FORM 20-F

US SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[ ] 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 December 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 000-30766

NETCO ENERGY INC.(Exact name of Registrant as specified in its charter)

Not Applicable(Translation of Registrant's Name into English)

Alberta, Canada(Jurisdiction of incorporation or organization)

1320 - 925 West Georgia Street
Vancouver, British Columbia, Canada V6C 1G8

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act:

NoneTitle of Class

None
Name of Each Exchange on Which Registered

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:

NoneTitle 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.

There were 6,461,829 common shares, without par value, issued and outstanding as of May 27, 2003.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such 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 [ ] ITEM 18 [X]



TABLE OF CONTENTS

Item / Page Number

PART 1

Item 1 Identity of Directors, Senior Management and Advisers / not applicable

Item 2 Offer Statistics and Expected Timetable / not applicable

Item 3 Key Information / page 1

Item 4 Information on Netco Energy Inc. / page 10

Item 5 Operating and Financial Review and Prospects / page 18

Item 6 Directors, Senior Management and Employees / page 21

Item 7 Major Shareholders and Related Party Transactions / page 26

Item 8 Financial Information / page 27

Item 9 The Offer and Listing / page 28

Item 10 Additional Information / page 30

Item 11 Quantitative and Qualitative Disclosures About Market Risk / page 45

Item 12 Description of Securities Other than Equity Securities / page 45

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

Item 15 Controls and Procedures / page 45

Item 16 (Reserved) (Reserved)

PART III

Item 17 Financial Statements / page 46

Item 18 Financial Statements / page 46

Item 19 Exhibits / page 59

SIGNATURES / page 61





ABBREVIATIONS

bbls - barrels
mbbls - thousand barrels
mmbbls - millions barrels
bopd - barrels per day
boe - barrels of oil equivalent
boepd - barrels of oil equivalent per day
mcf - thousand cubic feet
mmcf - million cubic feet
bcf - billion cubic feet
mmcf/d - million cubic feet per day
mmbtu - million British Thermal Units
ngls - natural gas liquids



CONVERSION TABLE

|To Convert From                                     | To                                                                   | Multiply By                                
|--------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------
|Mcf
Cubic metres
Feet
Metres
Miles
Kilometres
Acres | Cubic metres ("m3")
Cubic feet
Metres
Feet
Kilometres
Miles
Hectares | 28.174
35.494
0.305
3.281
1.609
0.621
0.405

PART I

FORWARD-LOOKING STATEMENTS

This Form 20-F Annual Report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this prospectus, the terms "we", "us", "our", and "Netco" mean Netco Energy Inc. and Netco's subsidiary, unless otherwise indicated.

ITEM 1		Identity of Directors, Senior Management and Advisers

Not applicable.

ITEM 2		Offer Statistics and Expected Timetable

Not applicable.

ITEM 3		Key Information

A.	Selected Financial Data

The selected financial data presented below for the five year period ended December 31, 2002 is derived from our consolidated financial statements which were examined by our independent auditor. The information set forth below should be read in conjunction with our consolidated financial statements (including related notes thereto) and "Operating and Financial Review and Prospects" (Item 5). The data is presented in Canadian dollars and in accordance with Canadian generally accepted accounting principles.



Selected Financial Data

(Stated in Canadian Dollars)

Fiscal Year Ended December 31 (Audited)



