir sand and that 400
net  feet  was  of fair quality reservoir sand.   A  slotted
liner  was successfully installed in the horizontal  section
of  Well  Derek #1.  On July 15, 2000, the second (injector)
well  of  the  horizontal well pair,  Well  Derek  2-I,  was
spudded.  Well Derek 2-I was completed on July 29, 2000 at a
total measured length of 3,210 feet.  The horizontal section
of  the  well was emplaced an average of 24 feet  vertically
above Well Derek #1.

By  October 17, 2000 all major pieces of equipment  for  the
surface  facility were sourced, minor site  preparation  was
underway  and  the  route for the natural gas  pipeline  was
being  laid  out.  By November 14, 2000, grading and  survey
work  at  the  LAK  Ranch Project site was nearly  complete.
Construction and installation of concrete footings was being
carried out.  Installation of a 4-inch natural gas pipeline,
which  will  be  about 30,000 feet in length had  commenced.
This  pipeline  is capable of supplying up to  1.5  MMCF  of
natural  gas  to the project on a daily basis.  The  Company
estimated  that this pipeline would provide sufficient  fuel
to  operate steam generation equipment able to supply  steam
to  approximately 4 to 6 well pairs.  By the end of November
2000, an oil treatment plant, or "heater-treater" and  a  22
MMBTU  leased steam generator, complete with water treatment
plant,   pre-fabricated   steel   building   and   ancillary
equipment, arrived at the LAK Ranch site.

On  December  15,  2000, the Company executed  a  Gas  Sales
Agreement with Western Gas Resources, Inc. of Denver, CO  to
supply  100%  of  the  first 1,500  MMBtu  per  day  of  the
Company's natural gas requirements at the LAK Ranch  Project
for a period of five years from the first delivery.

On  January  9,  2001, 33,000-foot long 4-inch  natural  gas
pipeline  had  been  installed to  the  site  and  completed
sections  of  the  pipeline had been  pressure  tested.   By
February  12,  2001,  the LAK Ranch  plant  was  essentially
complete and acid treatment had been initiated on the  steam
blow-down wells.  Steam generation and injection to the SAGD
well  pair had commenced at the beginning of March 2001  and
breakthrough  communication  between  the  two   wells   was
achieved on March 18, 2001.  SAGD operations began on  March
19,  2001, permitting steam to be injected through the upper
well and condensed steam and oil to be collected through the
lower, producing well.

The  Company produced and sold oil at the LAK Ranch  Project
for  the  months of April, May and June 2001  but  suspended
pilot  production operations in mid-June 2001  in  order  to
install  additional wastewater disposal system  which  would
allow the plant to operate at 100% of its steaming capacity.
The Company restarted pilot plant operations in October 2001
and  produced  and  soil  oil for  the  months  of  October,
November  and  December 2001 and the first part  of  January
2002.

The following summarizes all oil production and sales by the
Company:

Month/Year     Oil Sold       Average         Average         Gross
               (Barrels)    Gravity (API)    Price/Bbl.       Value
                                               (US$)          (US$)
----------     --------     ------------     ---------      ----------
Apr-01          1096.61         21.4          $25.00        $27,415.32
May-01           1586.5         20.8          $25.40        $40,294.80
Jun-01           473.04         19.6          $25.22        $11,929.91
Oct-01           484.41         20.4          $18.47        $ 8,945.82
Nov-01           698.31         20.8          $17.11        $11,948.85
Dec-01           693.23         19.9          $16.52        $11,453.13
Jan-02           331.17         20.1          $15.85        $ 5,249.04


Pilot  plant  operations were suspended in January  of  2002
pending  the grant of a surface water discharge permit  from
the  State  of Wyoming.  This permit was granted on  January
31,   2002.   Pilot  plant  operations  were  not  restarted
subsequent to January, 2002 as the Company decided  to  seek
further  funding  for the project before recommencing  pilot
plant operations.

All of the oil produced on the LAK Ranch Project to date has
been sold to one customer, Equiva Trading Company of Denver,
CO  pursuant to a Lease Purchase Agreement executed  between
the  parties on May 17, 2001.  Effective September 1,  2002,
Equiva  assigned  this  agreement  to  Shell  Trading   (US)
Company.

Litigation with Asdar Group

On  October 3, 2000, Rising Phoenix's remaining interest  in
the LAK Ranch Project was assigned to 2U Online.com, Inc., a
Delaware  public  corporation.  On October  13,  2000,  this
interest was subsequently assigned to Asdar Group ("Asdar"),
a  Nevada public corporation whose shares are quoted on  the
NASD  OTC Bulletin Board Service.  As a result, Asdar became
the  Company's  joint  venture  partner  in  the  LAK  Ranch
Project.

Pursuant  to the terms of the LAK Agreement, the Company  is
required  to  incur  not  less  than  US  $3.5  million   in
expenditures by December 31, 2000 to install a  pilot  plant
facility.   On  December  19, 2000,  the  Company  delivered
formal  notice  to Asdar that it had spent US $3,868,144  on
the  LAK Ranch Project, met the earn-in requirements of  the
LAK Agreement and vested its 75% working interest in the LAK
Ranch Project.  Between October 2000 and February 2001,  the
Company  sent  Asdar detailed project accounting  statements
and  general ledgers with requests that Asdar pay for  their
25%  share  of  ongoing  project  costs  in  excess  of   US
$3,500,000.  Asdar was also invited to inspect the site well
before year-end, but declined the invitation.

Asdar  made no payments to the Company with respect to their
share  of  operating costs for the LAK  Ranch  Project.   On
January  30,  2001, the Company delivered formal  notice  of
default to Asdar for their failure to pay amounts then  due.
On  March  1,  2001 the Company initiated formal foreclosure
proceedings  in Wyoming against Asdar for their  failure  to
pay  for their share of the ongoing project costs.   In  the
March  1,  2001  foreclosure  action,  the  Company  claimed
amounts then due or that would become due by March 15,  2001
totalling US $777,190 plus accrued interest, attorney's fees
and costs.

On  March  20,  2001,  Asdar filed a complaint  against  the
Company in Wyoming District Court, alleging that the Company
could  not legally foreclose on the Asdar interest since  it
had  not yet been determined that the Company's interest  in
the  LAK  Ranch Project had vested.  Asdar filed  a  Wyoming
application  for  entry of Temporary Restraining  Order  and
Preliminary  Injunction against the  Company  on  March  20,
2001.   The  purpose of this application  was  to  stop  the
Company's  foreclosure on Asdar's interest in the LAK  Ranch
Project.   A  hearing  was held on April  6,  2001  and  the
District Judge denied this application on April 17, 2001.

On  April 13, 2001 the Company foreclosed on all of  Asdar's
rights  and  interests in the LAK Ranch Project.  To  effect
foreclosure, the Company bid an amount of US $852,571.11  to
purchase  all of Asdar's rights, giving the Company  a  100%
interest in the LAK Ranch Project. The Weston County Sheriff
completed  a  Certificate  of Sale recording  the  Company's
purchase  and  this document was recorded  with  the  County
Clerk.  Under Wyoming law, Asdar had 90 days from April  13,
2001   to  remedy  their  situation  by  repayment  of   the
foreclosure amount plus costs and interest.  Asdar responded
by  filing  a lis pendens notice of claim, thereby providing
public  notice  that  a lawsuit involving  title  was  being
brought  against  the LAK Ranch Project.  On  May  4,  2001,
Derek  filed  a motion in the District Court  of  the  Sixth
Judicial  District for Wyoming requesting a partial  summary
judgment  in its favour against Asdar seeking court approval
that  it  has  acquired  a 75% interest  in  the  LAK  Ranch
Project.   This motion was scheduled to be heard on  October
31, 2001.

Prior  to  the court hearing, Asdar agreed to a  settlement.
Pursuant  to  the  terms of the Settlement  Agreement  dated
November  21,  2001, Asdar released the  lis  pendens  filed
against the property and relinquished any claim to any right
or interest in the LAK Ranch Project.  In return it received
a  proportionate reducible gross overriding royalty  on  the
property of 0.7%.  Payment of the royalty is retroactive  to
the  commencement  of  production. Asdar  was  also  granted
certain  participation rights in the event that the  Company
should  sell some or all of its rights and interests in  the
property.  From any net sales proceeds, Asdar will receive a
7.5%  interest in the first US $7.5 million of net  proceeds
and  1%  of  any  proceeds thereafter,  subject  to  certain
adjustments.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of the financial condition, changes
in  financial  conditions and results of operations  of  the
Company  for the years ended April 30, 2002, 2001  and  2000
should   be   read  in  conjunction  with  the  consolidated
financial  statements  of  the  Company  and  related  notes
included  therein.  The Company's financial  statements  are
presented   in  Canadian  dollars  have  been  prepared   in
accordance   with   Canadian  GAAP.    Differences   between
accounting  principles generally accepted in  Canadian  GAAP
and  U.S. GAAP, as applicable to the Company, are set  forth
in  Note  11  to  the  accompanying  Consolidated  Financial
Statements of the Company.
Overview

The  Company  is a natural resource company engaged  in  the
acquisition,  exploration and development  of  oil  and  gas
properties.   Since Fiscal 1998, the Company  has  primarily
been  focused on financing the acquisition of the LAK  Ranch
Project  and  the construction of the pilot plant  facility.
The  pilot  plant utilizes the SAGD recovery  process  which
falls  under  the category of improved recovery pursuant  to
the  definition found in Rule 4-10(a)(4) of Regulation  S-X.
As  a  result,  the  Company has not attributed  any  proved
reserves  to the LAK Ranch Project.  Technical and  economic
information  derived from the pilot study will  be  used  to
estimate  the amount of recoverable oil for the  development
of  a commercial scale operation.  There is a risk that  the
Company may not be able to economically recover the  oil  in
place.

The  Company has total and deferred exploration expenditures
of  $13,910,104 at April 30, 2002, $12,249,321 at April  30,
2001  and  $1,523,623 at April 30, 2000, all  of  which  was
spent on the LAK Ranch Project.  The recoverability of these
amounts  is  dependent  upon the existence  of  economically
recoverable  reserves,  securing and maintaining  title  and
beneficial interest in the LAK Ranch Project, the ability of
the Company to obtain the necessary financing to complete of
the  development  of  its property,  any  future  profitable
production, or alternatively, upon the Company's ability  to
dispose   of   its  interests  on  an  advantageous   basis.
Accordingly, there is substantial doubt about the ability of
the Company to continue as a going concern.

The  Company follows the full-cost method of accounting  for
oil and natural gas properties whereby all costs relating to
exploration and development of oil and natural gas  reserves
are capitalized.  Such costs include land acquisition costs,
geological   and  geophysical  expense,  engineering   fees,
related direct administrative expenses and costs of drilling
both productive and non-productive wells, including the cost
of production equipment.

Costs  are  allocated  to a separate cost  centre  for  each
program  in  which  the  Company has  an  interest  and  are
depleted by cost centre using the unit-of-production  method
based  upon  estimated  proven  developed  reserves.    Cost
centres  whose  carrying values exceed their  estimated  net
realizable  values are written down to that  net  realizable
value  in the period in which such determinations are  made.
For  cost centres that do not yet have proven reserves,  the
amounts  shown  for oil and natural gas interests  represent
costs   to  date,  and  the  underlying  value  is  entirely
dependent  on the existence and future economic recovery  of
reserves.

Estimated  future site restoration costs are provided  on  a
unit-of-production basis.  Actual costs are charged  against
the accumulated provision as incurred.

Future  write-downs  of  properties are  dependent  on  many
factors, including general and specific assessments  of  oil
and   gas   resources,  the  likelihood  of  increasing   or
decreasing  resources, land costs, estimates of  future  oil
and  gas prices, potential extraction methods and costs, the
likelihood   of   positive  of  negative  changes   to   the
environment, taxation, labor and capital costs. The  Company
cannot  assess the monetary impact of these factors  at  the
current stage of its properties.

Revenue from oil and gas sales from the LAK Ranch Project is
not  sufficient to fully meet its cash requirements and  the
Company  is  dependent on its shareholders and creditors  to
support  it as a going concern.  While the Company has  been
successful  in  obtaining financing  from  shareholders  and
directors  in  the past, there is no assurance  the  Company
will   continue  to  be  successful  in  raising   necessary
financing.   Accordingly, there is substantial  doubt  about
the ability of the Company to continue as a going concern.

The  Company  has  not been required to  make  any  material
expenditure  for  environmental  compliance  to  date.   The
operations of the Company may in the future be affected from
time   to  time  in  varying  degrees  by  changes  in   the
environmental  regulations.   Both  the  likelihood  of  new
regulations  and their overall affect upon the Company  vary
greatly  from  state to state and are not predictable.   See
"Item 3 - Key Information, Risk Factors".

Operating Results

Year  Ended April 30, 2002 Compared to the Year Ended  April
30, 2001

The  Company incurred a net loss of $1,062,580 or $0.03  per
share for Fiscal 2002 compared to a net loss of $826,342  or
$0.04 per share for Fiscal 2001.  Revenues from oil and  gas
sales (net of royalties) totaled $1,024 for Fiscal 2002.  In
comparison,  revenues  from  oil  and  gas  sales  (net   of
royalties)  ($10,221),  a gain on the  sale  of  the  Morton
Project  ($11,729)  and  interest earned  on  cash  balances
($109,485) totaled $131,435 in Fiscal 2001.  Interest earned
on  cash balances decreased in Fiscal 2002 due to lower cash
balances  while in Fiscal 2001, the Company had higher  cash
balances  from the proceeds of private placements  completed
during the year.

General  and  administrative expenses  were  $1,063,604  for
Fiscal  2002  compared to $957,777 for  Fiscal  2001.  Costs
generally increased during Fiscal 2002, most notably in  the
categories  of accounting, legal and audit fees at  $167,557
in  Fiscal 2002 (Fiscal 2001 - $62,801), interest expense of
$141,151  in  Fiscal 2002 (Fiscal 2001 - $nil)  and  foreign
exchange  loss  of  $35,023 in Fiscal 2002  (Fiscal  2001  -
$11,816).  The increase in accounting, legal  and  audit  in
Fiscal 2002 is primarily attributable to the litigation with
Asdar.  The increase in interest expense in Fiscal  2002  is
primarily  attributable to the notes payable  issued  during
Fiscal  2002  totalling US $1,217,521. The foreign  exchange
loss  in  Fiscal 2002 is primarily attributable to a  weaker
Canadian dollar, resulting in foreign exchange losses  being
recognized on US dollar denominated notes payable.

Oil  and  natural gas property costs deferred during  Fiscal
2002  totalled  $1,660,783 compared  to  $10,725,698  during
Fiscal  2001,  all  of  which was spent  on  the  LAK  Ranch
Project.  The  amount  deferred  for  Fiscal  2002  can   be
attributable  to  the  capitalization of  some  final  plant
construction and adjustment costs and the capitalization  of
pilot  test operating costs. The amount deferred for  Fiscal
2001   can   be   attributable  to  the  capitalization   of
construction  costs  of  the  well  pair  and  pilot   plant
facility.

The Company's operations at the LAK Ranch Project are in the
United  States  and  the  expenses of  such  operations  are
payable  in  U.S.  dollars  while the  Company's  functional
currency  is  the  Canadian dollar.  Most of  the  Company's
financings  to April 30, 2002 were in Canadian  dollars  and
the majority will continue to be in Canadian dollars for the
foreseeable future. Accordingly, the Company is  subject  to
the  risk  of  fluctuations in the relative  values  of  the
Canadian  and  U.S. dollars.  Although this has  not  had  a
materially  adverse  affect  on  the  Company's  results  of
operations  to  date,  this may have  a  materially  adverse
affect on the Company's results of operations in the future.
The  Company  is  required  to  recognize  foreign  currency
translation  gains  or  losses in the determination  of  net
earnings  and losses, except for exchange gains  or  losses.
For  the  year  ended April 30, 2002, net loss from  foreign
exchange was $35,023 compared to $11,816 for the year  ended
April  30,  2001. The Company is not aware of any government
currency  policies  or  regulations  which  may  affect  the
Company's operations.

The  Company's  operations  are not  adversely  affected  by
inflation.

Year Ended April 30, 2001 Compared to the Year Ended April
30, 2000

The  Company  incurred a net loss of $826,342 or  $0.04  per
share for Fiscal 2001 compared to a net loss of $675,731  or
$0.09  per  share for Fiscal 2000.  Revenues  from  interest
earned  on  cash  balances ($109,485),  oil  and  gas  sales
($10,221)  and  a  gain on the sale of  the  Morton  Project
($11,729)  totaled $131,435 in Fiscal 2001.  In  comparison,
interest earned on cash balances ($15,278) and revenues from
oil  and gas sales ($4,546) totalled $19,824 in Fiscal 2000.
The  increase in interest earned on cash balances in  Fiscal
2001  is  due  to higher cash balances from the proceeds  of
private placements completed during the year.

General and administrative expenses were $957,777 for Fiscal
2001  compared to $695,555 for Fiscal 2000.  Costs generally
increased during Fiscal 2001, most notably in the categories
of consulting and management fees at $385,333 in Fiscal 2001
(Fiscal 2000 - $273,938), office administration and other at
$177,687  in  Fiscal  2001  (Fiscal  2000  -  $123,116)  and
shareholders' information and travel at $310,647  in  Fiscal
2001  (Fiscal 2000 - $225,244).  The increase in  consulting
and  management  fees  and office administration  and  other
expenses  is primarily attributable to the increase  in  the
Company's  development activities at the LAK Ranch  Project.
The   increase  in  shareholders'  information  and   travel
expenses  in  Fiscal  2001  primarily  attributable  to  the
Company's  increased  efforts  in  Fiscal  2001   to   raise
financing for the development of the LAK Ranch Project.

Oil  and  natural gas property costs deferred during  Fiscal
2001 totalled $10,725,698 compared to $424,222 during Fiscal
2000, all of which was spent on the LAK Ranch Project.   The
increase   in   Fiscal   2001   is   attributable   to   the
capitalization of construction costs of the  well  pair  and
pilot plant facility.

Year Ended April 30, 2000 Compared to the Year Ended April
30, 1999

The  Company  incurred a net loss of $675,731 or  $0.09  per
share for Fiscal 2000 compared to a net loss of $528,589  or
$0.14  per  share for Fiscal 1999.  Revenues  from  interest
earned  on  cash balances ($15,278) and oil  and  gas  sales
($4,546) totaled $19,824 for Fiscal 2000 compared to $39,583
in Fiscal 1999.  In Fiscal 1999, the Company sold certain of
its  oil and gas leases in Canada, realizing a gain on  sale
of  $36,609  and  revenues from oil and gas  sales  totalled
$3,471.  This was offset by bank charges of $497.

General and administrative expenses were $695,555 for Fiscal
2000  compared  to $568,172 for Fiscal 1999.  The  increases
were  experienced in the categories of office administration
and  other  at  $123,116  for Fiscal  2000  (Fiscal  1999  -
$75,356)   and  shareholders'  information  and  travel   at
$225,244  for  Fiscal  2000 (Fiscal 1999  -  $73,975).   The
increase  in office administration and other is attributable
to  increased business activity as the Company moved towards
production  on  its  LAK  Ranch  Property  and  carried  out
financings.   The increase in shareholders' information  and
travel  is primarily attributable to the Company's increased
efforts   in  Fiscal  2000  to  raise  financing   for   the
development of the LAK Ranch Project.

Acquisition,  exploration  and  development  costs  deferred
against the LAK Ranch Project totaled $424,222 during Fiscal
2000 compared with $417,195 during Fiscal 1999.

US vs. Canadian GAAP

The  Company prepares its consolidated financial  statements
in  accordance with Canadian GAAP which differs  in  certain
respects  from  those  principles  the  Company  would  have
followed  had  its  consolidated financial  statements  been
prepared   in   accordance  with  U.S.  GAAP.    The   major
differences between Canadian GAAP and U.S. GAAP  that  would
affect  the measurement of the Company's financial position,
loss or cash flows are set forth below.

<table>
<caption>

                                                 <c>              <c>             <c>

                                                                                        30-Apr
                                                          2002            2001            2000
                                                            $               $               $
Adjustment to earnings:                             ----------       ---------       ---------
Loss for the period under Canadian GAAP              1,062,580         826,342         675,731
Consulting and management fees (a)                          -           33,517              -
Loss for the period under U.S. GAAP                  1,062,580         859,859         675,731

Loss per share under U.S. GAAP                            0.03            0.04            0.09

Adjustments to shareholders' equity
Total shareholders' equity under Canadian GAAP      10,998,529       9,919,604       2,001,849
Consulting and management fees (a)                          -          (33,517)              -
Escrow shares released (a)                                  -           33,517              -

Total shareholders' equity under U.S. GAAP          10,998,529       2,011,849       9,919,604

</table>

(a) On November 17, 1997, the Company issued 375,000
performance escrow shares to a director at $0.01 per share.

See "Item 7 - Major Shareholders and Related Party
Transactions".  These shares  are  released from escrow
subject to  the  terms  of release  as required by the
Exchange.  Under US  GAAP   (APB No.  25), these escrow
shares result in compensation expense on the date of release
from escrow measured as the excess of the  fair  value of the
shares at that time over  the  price paid for the shares.
During the year ending April 30, 2002, nil  (2001 - 55,862;
2000 - nil) Common Shares were released from escrow.

Accounting for stock-based compensation

For financial statement purposes, the Company has elected to
follow the Accounting Principles Board Opinion (APB) No. 25,
"Accounting  for Stock Issued to Employees,"  in  accounting
for  its  stock options.  Under APB No. 25, as the  exercise
price of the company's stock options and warrants equals the
market  price of the underlying stock at the date of  grant,
no compensation expense is recognized.

Recent accounting pronouncements
In August 2001, the Financial Accounting Standards Board
(FASB) issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 requires that asset retirement
obligations be recognized when they are incurred, and be
capitalized as part of the asset's carrying value and
displayed as liabilities. SFAS No. 143 also requires
increased disclosure surrounding asset retirement
obligations. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The company is analyzing the
impact of SFAS No. 143 and will adopt the standard on May 1,
2003.

In  October  2001, the FASB issued SFAS No. 144, "Accounting
for  the Impairment or Disposal of Long-Lived Assets".  SFAS
No.  144  requires that long-lived assets be  classified  as
assets  either to be held and used, to be disposed of  other
than  by  sale,  or  to be disposed of  by  sale.   It  also
prescribes various approaches to valuing these types of long-
lived  assets.  SFAS No. 144 is effective for  fiscal  years
beginning  after  December 15, 2001.  The Company  does  not
expect that the implementation of these guidelines will have
a  material impact on its consolidated financial position or
results of operations.