|CANADIAN GAAP                                                    | 2002      | 2001      | 2000      | 1999      | 1998          
|---------------------------------------------------------------- | --------- | --------- | --------- | --------- | --------------
|Net Sales or Operating Revenue                                   | 1,281,645 | 604,160   | 592,072   | 302,478   | 293,881       
|Direct Costs                                                     |           |           | 137,198   | 74,407    | 100,861       
|Administrative Expenses                                          | 201,245   | 266,808   | 250,267   | 196,667   | 262,932       
|Amortization and Asset Write-down                                | 311,000   | 37,181    | 150,419   | 24,352    | 9,041,763     
|Income (Loss) From Operations                                    | 878,125   | 192,826   | 81,047    | 1,203,227 | (9,099,800)   
|Net Income (Loss) from Continuing Operations                     | 878,125   | 192,826   | 81,047    | 1,203,227 | (9,099,800)   
|Net Income (Loss) for the year                                   | 878,125   | 192,826   | 81,047    | 1,203,227 | (9,099,800)   
|Net Income (Loss) from Operations per Common Share               | 0.14      | 0.06      | 0.03      | 0.55      | (4.52)        
|Income (Loss) from Continuing Operations per Common Share        | 0.14      | 0.06      | 0.03      | 0.55      | (4.52)        
|Total Assets                                                     | 2,873,267 | 1,737,938 | 1,009,379 | 914,082   | 851,220       
|Net Assets                                                       | 2,752,551 | 1,489,176 | 984,350   | 899,693   | (493,534)     
|Capital Stock                                                    | 9,634,484 | 9,249,234 | 8,937,234 | 8,743,984 | 8,743,984     
|Number of Common Shares
(adjusted to reflect changes
in capital) | 6,461,829 | 4,749,329 | 3,199,329 | 2,186,826 | 2,186,826     
|Diluted Net Income per
Common Share                              | 0.13      | 0.05      | 0.02      | 0.29      | anti-
dilutive
|Long-Term Debt                                                   | Nil       | Nil       | Nil       | Nil       | Nil           
|Cash Dividends per Common Share                                  | Nil       | Nil       | Nil       | Nil       | Nil           





|UNITED STATES GAAP                                               | 2002      | 2001      | 2000      | 1999      | 1998          
|---------------------------------------------------------------- | --------- | --------- | --------- | --------- | --------------
|Net Sales or Operating Revenue                                   | 1,281,645 | 604,160   | 592,072   | 302,478   | 293,881       
|Direct Costs                                                     | -         |           | 137,198   | 74,407    | 100,861       
|Administrative Expenses                                          | 201,245   | 266,808   | 250,667   | 196,667   | 262,932       
|Amortization and Asset Write-down                                | 311,000   | 37,181    | 150,419   | 24,352    | 1,101,152     
|Income (Loss) From Operations                                    | 878,125   | 192,826   | 81,047    | 1,200,647 | (7,685,401)   
|Net Income (Loss) from Continuing
Operations                     | 878,125   | 192,826   | 81,047    | 1,200,647 | (7,685,401)   
|Net Income (Loss) for the year                                   | 878,125   | 192,826   | 81,047    | 1,200,647 | (7,685,401)   
|Net Income (Loss) from Operations
per Common Share               | 0.14      | 0.06      | 0.03      | 0.55      | (3.82)        
|Income (Loss) from Continuing
Operations per Common Share        | 0.14      | 0.06      | 0.03      | 0.55      | (3.82)        
|Total Assets                                                     | 2,873,267 | 1,873,472 | 1,144,913 | 1,049,616 | 2,245,619     
|Net Assets                                                       | 2,752,551 | 1,624,710 | 1,119,884 | 1,035,227 | 920,865       
|Capital Stock                                                    | 9,634,484 | 9,249,234 | 8,937,234 | 8,743,384 | 8,734,984     
|Number of Common Shares
(adjusted to reflect changes
in capital) | 6,461,829 | 4,749,329 | 3,199,329 | 2,186,826 | 2,186,826     
|Diluted Net Income per
Common Share                              | 0.13      | 0.05      | 0.02      | 0.28      | anti-
dilutive
|Long-Term Debt                                                   | Nil       | Nil       | Nil       | Nil       | Nil           
|Cash Dividends per Common Share                                  | Nil       | Nil       | Nil       | Nil       | Nil           

Differences Between Generally Accepted Accounting Principles (GAAP) in Canada and the United States

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The following summarizes the significant adjustments or disclosures which would be required to present these consolidated financial statements in accordance with U.S. generally accepted accounting principles.

Earnings (Loss) Per Share

Canadian generally accepted accounting principles require that basic earnings per share (EPS) be based solely on the common shares actually issued and outstanding, whereas U.S. generally accepted accounting principles require the inclusion of "common stock equivalents" in the calculation of primary EPS when their inclusion would have dilutive effect. Our common stock equivalents are the unexercised common share stock options and share purchase warrants. In the current periods, inclusion of such common stock equivalents would have an anti-dilutive effect on primary EPS and have not, therefore, been included. Accordingly, there is no difference in the calculations of income and loss per share presented in the periods covered by these consolidated financial statements.

A reconciliation to United States Generally Accepted Accounting Principles is included in Note 11 to the Audited Financial Statements.

Exchange Rate Summary

Since June 1, 1970, the government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the United States dollar. On May 27, 2003, the exchange rate in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars (based on the noon buying rates in New York City, for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York) was $1.3754. For the past five fiscal years ended December 31 and for the period between December 31, 2002 and May 28, 2003, the following exchange rates were in effect for Canadian dollars exchanged for United States dollars, expressed in terms of Canadian dollars (based on the noon buying rates in New York City, for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York):

|Year Ended        | Average
|----------------- | -------
|December 31, 1998 | $1.484 
|December 31, 1999 | $1.486 
|December 31, 2000 | $1.4855
|December 31, 2001 | $1.5519
|December 31, 2002 | $1.58  



|Month ended       | Low / High       
|----------------- | -----------------
|December 31, 2002 | $1.5476 / $1.5776
|January 31, 2003  | $1.5184 / $1.5672
|February 28, 2003 | $1.4840 / $1.5292
|March 31, 2003    | $1.4628 / $1.4944
|April 30, 2003    | $1.4334 / $1.4740
|May 31, 2003      | $1.4197 / $1.3507

We have not issued any dividends in the past five fiscal years.

D.	Risk Factors

Much of the information included in this annual report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by our company and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outline below. We caution the reader that important factors in some cases have affected and could materially affect actual results in the future, and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". Prospective investors should consider carefully the risk factors set out below.

We are a company with a limited operating history which makes it difficult to evaluate whether we will operate profitably.

We have a limited oil and gas operating history and therefore have a limited history of earnings. We started our oil and gas operations in August, 1997. In the past, we have incurred substantial net losses. For the year ended December 31, 2002, we had a cumulative deficit of $6,881,933. Our ability to generate significant revenues is uncertain. In order for us to make a profit, our revenues will need to increase significantly.

Fluctuating World Prices

The market prices of oil and natural gas have historically fluctuated widely and are effected by numerous global factors beyond our control. A decline in such market prices may have an adverse effect on revenues we receive from the sale of oil and gas. A decline in prices will also reduce our exploration efforts and make it more difficult to raise capital.

Uncertainty of Estimates of Reserves

Under applicable regulatory requirements, we are required to identify and disclose proved oil and gas reserves, estimated quantities of crude oil, natural gas and natural gas liquids. This geological and engineering data demonstrates with reasonable certainty the estimated quantities of crude oil, natural gas and natural gas liquids which will be recoverable in future years from known reservoirs under existing economic and operating conditions. However, the process of estimating oil and gas reserves is complex, requiring significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. As a result, such estimates are inherently imprecise. Actual future production, oil and gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and gas reserves may vary substantially from our estimations from year to year. Any significant variance in the assumptions could materially affect the estimated quantities and present values of reserves. For example, a material drop in oil and gas prices, or a material increase in applicable taxes, will require management to reassess whether known reservoirs can continue to be reasonably judged as economically productive from one year to the next. In addition, our reserves may be subject to downward or upward revisions based upon production history, results of future exploration and development, prevailing oil and gas prices and other factors, many of which are beyond our control. Actual production, revenues, taxes, development expenditures and operating expenses with respect to our reserves will likely vary from our estimates, and such variances may be material.

Declining Reserves

In general, the volume of production from oil and gas properties declines as reserves are depleted. The decline rates depend on reservoir characteristics and vary from steep declines to the relatively slow declines characteristic of long-lived fields in other regions. Because we do not intend to acquire further oil and gas properties, our reserves will decline as reserves are produced.

Environmental Risks

We are subject to laws and regulations that control the discharge of materials into the environment, require removal and cleanup in certain circumstances, require the proper handling and disposal of waste materials or otherwise relate to the protection of the environment. In operating and owning petroleum interests, we may be liable for damages and the costs of removing hydrocarbon spills for which we are held responsible. Laws relating to the protection of the environment have in many jurisdictions become more stringent in recent years and may, in certain circumstances, impose strict liability, rendering our company liable for environmental damage without regard to actual negligence or fault. Such laws and regulations may expose us to liability for the conduct of, or conditions caused by, others or for acts of our company. We believe that we have complied in all material respects with applicable environmental laws and regulations.