On  May  7,  2002,  the  FASB issued  SFAS  No.  145,  which
rescinded  SFAS  No.  4, "Reporting Gains  and  Losses  from
Extinguishment  of  Debt",  SFAS  No.  44,  "Accounting  for
Intangible  Assets  of Motor Carriers",  and  SFAS  No.  64,
"Extinguishment  of  Debt  Made to  Satisfying  Sinking-Fund
Requirements",  and  amended SFAS No.  13,  "Accounting  for
Leases".   The  provisions are effective  for  fiscal  years
beginning  after May 15, 2002.  The Company does not  expect
that  the  implementation of these  standards  will  have  a
material  impact on its consolidated financial  position  or
results of operations.

On  July  30, 2002, the FASB issued SFAS No.146, "Accounting
for Costs Associated with Exit or Disposal Activities". SFAS
No.  146  requires  companies to recognize costs  associated
with  exit  or  disposal activities when they  are  incurred
rather  than  at  the date of a commitment  to  an  exit  or
disposal  plan.  The provisions are effective  for  exit  or
disposal  activities that are initiated after  December  31,
2002.

In November 2001, the Accounting Standards Board of the
Canadian Institute of Chartered Accountants issued new
Handbook Section 3870, "Stock-based Compensation and Other
Stock-based Payments". This Section establishes standards
for the recognition, measurement and disclosure of stock-
based compensation and other stock-based payments made in
exchange for goods and services.  It applies to transactions
in which an enterprise grants shares of common stock, stock
options, or other equity instruments, or incurs liabilities
based on the price of common stock or other equity
instruments, and sets out a fair value based method of
accounting which is required for certain, but not all, stock-
based transactions. The Company is analyzing the impact of
Section 3870 and will adopt the standard on May 1, 2002.

Liquidity and Capital Resources

The  working  capital of the Company is a direct  result  of
funds raised from the sale of equity shares over the outflow
into  acquisition, exploration and development costs as well
as  administrative  expenses.  The working  capital  balance
(deficit)  at the end of the following periods were:   April
30,  2002 - $(2,488,985); April 30, 2001 - $(2,416,032); and
April 30, 2000 - $433,352. The fluctuations stem from timing
differences between when money is raised from equity  issues
and  when  expenditures  are committed  on  exploration  and
development.

The Company's cash and short-term deposits at April 30, 2002
totalled  $14,804 compared to $19,857 at April 30, 2001  and
$437,146  at April 30, 2000.  Aside from cash and short-term
deposits,  the  Company had no material  unused  sources  of
liquid  assets.  The cash and term deposits are attributable
primarily to the issue of share capital.

During Fiscal 2002, the Company issued 5,653,051 units at an
average  price  of  $0.316  per unit  for  net  proceeds  of
$1,790,115.   In  connection  thereof,  183,050  units  were
issued  as  finder's  fees. The proceeds  of  these  private
placements  in  Fiscal 2002 were used to settle  short-terms
notes  and accounts payable and for general working  capital
resulting from construction and operations at the LAK  Ranch
Project.   Notes payable issued during Fiscal 2002  totalled
US   $1,217,521  (Cdn  $1,923,570).   Proceeds  from   these
issuances   were   used  primarily  to   cover   outstanding
construction  and  operating expenses at the  Company's  LAK
Ranch  Project.   See  Note 4 to the  financial  statements.
During  the  year, the Company repaid some of the  principal
and accrued interest on these notes payable; US $138,000  in
exchange for 731,300 common shares and US $78,600 for  cash.
At  April  30,  2002,  the principal  outstanding  on  notes
payable  totalled  US  $  1,009,605  (Cdn   $1,585,080)  and
interest  accrued on notes payable totalled US $75,860  (Cdn
$119,100).

During  Fiscal 2001, the Company issued 19,137,865 units  at
$0.42   per  unit  for  net  proceeds  of  $7,729,247.    In
connection  thereof, an aggregate of 410,377 units,  705,000
share purchase warrants and $222,075 was paid by the Company
as finder's fees.  The proceeds of the private placements in
Fiscal  2001  were used for the construction  of  the  pilot
plant  facility  at the LAK Ranch Project  and  for  general
working  capital.  The Company also issued 1,811,500  Common
Shares on the exercise of 1,811,500 previously issued  share
purchase warrants resulting in gross proceeds to the Company
of  $973,470.  Another 72,000 Common Shares were  issued  on
the  exercise  of  stock options for gross proceeds  to  the
Company of $35,380.

During  Fiscal  2000, the Company issued  2,300,000  special
warrants  at a price of $0.50 per special warrant for  gross
proceeds of $1,150,000.  In connection thereof, an aggregate
of  74,250  special warrants were issued by the  Company  in
payment  of  finder's  fees.   The  Company  also  completed
another  private placement of 64,000 special warrants  at  a
price  of  $0.75 per special warrant for gross  proceeds  of
$48,000.   Also  during the same period, the Company  issued
267,500  Common Shares on the exercise of 267,500 previously
issued  warrants resulting in gross proceeds to the  Company
$145,040.  Another 30,000 Common Shares were issued  on  the
exercise of 30,000 stock options for gross proceeds  to  the
Company of $14,900.

From the beginning of Fiscal 2001 (May 1, 2000) to September
13,  2001  a  total  of  two  U.S.  residents  purchased  an
aggregate of 739,000 units at a price of $0.42 for aggregate
gross   proceeds  of  $310,380.  All  the  financings   were
principally conducted outside the United States, however two
U.S.  residents  purchased an aggregate of  300,000  special
warrants  at  prices of $0.40 and $0.50 per special  warrant
for  aggregate  gross  proceeds of $145,000.   Another  U.S.
resident  received a commission of 112,500 special  warrants
at a deemed value of $0.40 per special warrant for arranging
a financing.  None of the debt settlements were conducted in
the United States or with U.S. residents.

At April 30, 2002, the Company had a working capital deficit
of  $2,488,985.  Revenue from oil and gas sales from the LAK
Ranch  Project  is  not sufficient to fully  meet  its  cash
requirements  and  ongoing commitments and  the  Company  is
dependent on its shareholders and creditors to support it as
a  going concern.  While the Company has been successful  in
obtaining financing from shareholders and directors  in  the
past, there is no assurance the Company will continue to  be
successful  in  raising  necessary  financing.  Accordingly,
there  is substantial doubt about the ability of the Company
to continue as a going concern.

Management  is  actively  pursuing  additional  sources   of
financing  and  is pursuing a partnership  with  an  outside
source  to  develop the LAK Ranch Project.  At  the  present
time,  the  LAK Ranch oil production plant is idle  until  a
partner  or substantial financing can be found.   Subsequent
to April 30, 2002, the Company exchanged common shares for a
portion of the notes payable outstanding at April 30,  2002,
extended repayment terms on notes payable not exchanged  and
completed  a private placement of 3,917,500 units  at  $0.10
per  unit for proceeds of $391,750.  See "Item 8 - Financial
Information, Significant Changes".

Research and Development, Patents and Licences, etc.

The Company does not engage in research and development
activities.

Trend Information

Factors  which  may have a material effect on the  Company's
future  financial condition are set forth in "Item 3  -  Key
Information, Risk Factors".


ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The  following table sets out certain information concerning
the  directors and executive officers of the Company.   Each
director holds office until the next annual general  meeting
of  the  Company  or  until  his  successor  is  elected  or
appointed,   unless  his  office  is  earlier   vacated   in
accordance  with the Articles of the Company,  or  with  the
provisions  of the Company Act.  The officers are  appointed
at the pleasure of the board of directors.


<table>
<caption>

                             <c>                                                   <c>

Name, Position, Age and
Country of Residence            Principal Occupation or Employment                    Date Appointed
---------------------------     -----------------------------------------             --------------
BARRY C.J. EHRL (1)             President of the Company                                April, 1981
President, CEO and Director     President of Sydney Resource Corporation,
Age:  63                        a public company involved in mineral
Resident of Canada              exploration in British Columbia
                                (non-competitive).

FRANK R. HALLAM (1)             Chartered Accountant                                  November, 1997
CFO and Director                Director of Platinum Group Metals Ltd.,
Age:  42                        a public company with platinum group metal
Resident of Canada              properties in Canada and South Africa
                                (non-competitive).

EDWARD G. BYRD (1)              Director of Century Pacific Greenhouses, a             October, 1994
Director                        private agricultural business
Age:  65                        (non-competitive).
Resident of Canada


BRENT C. EHRL                   President of Pacific Supply Company, a                September, 1997
Corporate Secretary             private wholesale dried-goods business
Age:  43                        (non-competitive).
Resident of Canada

ROBERT E. SWENARCHUK            President of Rescom Consultants Ltd., a                October, 1986
Vice-President, Communications  private company which provides a range
Age:  67                        of financial and investor services to
Resident of Canada              public companies (non-competitive);
                                Director of Quaterra Resources Inc. and
                                Eaglecrest Explorations Ltd. (non-competitive).

PAUL TROST                      President of MTARRI, Inc., a private profess           October, 1997
Vice-President, Operations of   professional services business involved in oil
Derek Resources (U.S.A.) Inc.   consulting and acquisition of oil interests
Age:  58                        (possible competitor).
Resident of United States


GEORGE POUSKA                   President of Petrospec Corporation, a private           October, 1997
Field Manager of Derek          holding company involved in the acquisition of
Resources (U.S.A.) Inc.         oil field rights and interests (possible
Age:  60                        competitor).
Resident of United States

</table>


  NOTES:

  (1)  Member of the Audit Committee

No Director and/or Executive Officer has been the subject of
any order, judgment, or decree of any governmental agency or
administrator  or  of  any court or competent  jurisdiction,
revoking  or  suspending for cause any  license,  permit  or
other  authority  of  such person or of any  corporation  of
which  he is a Director and/or Executive Officer, to  engage
in  the  securities business or in the sale of a  particular
security  or  temporarily  or  permanently  restraining   or
enjoining any such person or any corporation of which he  is
an  officer  or director from engaging in or continuing  any
conduct,  practice,  or employment in  connection  with  the
purchase or sale of securities, or convicting such person of
any felony or misdemeanor involving a security or any aspect
of the securities business or of theft or of any felony.

Certain  of  the Company's directors and officers  serve  as
directors or officers of other reporting companies  or  have
significant shareholdings in other reporting companies  and,
to  the extent that such other companies may participate  in
ventures in which the Company may participate, the directors
of   the  Company  may  have  a  conflict  of  interest   in
negotiating  and concluding terms respecting the  extent  of
such  participation.  In the event that such a  conflict  of
interest  arises at a meeting of the Company's directors,  a
director  who has such a conflict will abstain  from  voting
for  or  against the approval of such participation or  such
terms.   From time to time several companies may participate
in  the  acquisition, exploration and development of natural
resource properties thereby allowing for their participation
in  larger  programs, permitting involvement  in  a  greater
number  of  programs  and  reducing  financial  exposure  in
respect  of  any  one program.  It may  also  occur  that  a
particular  company  will assign all or  a  portion  of  its
interest  in  a  particular  program  to  another  of  these
companies  due  to  the financial position  of  the  company
making  the assignment.  Under the laws of British Columbia,
the  directors of the Company are required to act  honestly,
in  good faith and in the best interests of the Company.  In
determining whether or not the Company will participate in a
particular  program and the interest therein to be  acquired
by  it, the directors will primarily consider the degree  of
risk  to  which the Company may be exposed and its financial
position at the time.

The  Company's plan currently in place to resolve actual and
potential conflicts of interest requires (1) full disclosure
from  directors, officers and key employees with respect  to
any potentially competitive interests; and (2) the Board  of
Directors  to  assess each actual or potential  conflict  of
interest on a case-by-case basis.  If the Board of Directors
determines that an actual or potential conflict of  interest
exists,  it  will  act to mitigate or remove  the  conflict.
There  have been no actual conflicts of interest  issues  to
date.

While  the  Directors of the Company are involved  in  other
business ventures and with the exception of Barry C.J. Ehrl,
do  not  spend full time on the affairs of the Company,  the
Company  believes  that each devotes as  much  time  to  the
affairs  of  the  Company as are required to  satisfactorily
carry out their duty.

Brent C. Ehrl, Corporate Secretary, is the son of Barry C.J.
Ehrl,  President,  Chief  Executive  Officer  and  Director.
Other   than   discussed  above,   there   are   no   family
relationships between any two or more Directors or Executive
Officers.   There  are  no  arrangements  or  understandings
between  any  two  or  more Directors or Executive  Officers
pursuant to which he was selected as a Director or Officer.

Barry  C.J.  Ehrl,  President, Chief Executive  Officer  and
Director

Mr.  Ehrl  has served as President, Chief Executive  Officer
and  Director  of  the Company since 1981,  raising  several
million dollars for the acquisition of the LAK Ranch Project
and  the  development of the pilot plant  facility.  Between
1990  and 1994, he was President and Chief Financial Officer
of  Star  Valley  Resources, Inc., which at  that  time  was
involved  in  oil  recovery projects with  Gulf  Canada  and
British  Gas.  Between 1986 and 1991, Mr. Ehrl was President
and  C.E.O.  of  Sun Mask Petroleum in which he  raised  $17
million  for  proposed takeovers of Inland Natural  Gas  and
Trans-Mountain  Pipeline.  Between 1986 and 1990,  Mr.  Ehrl
was Vice-President, Finance and Director of Dawn Development
Canada  Corporation, a private catering firm  where  he  was
directly  responsible  for  raising  over  $10  million  for
restaurant  acquisitions in London and  Vancouver.   Between
1983 and 1995, Mr. Ehrl was Chief Financial Officer of Anvil
Resources Ltd. where he was directly responsible for raising
in  excess of $5 million for exploration and development  of
mineral  properties  in British Columbia  and  the  Maritime
provinces.   Mr. Ehrl also serves as President,  C.E.O.  and
Director  of  Sydney Resource Corporation, a public  company
involved  in  mineral exploration in British Columbia.   Mr.
Ehrl currently devotes 80% of his time on the affairs of the
Company.

Frank R. Hallam, B.Ba, CA, Chief Financial Officer and
Director

Frank  Hallam  was an auditor with Coopers and Lybrand  (now
PricewaterhouseCoopers) prior to joining the Tan Range Group
of  Companies in 1994.  He has extensive experience  at  the
senior   management   level  with  several   publicly-listed
resource  companies.   In  addition  to  serving  as   Chief
Financial  Officer and Director of the Company,  Mr.  Hallam
also  serves as a Director of Platinum Group Metals Ltd.,  a
public  company  with  platinum group  metal  properties  in
Canada  and South Africa.  Mr. Hallam currently devotes  50%
of his time on the affairs of the Company.

Edward G. Byrd, CA, Director

Edward  Byrd, Chartered Accountant, is currently a  Director
of  Century  Pacific  Greenhouses,  a  private  agricultural
business.   Mr.  Byrd  was formerly a  Senior  Partner  with
Coopers & Lybrand (now PricewaterhouseCoopers) as well as  a
director  of  Atomic Energy Canada Limited.  He has  several
years  of experience dealing with public and private  sector
companies  and  has served on the boards of  several  public
resource  companies.  Currently, Mr. Byrd is a  director  of
Star  Valley  Resources, Inc., a public company involved  in
gold  and  oil properties in the former U.S.S.R.   Mr.  Byrd
currently  devotes  15% of his time on the  affairs  of  the
Company.

Brent C. Ehrl, Corporate Secretary

Brent Ehrl is currently President of Pacific Supply Company,
a  private wholesale dry goods business.  He also serves  as
Director  of  Sydney Resource Corporation, a public  company
involved in mineral exploration in British Columbia.   Brent
Ehrl currently devotes 75% of his time on the affairs of the
Company.

Robert E. Swenarchuk, Vice-President, Communications.

Robert  Swenarchuk  has  more than 25  years  of  successful
practice in the corporate and investor relations sectors  of
the natural resources industry.   Currently, he is President
of  Rescom  Consultants  Ltd., which  he  founded  in  1980.
Rescom  provides a range of financial and investor  services
to  public  companies.  Over the past 15 years he  has  been
involved  in arranging financing for mining exploration  and
development  projects in Canada, the United States,  Mexico,
Russia,  Kazakhstan  and China. He has  extensive  financial
community  contacts  throughout North  America,  Europe  and
Asia.  Currently,  Mr. Swenarchuk is Senior  Vice-President,
Corporate Development for Eaglecrest Explorations Ltd.,  Rio
Fortuna  Exploration  Corp.,  Quaterra  Resources  Inc.  and
International  Bravo  Resource  Corp.,  all  of  which   are
involved  in mineral exploration.  Mr. Swenarchuk  currently
devotes 10% of his time on the affairs of the Company.

Paul Trost, PhD, B.Sc.,Vice-President, Operations of Derek
USA

Dr.  Trost obtained his PhD in geochemistry at the  Colorado
School  of  Mines.   With over 20 years of oil  exploration,
production  and  operating  experience,  Dr.  Trost  is   an
established   expert  in  the  field  of   hazardous   waste
remediation  and  waste treatment.   Dr.  Trost  also  holds
several  oil  recovery and waste treatment process  patents.
He  was  previously a co-founder of an enhanced oil recovery
company   which   specialized  in  tertiary   oil   recovery
operations  using  chemical  approaches  and  is   currently
actively   involved  in  using  geochemical  techniques   to
evaluate  oil  projects.   Presently,  he  is  President  of
MTARRI,  Inc.,  a  private  professional  services  business
involved  in  oil  consulting and  the  acquisition  of  oil
interests.  Dr. Trost currently devotes 10% of his  time  on
the affairs of the Company.

George Pouska, MBA, B.Sc., Field Manager of Derek USA

Mr.  Pouska  has  28  years  experience  in  the  fields  of
remediation  and  enhanced  oil  recovery  applications  and
chemical engineering.  Mr. Pouska, a Registered Professional
Engineer and the holder of several oil industry patents, has
been  involved  in  the design and construction  of  several
commercial enhanced oil recovery systems. Presently,  he  is
President  of  Petrospec  Corporation,  a  private   holding
company involved in the acquisition of oil field rights  and
interests.  Mr. Pouska currently devotes 5% of his  time  on
the affairs of the Company.
Compensation

The  following  table  sets forth all compensation  paid  or
accrued by the Company to its directors and members  of  its
administrative,  supervisory or management  bodies  for  the
financial year ended April 30, 2002.

The Company has no pension plan and no other arrangement for
non-cash compensation to the directors of the Company except
stock options.

<table>
<caption>

                             <c>      <c>       <c>      <c>      <c>                 <c>               <c>          <c>

                                                                          Long Term Compensation
                                ---------------------------------------------------------------------------------------------------
Name and Principal Position            Annual Compensation                         Awards                  Payouts
                                                            Other    --------------------------------------------------------------
                                --------------------------  Annual     Securities           Restricted
                                Year    Salary      Bonus  Compen-   Under Options/      Shares / Units      LTIP       All Other
                                                           sation    SARs Granted          Awarded          Payouts    Compensation
                                          ($)        ($)      (#)        ($)                 ($)              ($)          ($)
                                ---------------------------------------------------------------------------------------------------
Barry C.J. Ehrl                 2002    $120,000     $Nil    $Nil    602,500 (1)              $Nil           $Nil          $Nil
President, CEO and Director
Frank R. Hallam                 2001    $ 96,000     $Nil    $Nil    499,500 (1)              $Nil           $Nil          $Nil
CFO and Director
Edward G. Byrd                  2001    $    Nil     $Nil    $Nil    160,000 (1)              $Nil           Nil           $Nil
Director
Brent C. Ehrl                   2001    $  7,231     $Nil    $Nil     95,000 (1)              $Nil           $Nil          $Nil
Corporate Secretary

Robert Swenarchuk               2001    $ 6,000      $Nil    $Nil     55,000 (1)              $Nil           $Nil          $Nil
VP,Communications
Paul Trost                      2001    $10,500      $Nil    $Nil     65,000 (1)              $Nil           $Nil          $Nil
VP, Operations of Derek USA
George Pouska                   2001    $18,328      $Nil    $Nil        Nil                  $Nil           $Nil          $Nil
Field Manager of Derek USA

</table>


NOTES:

1.   Options granted on November 5, 2001 are exercisable at a
     price of $0.35 per share and expire on November 4, 2005.

With the exceptions of Barry Ehrl and Frank Hallam, the
Company does not have any written consulting agreements with
any of its directors or officers.

Pursuant to a management agreement dated September 30, 2000
between the Company and Barry Ehrl, Mr. Ehrl was engaged as
President and Chief Executive Officer of the Company for an
unspecified term.  Pursuant to the management agreement, Mr.
Ehrl received compensation in the amount of $8,500 per month
for the period October 1, 2000 through January 1, 2001 and
$10,000 per month for the period subsequent to February 1,
2001 as well as the reimbursement of out-of-pocket expenses.
The management agreement may be terminated by Mr. Ehrl at
any time by providing 90 days' notice to the Company.  The
management agreement with Mr. Ehrl may be terminated by the
Company at any time with cause or, without cause, by
providing 36 months' notice or payment in lieu of notice of
not less than $360,000.

Pursuant to a management agreement dated September 30,  2000
between the Company and Frank Hallam, Mr. Hallam was engaged
as Chief Financial Officer of the Company for an unspecified
term.   Pursuant  to  the management agreement,  Mr.  Hallam
received compensation in the amount of $6,500 per month  for
the  period  October  1, 2000 through January  1,  2001  and
$8,000  per  month for the period subsequent to February  1,
2001 as well as the reimbursement of out-of-pocket expenses.
The management agreement may be terminated by Mr. Hallam  at
any  time by providing 90 days' notice to the Company.   The
management  agreement with Mr. Hallam may be  terminated  by
the  Company  at any time with cause or, without  cause,  by
providing 36 months' notice or payment in lieu of notice  of
not less than $288,000.

Board Practices

The Board of Directors presently consists of three
Directors.  Each Director was elected at the annual general
meeting of the shareholders of the Company, held on October
31, 2001.  Each Director holds office until the next annual
general meeting of the Company or until his successor is
elected or appointed, unless his office is earlier vacated
in accordance with the Articles of the Company, or with the
provisions of the Company Act (British Columbia).  See page
36 for the dates on which the current Directors of the
Company were first elected or appointed.

With the exceptions of Barry Ehrl and Frank Hallam, the
Company has not entered into contracts providing for
benefits to the directors upon termination of employment.
Mssrs. Ehrl and Hallam are entitled to receive amounts not
less than $360,000 and $288,000, respectively, upon
termination of employment pursuant to their respective
management agreements with the Company.  See "Compensation"
above.

Board Committees

Audit Committee  Pursuant to Section 187 of the Company  Act
(British Columbia), the Company is required to have an Audit
Committee.  As at the date hereof, the members of the  Audit
Committee  are  Barry Ehrl, Frank Hallam  and  Edward  Byrd.
Section 187(1) of the Company Act requires the directors  of
a  reporting  company  to elect from among  their  number  a
committee  composed  of not fewer than three  directors,  of
whom  a  majority must not be officers or employees  of  the
company  or an affiliate of the company.  The election  must
occur  at the first meeting of the directors following  each
annual  general meeting, and those elected will hold  office
until  the  next  annual  general meeting.   Section  187(4)
provides  that before a financial statement that  is  to  be
submitted to an annual general meeting is considered by  the
directors,  it must be submitted to the audit committee  for
review with the auditor, and, after that, the report of  the
audit committee on the financial statement must be submitted
to  the directors.  Section 187(5) provides that the auditor
must  be given notice of, and has the right to appear before
and  to  be  heard at, every meeting of the audit committee,
and must appear before the audit committee when requested to
do  so  by  the committee.  Finally, section 187(6) provides
that  on the request of the auditor, the chair of the  audit
committee  must convene a meeting of the audit committee  to
consider any matters the auditor believes should be  brought
to the attention of the directors or members.

Currently, the Company has three directors, two of whom  are
officers of the Company:  Barry C.J. Ehrl, President &  CEO,
and  Frank  R.  Hallam, CFO.  The Company does  not  have  a
sufficient  number  of  outside  directors  but  intends  to
address this in 2003.
Employees

At  April  30, 2002, the Company had two full time employees
and  one part-time employee. In comparison, the Company  had
two  full time employees and no part-time employees at April
30, 2001 and 2000.

The  Company  engages  directors, officers  and  independent
contractors  from  time to time to supply work  on  specific
corporate business and project exploration programs.
Share Ownership

With respect to the persons listed in "Compensation," above,
the  following  table discloses the number of Common  Shares
and  percent of the Common Shares outstanding held by  those
persons,  as of November 1, 2002. The Common Shares  possess
identical voting rights.

                                             No. of             Percent of
       Name and Title                     Shares (1)(2)    Shares Outstanding

-----------------------------             --------------   ------------------
Barry C.J. Ehrl                             1,143,471            2.70%
President, CEO and Director

Frank R. Hallam                              273,900          Less than 1%
CFO and Director

Edward G. Byrd                               136,362          Less than 1%
Director

Brent C. Ehrl                                55,409           Less than 1%
Corporate Secretary

Robert E. Swenarchuk                         323,706          Less than 1%
Vice-President, Communications

Paul Trost                                   153,000          Less than 1%
Vice-President, Operations of Derek USA

George Pouska                                130,000          Less than 1%


NOTES:
1.   Includes beneficial, direct and indirect shareholdings.
2.   Does not include stock options and other rights to
purchase or acquire shares.
3.   There are 42,076,522 Common Shares issued and
outstanding as of the date of this Form 20-F Annual Report

The  following  table discloses the incentive stock  options
outstanding to the aforementioned persons as of November  1,
2002:


<table>
<caption>

                                        <c>               <c>                    <c>               <c>

         Name of Person(s)                 Date of Grant     # Common Shares        Exercise Price    Expiry Date
                                           or Issuance       Subject to Issuance     (Per Share)

Barry C.J. Ehrl                            Dec. 1, 1997            90,000                $0.51        Dec. 1, 2002
President, CEO and Director                    5-May-99            90,000                $0.48            5-May-04
                                           Nov. 5, 2001           602,500                $0.35        Nov. 4, 2005
Frank R. Hallam                            Dec. 1, 1997            42,000                $0.51        Dec. 1, 2002
CFO and Director                               5-May-99            30,000                $0.48            5-May-04
                                           Nov. 5, 2001           499,500                $0.35        Nov. 4, 2005
Edward G. Byrd                                 5-May-99            20,000                $0.48            5-May-04
Director                                  Oct. 15, 1999            11,000                $0.75       Oct. 15, 2004
                                           Nov. 5, 2001           160,000                $0.35        Nov. 4, 2005
Brent C. Ehrl                              Dec. 1, 1997            20,000                $0.51        Dec. 1, 2002
Corporate Secretary                            5-May-99            25,000                $0.48            5-May-04
                                           Nov. 5, 2001            95,000                $0.35        Nov. 4, 2005
Robert E. Swenarchuk                       Dec. 1, 1997            50,000                $0.51        Dec. 1, 2002
Vice-President, Communications                 5-May-99            40,000                $0.48            5-May-04
                                           Nov. 5, 2001            55,000                $0.35        Nov. 4, 2005
Paul Trost                                 Dec. 1, 1997            20,000                $0.51        Dec. 1, 2002
Vice-President, Operations of Derek            5-May-99            20,000                $0.48            5-May-04
                                          Dec. 16, 1999            50,000                $0.70       Dec. 16, 2004
                                           Nov. 5, 2001            65,000                $0.35        Nov. 4, 2005
George  Pouska                                                       Nil

</table>


GEORGE POUSKA
Field Manager of Derek USA

                                                       Nil

The Company has no arrangements for involving the employees
in the capital of the Company.  The Company does not have a
share purchase plan, dividend reinvestment plan or a share
option plan for its directors, officers and employees.
However, the Company will, from time to time, grant
individual stock options to its directors, officers or
employees as an incentive.

The  following  table discloses the share purchase  warrants
outstanding to the aforementioned persons as of November  1,
2002:

<table>
<caption>

                                        <c>               <c>                    <c>               <c>

         Name of Person(s)                 Date of Grant     # Common Shares        Exercise Price    Expiry Date
                                           or Issuance       Subject to Issuance     (Per Share)

Barry C.J. Ehrl                            Aug. 20, 2001          60,000               $0.75          Aug. 20, 2003
President, CEO and Directo                 Oct. 19, 2001         100,000               $0.40          Oct. 19, 2003
                                           Dec. 20, 2001         135,000               $0.40          Dec. 20, 2003
Frank R. Hallam                            Aug. 20, 2001          91,000               $0.75          Aug. 20, 2003
CFO and Director
                                           Oct. 19, 2001          75,000               $0.40          Oct. 19, 2003
Edward G. Byrd                                                      Nil
Director

Brent C. Ehrl                              Dec. 20, 2001          10,000               $0.40          Dec. 20, 2003
Corporate Secretary

Robert E. Swenarchuk                      Sept. 11, 2000         239,000               $0.53         Sept. 11, 2002
Vice-President, Communications

Paul Trost                                 Oct. 19, 2001          73,500               $0.40          Oct. 19, 2003
Vice-President, Operations of Derek USA

George  Pouska                             Dec. 20, 2001          50,000               $0.40          Dec. 20, 2003
Field Manager of Derek USA

</table>


ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

To  the  best of the Company's knowledge, it is not directly
or  indirectly owned or controlled by another corporation(s)
or by any foreign government.

There  are  presently no arrangements known to the  Company,
the operation of which may at a subsequent date result in  a
change in control of the Company.

There  have  been no significant changes in  the  percentage
ownership  held  by any major shareholders during  the  past
three  years except for the acquisition of 3,829,000  Common
Shares  by  Curb  Inc. whose shares were acquired  primarily
through private placements.

As  at October 15, 2002, the persons or groups known to  the
Company  to  own  more than 5% of the Company's  issued  and
outstanding Common Shares are:


Identity of Person           Amount       Percent
or Group                     Owned       of Class (1)

Curb Inc. (2)               3,829,000      9.1%
6301 Indian School NE
Suite 1208
Albuquerque, NM
USA  87110


Notes:

1.   There  are  42,076,522  Common  Shares  issued  and
     outstanding as of the date of this Form 20-F Annual
     Report

2.   Curb Inc. is controlled by Mr. Charles Haegelin

Holders of Record in the United States

Based  on the Company's knowledge, after reasonable  inquiry
as of October 15, 2002, the most recent practicable date for
conducting such search in the light of the time required for
responses, the total number of Common Shares held of  record
by  225  residents in the United States is 13,320,265 Common
Shares  representing approximately 31.7% of  the  42,076,522
Common  Shares  issued and outstanding.   The  foregoing  is
comprised of the following:

1.   According to the records of the Company's registrar and
     transfer agent, Computershare Trust Company of Canada,
     there are 4,991,245 Common Shares held of record by 173
     residents of the United States, one of which is Cede &
     Co. with a total of 277,538 Common Shares.

2.   Through  a search conducted by the Company, the Company
     has ascertained that there are no Common Shares held by
     residents of the United States through CDS & Co. in
     Canada.

3.   A  search  conducted through Cede & Co. in  the  United
     States by the Company revealed there are 53 holders  of
     record resident in the United States owning 8,606,558
     Common Shares of record (CDS held a deficit of 8,609,029
     Common Shares).

The Common Shares commenced trading on the NASD OTC Bulletin
Board  Service  on  January 4, 2001,  making  the  Company's
shares available to U.S. residents on the open market.

Related Party Transactions

Certain  of  the Company's directors and officers  serve  as
directors or officers of other reporting companies  or  have
significant shareholdings in other reporting companies  and,
to  the extent that such other companies may participate  in
ventures in which the Company may participate, the directors
of   the  Company  may  have  a  conflict  of  interest   in
negotiating  and concluding terms respecting the  extent  of
such  participation.  In the event that such a  conflict  of
interest  arises at a meeting of the Company's directors,  a
director  who has such a conflict will abstain  from  voting
for  or  against the approval of such participation or  such
terms.   From time to time several companies may participate
in  the  acquisition, exploration and development of natural
resource properties thereby allowing for their participation
in  larger  programs, permitting involvement  in  a  greater
number  of  programs  and  reducing  financial  exposure  in
respect  of  any  one program.  It may  also  occur  that  a
particular  company  will assign all or  a  portion  of  its
interest  in  a  particular  program  to  another  of  these
companies  due  to  the financial position  of  the  company
making  the assignment.  Under the laws of British Columbia,
the  directors of the Company are required to act  honestly,
in  good faith and in the best interests of the Company.  In
determining whether or not the Company will participate in a
particular  program and the interest therein to be  acquired
by  it, the directors will primarily consider the degree  of
risk  to  which the Company may be exposed and its financial
position at the time.

Management  believes that the transactions referenced  below
were  on  terms at least as favorable to the Company  as  it
could have obtained from unaffiliated parties.

Other  than disclosed elsewhere in this Annual Report,  none
of  the  Company's  directors,  senior  officers,  principal
shareholders  named  in  "Item 7 -  Major  Shareholders  and
Related  Party Transactions", or any relative or  spouse  of
the foregoing, have had an interest, direct or indirect,  in
any  transaction, during the current financial  year  ending
April  30,  2002, or in any proposed transaction  which  has
materially affected or will materially affect the Company or
any of its subsidiaries except for the following:

1.   Barry C.J. Ehrl, President, C.E.O. and Director of the
Company provided management services to the Company as
President and C.E.O. During Fiscal 2002, Mr. Ehrl was paid or
accrued $120,000 pursuant to a management agreement with the
Company. See "Item 6 - Directors, Senior Management and
Employees".

  1.   Frank R. Hallam, C.F.O. and Director of the Company
     provided management services to the Company as C.F.O.
     During Fiscal 2002, Mr. Hallam was paid or accrued
     $96,000 pursuant to a management agreement with the
     Company.  See "Item 6 - Directors, Senior Management and
     Employees".

  2.   Brent C. Ehrl, Corporate Secretary of the Company,
     provided administrative services to the Company.  During
     Fiscal 2002, Brent Ehrl was paid or accrued $37,231 for
     administrative services rendered.  Brent Ehrl does not
     have an agreement with the Company but is paid by the
     Company upon the rendering of services and receipt of
     expense reports and/or invoices. See "Item 6 -
     Directors, Senior Management and Employees".

  4.   Robert E. Swenarchuk, Vice-President, Communications
     of the Company, provided corporate communication
     services to the Company.  During Fiscal 2002, Mr.
     Swenarchuk was paid or accrued $6,000 for corporate
     communication services rendered.  Mr. Swenarchuk does
     not have an agreement with the Company but is paid by
     the Company upon the rendering of services and receipt
     of expense reports and/or invoices. See "Item 6 -
     Directors, Senior Management and Employees".

  5.   Paul B. Trost, Vice-President, Operations and Director
     of the Company's wholly owned U.S. subsidiary, Derek
     USA, provided consulting services to the Company.
     During Fiscal 2002, MTARRI, Inc., a private company
     beneficially owned by Mr. Trost, was paid or accrued
     $10,500 for consulting services rendered.

  6.   George Pouska, Field Manager of the Company's wholly
     owned U.S. subsidiary, Derek USA, provided consulting
     services to the Company.  During Fiscal 2002, Petrospec
     Corporation, a private company beneficially owned by Mr.
     Pouska was paid or accrued $18,328 for consulting
     services rendered.

7.   Pursuant to an escrow agreement dated November 7, 1997
     (the "Escrow Agreement") among Montreal Trust Company,
     the Company, Barry Ehrl, President C.E.O. and director
     of the Company, the Company issued 375,000 performance
     escrow shares to Mr. Ehrl at an ascribed value of $0.01
     per share. The performance shares are subject to the
     terms of release as required by the Executive Director
     of the Commission or the Exchange which provide that
     holders of performance shares in a natural resource
     company will be entitled to a pro-rata release of those
     shares on the basis of 15% of the original number of
     performance shares for every $100,000 expended on
     exploration and development of a resource property
     calculated proportionately after the first $100,000
     expenditure.  No more than 50% of the original number of
     performance shares may be released in any twelve-month
     period and no expenditure on exploration and development
     made prior to the date of a company's initial public
     offering may be included.  Where administrative expenses
     exceed 33% of total expenditures during the period on
     which the calculation is based, the pro-rata release
     factor of 15% will be reduced to 7.5% and the percentage
     of the original number of performance shares available
     for release in any twelve-month period will be reduced
     to 25%.  Resource property option payments cannot be
     included as expenditures on exploration and development
     of a resource property for the purpose of calculating
     the allowable escrow release.

     The restrictions contained in the Escrow Agreement
     provide that the performance shares may not be traded
     in, dealt with in any manner whatsoever, or released,
     nor may the Company, its transfer agent or escrow
     holder, make any transfer or record any trading of the
     performance shares without the consent of the Executive
     Director of the Commission, or while the Common Shares
     are listed on the Exchange without the consent of the
     Exchange.  A holder of the performance shares who ceases
     to be a principal of the Company, or who dies or becomes
     bankrupt is not thereby subject to forfeiture of the
     performance shares under the terms of the Escrow
     Agreement.

     Any performance shares not released from escrow by
     November 7, 2002 shall be cancelled. During Fiscal 1999,
     the Exchange consented to the release from escrow of
     70,422 shares to Mr. Ehrl.   During Fiscal 2001, the
     Exchange consented to the release from escrow of an
     additional 55,862 shares to Mr. Ehrl.  During Fiscal
     2000 and Fiscal 2002, no shares were released from
     escrow.

     There were 248,716 performance escrow shares remaining
     at April 30, 2002.

8.   The  Company's executive offices are located in  rented
     premises which it shares with Sydney Resource
     Corporation, a company which Barry C.J. Ehrl, President,
     CEO and Director of the Company, is a director and
     officer.

No  director, senior officer, relative or associate of  such
persons  was  indebted  to the Company  during  the  current
financial year ending April 30, 2002.

Interests of Experts and Counsel

Not applicable.

ITEM 8 - FINANCIAL INFORMATION

Consolidated Financial Statements and Other Financial
Information

See the audited consolidated financial statements listed  in
Item  17  hereof and filed as part of this Form 20-F  Annual
Report.  These financial statements include the consolidated
balance  sheets as at April 30, 2002 and 2001 and statements
of  loss  and  cash flows for each of the three years  ended
April 30, 2002.

These financial statements were prepared in accordance  with
accounting   principles  generally   accepted   in   Canada.
Differences between accounting principles generally accepted
in  Canada  and in the United States, as applicable  to  the
Company,  are  set  forth  in Note 11  to  the  accompanying
consolidated financial statements of the Company.
Legal Proceedings

There   are  no  other  actual  or  pending  material  legal
proceedings  to which the Company is or is likely  to  be  a
party  or of which any of its properties is or is likely  to
be the subject except for the following:

Two   creditors  filed  claims  against  the   Company   for
settlement of amounts due to them in 2002. One creditor  was
paid  in  full  subsequent to year-end and their  action  is
being  terminated.   The  other  creditor,  Venture  101  of
Douglas,  Wyoming, was liquidated during the  year  and  the
Company is awaiting further advice from their trustees as to
how  a  settlement arrangement may be reached.  Venture  101
had  claimed  unpaid  amounts due  from  the  Company.   The
Company  records  an  amount  due  to  Venture  101  of   US
$45,568.15.
Dividend Policy

The   Company   has   not  declared  any   dividends   since
incorporation in 1981 and does not anticipate that  it  will
do  so in the foreseeable future.  The present policy of the
Company  is  to  retain  future  earnings  for  use  in  its
operations and the expansion of its business.

Significant Changes

Since  April  30, 2002, the date of the most recent  audited
financial statements, the following significant changes have
occurred:

1.   Pursuant  to  a  letter agreement dated June  21,  2001
     between the Company and Bateman Project Holdings Limited
     ("BPHL") of Johannesburg, South Africa pursuant to which
     Bateman agreed to defer US $471,183 of debt payable by
     the Company until May 31, 2002.  Any amounts incurred in
     excess of US $471,183 would be due and payable in the
     normal course of  business.  In consideration, Bateman
     would  receive interest of 10% per annum commencing June
     15, 2001 with both principal and interest due on May 31,
     2002.  The debt may be converted in whole or in part
     into Common Shares for $0.75 per share at any time until
     May 31, 2002. In addition, the Company granted a
     permanent gross over-riding royalty in the amount of US
     $0.0471 per barrel of oil produced net to the Company's
     interest.  As security for the amount deferred, the
     Company granted a lien in favour of Bateman, first on
     the surface equipment owned by the Company and located
     on the LAK Ranch Project and secondly, if required to
     satisfy amounts outstanding on the repayment date, on
     the LAK Ranch Project itself.  See "Item 4 - Information
     on the Company, The LAK Ranch Project, Wyoming, USA".
     The Company was not able to repay the principal and
     interest on May 31, 2002. On August 21, 2002, Bateman
     Project Holdings Limited agreed to settle one half of
     the total debt outstanding in exchange for common shares
     of the Company at a price of $0.10 per share with the
     remaining amount payable to be secured by way of a new
     note issued by the Company bearing interest at 10% per
     annum and maturing on September 30, 2003.  BPHL will
     have the right, after August 21, 2003, to convert any
     unpaid principal and interest into Common Shares at an
     exercise price of $0.10 per share.

2.   On  June  6,  2001,  the Company entered  into  a  loan
     agreement with Sparten Establishment for US $100,000.
     This loan bears interest at 10% per annum, payable
     monthly, plus an overriding royalty of US $0.01 per
     barrel of oil produced at the LAK Ranch Project and
     matures on May 31, 2003 but does not bear a conversion
     right. The proceeds were used to settle outstanding
     accounts payable for construction and operating costs at
     the LAK Ranch Project.  On August 21, 2002,  the lender
     agreed to settle US $50,000 from  the principal amount
     in exchange for Common Shares at a price of $0.10 per
     share and to exchange the remaining principal amount of
     US $50,000 by way of a new promissory note bearing
     interest at an effective rate of 10% per annum,
     repayable on September 30, 2003.

3.   On  June  27,  2001, the Company entered  into  a  loan
     agreement in the amount of US $100,000 with Cristina
     Casati. The loan bears interest at a rate of 10% per
     annum, plus an additional overriding royalty of US $0.01
     per barrel of oil produced  at  the LAK Ranch Project.
     The loan  may  be converted in whole or in part into
     Common Shares for $0.75 per share at any time until May
     31, 2003 at which time it is repayable  in  full. The
     proceeds were used  to  settle outstanding accounts
     payable for construction and operating costs at the LAK
     Ranch Project.  On August 21, 2002, the lender agreed to
     settle the accrued interest on this note in the amount
     of US $12,114 in exchange for Common Shares at a price
     of $0.10 per share.

4.   On  June  28,  2001, the Company entered  into  a  loan
     agreement  in  the amount of US $50,000  with  Savannah
     Consulting Ltd. The loan bears interest at a rate of 10%
     per annum, plus an additional overriding royalty of US
     $0.005 per barrel of oil produced at the LAK Ranch
     Project.  The loan may be converted in whole or in part
     into Common Shares for $0.75 per share at any time until
     May 31, 2002 at which time it was repayable in full.
     The proceeds were used to settle outstanding accounts
     payable for construction and operating costs at the LAK
     Ranch Project.  The Company was not able to repay the
     principal and interest on May 31, 2002.  On August 21,
     2002, the lender agreed to settle the principal and
     interest outstanding in the amount of  US $56,041 in
     exchange for Common Shares at a price of $0.10 per
     share.

5.   On  June  28,  2001, the Company entered  into  a  loan
     agreement in the amount of US $50,000 with John F.P.
     Lush. The loan bears interest at a rate of 10% per
     annum, plus an additional overriding royalty of US
     $0.005 per barrel of oil produced  at  the LAK Ranch
     Project.  The loan  may  be converted in whole or in
     part into Common Shares for $0.75 per share at any time
     until May 31, 2002 at which time it was repayable in
     full.  The proceeds were used to settle outstanding
     accounts payable for construction and operating costs at
     the LAK Ranch Project.  The Company was not able to
     repay the principal and interest on May 31, 2002.  On
     August 21, 2002, the lender agreed to settle the
     principal and interest outstanding in the amount of US
     $56,041 in exchange for Common Shares at a price of
     $0.10 per share.

6.   On  October 30, 2001, the Company entered into  a  loan
     agreement with Western Industrial, Inc. for US
     $89,838.35. The loan bears interest at a rate of 10% per
     annum, plus an additional overriding royalty of US
     $0.0089838 per barrel of oil produced at the LAK Ranch
     Project.  The loan may be converted in whole or in part
     into Common Shares for $0.75 per share at any time until
     August 31, 2002 at which time it was repayable in full.
     The proceeds were used to settle outstanding accounts
     payable for construction and operating costs at the LAK
     Ranch Project.  On August 21, 2002, the lender  agreed
     to  settle the principal  and  interest outstanding in
     the amount of US $99,806 in exchange for Common Shares
     at a price of $0.10 per share.

7.   During  the  period February 2002 to  April  2002,  the
     Company borrowed US $150,000 in four separate tranches
     from a  single lender, bearing interest at a rate of 15%
     per annum, payable on demand.  On August 21, 2002, the
     lender agreed to settle the principal and interest
     outstanding in the amount of US $160,193 in exchange for
     Common Shares at a price of $0.10 per share.