We have not obtained title reports and our properties may be subject to prior unregistered agreements, native land claims or transfers which have not been recorded or detected, resulting in a possible claim against any future revenues generated by such properties.

We have not obtained any recent legal opinion as to title of our assets. As a result, no assurances can be given that title defects do not exist. If title defects do exist, it is possible that we may lose all or a portion of our right, title, estate and interest in and to our assets.

Operating Hazards and Drilling Risks

Oil and natural gas exploration operations are subject to all of the risks and hazards typically associated with such operations, including fire, explosions, blowouts and oil spills, each of which could result in substantial damage to oil and natural gas wells, producing facilities, other property and the environment or personal injury. The nature of these risks is such that liabilities could exceed insurance policy limits, in which event, our company could incur significant costs that could have a materially adverse effect upon our financial condition. Oil and natural gas production operations are also subject to all the risks typically associated with such operations, including premature decline of reservoirs and the invasion of water into producing formations.

Drilling involves numerous risks, including the risk that no commercially productive oil or gas reservoirs will be encountered. The cost of drilling and completing wells is often unpredictable, and drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors, including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, weather conditions and shortages or delays in delivery of equipment.

Competition in the oil and gas industry is highly competitive.

The oil and gas industry is highly competitive and we must compete with many companies who have greater financial strength and technical resources than we do.

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Our oil and gas operations are subject to various Canadian federal, provincial and local governmental regulations. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, provincial and local laws and regulations relating primarily to the protection of human health and the environment. To date, expenditures related to complying with these laws, and for remediation of existing environmental contamination, have not been significant in relation to the results of operations of our company. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

The loss of Donald Sharpe would have a materially adverse effect on our prospects.

We consider our President and CEO, Donald Sharpe, vital to our continued operations. The loss of the services of Mr. Sharpe, for any reason, may have a materially adverse effect on our prospects. Furthermore, we do not maintain "key man" life insurance on the life of Mr. Sharpe. To the extent that the services of Mr. Sharpe become unavailable, we will be required to retain other qualified persons; however, there can be no assurance that we will be able to employ qualified persons upon acceptable terms.

Trading of our stock may be restricted by the SEC's "Penny Stock" regulations which may limit a stockholder's ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 in a form prepared by the SEC which 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 offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer 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 these 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 the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

Our directors and officers own a significant amount of stock and, if they act as a group, will have a significant influence on all matters requiring shareholder approval which may delay or prevent a change in control.

As of May 31, 2003, directors and executive officers beneficially owned approximately 14.6% of our outstanding common shares. As a group, the directors and officers also have options and/or warrants to purchase 1,001,000 additional shares which if exercised would represent approximately 3.4% of our outstanding common shares. As a result, these shareholders, if they act as a group, will have a significant influence on all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. Such control may have the effect of delaying or preventing a change in control.

Trading in our common shares on the TSX Venture Exchange is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments.

The trading price of our shares has been and may continue to be subject to wide fluctuations. Trading prices of the our shares may fluctuate in response to a number of factors, many of which are beyond our control. In addition, the stock market in general, and the market for gas and oil exploration companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. These broad market and industry factors may adversely affect the market price of our shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions limiting the liability of our officers and directors for all acts, receipts, neglects or defaults of themselves and all of our other officers or directors or for any other loss, damage or expense incurred by our company which shall happen in the execution of the duties of such officers or directors. Such limitations on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter the our shareholders from suing our officers and directors based upon breaches of their duties to our company, though such an action, if successful, might otherwise benefit our company and our shareholders.

Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

In the event that we are required to issue additional shares or decide to enter into joint ventures with other parties in order to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. There are also outstanding common share purchase warrants exercisable into 2,500,000 common shares which, if exercised, would represent approximately 27% of our issued and outstanding shares. If all of these shares are exercised and issued, such issuance also will cause a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the market price of the our shares.

U.S. investors could suffer adverse tax consequences if we are characterized as a passive foreign investment company

We may be treated as a passive foreign investment company, or PFIC, for United States federal income tax purposes during the 2002 tax year or in subsequent years. We may be deemed a PFIC because previous financings combined with proceeds of future financings may produce, or be deemed to be held to produce, passive income. Additionally, U.S. citizens should review the section entitled "Taxation-U.S. Federal Income Taxation - Passive Foreign Investment Companies" contained in this Registration Statement for a more detailed description of the PFIC rules and how those rules may affect their ownership of our capital shares.