8.   On  August  29,  2002,  the  Company  entered  into  an
     Assignment  Agreement dated August 9, 2002 with  Equiva
     Trading Company with respect the assignment of the May
     17, 2001 agreement (to purchase crude oil produced from
     the LAK Ranch Project) to Shell Trading (US) Company.

9.   On  August 19, 2002, as amended September 3, 2002,  the
     Company  entered  into a leasing proposal  with  Oxford
     Properties Group with respect to the head office space.

10.  On  August  27, 2002, the Company completed  a  private
     placement for 3,917,500 units at a price of $0.10 per
     unit for gross proceeds of $391,750.  Each unit
     consisted of one common share and one share purchase
     warrant exercisable at a price  of  $0.15 per share for
     a period of  two  years. Proceeds of $391,750 were used
     for general administrative expenses  and working capital
     related to the LAK  Ranch Project.


ITEM 9 - THE OFFER AND LISTING

Offer and Listings Details

There is no offer associated with this Annual Report.

Trading History

The following table sets forth the high and low market
prices for the Common Shares on the Exchange for each full
quarterly period within the within the two most recent
fiscal years:

                      CDNX HIGH     CDNX LOW     OTC-BB HIGH    OTC-BB LOW
PERIOD                  CDN $        CDN $          USD $          USD $
-----------------     ---------     --------     -----------    ----------
2002
Fourth Quarter          $0.31        $0.15         $0.21          $0.12
Third Quarter           $0.42        $0.23         $0.27          $0.13
Second Quarter          $0.49        $0.22         $0.32          $0.16
First Quarter           $0.60        $0.41         $0.40          $0.28
2001
Fourth Quarter          $0.80        $0.41         $0.51          $0.28
Third Quarter           $0.80        $0.44         $0.43          $0.31
Second Quarter          $1.18        $0.65         n/a (1)        n/a (1)
First Quarter           $0.85        $0.45         n/a (1)        n/a (1)


NOTES:

(1)  The Common Shares commenced trading on the NASD OTC
     Bulletin Board Service on January 4, 2001.

The following table sets forth the annual high and low
   market prices for the five fiscal years ending April 30,
   2002:

                          CDNX HIGH      CDNX LOW    OTC-BB HIGH    OTC-BB LOW
YEARS ENDING APRIL 30       CDN $         CDN $         USD $          USD $
---------------------     ---------      --------    -----------    ----------
2002                        $0.60         $0.15        $0.40          $0.12
2001                        $1.18         $0.41        $0.51          $0.28
2000                        $1.25         $0.31        n/a (1)        n/a (1)
1999                        $0.75         $0.34        n/a (1)        n/a (1)
1998                        $0.79         $0.21        n/a (1)        n/a (1)


NOTES:

(1)  The Common Shares commenced trading on the NASD OTC
     Bulletin Board Service on January 4, 2001.

The following table sets forth the high and low market prices
for the most recent six months:

             CDNX HIGH      CDNX LOW    OTC-BB HIGH    OTC-BB LOW
MONTH          CDN $         CDN $         USD $          USD $
-------      ---------     ---------    -----------    ----------
Oct-02         $0.10         $0.05        $0.07          $0.05
Sep-02         $0.10         $0.06        $0.07          $0.04
Aug-02         $0.15         $0.09        $0.09          $0.05
Jul-02         $0.17         $0.07        $0.15          $0.06
Jun-02         $0.22         $0.15        $0.16          $0.10



The  closing  price of the Company's shares on  November  1,
2002 was $0.09 on the Exchange and US $0.065 on the NASD OTC
Bulletin Board Service.

There have been no trading suspensions in the prior three
years.
Plan of Distribution

Not applicable.
Markets

The  Common  Shares trade on the Exchange under  the  symbol
"DRS"  on  the  Exchange.  On January 4,  2001,  the  Common
Shares  commenced  trading on the NASD  OTC  Bulletin  Board
Service under the symbol "DRKRF".
Selling Shareholders

Not applicable.
Dilution

Not applicable.
Expenses of the Issue

Not applicable.

ITEM 10 - ADDITIONAL INFORMATION
Share Capital

Not applicable.
Memorandum of Articles of Association

Objects and Purposes of the Company

The  Memorandum  of the Company places no restrictions  upon
the Company's objects and purposes.

Directors' Powers

Section 12.6 of the Articles of the Company (the "Articles")
provides  that  a  director who is in any  way  directly  or
indirectly interested in a contract or proposed contract  or
transaction  with the Company shall declare the  nature  and
extent  of  his  interest at a meeting of the  directors  in
accordance  with the provisions of the Company  Act  of  the
Province of British Columbia (the "Company Act"). Subject to
the Company Act, a director shall not vote in respect of any
such contract or transaction with the Company in which he is
interested  and  if he shall do so, his vote  shall  not  be
counted, but he may be counted in the quorum present at  the
meeting at which such vote is taken.  Subject to the Company
Act, the foregoing shall not apply to:

1.   any contract or transaction relating to a loan to the
     Company, which a director of a specified corporation or
     a specified firm in which he has an interest has
     guaranteed or joined in guaranteeing the repayment of
     the loan or any part of the loan; or

2.   any contract or transaction made or to be made with, or
     for the benefit of an affiliated corporation or a
     subsidiary corporation of which a director is a
     director; or

3.   any contract by a director to subscribe for shares,
     debentures or debt obligations to be issued by the
     Company or a subsidiary of the Company, or any contract,
     arrangement or transaction in which a director is,
     directly or indirectly, interested if all the other
     directors are also, director or indirectly interested in
     the contract, arrangement or transaction; or

4.   if authorized by ordinary resolution pursuant to Article
     12.4, the remuneration of the directors.

Subject  to  the Company Act the foregoing prohibitions  and
exceptions  thereto may from time to time  be  suspended  or
amended  to  any  extent  by  ordinary  resolution,   either
generally   or  in  respect  of  any  particular   contract,
arrangement or transaction or for any particular period.

Section  15.1  of  the  Articles provides  that  the  quorum
necessary  for  the  transaction  of  the  business  of  the
Directors may be fixed by the Directors and unless so  fixed
such  quorum shall be a majority of the Board.  The Chairman
of the Board, if any, or in his absence the President of the
Company, shall be the chairman of all meetings of the  Board
but if at any meeting neither the Chairman of the Board,  if
any,  nor  the President shall be present within 30  minutes
after the time appointed for holding the same or if both the
Chairman  of  the  Board  and the President,  being  present
decline to act, the directors present may choose someone  of
their  number  to be chairman at such meeting.   A  director
interested   in  a  contract  or  a  proposed  contract   or
transaction with the Company pursuant to Section 12.6 is  to
be counted in a quorum notwithstanding his interest.

Section  12.4 of the Articles provides that the remuneration
of the Directors as such may from time to time be determined
by  the Directors, unless by ordinary resolution the members
determine that such remuneration shall be determined by  the
members,  such remuneration to be in addition to any  salary
or other remuneration paid to any officer or employee of the
Company  as  such,  who is also a director.   The  Directors
shall  be repaid such reasonable expenses as they may  incur
in and about the business of the Company and if any Director
shall  perform  any professional or other services  for  the
Company  that, in the opinion of the Directors, are  outside
the  ordinary  duties of a Director or  shall  otherwise  be
specially  occupied in or about the Company's  business,  he
may be paid a remuneration to be fixed by the Board, or,  at
the  option  of  such  Director, by the Company  in  general
meeting, and such remuneration may be either in addition to,
or  in substitution for, any other remuneration that he  may
be  entitled  to receive, and the same shall be  charged  as
part  of  the  ordinary  expenses of  the  Company.   Unless
otherwise  determined by ordinary resolution, the  Directors
on  behalf of the Company, may pay a gratuity or pension  or
allowance  on  retirement to any Director who has  held  any
salaried  office or place of profit with the Company  or  to
his  spouse or dependents and may make contributions to  any
fund  and pay premiums for the purchase or provision of  any
gratuity,  pension or allowance.  There are no  restrictions
in the Articles upon the directors' power, in the absence of
an independent quorum, to vote compensation to themselves or
any members of their body.

Section 8.1 of the Articles provides that the directors  may
from time to time at their discretion authorize the Company:

1.   to  guarantee the indebtedness of an affiliate  of  the
     Company or of any other person;

2.   to  borrow money for the purposes of the Company or  an
     affiliate of the Company in such manner and amount, on
     such security,  from  such sources and upon such  terms
     and conditions as they think fit;

3.   to  issue  bonds, debentures and other debt obligations
     either as principal debtor or as surety or guarantor for
     any liability or obligation, contingent or otherwise, of
     an affiliate of the Company or of any other person;

4.   to  mortgage  or  charge,  whether  by  way  of  either
     specific or floating charge, or give other security on
     the undertaking, or on whole or any part of the property
     and assets of the Company, both present and future.

The borrowing powers of the directors set forth in the
Articles can be varied by amending the Articles.  Section
219 of the Company Act provides that a Company may alter its
Articles by filing with the registrar of companies a
certified copy of a special resolution altering the
Articles.  A special resolution is a resolution passed by a
majority of not less than three quarters of the votes cast
by those members of a company who, being entitled to do so,
vote in person or by proxy at a general meeting of the
company, or consented to in writing by every member of a
company who would have been entitled to vote in person or by
proxy at a general meeting of the company.  Under the
Company Act, an ordinary resolution of shareholders requires
approval by a majority of the votes cast at a meeting of
shareholders, present in person or represented by proxy.

Qualifications of Directors

There is no provision in the Articles imposing a requirement
for  retirement or non-retirement of directors under an  age
limit requirement.

Section 12.3 of the Articles provides that a director  shall
not  be  required have any share qualification  (to  hold  a
share  in  the  capital of the Company) but any  person  not
being  a member of the Company who becomes a director  shall
be  deemed  to have agreed to be bound by the provisions  of
the  Articles  to the extent as if he were a member  of  the
Company.

Section  114 of the Company Act provides that no  person  is
qualified to act as a director if that person is:

(a)  under the age of 18 years;

(b)   found  to  be incapable of managing the  person's  own
affairs by reason of mental infirmity;

(c)  a corporation;

(d)  an undischarged bankrupt;

(e)  unless  the  court orders otherwise,  convicted  of  an
     offence in connection with the promotion, formation  or
     management of a corporation, or involving fraud, unless
     5 years have elapsed since the expiration of the period
     fixed for suspension of the passing of sentence without
     sentencing or since a fine was imposed, or the term  of
     imprisonment  and  probation  imposed,  if   any,   was
     concluded,  whichever is the latest, but the disability
     imposed  by  this paragraph ceases on  a  pardon  being
     granted under the Criminal Records Act (Canada); or

(f)  in  the  case of a reporting company, a  person  whose
     registration in any capacity has been cancelled under

     (i)   the Securities Act by either the British Columbia
Securities Commission or the executive director, or

     (ii) the  Mortgage Brokers Act by either the Commercial
          Appeals  Commission or the registrar,  unless  the
          commission,   the   executive  director   or   the
          registrar,  whichever  is  applicable,   otherwise
          orders,  or unless 5 years have elapsed since  the
          cancellation of the registration.

Pursuant to Section 114(3) of the Company Act, every  person
who acts as a director of a company and who is not qualified
to  act as a director of the company because of section  114
(1) commits an offence.

Section  108 of the Company Act provides that every  company
must  have  at  least one director, and a reporting  company
must  have  at least three directors. Section 109(1)  states
that the majority of the directors of every company must  be
persons ordinarily resident in Canada, while section  109(2)
specifies  that  one  director  of  every  company  must  be
ordinarily resident in British Columbia.

Section 13.1 of the Articles provides for the removal  of  a
Director,  which states that the directorship of a  Director
shall be immediately terminated:

1.   if he is found to be incapable of managing the person's
     own affairs by reason of mental infirmity;

2.   if he becomes bankrupt;

3.   if   by  notice  in  writing  to  the  Company  at  its
     registered office he resigns;

4.   if he is removed pursuant to Article 14.2;

5.   if he is convicted within or without the Province of an
     offence;

     1.   in  connection  with the promotion,  formation  or
          management of a corporation; or

     2.   involving fraud;

     unless 5 years have elapsed since the expiration of the
     period  fixed for suspension of the passing of sentence
     without sentencing or since a fine was imposed, or  the
     term of imprisonment and probation imposed, if any, was
     concluded,  whichever is the latest, but the disability
     imposed  by  this paragraph ceases on  a  pardon  being
     granted under the Criminal Records Act (Canada); or

6.   if   the  Company  is  a  reporting  company,  if   his
     registration in any capacity under the Securities Act or
     the Mortgage  Brokers Act or the Commodity Brokers  Act
     is cancelled,   unless  the  Securities  Commission,
     the Superintendent of Brokers or the Registrar of
     Companies, whichever is applicable, otherwise orders, or
     unless five years  have  elapsed  since  the
     cancellation  of  the registration; or

7.   if  he  ceases  to be qualified to act  as  a  Director
     pursuant to the Company Act.

8.   if  he  is convicted after the date of his election  or
     appointment as a director of any criminal or quasi-
     criminal offence other than an offence described in
     subparagraph (e) and the Directors determine that it is
     in the best interests of the Company that his
     directorship be terminated.

Section 14.2 of the Articles provides that the Company  may,
by  special resolution remove any Director, and by  ordinary
resolution,  appoint  another  person  in  his  stead.   Any
director  so  appointed  shall hold office  only  until  the
conclusion  of  the  next  annual  general  meeting  of  the
Company,  but  shall  be eligible for  re-election  at  such
meeting.

Rights, Preference and Restrictions

All  of the authorized shares of common stock of the Company
are  of the same class and, once issued, rank equally as  to
dividends, voting powers, and participation in assets and in
all  other respects, on liquidation, dissolution or  winding
up  of the Company, whether voluntary or involuntary, or any
other  distribution of the assets of the Company  among  its
shareholders for the purpose of winding up its affairs after
the Company has paid out its liabilities.  The issued common
shares  are not subject to call or assessment rights or  any
pre-emptive or conversion rights.  The holders of Shares are
entitled  to  one vote for each Share on all matters  to  be
voted  on by the shareholders.  There are no provisions  for
redemption, purchase for cancellation, surrender or purchase
funds.

To  change the rights of holders of stock, where such rights
are attached to an issued class or series of shares, section
226  of  the Company Act requires the consent by a  separate
resolution of the holders of the class or series of  shares,
as the case may be, requiring a majority of 75% of the votes
cast.

Annual General Meetings and Extraordinary General Meetings

The  Company  Act  provides that the Company  must  hold  an
annual general meeting at least once in every calendar  year
and  not  more than 13 months after the date that  the  last
annual  general meeting was held.  If the Company  fails  to
hold an annual general meeting, the Supreme Court of British
Columbia  may,  on the application of a shareholder  of  the
Company,  call  or  direct an annual general  meeting.   The
Company must give to its members entitled to receive  notice
of  a  general meeting not less than 21 days' notice of  any
general meeting of the Company, but those members may  waive
or  reduce the period of notice for a particular meeting  by
unanimous  consent in writing. The Company Act requires  the
directors of a reporting company to provide with notice of a
general  meeting  a form of proxy for use  by  every  member
entitled  to  vote at such meeting as well as an information
circular  containing  prescribed information  regarding  the
matter  to be dealt with and conduct of the general meeting.
Prior  to  each  annual general meeting of its  members  the
directors  of  the Company must place comparative  financial
statements, made up to a date not more than 6 months  before
the  annual general meeting, the report of the auditor,  and
the report of the directors to the members.

The  directors  of the Company may, whenever they  see  fit,
convene  an  extraordinary general  meeting.   One  or  more
shareholders   of  the  Company  may  also  requisition   an
extraordinary  general meeting so long as such  shareholders
own not less than 5% of the issued and outstanding shares at
the  date  such  shareholders requisition  an  extraordinary
general  meeting.   After receiving  such  requisition,  the
Company's  directors must immediately  give  notice  of  the
extraordinary general meeting which must be held within four
months after the date of delivery of the requisition to  the
Company.

Limitations on Ownership of Securities

There  are  no  limitations on the right to own  securities,
imposed   by  foreign  law  or  by  the  charter  or   other
constituent document of the Company.

Change in Control of Company

No  provision of the Company's Articles, charter  or  bylaws
would  have the effect of delaying, deferring, or preventing
a  change  in control of the Company, and operate only  with
respect  to a merger, acquisition or corporate restructuring
of the Company or any of its subsidiaries.

Ownership Threshold

There  are  no  bylaw  provisions  governing  the  ownership
threshold   above  which  shareholder  ownership   must   be
disclosed.

Changes to Capital

There are no conditions imposed by the Company's memorandum
and articles governing changes in the capital where such
conditions are more stringent than is required by the law of
British Columbia.

Material Contracts

The  following material contracts have been entered into  by
the  Company within the past two years, copies of which  may
be  inspected between the hours of 10:00 am and 5:00 p.m. at
the  head  office of the Company located at Suite 1550,  355
Burrard Street, Vancouver, British Columbia, V6C 2G8.

1.   Recorded  Certificate of Purchase dated April 13,  2001
     executed by the Weston County Sheriff confirming the
     sale of Asdar Group's 25% interest in the LAK Ranch
     Project to Derek Resources Corporation by way of a
     mortgage foreclosure.  See "Item 4 - Information on the
     Company, The LAK Ranch Project, Wyoming, USA".

2.   Letter  agreement  dated April  30,  2001  between  the
     Company and First Echelon Ventures Inc. pursuant to
     which the Company sold its rights and interests in the
     Morton Project to First Echelon for the sum of US
     $100,000.  See "Item 4 - Information on the Company,
     General Development of the Business of the Registrant".

3.   Lease Purchase Agreement dated May 17, 2001 between the
     Company and Equiva Trading Corporation pursuant to which
     Equiva purchased crude oil produced from the LAK  Ranch
     Project.  See "Item 4 - Information on the Company, The
     LAK Ranch Project, Wyoming, USA".

4.   Finder's  Fee Agreement dated May 30, 2001 between  the
     Company and Tecucomp Geological Inc. pursuant to  which
     Tecucomp was engaged by the Company to assist in finding
     a joint venture partner or financier for the development
     of the LAK Ranch Project.

5.   Letter  agreement  dated  June  21,  2001  between  the
     Company   and  Bateman  Project  Holdings  Limited   of
     Johannesburg, South Africa pursuant to which Bateman
     agreed to defer US $471,183 of debt payable by the
     Company until May 31, 2002. See "Item 4 - Information on
     the Company, The LAK  Ranch Project, Wyoming, USA" and
     "See  Item  8  - Financial Information, Significant
     Changes".

6.   Assignment  of a Federal Lease dated July 6,  2001,  as
     amended July 10, 2001, from Edel P. Smith and Accidental
     Oil Company pursuant to which the Company acquired an
     additional 80  acres  in  the LAK Ranch Project.  See
     "Item  4  - Information on the Company, The LAK Ranch
     Project, Wyoming, USA".

7.   Loan  agreement dated May 3, 2001 between  the  Company
     and Westerton Management Corp. for US $56,500.  See
     "Item 4 -  Information  on the Company, The LAK Ranch
     Project, Wyoming, USA".

8.   Loan  agreement dated May 9, 2001 between  the  Company
     and Marble Hall Investments Ltd. for US $75,000.  See
     "Item 4  - Information on the Company, The LAK Ranch
     Project, Wyoming, USA".

9.   Loan  agreement dated May 9, 2001 between  the  Company
     and Wet Coast Management Corp. for US $75,000.  See
     "Item 4 -  Information  on the Company, The LAK Ranch
     Project, Wyoming, USA".

10.  Loan  agreement dated June 6, 2001 between the  Company
     and Sparten Establishment for US $100,000.  See "Item 4
     - Information on the Company, The LAK Ranch Project,
     Wyoming, USA".

11.  Loan agreement dated June 27, 2001 in the amount of  US
     $100,000 between the Company and Cristina Casati. See
     "Item 4  - Information on the Company, The LAK Ranch
     Project, Wyoming, USA".

12.  Loan agreement dated June 28, 2001 in the amount of  US
     $50,000 between the Company and Savannah Consulting Ltd.
     See "Item 4 - Information on the Company, The LAK Ranch
     Project, Wyoming, USA".

13.  Loan agreement dated June 28, 2001 in the amount of  US
     $50,000 between the Company and John F.P. Lush.  See
     "Item 4 -  Information  on the Company, The LAK Ranch
     Project, Wyoming, USA".

14.  Loan  agreement  dated  October 30,  2001  between  the
     Company and Western Industrial, Inc. for US $89,838.35.
     See "Item 4 - Information on the Company, The LAK Ranch
     Project, Wyoming, USA".

15.  Settlement agreement dated November 21, 2001 with Asdar
     Group whereby Asdar released the lis pendens filed
     against the property and relinquished any claim to any
     right or interest in the LAK Ranch Project.  See
     "Litigation with Asdar Group" on page 29.

16.  Assignment  Agreement dated August 9, 2002 between  the
     Company  and  Equiva Trading Company with  respect  the
     assignment of the May 17, 2001 agreement (to purchase
     crude oil produced from the LAK Ranch Project) to Shell
     Trading (US) Company.

17.  Leasing  proposal  dated August 19,  2002,  as  amended
     September 3, 2002, between the Company and Oxford
     Properties Group with respect to the head office space.

Exchange Controls

There  are  no governmental laws, decrees or regulations  in
Canada  relating to restrictions on the export or import  of
capital,  or affecting the remittance of interest, dividends
or  other payments to non-resident holders of Common Shares.
Any remittances of dividends to United States residents are,
however,  subject  to  a  15% withholding  tax  (5%  if  the
shareholder  is  a corporation owning at least  10%  of  the
outstanding  Common Shares) pursuant to  Article  X  of  the
reciprocal tax treaty between Canada and the United  States.
See "Taxation" on page 55.

Except as provided in the Investment Canada Act (the "Act"),
which  has  provisions  which govern the  acquisition  of  a
control  block  of  voting  shares  by  non-Canadians  of  a
corporation  carrying on a Canadian business, there  are  no
limitations specific to the rights of non-Canadians to  hold
or  vote the Common Shares under the laws of Canada  or  the
Province of British Columbia or in the charter documents  of
the Company.

The   following  describes  those  provisions  of  the   Act
pertinent to an investment in the Company by a person who is
not a Canadian resident (a "non-Canadian").

The  Act requires a non-Canadian making an investment  which
would  result in the acquisition of control of the  Canadian
business  to  notify  the  Investment  Review  Division   of
Industry Canada, the federal agency created by the  Act;  or
in  the  case of an acquisition of a Canadian business,  the
gross value of the assets of which exceeds certain threshold
levels  of  the  business activity of which  is  related  to
Canada's cultural heritage or national identity, to file  an
application for review with the Investment Review Division.

The  notification  procedure involves a brief  statement  of
information about the investment on a prescribed form, which
is  required  to  be  filed with Investment  Canada  by  the
investor  at any time up to 30 days following implementation
of the investment. It is intended that investments requiring
only    notification   will   proceed   without   government
intervention unless the investment is in a specific type  of
business activity related to Canada's cultural heritage  and
national identity.

If an investment is reviewable under the Act, an application
for  review in the form prescribed is required to  be  filed
with  Investment Canada prior to the investment taking place
and  the investment may not be implemented until the  review
has  been  completed  and the Minister responsible  for  the
Investment  Canada Act is satisfied that the  investment  is
likely  to  be of net benefit to Canada. If the Minister  is
not  satisfied that the investment is likely to  be  of  net
benefit  to Canada, the non-Canadian must not implement  the
investment  or, if the investment has been implemented,  may
be  required  to divest himself of control of  the  business
that is the subject of the investment.

The  following investments by non-Canadians are  subject  to
notification under the Act:

1.   an investment to establish a new Canadian business; and

2.   an investment to acquire control of a Canadian business
     that is not reviewable pursuant to the Act.

The  following investments by a non-Canadian are subject  to
review under the Act:

1.   direct  acquisitions of control of Canadian  businesses
     with assets of $5 million or more, unless the
     acquisition is being made by a World Trade Organization
     ("WTO") member country investor (the United States being
     a member of the WTO);

2.   direct  acquisitions of control of Canadian  businesses
     with assets of $172,000,000 or more by a WTO investor;

3.   indirect acquisitions of control of Canadian businesses
     with assets of $5 million or more is such assets
     represent more  than 50% of the total value of the
     assets of  the entities, the control of which is being
     acquired, unless the acquisition is being made by a WTO
     investor, in which case there is no review;

4.   indirect acquisitions of control of Canadian businesses
     with  assets of $50 million or more even if such assets
     represent less than 50% or the total value of the assets
     of the entities, the control of which being acquired,
     unless the acquisition is being made by a WTO investor,
     in which case there is no review; and

5.   an  investment subject to notification that  would  not
     otherwise be reviewable if the Canadian business engages
     in the activity of publication, distribution or sale for
     books, magazines,  periodicals,  newspapers,  film  or
     video recordings, audio or video music recordings, or
     music in print or machine-readable form.

An  acquisition is direct if it involves the acquisition  of
control  of the Canadian business or of its Canadian  parent
or grandparent and an acquisition is indirect if it involves
the  acquisition  of  control of a  non-Canadian  parent  or
grandparent of an entity carrying on the Canadian  business.
Control  may be acquired through the acquisition  of  actual
voting  control  by the acquisition of voting  shares  of  a
Canadian   corporation  or  through   the   acquisition   of
substantially  all  of the assets of the Canadian  business.
No  change of voting control will be deemed to have occurred
if  less  than one-third of the voting control of a Canadian
corporation is acquired by an investor.

A   WTO  investor,  as  defined  in  the  Act,  includes  an
individual  who  is a national of a member  country  of  the
World  Trade Organization or who has the right of  permanent
residence  in  relation to that WTO member, a government  or
government  agency of a WTO investor-controlled corporation,
limited   partnership,  trust  or  joint   venture   and   a
corporation,  limited partnership, trust  or  joint  venture
that   is   neither  WTO-investor  controlled  or   Canadian
controlled  of  which two-thirds of its board of  directors,
general  partners or trustees, as the case may be,  are  any
combination of Canadians and WTO investors.

The  higher thresholds for WTO investors do not apply if the
Canadian  business engages in activities in certain  sectors
such as uranium, financial services, transportation services
or communications.

The  Act  specifically  exempts  certain  transactions  from
either notification or review.  Included among this category
of transactions is the acquisition of voting shares or other
voting  interests  by any person in the ordinary  course  of
that person's business as a trader or dealer in securities.

The  Regulations  under  the  Act  specifies  the  remedies,
offences  and punishment applicable. Section 39 states  that
"When the Minister believes that a non-Canadian, contrary to
this  act  (a)  has  failed  to  give  notice;  or  (b)  has
implemented  an  investment which is prohibited",  then  the
Minister  may  send  a demand requiring the  default  to  be
remedied  and  if  this  demand is not  complied  with,  the
Minister may apply for a Court Order require divestiture  or
other   remedies,  as  the  circumstances   require.   Civil
penalties  apply for non-compliance with any provision,  and
criminal penalties may also apply.

Taxation

Canadian Federal Income Tax Consequences

The  following  is  a  discussion of the  material  Canadian
federal  income tax consequences applicable to a  holder  of
Common Shares who is a resident of the United States and who
is  not  a resident of Canada and who does not use or  hold,
and  is  not  deemed to use or hold, his  Common  Shares  in
connection  with carrying on a business in Canada  (a  "non-
resident    holder").    Accordingly,    shareholders    and
prospective investors should consult their own tax  advisors
for advice regarding their individual tax consequences.

This  summary  is based upon the current provisions  of  the
Income   Tax  Act  (Canada)  (the  "ITA"),  the  regulations
thereunder   (the   "Regulations"),  the  current   publicly
announced  administrative and assessing policies of  Revenue
Canada,  Taxation,  and  all specific  proposals  (the  "Tax
Proposals")  to amend the ITA and Regulations  announced  by
the  Minister of Finance (Canada) prior to the date  hereof.
This  summary assumes that the Tax Proposals will be enacted
in their form as of the date of this Annual Report.

Dividends

Dividends paid on the Common Shares to a non-resident holder
will  be subject to withholding tax. The Canada-U.S.  Income
Tax  Convention  (1980)  (the "Treaty")  provides  that  the
normal 25% withholding tax rate under the ITA is reduced  to
15% on dividends paid on shares of a corporation resident in
Canada  (such  as the Company) to beneficial owners  of  the
dividends who are residents of the United States,  and  also
provides  for a further reduction of this rate to  5%  where
the  beneficial owner of the dividends is a corporation that
is  a resident of the United States which owns at least  10%
of the voting shares of the corporation paying the dividend.

Capital Gains

Under  the  ITA, a taxpayer's capital gain or  capital  loss
from  a disposition of a Common Share is the amount, if any,
by which his proceeds of disposition exceed (or are exceeded
by) the aggregate of his adjusted cost base of the share and
reasonable  expenses  of disposition.  Three-quarters  of  a
capital  gain  (the "taxable capital gain") is  included  in
income, and three-quarters of a capital loss in a year  (the
"allowable capital loss") is deductible from taxable capital
gains  realized  in  the same year. The amount  by  which  a
shareholder's  allowable capital loss  exceeds  his  taxable
capital  gains  in  a year may be deducted  from  a  taxable
capital  gain  realized  by  the shareholder  in  the  three
previous   or  any  subsequent  year,  subject  to   certain
restrictions  in  the  case of a corporate  shareholder  and
subject to adjustment when the capital gains inclusion  rate
in  the year of disposition differs from the inclusion  rate
in the year the deduction is claimed.

A non-resident of Canada is not subject to tax under the ITA
in  respect  of a capital gain realized upon the disposition
of  a  share  of  a  public  corporation  unless  the  share
represents   "taxable  Canadian  property"  to  the   holder
thereof.   The Company is a public corporation for  purposes
of  the  ITA  and  a  Common Share will be taxable  Canadian
property to a non-resident holder if, at any time during the
period  of five years immediately preceding the disposition,
the  non-resident holder, persons with whom the non-resident
holder  did  not  deal at arm's length, or the  non-resident
holder and persons with whom he did not deal at arm's length
together owned not less than 25% of the issued shares of any
class of shares of the Company.

Where  a non-resident holder who is an individual ceased  to
be  resident in Canada, and at the time he ceased  to  be  a
Canadian resident elected to have his Common Shares  treated
as taxable Canadian property, he will be subject to Canadian
tax  on  any  capital  gain realized on disposition  of  the
Common  Shares, subject to the relieving provisions  of  the
Treaty  described  below.  The Common  Shares  may  also  be
taxable Canadian property to a holder if the holder acquired
them  pursuant  to  certain "rollover"  transactions.   This
would  include transactions under Sections 85 and 87 of  the
ITA   which  apply  to  share  for  share  and  amalgamation
transactions.

Where  a U.S. resident holder realizes a capital gain  on  a
disposition   of  Common  Shares  that  constitute   taxable
Canadian  property,  the  Treaty relieves  the  non-resident
shareholder from liability for Canadian tax on such  capital
gains unless:

1.   the  value  of  the shares is derived principally  from
     "real property" in Canada, including the right to
     explore for  or exploit natural resources and rights to
     amounts computed by reference to production from natural
     resources. It is a question of fact as to whether the
     value of the Company's  common shares results
     principally from  real property in Canada.  Although a
     tax opinion on this matter has not been obtained, given
     the nature of the Company's business and its stage of
     development, we have concluded that the value of our
     shares would likely fall into this category;

2.   the  non-resident  holder  is  an  individual  who  was
     resident in Canada for not less than 120 months during
     any period of 20 consecutive years preceding, and at any
     time during the 10 years immediately preceding, the
     disposition and  the shares were owned by him when he
     ceased to  be resident in Canada or are property
     substituted for property that was owned at that time; or

3.   the  shares formed part of the business property  of  a
     "permanent establishment" or pertained to a fixed base
     used for the purpose of performing independent personal
     services that the shareholder has or had in Canada
     within the 12 months preceding the disposition.

Notwithstanding  the potential exemption from  Canadian  tax
provided  under the Treaty, where a non-resident  of  Canada
disposes of Common Share that are taxable Canadian property,
the  non-resident is required to file a Canadian income  tax
return in respect of such dispositions.

United States Federal Income Tax Consequences

The  following is a discussion of all material United States
Federal income tax consequences, under current law, that may
be  applicable to a U.S. Holder (as defined below) of Common
Shares  of the Registrant. This discussion does not  address
all  potentially relevant Federal income tax matters and  it
does not address consequences peculiar to persons subject to
special provisions of Federal income tax law, such as  those
described  below as excluded from the definition of  a  U.S.
Holder.  In  addition, this discussion does  not  cover  any
state,  local  or foreign tax consequences.  (See  "Canadian
Federal Income Tax Consequences" above.)

The  following discussion is based upon the sections of  the
Internal Revenue Code of 1986, as amended to the date hereof
(the   "Code"),  Treasury  Regulations,  published  Internal
Revenue  Service  ("IRS") rulings, published  administrative
positions  of the IRS and court decisions that are currently
applicable,  any  or all of which could  be  materially  and
adversely changed, possibly on a retroactive basis,  at  any
time.   In  addition, this discussion does not consider  the
potential  effects,  both adverse  and  beneficial,  of  any
future  legislation  which, if enacted,  could  be  applied,
possibly  on  a retroactive basis, at any time. Shareholders
and  prospective  investors should  consult  their  own  tax
advisors   for   advice  regarding  their   individual   tax
consequences.

U.S.  information  reporting  requirements  may  apply  with
respect to the payment of dividends to U.S. Holders  of  the
Company's  shares.  Under Treasury regulations currently  in
effect,  non-corporate  holders may  be  subject  to  backup
withholding  at  a 31% rate with respect to  dividends  when
such  holder  (1)  fails to furnish  or  certify  a  correct
taxpayer  identification number to the payor in the required
manner; and (2) is notified by the IRS that it has failed to
report  payments of interest or dividends properly;  or  (3)
fails,  under certain circumstances, to certify that it  has
been  notified  by  the  IRS that it is  subject  to  backup
withholding  for  failure to report  interest  and  dividend
payments.

U.S. Holders

As used herein, a "U.S. Holder" is a holder of Common Shares
of  the  Registrant who or which is a citizen or  individual
resident (or is treated as a citizen or individual resident)
of  the  United  States for federal income tax  purposes,  a
corporation or partnership created or organized (or  treated
as  created or organized for federal income tax purposes) in
or  under  the  laws of the United States or  any  political
subdivision  thereof,  or a trust or estate  the  income  of
which  is includable in its gross income for federal  income
tax  purposes without regard to its source, if, (i) a  court
within  the  United  States  is  able  to  exercise  primary
supervision  over  the  administration  of  the  trust   and
(ii)  one  or more United States trustees have the authority
to  control  all  substantial decisions of the  trust.   For
purposes of this discussion, a U.S. Holder does not  include
persons subject to special provisions of Federal income  tax
law,  such as tax-exempt organizations, qualified retirement
plans,  financial  institutions, insurance  companies,  real
estate  investment  trusts, regulated investment  companies,
broker-dealers and Holders who acquired their stock  through
the  exercise  of  employee stock options  or  otherwise  as
compensation.

Distributions on Common Shares of the Registrant

U.S.  Holders  receiving  dividend distributions  (including
constructive dividends) with respect to Common Shares of the
Registrant  are  required to include  in  gross  income  for
United  States Federal income tax purposes the gross  amount
of  such distributions to the extent that the Registrant has
current   or  accumulated  earnings  and  profits,   without
reduction  for  any Canadian income tax withheld  from  such
distributions.  Such Canadian tax withheld may be  credited,
subject  to  certain limitations, against the U.S.  Holder's
United    States   Federal   income   tax   liability    or,
alternatively,  may  be  deducted  in  computing  the   U.S.
Holder's  United States Federal taxable income by those  who
itemize  deductions.   (See  more  detailed  discussion   at
"Foreign   Tax   Credit"  below).   To   the   extent   that
distributions  exceed  current or accumulated  earnings  and
profits of the Registrant, they will be treated first  as  a
return of capital up to the U.S. Holder's adjusted basis  in
the  Common Shares and thereafter as gain from the  sale  or
exchange  of the Common Shares.  Preferential tax rates  for
long-term  capital gains are applicable  to  a  U.S.  Holder
which  is  an  individual,  estate  or  trust.   There   are
currently  no  preferential tax rates for long-term  capital
gains for a U.S. Holder which is a corporation.

Dividends  paid on the Common Shares of the Registrant  will
not   be  eligible  for  the  dividends  received  deduction
provided  to  corporations receiving dividends from  certain
United  States  corporations.  A  U.S.  Holder  which  is  a
corporation may, under certain circumstances, be entitled to
a  70%  deduction  of the United States  source  portion  of
dividends   received   from  the  Registrant   (unless   the
Registrant qualifies as a "foreign personal holding company"
or a "passive foreign investment company", as defined below)
if such U.S. Holder owns shares representing at least 10% of
the   voting  power  and  value  of  the  Registrant.    The
availability of this deduction is subject to several complex
limitations which are beyond the scope of this discussion.

Foreign Tax Credit

A  U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of  Common
Shares  of the Registrant may be entitled, at the option  of
the  U.S. Holder, to either a deduction or a tax credit  for
such  foreign  tax  paid  or  withheld.   It  will  be  more
advantageous  to  claim a credit because  a  credit  reduces
United  States  Federal income taxes on a  dollar-for-dollar
basis,  while  a  deduction merely  reduces  the  taxpayer's
income  subject to tax.  This election is made on a year-by-
year  basis  and applies to all foreign taxes  paid  by  (or
withheld  from) the U.S. Holder during that year. There  are
significant  and  complex limitations  which  apply  to  the
credit,  among  which  is the general  limitation  that  the
credit  cannot exceed the proportionate shares of  the  U.S.
Holder's  United States income tax liability that  the  U.S.
Holder's foreign source income bears to his or its worldwide
taxable income.  In the determination of the application  of
this  limitation, the various items of income and  deduction
must  be  classified  into  foreign  and  domestic  sources.
Complex rules govern this classification process.  There are
further  limitations on the foreign tax credit  for  certain
types  of income such as "passive income", "high withholding
tax   interest",  "financial  services  income",   "shipping
income",  and certain other classifications of income.   The
availability  of the foreign tax credit and the  application
of  the  limitations  on the credit are  fact  specific  and
holders  and  prospective holders of Common  Shares  of  the
Registrant  should consult their own tax advisors  regarding
their individual circumstances.

Disposition of Common Shares of the Registrant

A  U.S. Holder will recognize gain or loss upon the sale  of
Common Shares of the Registrant equal to the difference,  if
any,  between the amount of cash plus the fair market  value
of  any property received, and the Holder's tax basis in the
Common Shares of the Registrant.  This gain or loss will  be
capital  gain  or loss if the Common Shares  are  a  capital
asset  in the hands of the U.S. Holder unless the Registrant
were  to  become a controlled foreign corporation.  For  the
effect   on   the  Registrant  of  becoming   a   controlled
corporation,  see  "Controlled Foreign  Corporation  Status"
below.   Any capital gain will be a short-term or  long-term
capital  gain or loss depending upon the holding  period  of
the  U.S.  Holder.  Gains and losses are netted and combined
according  to  special  rules in  arriving  at  the  overall
capital  gain or loss for a particular tax year.  Deductions
for   net   capital  losses  are  subject   to   significant
limitations.   For  U.S. Holders which are individuals,  any
unused portion of such net capital loss may be carried  over
to be used in later tax years until such net capital loss is
thereby  exhausted.  For U.S. Holders which are corporations
(other  than  corporations subject to Subchapter  S  of  the
Code), an unused net capital loss may be carried back  three
years from the loss year and carried forward five years from
the  loss year to be offset against capital gains until such
net capital loss is thereby exhausted.

Other Considerations for U.S. Holders

In  the following circumstances, the above sections of  this
discussion may not describe the United States Federal income
tax  consequences resulting from the holding and disposition
of Common Shares of the Registrant:

Foreign Personal Holding Company

If  at  any time during a taxable year more than 50% of  the
total  combined  voting  power or the  total  value  of  the
Registrant's  outstanding  shares  is  owned,  actually   or
constructively,  by  five  or  fewer  individuals  who   are
citizens or residents of the United States and 60%  or  more
of  the  Registrant's gross income for such year was derived
from  certain passive sources (e.g., from dividends received
from its subsidiaries), the Registrant would be treated as a
"foreign  personal  holding company." In  that  event,  U.S.
Holders  that hold Common Shares of the Registrant would  be
required  to include in income for such year their allocable
portion of the Registrant's passive income which would  have
been  treated as a dividend had that passive income actually
been  distributed.  To the best knowledge of the Registrant,
it  is  not  and  has never been a Foreign Personal  Holding
Company.

Foreign Investment Company

If  50% or more of the combined voting power or total  value
of the Registrant's outstanding shares are held, actually or
constructively,  by  citizens or  residents  of  the  United
States, United States domestic partnerships or corporations,
or  estates or trusts other than foreign estates  or  trusts
(as  defined  by  the  Code Section  7701(a)(31)),  and  the
Registrant is found to be engaged primarily in the  business
of   investing,  reinvesting,  or  trading  in   securities,
commodities,  or any interest therein, it is  possible  that
the  Registrant  might be treated as a  "foreign  investment
company" as defined in Section 1246 of the Code, causing all
or  part  of  any gain realized by a U.S. Holder selling  or
exchanging Common Shares of the Registrant to be treated  as
ordinary  income  rather than capital gains.   To  the  best
knowledge of the Registrant, it is not and has never been  a
Foreign Investment Company.

Passive Foreign Investment Company

A  U.S.  Holder  who  holds stock in a  foreign  corporation
during  any  year in which such corporation qualifies  as  a
passive  foreign investment company ("PFIC") is  subject  to
U.S.  federal  income  taxation of that foreign  corporation
under one of two alternative tax methods at the election  of
each  such  U.S.  Holder.  The directors of  the  Registrant
believe  that the Company has and does qualify as a  Passive
Foreign Investment Company for U.S. shareholders.

Section  1296  of the Code defines a PFIC as  a  corporation
that is not formed in the United States and, for any taxable
year, either (i) 75% or more of its gross income is "passive
income,"  which  includes interest,  dividends  and  certain
rents and royalties or (ii) the average percentage, by value
(or,  if the company is a controlled foreign corporation  or
makes  an election, adjusted tax basis), of its assets  that
produce  or are held for the production of "passive  income"
is  50% or more. For taxable years of U.S. persons beginning
after  December  31,  1997, and for  tax  years  of  foreign
corporations  ending  with or within  such  tax  years,  the
Taxpayer  Relief  Act of 1997 provides that publicly  traded
corporations  must  apply this test on a fair  market  value
basis only.  The Registrant believes that it is a PFIC.

As  a PFIC, each U. S. Holder must determine under which  of
the  alternative tax methods it wishes to be  taxed.   Under
one  method, a U.S. Holder who elects in a timely manner  to
treat  the Registrant as a Qualified Electing Fund  ("QEF"),
as  defined in the Code, (an "Electing U.S. Holder") will be
subject, under Section 1293 of the Code, to current  federal
income  tax  for any taxable year in which the  Registrant's
qualifies   as  a  PFIC  on  his  pro-rata  share   of   the
Registrant's (i) "net capital gain" (the excess of net long-
term  capital gain over net short-term capital loss),  which
will be taxed as long-term capital gain to the Electing U.S.
Holder  and (ii) "ordinary earnings" (the excess of earnings
and  profits over net capital gain), which will be taxed  as
ordinary  income to the Electing U.S. Holder, in each  case,
for  the U.S. Holder's taxable year in which (or with which)
the Registrant taxable year ends, regardless of whether such
amounts are actually distributed.

A  QEF election also allows the Electing U.S. Holder to  (i)
treat  any  gain realized on the disposition of  his  Common
Shares (or deemed to be realized on the pledge of his Common
Shares)  as  capital  gain; (ii)  treat  his  share  of  the
Registrant's net capital gain, if any, as long-term  capital
gain  instead  of  ordinary income, and (iii)  either  avoid
interest charges resulting from PFIC status altogether  (see
discussion  of  interest charge below), or  make  an  annual
election,  subject to certain limitations, to defer  payment
of  current  taxes  on his share of the Registrant's  annual
realized  net  capital gain and ordinary  earnings  subject,
however, to an interest charge.  If the Electing U.S. Holder
is  not  a  corporation, such an interest  charge  would  be
treated as "personal interest" that is not deductible at all
in taxable years beginning after 1990.

The  procedure a U.S. Holder must comply with  in  making  a
timely  QEF election will depend on whether the year of  the
election  is  the  first year in the U.S.  Holder's  holding
period  in  which  the Registrant is a PFIC.   If  the  U.S.
Holder  makes a QEF election in such first year,  (sometimes
referred  to as a "Pedigreed QEF Election"), then  the  U.S.
Holder  may  make  the  QEF election by  simply  filing  the
appropriate documents at the time the U.S. Holder files  its
tax  return for such first year. If, however, the Registrant
qualified  as  a PFIC in a prior year, then in  addition  to
filing  documents,  the  U.S.  Holder  must  also  elect  to
recognize as an "excess distribution" (i) under the rules of
Section  1291  (discussed below), any  gain  that  he  would
otherwise recognize if the U.S. Holder sold his stock on the
application  date or (ii) if the Registrant is a  controlled
foreign corporation ("CFC"), the Holder's pro rata share  of
the   corporation's   earnings   and   profits.   (But   see
"Elimination  of Overlap Between Subpart F  Rules  and  PFIC
Provisions").  Either the deemed sale election or the deemed
dividend  election  will result in  the  U.S.  Holder  being
deemed to have made a timely QEF election.

With  respect  to  a  situation in  which  a  Pedigreed  QEF
election is made, if the Registrant no longer qualifies as a
PFIC  in  a subsequent year, normal Code rules and  not  the
PFIC rules will apply.

If  a U.S. Holder has not made a QEF Election at any time (a
"Non-electing  U.S.  Holder"), then special  taxation  rules
under  Section  1291  of the Code will apply  to  (i)  gains
realized  on  the disposition (or deemed to be  realized  by
reason  of  a pledge) of his Common Shares and (ii)  certain
"excess  distributions",  as  specially  defined,   by   the
Registrant.

A Non-electing U.S. Holder would be required to pro-rate all
gains  realized on the disposition of his Common Shares  and
all  excess distributions over the entire holding period for
the  Common  Shares.   All  gains  or  excess  distributions
allocated  to  prior  years of the U.S. Holder  (other  than
years  prior  to  the first taxable year of  the  Registrant
during such U.S. Holder's holding period and beginning after
January  1, 1987 for which it was a PFIC) would be taxed  at
the highest tax rate for each such prior year applicable  to
ordinary income.  The Non-electing U.S. Holder also would be
liable for interest on the foregoing tax liability for  each
such prior year calculated as if such liability had been due
with  respect to each such prior year.  A Non-electing  U.S.
Holder  that  is not a corporation must treat this  interest
charge as "personal interest" which, as discussed above,  is
wholly  non-deductible.  The balance  of  the  gain  or  the
excess  distribution will be treated as ordinary  income  in
the year of the disposition or distribution, and no interest
charge will be incurred with respect to such balance.

If  the  Registrant  is a PFIC for any taxable  year  during
which  a Non-electing U.S. Holder holds Common Shares,  then
the  Registrant will continue to be treated as a  PFIC  with
respect  to such Common Shares, even if it is no  longer  by
definition a PFIC.  A Non-electing U.S. Holder may terminate
this deemed PFIC status by electing to recognize gain (which
will  be  taxed  under the rules discussed  above  for  Non-
Electing  U.S.  Holders) as if such Common Shares  had  been
sold  on the last day of the last taxable year for which  it
was a PFIC.

Under  Section  1291(f) of the Code, the Department  of  the
Treasury has issued proposed regulations that would treat as
taxable certain transfers of PFIC stock by Non-electing U.S.
Holders  that  are  not  otherwise  taxed,  such  as  gifts,
exchanges   pursuant   to  corporate  reorganizations,   and
transfers at death.

If  a  U.S.  Holder  makes  a QEF Election  that  is  not  a
Pedigreed  Election (i.e., it is made after the  first  year
during  which the Registrant is a PFIC and the  U.S.  Holder
holds   shares   of   the  Registrant)   (a   "Non-Pedigreed
Election"),  the QEF rules apply prospectively  but  do  not
apply  to  years prior to the year in which  the  QEF  first
becomes  effective.  U.S. Holders should consult  their  tax
advisors regarding the specific consequences of making a Non-
Pedigreed QEF Election.

Certain special adverse rules will apply with respect to the
Common Shares while the Registrant is a PFIC whether or  not
it is treated as a QEF. For example under Section 1297(b)(6)
of  the Code (as in effect prior to the Taxpayer Relief  Act
of  1997), a U.S. Holder who uses PFIC stock as security for
a  loan  (including a margin loan) will, except  as  may  be
provided in regulations, be treated as having made a taxable
disposition of such stock.

The  foregoing  discussion is based on  currently  effective
provisions  of  the Code, existing and proposed  regulations
thereunder,  and  current administrative rulings  and  court
decisions,  all  of which are subject to change.   Any  such
change  could  affect the validity of this  discussion.   In
addition, the implementation of certain aspects of the  PFIC
rules  requires the issuance of regulations  which  in  many
instances  have  not  been promulgated and  which  may  have
retroactive effect.  There can be no assurance that  any  of
these  proposals will be enacted or promulgated, and if  so,
the form they will take or the effect that they may have  on
this discussion.  Accordingly, and due to the complexity  of
the  PFIC rules, U.S. Holders of the Registrant are strongly
urged  to  consult  their  own tax advisors  concerning  the
impact of these rules on their investment in the Registrant.
For a discussion of the impact of the Taxpayer Relief Act of
1997  on  a  U.S.  Holder  of  a PFIC,  see  "Mark-to-Market
Election  For  PFIC Stock Under the Taxpayer Relief  Act  of
1997"  and "Elimination of Overlap Between Subpart  F  Rules
and PFIC Provisions" below.

Mark-to-Market  Election for PFIC Stock Under  the  Taxpayer
Relief Act of 1997

The  Taxpayer Relief Act of 1997 provides that a U.S. Holder
of a PFIC may make a mark-to-market election with respect to
the stock of the PFIC if such stock is marketable as defined
below.   This  provision is designed to  provide  a  current
inclusion   provision  for  persons  that  are  Non-Electing
Holders.  Under the election, any excess of the fair  market
value  of  the PFIC stock at the close of the tax year  over
the  Holder's adjusted basis in the stock is included in the
Holder's  income.  The Holder may deduct any excess  of  the
adjusted basis of the PFIC stock over its fair market  value
at  the  close  of  the tax year.  However,  deductions  are
limited  to  the net mark-to-market gains on the stock  that
the  Holder  included in income in prior tax  years,  or  so
called "unreversed inclusions."

For purposes of the election, PFIC stock is marketable if it
is  regularly  traded on (1) a national securities  exchange
that  is  registered with the SEC, (2) the  national  market
system  established  under Section  11A  of  the  Securities
Exchange Act of 1934, or (3) an exchange or market that  the
IRS  determines  has  rules sufficient to  ensure  that  the
market  price  represents legitimate and sound  fair  market
value.

A  Holder's adjusted basis of PFIC stock is increased by the
income  recognized  under  the mark-to-market  election  and
decreased by the deductions allowed under the election.   If
a  U.S.  Holder owns PFIC stock indirectly through a foreign
entity, the basis adjustments apply to the basis of the PFIC
stock in the hands of the foreign entity for the purpose  of
applying  the PFIC rules to the tax treatment  of  the  U.S.
owner.   Similar basis adjustments are made to the basis  of
the  property through which the U.S. persons hold  the  PFIC
stock.

Income recognized under the mark-to-market election and gain
on  the sale of PFIC stock with respect to which an election
is  made  is treated as ordinary income.  Deductions allowed
under the election and loss on the sale of PFIC with respect
to  which an election is made, to the extent that the amount
of  loss  does  not  exceed  the  net  mark-to-market  gains
previously  included, are treated as ordinary  losses.   The
U.S. or foreign source of any income or losses is determined
as  if the amount were a gain or loss from the sale of stock
in the PFIC.

If  PFIC stock is owned by a CFC (discussed below), the  CFC
is treated as a U.S. person that may make the mark-to-market
election.  Amounts includable in the CFC's income under  the
election  are  treated as foreign personal  holding  company
income,  and  deductions are allocable to  foreign  personal
holding company income.

The  above  provisions apply to tax years  of  U.S.  persons
beginning  after  December 31, 1997, and  to  tax  years  of
foreign corporations ending with or within such tax years of
U.S. persons.

The  rules  of  Code Section 1291 applicable to nonqualified
funds  do not apply to a U.S. Holder for tax years for which
a  mark-to-market election is in effect.   If  Code  Section
1291  is applied and a mark-to-market election was in effect
for any prior tax year, the U.S. Holder's holding period for
the PFIC stock is treated as beginning immediately after the
last tax year of the election.  However, if a taxpayer makes
a   mark-to-market  election  for  PFIC  stock  that  is   a
nonqualified  fund  after  the  beginning  of  a  taxpayer's
holding  period for such stock, a coordination rule  applies
to  ensure  that  the taxpayer does not avoid  the  interest
charge  with  respect  to  amounts attributable  to  periods
before the election.

Controlled Foreign Corporation Status

If more than 50% of the voting power of all classes of stock
or  the total value of the stock of the Registrant is owned,
directly  or indirectly, by U.S. Holders, each of  whom  own
10%  or  more  of  the total combined voting  power  of  all
classes of stock of the Registrant, the Registrant would  be
treated as a "controlled foreign corporation" or "CFC" under
Subpart F of the Code.  This classification would bring into
effect many complex results including the required inclusion
by  such 10% U.S. Holders in income of their pro rata shares
of  "Subpart  F  income" (as defined by  the  Code)  of  the
Registrant and the Registrant's earnings invested  in  "U.S.
property"  (as  defined by the Code).   In  addition,  under
Section 1248 of the Code, gain from the sale or exchange  of
Common Shares of the Registrant by such a 10% U.S. Holder of
Registrant  at  any time during the five year period  ending
with  the  sale or exchange is treated as ordinary  dividend
income  to  the  extent  of  earnings  and  profits  of  the
Registrant  attributable  to the stock  sold  or  exchanged.
Because  of  the  complexity of Subpart F, and  because  the
Registrant  may  never be a CFC, a more detailed  review  of
these rules is beyond of the scope of this discussion.

Elimination of Overlap Between Subpart F Rules and PFIC
Provisions

Under the Taxpayer Relief Act of 1997, a PFIC that is also a
CFC  will  not be treated as a PFIC with respect to  certain
10%  U.S.  Holders.   For the exception to  apply,  (i)  the
corporation  must  be a CFC within the  meaning  of  section
957(a)  of the Code and (ii) the U.S. Holder must be subject
to  the current inclusion rules of Subpart F with respect to
such  corporation (i.e., the U.S. Holder is a "United States
Shareholder," see "Controlled Foreign Corporation,"  above).
The  exception  only  applies to  that  portion  of  a  U.S.
Holder's  holding period beginning after December 31,  1997.
For that portion of a United States Holder before January 1,
1998, the ordinary PFIC and QEF rules continue to apply.

As  a  result of this new provision, if the Registrant  were
ever  to become a CFC, U.S. Holders who are currently  taxed
on their pro rata shares of Subpart F income of a PFIC which
is  also  a  CFC will not be subject to the PFIC  provisions
with  respect to the same stock if they have previously made
a  Pedigreed QEF Election.  The PFIC provisions will however
continue  to apply to PFIC/CFC U.S. Holders for any  periods
in  which  they  are not subject to Subpart F  and  to  U.S.
Holders  that  did not make a Pedigreed QEF Election  unless
the  U.S. Holder elects to recognize gain on the PFIC shares
held in the Registrant as if those shares had been sold.
Dividends and Paying Agents

Not applicable.
Statement by Experts

Not applicable.
Documents on Display

The  material  contracts  listed  herein  may  be  inspected
between  the hours of 10:00 a.m. and 5:00 p.m. at  the  head
office  of  the Company located at Suite 1550,  355  Burrard
Street, Vancouver, British Columbia.
Subsidiary Information

The  Company has a wholly owned subsidiary, Derek  Resources
(U.S.A.) Inc. incorporated by the Company under the laws  of
the State of Delaware on August 18, 1981 under the name Cove
Energy  Inc.  On December 18, 2000, Cove Energy Inc. changed
its name to Derek Resources (U.S.A.) Inc. The registered and
records  offices of Derek USA are located at  No.  100  West
Tenth  Street, Wilmington, Delaware.  The principal business
address  of  Derek USA is Suite 1550 - 355  Burrard  Street,
Vancouver, British Columbia. The authorized capital of Derek
USA  consists  of 2,000 common shares without par  value  of
which  one common share issued and outstanding is registered
in the name of the Company.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Not applicable.


ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

Not applicable.

                                 PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.


ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS

Not applicable.

                                PART III

ITEM 15 - CONTROLS AND PROCEDURES

The  directors of the Company are elected annually and  hold
office  until the next annual general meeting of the members
of  the Company or until their successors in office are duly
elected  or  appointed.   The  Company  does  not  have   an
executive committee.  All directors are elected for  a  one-
year  term.   All  officers serve at  the  pleasure  of  the
Board.   The next annual general meeting of the shareholders
of the Company has been set for November 28, 2002.

The  Company's  Board of Directors has  one  committee,  the
Audit Committee.  The members of the Audit Committee do  not
have  any  fixed  terms  for holding  their  positions,  are
appointed  and  replaced from time to time by resolution  of
the  Board  of  Directors and do not  receive  any  separate
remuneration for acting as members of the committee.

The  Audit Committee, comprised of Barry C.J. Ehrl, Ed  Byrd
and Frank R. Hallam has the responsibility of reviewing with
the  Company's  Auditor  all  financial  statements  to   be
submitted  to  an annual general meeting of the shareholders
of the Company, prior to their consideration by the Board of
Directors.  Due to the small size of the Company's Board  of
Directors, the present audit committee has only one outside,
non-executive member, Ed Byrd. The Company expects to expand
the  Company's  Board  and establish a majority  of  outside
members on the Audit Committee during 2003.

On  November 1, 2002, management concluded its evaluation of
the effectiveness of our disclosure controls and procedures.
As  of that date, the Company's Chief Executive Officer  and
Chief Financial Officer concluded that the Company maintains
effective  disclosure  controls and procedures  relating  to
transactions,  assets,  liabilities,  accounting  and  other
records  and  public  reporting and disclosure  that  ensure
information  required  to  be  disclosed  in  the  Company's
reports  under  the  Securities  Exchange  Act  of  1934  is
recorded, processed, summarized and reported within the time
periods   specified   in   the  SEC's   rules   and   forms.
Specifically, the disclosure controls and procedures  assure
that  information  is  accumulated and communicated  to  the
Company's management, including its Chief Executive  Officer
and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. There have been  no
significant changes in the Company's internal controls or in
other factors that could significantly affect these controls
subsequent to the date of management's evaluation.


ITEM 16 - RESERVED

                           PART IV

ITEM 17 - FINANCIAL STATEMENTS

See  the  Consolidated  Financial  Statements  and  Exhibits
listed  in  Item 19 hereof and filed as part of this  Annual
Report.

These financial statements were prepared in accordance  with
accounting   principles  generally   accepted   in   Canada.
Differences between accounting principles generally accepted
in  Canada  and in the United States, as applicable  to  the
Company,  are  set  forth  in Note 11  to  the  accompanying
Consolidated Financial Statements of the Company.


ITEM 18 - FINANCIAL STATEMENTS

Not applicable.


ITEM 19 - EXHIBITS

1.   Financial Statements

1.   The audited consolidated financial statements which
     include the consolidated balance sheets as at April 30,
     2002 and 2001 and statements of operations, cash flows,
     shareholders' equity and development expenditures for
     each of the years in the three years ended April 30,
     2002 together with the notes thereto.

Derek Resources Corporation
(an exploration stage company)

Consolidated Financial Statements
April 30, 2002, 2001 and 2000
(expressed in Canadian dollars)
To the Shareholders of
Derek Resources Corporation

We  have  audited  the  consolidated balance  sheets  of  Derek
Resources  Corporation (an exploration  stage  company)  as  at
April  30,  2002  and 2001 and the consolidated  statements  of
loss,  shareholders' equity and cash flows for the years  ended
April  30, 2002, 2001 and 2000. These financial statements  are
the   responsibility   of   the   company's   management.   Our
responsibility  is  to express an opinion  on  these  financial
statements based on our audits.

We  conducted our audits in accordance with Canadian and United
States  generally accepted auditing standards. Those  standards
require  that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material
misstatement.  An audit includes examining, on  a  test  basis,
evidence  supporting  the  amounts  and  disclosures   in   the
financial  statements.  An audit also  includes  assessing  the
accounting  principles used and significant estimates  made  by
management,  as  well  as  evaluating  the  overall   financial
statement presentation.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
company  as at April 30, 2002 and 2001 and the results  of  its
operations  and  its  cash  flows  and  the  changes   in   its
shareholders' equity for the years ended April 30,  2002,  2001
and   2000  in  accordance  with  Canadian  generally  accepted
accounting  principles.  As required by  the  British  Columbia
Company  Act, we report that, in our opinion, these  principles
have  been  applied,  after giving effect  to  the  changes  in
accounting  policy  described  in  note  2  to  the   financial
statements, on a consistent basis.

"PricewaterhouseCoopers LLP"

Chartered Accountants
Vancouver, Canada

July 24, 2002
(except note 1, which is as at August 27, 2002 and note 4,
which is at August 21, 2002)


Comments by the Auditors for U.S. Readers on Canada-U.S.
Reporting Conflict

In  the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion
paragraph)  when  the  financial  statements  are  affected  by
conditions  and  events  that cast  substantial  doubt  on  the
company's ability to continue as a going concern, such as those
described  in note 1 to the consolidated financial  statements.
Our  report  to  the shareholders dated July  24,  2002  except
note 1, which is as at August 27, 2002, and note 4, which is at
August  21,  2002  is  expressed in  accordance  with  Canadian
reporting  standards which do not permit a  reference  to  such
events  and conditions in the auditors' report when  these  are
adequately disclosed in the financial statements.

"PricewaterhouseCoopers LLP"

Chartered Accountants
Vancouver, Canada

<table>
<caption>

                                                     <c>                       <c>

                                                              2002                      2001
                                                                $                         $
                                                        ----------                ----------
Assets

Current assets
Cash and short-term deposits                                14,804                    19,857
Accounts receivable and prepaid expenses                     3,942                   147,538
                                                        ----------                ----------
                                                            18,746                   167,395

Oil and natural gas properties (note 3)                 13,910,104                12,249,321

Performance bonds (note 3)                                  71,195                    67,973

Other assets                                                12,215                    18,342
                                                        ----------                ----------
                                                        14,012,260                12,503,031
                                                        ----------                ----------
Liabilities

Current liabilities
Accounts payable and accrued liabilities                 1,441,551                 2,583,427
Current portion of notes payable (note 4)                1,066,180                        -
                                                        ----------                ----------
                                                         2,507,731                 2,583,427

Notes payable (note 4)                                     506,000                        -
                                                        ----------                ----------
                                                         3,013,731                 2,583,427
                                                        ----------                ----------
Shareholders' Equity

Capital stock (note 5)                                  22,464,255                20,357,250

Equity component of notes payable (note 4)                 132,000                        -

Common shares allotted - not issued (note 3)                    -                     97,500

Deficit                                                (11,597,726)              (10,535,146)
                                                        ----------                ----------
                                                        10,998,529                 9,919,604
                                                        ----------                ----------
                                                        14,012,260                12,503,031
                                                        ----------                ----------
Going concern and nature of operations (note 1)

</table>

<table>
<caption>

                                                <c>            <c>           <c>           <c>         <c>             <c>

                                                                                               Special                        Total
                                                               Common shares        Shares     warrants                      share-
                                                      Number          Amount    allotted -    and notes     Cumulative     holders'
                                                   of shares               $    not issued     payable       deficit         equity
                                                                                         $                $       $               $
                                                   ----------     ----------       --------     -------    ----------    ----------
Balance - April 30, 1999                            6,805,129     10,053,113             -       74,000    (9,033,073)    1,094,040

Conversion of special warrants to shares              297,500         74,000             -      (74,000)          -              -
Special warrants issued and converted to shares     2,364,000      1,198,000             -           -            -       1,198,000
Shares recorded as finder's fee                        74,250         37,125             -           -            -          37,125
Shares recorded as finder's fee                            -         (37,125)            -           -            -         (37,125)
Shares issued for cash:
Exercise of warrants                                  267,500        145,040             -           -            -         145,040
Exercise of options                                    30,000         14,900             -           -            -          14,900
Shares issued to acquire royalty interest             120,000         90,600             -           -            -          90,600
Shares allotted to acquire royalty interest                -              -         135,000          -            -         135,000
Loss for the year                                          -              -              -           -       (675,731)     (675,731)
                                                   ----------     ----------       --------     -------    ----------    ----------
Balance - April 30, 2000                            9,958,379     11,575,653        135,000          -     (9,708,804)    2,001,849

Special warrants issued and converted to shares         7,500          6,000             -           -            -           6,000
Shares recorded as finder's fee                       410,377        172,357             -           -            -         172,357
Shares recorded as finder's fee                            -        (172,357)            -           -            -        (172,357)
Shares issued for cash:
Exercise of warrants                                1,811,500        973,470             -           -            -         973,470
Exercise of options                                    72,000         35,380             -           -            -          35,380
Private placements - net of costs                  19,137,865      7,729,247             -           -            -       7,729,247
Shares issued to acquire royalty interest              50,000         37,500        (37,500)         -            -              -
Loss for the year                                          -              -              -           -       (826,342)     (826,342)
                                                   ----------     ----------       --------     -------    ----------    ----------
Balance - April 30, 2001                           31,447,621     20,357,250         97,500          -    (10,535,146)    9,919,604

Shares recorded as finder's fee                       183,050         56,665             -           -            -          56,665
Shares recorded as finder's fee                            -         (56,665)            -           -            -         (56,665)
Shares issued to repay notes payable (note 4)         731,300        219,390             -           -            -         219,390
Shares issued for cash:
Private placements - net of costs                   5,653,051      1,790,115             -           -            -       1,790,115
Shares issued to acquire royalty interest             130,000         97,500        (97,500)         -            -              -
Notes payable                                              -              -              -      132,000           -         132,000
Loss for the year                                          -              -              -           -     (1,062,580)   (1,062,580)
                                                   ----------     ----------       --------     -------    ----------    ----------
Balance - April 30, 2002                           38,145,022     22,464,255             -      132,000   (11,597,726)   10,998,529
                                                   ----------     ----------       --------     -------    ----------    ----------


                                                         2002           2001           2000
                                                           $              $              $

Revenues
Oil and gas sales - net of royalties                    1,024         10,221          4,546
Gain on sale of oil and gas leases                         -          11,729             -
Interest - net of bank charges                             -         109,485         15,278
                                                   ----------     ----------       --------
                                                        1,024        131,435         19,824
                                                   ----------     ----------       --------
Expenses
Accounting, legal and audit                           167,557         62,801         50,772
Interest expense                                      141,151             -              -
Consulting and management fees                        370,114        385,333        273,938
Office administration and other                       166,434        165,871        107,302
Shareholders' information and travel                  159,721        310,647        225,244
Stock exchange and filing fees                         15,740         11,493         14,520
Transfer fees                                           7,864          9,816          7,965
Foreign exchange loss                                  35,023         11,816         15,814
                                                   ----------     ----------       --------
                                                    1,063,604        957,777        695,555
                                                   ----------     ----------       --------
Loss for the year                                  (1,062,580)      (826,342)      (675,731)
                                                   ----------     ----------       --------
Basic and diluted loss per share                        (0.03)         (0.04)         (0.09)
                                                   ----------     ----------       --------
Weighted average number of shares outstanding      34,251,850     23,511,247       7,906,952
                                                   ----------     ----------       --------



                                                         2002           2001           2000
                                                           $              $              $
                                                   ----------     ----------       --------
Cash flows from operating activities
Loss for the year                                  (1,062,580)      (826,342)      (675,731)
Items not affecting cash
Gain on sale of oil and gas leases                         -         (11,729)             -
Amortization of other assets                            6,127          4,376              -
                                                   ----------     ----------       --------
                                                   (1,056,453)      (833,695)      (675,731)
Net change in non-cash working capital items
Accounts receivable and prepaid expenses              143,596        (81,487)       (60,142)
Accounts payable and accrued liabilities              302,826         45,873          4,120
                                                   ----------     ----------       --------
                                                     (610,031)      (869,309)      (731,753)
                                                   ----------     ----------       --------
Cash flows from investing activities
Expenditures on oil and natural gas properties     (1,660,783)   (10,719,698)      (198,622)
Accounts payable on oil and natural gas property   (1,444,702)     2,467,709             -
Proceeds from sale of oil and gas leases                   -          11,729             -
Performance bonds                                      (3,222)       (31,200)       (36,773)
Other assets                                               -         (14,617)        (8,101)
                                                   ----------     ----------       --------
                                                   (3,108,707)    (8,286,077)      (243,496)
                                                   ----------     ----------       --------
Cash flows from financing activities
Notes payable                                       1,923,570             -              -
Special warrants issued for cash                           -              -       1,198,000
Shares issued for cash                              1,790,115      8,738,097        159,940
                                                   ----------     ----------       --------
                                                    3,713,685      8,738,097      1,357,940
                                                   ----------     ----------       --------
(Decrease) increase in cash and                        (5,053)      (417,289)       382,691
short-term deposits

Cash and short-term deposits -                         19,857        437,146         54,455
Beginning of year
                                                   ----------     ----------       --------
Cash and short-term deposits -                         14,804         19,857        437,146
End of year

Cash and short-term deposits consist of
Cash                                                   14,804         19,857         62,146
Short-term deposits                                        -              -         375,000
                                                   ----------     ----------       --------
                                                       14,804         19,857        437,146
                                                   ----------     ----------       --------
Supplemental cash flow information (note 12)

</table>

1  Going concern and nature of operations

   Derek  Resources  Corporation is an exploration stage  oil  and  gas
   company  with working interests in oil wells in Canada and  oil  and
   gas properties in the United States.

   For  the years ended April 30, 2002, 2001 and 2000, the company  has
   incurred  losses of $1,062,580, $826,342 and $675,731  respectively,
   and  as  at  April  30,  2002, the company has insufficient  working
   capital to meet its ongoing operating commitments. Revenue from  its
   oil  and  gas  properties is not sufficient to fully meet  its  cash
   requirements  and  the company is dependent on its shareholders  and
   creditors  to support it as a going concern. While the  company  has
   been  successful  in  obtaining  financing  from  shareholders   and
   directors  in  the  past,  there is no assurance  the  company  will
   continue   to   be   successful  in  raising  necessary   financing.
   Accordingly,  there is substantial doubt about the  ability  of  the
   company to continue as a going concern.

   Management is actively pursuing additional sources of financing  and
   is  pursuing a partnership with an outside source to develop the LAK
   Ranch  property. At the present time, the LAK Ranch  oil  production
   plant is idle until a partner or substantial financing can be found.
   Subsequent to year-end (note 4), the company exchanged common shares
   for  a  portion of the notes payable outstanding at April 30,  2002,
   and  extended  repayment terms on notes payable  not  exchanged.  In
   addition,  on  August  27,  2002, the company  completed  a  private
   placement  of 3,917,500 units at $0.10 per unit. Each unit  consists
   of   one   common  share  and  one  common  share  purchase  warrant
   exercisable at $0.15 for a period of two years.

   The  continued  operations of the company and the recoverability  of
   the  amounts shown for oil and natural gas properties are  dependent
   upon   the  existence  of  economically  recoverable  oil  reserves,
   maintaining  title  and beneficial interest  in  the  property,  the
   ability  of the company to obtain necessary financing to  bring  the
   reserves  into production, and upon future profitable production  or
   proceeds  from the disposition of properties. The amounts  shown  as
   oil  and  natural gas properties represent net costs to  date,  less
   amounts  depleted  or written off, and do not necessarily  represent
   present or future values.

   These  consolidated  financial statements have been  prepared  on  a
   going concern basis and, accordingly, do not include any adjustments
   that might be necessary should the company be unable to continue  as
   a  going concern and therefore be required to realize its assets and
   discharge  its  liabilities  other than  in  the  normal  course  of
   business.


2  Significant accounting policies

   Generally accepted accounting principles

   These  consolidated  financial  statements  have  been  prepared  in
   accordance with accounting principles generally accepted in  Canada,
   which,  as  they  apply  to these financial  statements,  differ  in
   certain  respects from those in the United States, as  explained  in
   note 11.

   Principles of consolidation

   These consolidated financial statements include the accounts of  the
   company and its wholly owned U.S. subsidiary, Derek Resources  (USA)
   Inc.

   Use of estimates

   The  preparation of financial statements in accordance with Canadian
   generally accepted accounting principles 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
   income  and  expenses  during  the  period.  Actual  results   could
   materially differ from those reported.

   Cash and short-term deposits

   Cash  and short-term deposits consist of cash on deposit with  banks
   and   highly  liquid  short-term  interest-bearing  securities  with
   maturities at purchase dates of three months or less.

   Oil and natural gas properties

   The  company follows the full-cost method of accounting for oil  and
   natural  gas  properties, whereby all costs relating to  exploration
   and  development  of oil and natural gas reserves  are  capitalized.
   Such   costs   include  land  acquisition  costs,   geological   and
   geophysical    expenses,   engineering    fees,    related    direct
   administrative  expenses, and costs of drilling both productive  and
   non-productive wells, including the cost of production equipment.

   Costs  are  allocated to a separate cost centre for each program  in
   which  the  company has an interest and are depleted by cost  centre
   using  the  unit-of-production method based  upon  estimated  proven
   developed reserves. Cost centres whose carrying values exceed  their
   estimated  net  recoverable amount are  written  down  to  that  net
   realizable  value  in  the period in which such  determinations  are
   made.  For  cost centres that do not yet have proven  reserves,  the
   amounts shown for oil and natural gas properties represent costs  to
   date,  net  of  any revenues, and the underlying value  is  entirely
   dependent on the existence and future economic recovery of reserves.

   Estimated  future site restoration costs are provided on a  unit-of-
   production  basis. Actual costs are charged against the  accumulated
   provision as incurred.

   Translation of foreign currencies

   The  integrated foreign subsidiary is translated using the  temporal
   method.  Under  this  method  of translation,  monetary  assets  and
   liabilities denominated in foreign currencies are translated at  the
   exchange  rate in effect at the balance sheet date, and non-monetary
   assets and liabilities are translated at the exchange rate in effect
   at the date of the transaction. Revenues and expenses are translated
   at  the  average exchange rate for the period with the exception  of
   depletion  of  oil  and  gas  properties,  which  is  translated  at
   historical exchange rates. Exchange gains or losses are included  in
   the  determination of loss for the period, except for exchange gains
   or  losses  relating to non-current monetary assets or  liabilities,
   which  are  deferred and amortized over the remaining  life  of  the
   asset or liability.

   Stock options

   No  expense  is  recognized  when  stock  options  are  issued.  Any
   consideration paid by option holders on exercise of stock options is
   credited to capital stock.

   Loss per share

   Effective  April  30,  2001,  the  company  changed  the  method  of
   calculating loss per share in accordance with recommendations of the
   Canadian  Institute of Chartered Accountants (CICA). Loss per  share
   has  been  calculated using the weighted average  number  of  common
   shares  issued  and outstanding during the period, excluding  shares
   held in escrow but including shares issuable under special warrants.
   Outstanding stock options and warrants that could potentially dilute
   basic  loss  per share have not been included in the computation  of
   diluted loss per share because to do so would be anti-dilutive.  The
   loss  per share in the prior year's financial statements as a result
   of adopting the new recommendations was as follows:

                                                                 2000
                                                                    $
                                                                 ----
      Basic and diluted loss per share (restated)                0.09
      Loss per share prior to change in accounting policy        0.08


   Income taxes

   Effective  May 1, 2000, the company adopted the liability method  of
   accounting  for income taxes, on a retroactive basis, in  accordance
   with the recommendations of the CICA. Under this method, future  tax
   assets  and liabilities are based upon differences between financial
   reporting  and  tax basis of assets and liabilities  measured  using
   substantially  enacted tax rates. The company has  adopted  the  new
   recommendations   retroactively  without  restating   prior   years'
   financial statements. There was no effect on the company's financial
   position  or results of operations as a result of adopting  the  new
   standard.

   Financial instruments

   Financial  instruments  are  classified  in  accordance   with   the
   substance  of  the  contractual  arrangement.  The  fair  values  of
   financial  instruments are reported separately where fair  value  is
   determinable  and  where they are materially  different  from  their
   carrying values.


3  Oil and natural gas properties



                                                   2002            2001
                                                     $               $
                                             ----------      ----------
United States - LAK Ranch oil project        13,910,104      12,249,320
Canada                                               -                1
                                             ----------      ----------
                                             13,910,104      12,249,321


   United States

   The  company  has  working  interests in certain  wells  located  in
   Oklahoma and Kansas, U.S.A. These interests are carried at a nominal
   value.

   By  way of an option agreement dated September 24, 1997, the company
   has a working interest in the unproven LAK Ranch (LAK) oil leasehold
   interest located near Newcastle, Wyoming, U.S.A. Under the terms  of
   the option agreement, the company acquired a 75% interest in the LAK
   property and up to a 37.5% interest in two adjoining tracts of lands
   by  making  payments  of US$600,000 and funding of  US$3,500,000  in
   exploration  expenditures  by  December  31,  2000.  The   agreement
   required   that  all  property  expenditures  made  in   excess   of
   US$3,500,000 were to be on a pro rata basis by the company  and  the
   optionor.

   On  December  19, 2000, the company delivered formal notice  to  the
   optionor that the company had spent US$3,868,144 on the LAK  project
   and  had  met  the earn-in requirements of the option agreement  and
   that  the  company had vested its 75% working interest  in  the  LAK
   property.

   By January 30, 2001, the optionor had made no payment to the company
   with  respect to its 25% share of ongoing exploration costs for  the
   LAK  property. The company delivered a formal notice of  default  to
   the  optionor for its failure to pay amounts then due. On  March  1,
   2001,  the  company  initiated  formal  foreclosure  proceedings  in
   Wyoming.   The   optionor   contested  the   company's   foreclosure
   proceedings  to  the Wyoming District Court. The  court  upheld  the
   company's  right  to  foreclose. On  April  13,  2001,  the  company
   foreclosed on all of the optionor's rights and interests in the  LAK
   property for a bid amount of US$852,571, representing the optionor's
   share  of LAK property costs incurred to date, giving the company  a
   100% interest in the property.

   Subsequent to the foreclosure, the optionor filed a lawsuit  against
   the company claiming that the company had not earned its interest in
   the  LAK  property.  The company then filed  a  motion  for  partial
   summary judgement against the optionor and the court in Wyoming  set
   a date to hear the motion on October 31, 2001.

   Prior to the court hearing, on October 18, 2001, the optionor agreed
   to  a  settlement. Under the terms of the settlement agreement,  the
   optionor relinquished any claim to any right or interest in the  LAK
   Ranch  property.  In return, it received a proportionate,  reducible
   gross  overriding  royalty on the property  of  0.7%.  It  was  also
   granted  certain participation rights in the event that the  company
   should sell some or all of its rights and interests in the property.
   From  any  net  sales  proceeds, the optionor will  receive  a  7.5%
   interest in the first US$7.5 million of net proceeds and 1%  of  any
   proceeds thereafter, subject to certain adjustments.

   During the year ended April 30, 2000, the company acquired 4.43%  of
   the  pre-existing  18.82% overriding royalty  interest  in  the  LAK
   property as follows:

   *  1.05% purchased in  return  for  200,000  common  shares  of  the
      company, of which 20,000 have been issued during the  year  ended
      April 30, 2000, and another 50,000 during the  year  ended  April
      30, 2001, with the balance being issued  during  the  year  ended
      April 30, 2002;

   *  3.38% purchased in return for US$50,000 and 100,000 common shares
      of the company.

   On  June  30,  2000,  as  part of a private placement,  the  company
   granted an additional 1% field royalty on the LAK property. The main
   productive  portion of the LAK property is now subject to  a  16.09%
   overriding  royalty. The adjoining property is subject  to  a  9.23%
   overriding royalty.

   During  the year ended April 30, 2002, as part of certain financings
   (note  4), the company granted additional royalties of US$0.136  per
   barrel of oil produced on the LAK property.

   The company has posted performance bonds of US$45,000 in relation to
   the LAK property.

   During  the  year  ended  April 30, 2002,  the  company  capitalized
   $72,000 (2001 - $72,000) in general and administrative costs in  the
   LAK property.


4  Notes payable


                                                     2002       2001
                                                   ---------    -----
                               Debt     Equity       Total      Total
                                  $          $           $          $
                           ---------    -------    ---------    -----
Notes payable              1,453,080    132,000    1,585,080        -
Accrued interest             119,100         -      119,100         -

                           1,572,180    132,000    1,704,180        -
                           ---------    -------    ---------    -----

                                2002       2001
                                  $          $
                           ---------    -------
Interest expense on
notes payable                138,000          -



   The  fair value of the notes payable is estimated to equal the total
   carrying  value  of  the  debt and equity  components  amounting  to
   $1,585,080.

   Repayment of principal and interest on two of the notes payable,  in
   the  amount of $506,000, are due subsequent to April 30,  2003  and,
   accordingly, have been classified as non-current.

   Certain of the notes payable, with options to convert principal  and
   interest  to  common shares of the company, have been split  between
   debt  and equity. The equity component has been calculated using  an
   option  pricing  model, based on the price of the  company's  common
   shares  on  the  date the notes were issued, the option  price,  the
   price  volatility of the company's shares and a risk  free  discount
   rate based on Government of Canada Treasury Bill rates.

   Details of the notes payable issued during the year ended April  30,
   2002 are as follows:

   In  May  2001,  the company issued promissory notes, with  no  fixed
   repayment  terms,  in  the principal amount of  US$206,500,  bearing
   interest at an effective rate of 10.5% per annum. In addition to the
   interest  payable  on  the  notes,  the  lenders  received  a  gross
   overriding  royalty on the LAK Ranch property of US$0.05 per  barrel
   of  oil  produced. During the year ended April 30, 2002, the company
   repaid  promissory  notes  and accrued  interest  of  US$138,000  by
   issuing common shares, and US$78,600 in cash.

   On  June  6,  2001,  the  company issued a promissory  note  in  the
   principal  amount of US$100,000, bearing interest  at  an  effective
   rate  of  10% per annum. All principal and any outstanding  interest
   were  due  and payable on June 6, 2002. In addition to the  interest
   payable  on the note, the lender received a gross overriding royalty
   on  the LAK Ranch property of US$0.01 per barrel of oil produced. On
   August  21,  2002,  the lender agreed to settle US$50,000  from  the
   principal amount in exchange for common shares of the company  at  a
   price  of  $0.10  per share and to exchange the remaining  principal
   amount of US$50,000 by way of a new promissory note bearing interest
   at  an  effective rate of 10% per annum, repayable on September  30,
   2003.

   On  June  15,  2001,  the company issued a promissory  note  in  the
   principal  amount  of US$471,183 in settlement of accounts  payable.
   Interest on the note was calculated at a rate of 10% per annum.  All
   principal  and  interest were due and payable on May  31,  2002.  In
   addition to the interest payable on the note, the lender received  a
   gross overriding royalty on the LAK Ranch property of US$0.0471  per
   barrel  of oil produced. The lender also received a right to convert
   some or all of the principal and interest outstanding into shares of
   the  company  at an exercise price of $0.75 per share  at  any  time
   during  the life of the note. The company was not able to repay  the
   principal  and  interest on May 31, 2002. On August  21,  2002,  the
   lender  agreed  to settle one-half of the total debt outstanding  in
   exchange  for common shares of the company at a price of  $0.10  per
   share.  The lender also agreed that the remaining amount payable  by
   the  company  would be secured by way of a new note  issued  by  the
   company   bearing  interest  at  10%  per  annum  and  maturing   on
   September 30, 2003. The lender will have the right, after August 21,
   2003,  to  convert  any  unpaid principal and interest  into  common
   shares  of  the  company at an exercise price of  $0.10  per  share,
   subject to regulatory approval.

   On  June  27,  2001,  the  company issued a promissory  note  for  a
   principal amount of US$100,000, bearing interest at a rate of  10.0%
   per  annum.  All interest and principal are due and payable  by  the
   company on May 31, 2003. In addition to the interest payable on  the
   note,  the  lender received a gross overriding royalty  on  the  LAK
   Ranch  property  of US$0.01 per barrel of oil produced.  The  lender
   also  received  a right to convert some or all of the principal  and
   interest outstanding into shares of the company at a price of  $0.75
   per  share  at any time during the life of the note. On  August  21,
   2002,  the company settled the accrued interest on this note in  the
   amount of US$12,114 in exchange for common shares of the company  at
   a price of $0.10 per share.

   On  June, 28, 2001, the company issued promissory notes for a  total
   principal amount of US$100,000, bearing interest at a rate of  10.0%
   per  annum. All interest and principal were due and payable  by  the
   company on May 31, 2002. In addition to the interest payable on  the
   note,  the  lenders received a gross overriding royalty on  the  LAK
   Ranch  property of US$0.01 per barrel of oil produced.  The  lenders
   also  received  a right to convert some or all of the principal  and
   interest outstanding into shares of the company at a price of  $0.75
   per  share  at any time during the life of their notes. The  company
   did  not repay the principal and interest on May 31, 2002. On August
   21, 2002, the company settled the principal and interest outstanding
   on  these  notes in the amount of US$112,082 in exchange for  common
   shares of the company at a price of $0.10 per share.

   On  August  31, 2001, the company issued a promissory  note  in  the
   principal  amount  of US$89,838 in settlement of  accounts  payable,
   bearing  interest  at a rate of 10.0% per annum.  All  interest  and
   principal were due and payable by the company on August 31, 2002. In
   addition to the interest payable on the note, the lender received  a
   gross overriding royalty on the LAK Ranch property of US$0.0089  per
   barrel  of oil produced. The lender also received a right to convert
   some or all of the principal and interest outstanding into shares of
   the  company  at a price of $0.75 per share at any time  during  the
   life  of  the  note.  On August 21, 2002, the  company  settled  the
   principal  and  interest outstanding on this note in the  amount  of
   US$99,806 in exchange for common shares of the company at a price of
   $0.10 per share.

   During  the  period  from February 2002 to April 2002,  the  company
   borrowed US$150,000 in four separate tranches from a single  lender,
   bearing  interest at a rate of 15% per annum, payable on demand.  On
   August  21,  2002,  the lender agreed to settle  all  principal  and
   interest  outstanding in the amount of US$160,193  in  exchange  for
   common shares of the company at a price of $0.10 per share.


5  Capital stock

   Authorized
      100,000,000 common shares without par value

   Issued
      38,145,022 common shares

   On November 17, 1997, the company issued 375,000 escrow shares to  a
   director at $0.01 per escrow share. These escrow shares are  subject
   to  the  terms  of release as required by the TSX Venture  Exchange.
   During  the  year ended April 30, 2002, nil (2001 - 55,862;  2000  -
   nil;  1999  -  70,422)  shares were released  from  escrow,  leaving
   248,716 shares remaining in escrow.


6  Warrants

   The company's special warrant units convert without additional
   consideration into one common share and one common share purchase
   warrant.

   Share purchase warrants activity for the years ended April 30, 2001
   and 2002 was as follows:



                                                 Weighted
                                  Number of    average price
                                     shares          $


Outstanding - April 30, 2000       4,817,750        0.8
Granted                           20,253,239       0.53
Exercised                         (1,811,500)      0.54
Expired                             (850,000)      0.77

Outstanding - April 30, 2001      22,409,489       0.58
Granted                            6,567,401       0.42
Expired                           (2,203,250)         1

Outstanding - April 30, 2002      26,773,640        0.5

The share purchase warrants are exercisable into 26,773,640
shares of the company.

As at April 30, 2002, outstanding share purchase warrants
were as follows:

                  Number of    Price per     Expiry date
                     shares        share
                                       $

                   9,787,478         0.53       30-Jun-02
                   1,185,428         0.53       11-Sep-02
                   7,708,000         0.53       18-Sep-02
                   1,525,333         0.53       29-Mar-03
                     291,000         0.75       20-Aug-03
                     535,000          0.4       14-Sep-03
                   1,589,484          0.4       19-Oct-03
                   4,151,917          0.4       21-Dec-03

                  26,773,640


7  Stock options

   Stock  options  are  granted  at the  discretion  of  the  board  of
   directors,  within regulatory requirements, to directors,  officers,
   consultants and employees. Stock options are priced at the higher of
   the  previous day's closing price and the 15-day average price prior
   to the granting of the option as quoted on the TSX Venture Exchange.
   Stock  options  vest  immediately, once granted  and  approved,  and
   cannot exceed 10% of issued and outstanding capital stock.

   Stock option activity for the years ended April 30, 2001 and 2002
   was as follows:

                                       Weighted
                         Number of     average price
                            shares           $


Outstanding - April 3       810,000        0.48
Granted                   2,207,000        0.85
Exercised                   (72,000)       0.49
Cancelled                  (140,000)       0.59

Outstanding - April 3     2,805,000        0.79
Granted                   1,920,000        0.35
Cancelled                (2,157,000)       0.83

Outstanding - April 3     2,568,000         0.4

As at April 30, 2002, outstanding stock options were as
follows:

        Number of shares   Price per     Expiry date
                               share
                                   $

              222,000            0.51        1-Dec-02
              100,000            0.68       27-Dec-03
              225,000            0.48        5-May-04
               51,000            0.75       15-Oct-04
               50,000             0.7       16-Dec-04
            1,920,000            0.35        4-Nov-05

            2,568,000


8  Related party transactions

   a) The company has a management contract that provides the president
      with a fee for services rendered of $10,000 per month plus out-of-
      pocket expenses. Charges under this agreement of $120,000 for the year
      ended April 30, 2002 (2001 - $120,910; 2000 - $85,619) have  been
      included in consulting and management fee expenses.

   b) A director of the company provided professional services. For the
      year ended April 30, 2002, consulting and management fee expenses
      include $84,000 (2001 - $84,910; 2000 - $36,000) paid to the director
      and  accounting expenses include $12,000 (2001 - $12,000; 2000  -
      $12,000) paid to this same director.

   c) During  the year ended April 30, 2002, consulting fees of $96,981
      (2001 - $139,875; 2000 - $18,375) were paid or payable to officers and
      a director, and included in consulting and management fee expenses.

d) At April 30, 2002, accounts payable included $115,457 payable to
officers and directors for services provided under the foregoing
arrangements and $14,742 to companies with common officers and
directors for certain costs incurred on behalf of the company in the
normal course of business.
   Other  related  party  transactions are  noted  elsewhere  in  these
   consolidated financial statements.


9  Income taxes

   The  company has Canadian net operating losses available for  carry-
   forward  of  approximately $3,750,000 expiring over the  next  seven
   years.  No future tax benefit has been recognized in these  accounts
   related to these losses.


10 Segmented information

   The  company currently operates in one reportable segment. Segmented
   information  has  been  shown in note 3  for  oil  and  natural  gas
   properties.  Substantially all the company's  remaining  assets  and
   liabilities  are  in  Canada.  Revenues  and  expenses  are  sourced
   primarily in Canada.


11 Material  differences between Canadian and United  States  generally
   accepted accounting principles (GAAP)

   The  company  prepares  its  consolidated  financial  statements  in
   accordance with accounting principles generally accepted  in  Canada
   (Canadian  GAAP),  which  differ  in  certain  respects  from  those
   principles that the company would have followed had its consolidated
   financial  statements  been prepared in accordance  with  accounting
   principles generally accepted in the United States (U.S. GAAP).  The
   major  differences between Canadian and U.S. GAAP that would  affect
   the  measurement of the company's financial position, loss  or  cash
   flows are described below.

   Consolidated balance sheets and statements of loss and shareholders'
   equity

                                                   2002        2001        2000
                                                     $           $           $

Adjustments to earnings:
Loss for the year under Canadian GAAP         1,062,580     826,342     675,731
Consulting and management fees (a)                    -      33,517           -

Loss for the year under U.S. GAAP             1,062,580     859,859     675,731

Loss per share under U.S. GAAP                     0.03        0.04        0.09

Adjustments to shareholders' equity:
Total shareholders' equity under Canadian    10,998,529   9,919,604   2,001,849
Consulting and management fees (a)                    -     (33,517)          -
Escrow shares released (a)                            -      33,517           -

Total shareholders' equity under U.S. GAA    10,998,529   9,919,604   2,001,849

 ":" put in per J. Bunting Aug 17/01 rn


   a) On November 17, 1997, the company issued 375,000 performance escrow
      shares to a director at $0.01 per share. These shares are released from
      escrow subject to the terms of release as required by the regulators.
      Under  U.S.  GAAP  (APB No. 25), these escrow  shares  result  in
      compensation expense on the date of release from escrow measured as the
      excess of the fair value of the shares at that time over the price paid
      for the shares. During the year ended April 30, 2002, nil (2001 -
      55,862; 2000 - nil) shares were released from escrow.

   Accounting for stock-based compensation

   For  financial statement purposes, the company has elected to follow
   the  Accounting  Principles Board Opinion (APB) No. 25,  "Accounting
   for Stock Issued to Employees," in accounting for its stock options.
   Under  APB  No.  25,  as the exercise price of the  company's  stock
   options and warrants equals the market price of the underlying stock
   at the date of grant, no compensation expense is recognized.

   Recent accounting pronouncements

   In  August  2001,  the Financial Accounting Standards  Board  (FASB)
   issued  SFAS No. 143, "Accounting for Asset Retirement Obligations".
   SFAS   No.  143  requires  that  asset  retirement  obligations   be
   recognized when they are incurred, and be capitalized as part of the
   asset's  carrying value and displayed as liabilities. SFAS  No.  143
   also  requires  increased  disclosure surrounding  asset  retirement
   obligations.  SFAS No. 143 is effective for fiscal  years  beginning
   after June 15, 2002. The company is analyzing the impact of SFAS No.
   143 and will adopt the standard on May 1, 2003.

   In  October 2001, the FASB issued SFAS No. 144, "Accounting for  the
   Impairment or Disposal of Long-Lived Assets". SFAS No. 144  requires
   that long-lived assets be classified as assets either to be held and
   used, to be disposed of other than by sale, or to be disposed of  by
   sale.  It also prescribes various approaches to valuing these  types
   of  long-lived  assets. SFAS No. 144 is effective for  fiscal  years
   beginning after December 15, 2001. The company does not expect  that
   the  implementation of these guidelines will have a material  impact
   on its consolidated financial position or results of operations.

   On  May 7, 2002, the FASB issued SFAS No. 145, which rescinded  SFAS
   No.  4,  "Reporting Gains and Losses from Extinguishment  of  Debt",
   SFAS  No.  44, "Accounting for Intangible Assets of Motor Carriers",
   and SFAS No. 64, "Extinguishment of Debt Made to Satisfying Sinking-
   Fund  Requirements",  and  amended  SFAS  No.  13,  "Accounting  for
   Leases".  The  provisions are effective for fiscal  years  beginning
   after   May  15,  2002.  The  company  does  not  expect  that   the
   implementation  of these guidelines will have a material  impact  on
   its consolidated financial position or results of operations.

   On July 30, 2002, the FASB issued SFAS No.146, "Accounting for Costs
   Associated with Exit or Disposal Activities". SFAS No. 146  requires
   companies  to  recognize  costs associated  with  exit  or  disposal
   activities  when  they are incurred rather than at  the  date  of  a
   commitment to an exit or disposal plan. The provisions are effective
   for  exit  or disposal activities that are initiated after  December
   31, 2002.

   In  November  2001, the Accounting Standards Board of  the  Canadian
   Institute of Chartered Accountants issued new Handbook Section 3870,
   "Stock-based  Compensation  and Other  Stock-based  Payments".  This
   Section  establishes standards for the recognition, measurement  and
   disclosure   of  stock-based  compensation  and  other   stock-based
   payments  made  in exchange for goods and services.  It  applies  to
   transactions  in which an enterprise grants shares of common  stock,
   stock  options,  or other equity instruments, or incurs  liabilities
   based on the price of common stock or other equity instruments,  and
   sets  out  a fair value based method of accounting which is required
   for  certain, but not all, stock-based transactions. The company  is
   analyzing the impact of Section 3870 and will adopt the standard  on
   May 1, 2002.


12 Supplemental cash flow information


                                                  2002      2001      2000
                                                    $         $         $
                                                -------    -----    -------
Interest paid                                    15,000        -          -

Non-cash investing and financing activities
Shares issued or allotted to a                        -        -    225,600
Shares issued to settle accoun                        -    6,000          -
Shares issued to settle notes                   219,390        -          -



EXHIBITS


2.1     Certificate of Incorporation, Name Changes and
        Articles/By-Laws of the Company.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

2.2     Instruments defining the rights of holders of equity
        or debt securities being registered.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

3.0     Voting Trust Agreements: Not Applicable

4.0     Material Contracts:

4.1     Option  Agreement dated September 24, 1997, as
        amended April  21,  1998 and December 11, 1998,
        between  Derek Resources Corporation and Rising
        Phoenix Development Group Ltd. pursuant to which
        Derek Resources Corporation acquired two options to
        purchase from Rising Phoenix Development Group Ltd.
        up to a 75% working interest in the Original LAK
        Property  and  up to a 37.5% interest in the
        Adjoining Property.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.2     Model Form of Operating Agreement dated April 21,
        1998 between  Derek Resources Corporation and Rising
        Phoenix Development Group Ltd. setting out the terms
        of the joint venture between the parties and
        appointing the Company as operator of the LAK Ranch
        Project.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.3     Finder's Fee Agreement dated September 24, 1997
        between Derek Resources Corporation and Yorkton
        Securities Inc.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.4     Escrow  Agreement dated for reference November 7,
        1997 among Montreal Trust Company of Canada, Derek
        Resources Corporation and Barry C.J. Ehrl.

         --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.5     Letter  dated  April 10, 1998 from Texaco  Trading
        and Transportation Inc. to Petrospec Corporation.

         --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.6     Agreement  dated  May  3, 1999  among  Derek
        Resources Corporation, Petrospec, Paul Trost and
        Rising  Phoenix, pursuant to which the Company has
        agreed to issue 100,000 Common Shares to each of
        Petrospec and Paul Trost in ten annual tranches of
        10,000 Common Shares each to acquire varying portions
        of the overriding royalty interests held by Petrospec
        and Paul Trost pursuant to the terms  of  the
        Petrospec Agreement.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.7     Agreement  dated  September  30,  1999  between
        Derek Resources Corporation and MTARRI pursuant to
        which MTARRI was terminated as project manager of the
        LAK Ranch Project and the arrangement to pay MTARRI a
        percentage of all third party  expenses incurred on
        the LAK Ranch  project  was terminated  effective
        September 30, 1999.  MTARRI  will continue to be paid
        consulting fees based on the hourly and daily fees
        for Paul Trost's services.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.8     Agreement  dated November 9, 1999 among Derek
        Resources Corporation, Sheri Tietjen and Donald B.
        Roberts, pursuant to which the Company has agreed to
        acquire (a) 1.6875% of the overriding royal interests
        from Sheri Tietjen by paying US $25,000 and issuing
        50,000 Common Shares; and (b) 1.6875% of the
        overriding royalty interests from Donald B. Roberts
        by paying US $25,000 and issuing 50,000 Common
        Shares.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.9     Memorandum  of  Understanding  dated  March  20,
        2000 between   Derek  Resources  Corporation   and
        Bateman International BV of the Netherlands pursuant
        to which BIBV agreed  to  provide  professional
        project  management, engineering, design, procurement
        and construction management services to the Company
        for a fee of 5% of the total cost of the pilot plan
        at the LAK Ranch Project as it relates to the surface
        facility, subject to a minimum of US $150,000 and
        reimbursement of costs.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.10    Agency  Agreement  dated June  9,  2000  between
        Derek Resources Corporation and Yorkton Securities
        Inc. pursuant to which Yorkton was appointed to act
        as Agent for a best efforts brokered private
        placement of 7,050,000 units at a price of $0.42 per
        unit for gross proceeds of $2,961,000.

        --  Incorporated by Reference to Form 20-F 2000
        Annual Report --

4.11    Engineering,  Procurement and  Construction
        Management Agreement dated August 21, 2000 between
        the Company and Bateman Engineering Inc. of Denver,
        CO which formalized the Memorandum of Understanding
        dated March 20, 2000 between the Company and Bateman
        International BV.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.12    Letter of Intent dated September 18, 2000 between
        Derek Resources Corporation and MTARRI, Inc. to
        purchase a 51% working interest in the Morton Project
        located in Converse County, Wyoming.  Dr. Paul Trost,
        Vice-President, Operations of Derek USA is also
        President of MTARRI.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.13    Management  agreement dated September 30, 2000
        between Derek Resources Corporation and Barry Ehrl,
        President, CEO and Director of the Company.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.14    Management  agreement dated September 30, 2000
        between Derek  Resources Corporation and Frank
        Hallam, CFO  and Director of the Company.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.15    Gas  Sales  Agreement dated December 15,  2000
        between Derek Resources Corporation and Western Gas
        Resources, Inc. to  supply 100% of the first 1,500
        MMBtu per day of the Company's natural gas
        requirements at the LAK Ranch Project.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.16    Recorded  Certificate of Purchase dated April 13,
        2001 executed by the Weston County Sheriff confirming
        the sale of Asdar Group's 25% interest in the LAK
        Ranch Project to Derek Resources Corporation by way
        of a mortgage foreclosure.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.17    Letter  agreement  dated April 30, 2001  between
        Derek Resources  Corporation and First Echelon
        Ventures  Inc. pursuant to which the Company sold its
        rights and interests in the Morton Project to First
        Echelon for the sum of US $100,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.18    Lease  Purchase  Agreement dated May 17,  2001
        between Derek Resources Corporation and Equiva
        Trading Corporation (the  trading arm of Texaco),
        pursuant to which  Equiva purchased crude oil
        produced from the LAK Ranch Project.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.19    Finder's Fee Agreement dated May 30, 2001 between
        Derek Resources Corporation and Tecucomp Geological
        Inc. pursuant to which Tecucomp was engaged by the
        Company to assist in finding  a joint venture partner
        or financier  for  the development of the LAK Ranch
        Project.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.20    Letter  agreement  dated June 21,  2001  between
        Derek Resources Corporation and Bateman Project
        Holdings Limited of Johannesburg, South Africa
        pursuant to which Bateman agreed to defer US $471,183
        of debt payable by the Company until May 31, 2002.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.21    Assignment  of a Federal Lease dated July 6,  2001,
        as amended July 10, 2001, from Edel P. Smith and
        Accidental Oil Company pursuant to which the Company
        acquired an additional 80 acres in the LAK Ranch
        Project.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.22    Loan   agreement  dated  May  3,  2001  between
        Derek Resources Corporation and Westerton Management
        Corp. for US $56,500.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.23    Loan   agreement  dated  May  9,  2001  between
        Derek Resources Corporation and Marble Hall
        Investments Ltd. for US $75,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.24    Loan   agreement  dated  May  9,  2001  between
        Derek Resources Corporation and Wet Coast Management
        Corp. for US $75,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.25    Loan   agreement  dated  June  6,  2001  between
        Derek Resources Corporation and Sparten Establishment
        for  US $100,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.26    Loan  agreement  dated  June  27,  2001  between
        Derek Resources Corporation and Cristina Casati for
        US $100,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.27    Loan  agreement  dated  June  28,  2001  between
        Derek Resources Corporation and Savannah Consulting
        Ltd. for US $50,000.

        --  Incorporated by Reference to Form 20-F 2001
        Annual Report --

4.28    Loan  agreement  dated  June  28,  2001  between
        Derek Resources Corporation and John F.P. Lush for US
        $50,000.

        -- Incorporated  by Reference to Form 20-F 2001
        Annual Report --

4.29    Loan  agreement  dated October 30, 2001  between
        Derek Resources Corporation and Western Industrial,
        Inc. for US $89,838.35.

4.30    Assignment Agreement dated August 9, 2002 between
        Derek Resources  Corporation and Equiva Trading
        Company  with respect the assignment of the May 17,
        2001 agreement (to purchase crude oil produced from
        the LAK Ranch Project) to Shell Trading (US) Company.

4.31    Leasing  proposal  dated August 19,  2002,  as
        amended September 3, 2002, between Derek Resources
        Corporation and Oxford Properties Group with respect
        to the head office space.

5.0     Foreign Patents: Not Applicable.

6.0     Statement Explaining Calculation of Earnings Per
        Share Information: Not Included

7.0     Statement Explaining Calculation of Ratio of Earning
        to Fixed Charges, Ratio of Combined Fixed Charges and
        Preferred Stock Dividends or any other Ratios:  Not
        Included

8.0     Diagram of Parent and Subsidiaries: Not Included.

9.0     Statement Regarding Financial Statements Filed in
        Registration Statements for Initial Public Offering
        of Securities:  Not Applicable

10.3    Figure 1 - LAK Ranch Project

10.4    Figure 2 - SAGD Process


===============================================================

                       SIGNATURE PAGE


The  registrant hereby certifies that it meets  all  of  the
requirements for filing on Form 20-F and that  it  has  duly
caused  and  authorized the undersigned to sign this  Annual
Report on its behalf.


DEREK RESOURCES CORPORATION

(Registrant)



Date: November 1, 2002      /s/ Barry C.J. Ehrl
                                ----------------
                                Barry C.J. Ehrl
                                President, CEO and Director

===============================================================



                        CERTIFICATION


I, Barry C.J. Ehrl, certify that:

1.          I  have reviewed this annual report on Form 20-F
     of Derek Resources Corporation;

2.                   Based  on  my  knowledge,  this  annual
     report  does  not  contain any untrue  statement  of  a
     material  fact  or  omit  to  state  a  material   fact
     necessary to make the statements made, in light of  the
     circumstances  under which such statements  were  made,
     not  misleading with respect to the period  covered  by
     this annual report;

3.                   Based  on  my knowledge, the  financial
     statements, and other financial information included in
     this  annual  report, fairly present  in  all  material
     respects the financial condition, results of operations
     and  cash  flows of the registrant as of, and for,  the
     periods presented in this annual report;

4.                    The   registrant's  other   certifying
     officers  and  I  are responsible for establishing  and
     maintaining  disclosure  controls  and  procedures  (as
     defined  in  Exchange Act Rules 13a-14 and 15d-14)  for
     the registrant and have:

     a)          designed such disclosure controls and
          procedures to   ensure  that  material  information
          relating  to   the registrant, including its
          consolidated subsidiaries, is made known  to  us
          by others within those entities, particularly
          during  the  period  in which this annual  report
          is  being prepared;

     b)           evaluated   the   effectiveness   of   the
          registrant's disclosure controls and procedures as
          of  a date within 90 days prior to the filing date
          of this annual report (the "Evaluation Date"); and

     c)           presented   in  this  annual  report   our
          conclusions   about  the  effectiveness   of   the
          disclosure  controls and procedures based  on  our
          evaluation as of the Evaluation Date;

5.                    The registrant's other certifying
          officers and  I have disclosed, based on our most
          recent evaluation, to  the registrant's   auditors
          and   the   audit   committee   of registrant's
          board of directors (or persons performing  the
          equivalent function):

     a)                  all significant deficiencies in the
          design  or  operation of internal  controls  which
          could adversely affect the registrant's ability to
          record,  process,  summarize and report  financial
          data  and  have  identified for  the  registrant's
          auditors   any  material  weaknesses  in  internal
          controls; and

     b)                  any fraud, whether or not material,
          that  involves  management or other employees  who
          have   a  significant  role  in  the  registrant's
          internal controls; and

6.                    The registrant's other certifying
          officers and I have indicated in this annual report
          whether or not there were significant changes in
          internal controls or in other factors that could
          significantly affect internal controls subsequent
          to the date of our most recent evaluation,
          including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date:  November 1, 2002

DEREK RESOURCES CORPORATION

/s/ Barry C.J. Ehrl
    _______________________
    Barry C.J. Ehrl
    President, CEO and Director


===============================================================



                  CERTIFICATION PURSUANT TO
                   18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO
        SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In  connection  with  the  Annual Report  of  Derek  Resources
Corporation  (the "Company") on Form 20-F for the fiscal  year
ended April 30, 2002 as filed with the Securities and Exchange
Commission  on the date hereof (the "Report"), I,  Barry  C.J.
Ehrl,  President and Chief Executive Officer of  the  Company,
certify,  pursuant  to  18  U.S.C. Section  1350,  as  adopted
pursuant  to  Section 906 of the Sarbanes-Oxley Act  of  2002,
that:

1.                    The  Report  fully  complies  with   the
     requirements of Section 15(d) of the Securities  Exchange
     Act of 1934; and

2.                   The  information contained in the  Report
     fairly  presents, in all material respects, the financial
     condition and results of operations of the Company.



Date:  November 1, 2002

DEREK RESOURCES CORPORATION


/s/ Barry C.J. Ehrl
    _______________________
    Barry C.J. Ehrl
    President, CEO and Director


===============================================================


                        CERTIFICATION


I, Frank R. Hallam, certify that:

1.          I  have reviewed this annual report on Form 20-F
of Derek Resources Corporation;

2.                   Based  on  my  knowledge,  this  annual
report  does not contain any untrue statement of a  material
fact or omit to state a material fact necessary to make  the
statements  made, in light of the circumstances under  which
such  statements were made, not misleading with  respect  to
the period covered by this annual report;

3.                   Based  on  my knowledge, the  financial
statements, and other financial information included in this
annual  report, fairly present in all material respects  the
financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this
annual report;

4.                    The   registrant's  other   certifying
officers   and  I  are  responsible  for  establishing   and
maintaining  disclosure controls and procedures (as  defined
in  Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:

a)          designed such disclosure controls and procedures
to   ensure  that  material  information  relating  to   the
registrant, including its consolidated subsidiaries, is made
known  to  us  by others within those entities, particularly
during  the  period  in which this annual  report  is  being
prepared;

b)          evaluated  the effectiveness of the registrant's
disclosure  controls and procedures as of a date  within  90
days  prior  to the filing date of this annual  report  (the
"Evaluation Date"); and

c)          presented in this annual report our  conclusions
about  the  effectiveness  of the  disclosure  controls  and
procedures  based  on our evaluation as  of  the  Evaluation
Date;

5.         The registrant's other certifying officers and  I
have disclosed, based on our most recent evaluation, to  the
registrant's   auditors   and   the   audit   committee   of
registrant's  board of directors (or persons performing  the
equivalent function):

a)                   all  significant  deficiencies  in  the
design  or  operation  of  internal  controls  which   could
adversely   affect  the  registrant's  ability  to   record,
process,  summarize  and  report  financial  data  and  have
identified  for  the  registrant's  auditors  any   material
weaknesses in internal controls; and

b)                  any fraud, whether or not material, that
involves   management  or  other  employees   who   have   a
significant role in the registrant's internal controls; and

6.         The registrant's other certifying officers and  I
have  indicated in this annual report whether or  not  there
were  significant changes in internal controls or  in  other
factors  that  could significantly affect internal  controls
subsequent  to  the  date  of our  most  recent  evaluation,
including  any corrective actions with regard to significant
deficiencies and material weaknesses.

Date:  November 1, 2002

DEREK RESOURCE CORPORATION


/s/ Frank R. Hallam
    _______________________
    Frank R. Hallam
    C.F.O. and Director

===============================================================


                  CERTIFICATION PURSUANT TO
                   18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO
        SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In  connection  with  the  Annual Report  of  Derek  Resources
Corporation  (the "Company") on Form 20-F for the fiscal  year
ended April 30, 2002 as filed with the Securities and Exchange
Commission  on  the date hereof (the "Report"),  I,  Frank  R.
Hallam,  C.F.O. and Director of the Company, certify, pursuant
to  18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

1.                    The  Report  fully  complies  with   the
     requirements of Section 15(d) of the Securities  Exchange
     Act of 1934; and

2.                   The  information contained in the  Report
     fairly  presents, in all material respects, the financial
     condition and results of operations of the Company.



Date:  November 1, 2002

DEREK RESOURCES CORPORATION


/s/ Frank R. Hallam
    _______________________
    Frank R. Hallam
    C.F.O. and Director

===============================================================