If we are or become a PFIC, many of the U.S. shareholders will be subject to the following adverse tax consequences:

- they will be taxed at the highest ordinary income tax rates in effect during their holding period on certain distributions on our capital shares, and gains from the sale or other disposition of our capital shares;

- they will be required to pay interest on taxes allocable to prior periods; and

- the tax basis of our capital shares will not be increased to fair market value at the date of their date.

We do not expect to declare or pay any dividends

We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.

ITEM 4		Information on Netco Energy Inc.

A.	History and Development of Netco Energy Inc.

Netco Energy Inc. was incorporated on May 21, 1993 as "567905 Alberta Ltd." pursuant to the Business Corporations Act (Alberta)(the "ABCA"). We changed our name to "Hilstar Capital Corporation" on September 8, 1993. Pursuant to Articles of Amendment filed on October 5, 1995, we changed our name to "KINeSYS Pharmaceutical Inc.", and our then issued and outstanding common shares were consolidated on a three-for-one basis (one new common share for every three common shares then outstanding). On August 20, 1997, we changed our name to "Green River Petroleum Inc.", and on July 6, 1999, to "Green River Holdings Inc.". Also on July 6, 1999, our then issued and outstanding common shares were consolidated on a one-for-five basis (one new common share for every five common shares then outstanding). On July 28, 2000, we changed our name to "Netco Energy Inc.", and our then issued and outstanding common shares were consolidated on a one-for-two basis (one new common share for every two common shares then outstanding).

We do not have any subsidiaries. Our previous wholly-owned subsidiary, Green River Petroleum (USA) Ltd., incorporated under the laws of the State of Wyoming was dissolved during 2002.

Development of Our Company

Our common shares were listed and posted on the Alberta Stock Exchange on January 4, 1994 as a junior capital pool corporation under the name "Hilstar Capital Corporation". As a junior capital pool corporation, our principal business was to identify and evaluate properties or businesses with a view to acquisition or participation. The Alberta Stock Exchange was a predecessor exchange of the Canadian Venture Exchange, which was formed by the merger of the Alberta and Vancouver Stock Exchanges effective November 26, 1999. The Canadian Venture Exchange is now the TSX Venture Exchange.

On August 19, 1997, acting through our subsidiary, Green River Petroleum (USA) Inc., we entered into a Farm-In Agreement with Ultra Resources, Inc. and Ultra Petroleum (USA) Inc. (together, "Ultra"), both wholly-owned subsidiaries of Ultra Petroleum Corp., pursuant to which our subsidiary agreed to pay prospect fees and drill three wells in order to earn a portion of Ultra's interest in certain petroleum and natural gas assets located in Sublette County, Wyoming. The Farm-In Agreement was formalized by way of an Exploration Development Agreement among our subsidiary and Ultra. Pursuant to the Farm-In Agreement, we agreed to drill three (3) wells and pay various costs and expenses with respect to certain of Ultra's land holdings in Sublette County, Wyoming to earn an interest in such leasehold. The Farm-In Agreement covered prospects in four areas: Warbonnet (406.40 net acres), Lovatt Draw (4,847.9 net acres), Fort Bonneville (7,239.3 net acres) and Merna (9,920 net acres). Ultra was to be the initial operator in all four areas.

Pursuant to a letter agreement dated October 31, 1997 with Ultra Petroleum (USA) Inc., William Charles Helton, Barbara Mary Helton and Enterprise Exploration and Production Co., Inc., our company, acting through our subsidiary, acquired a 17.75% working interest and a 13.274211% net revenue interest in certain petroleum and natural gas assets covering 430.808 gross acres in the Bon Air Field, Jefferson Davis Parish, Louisiana, USA. The transaction closed on January 16, 1998, with an effective date of July 1, 1997. The assets on the Louisiana property include one producing gas well, the Mildred Landry MT#1 well.

Pursuant to a letter agreement dated April 27, 1998, acting through our subsidiary, we acquired a non-convertible 0.5% gross overriding royalty interest in certain petroleum and natural gas leases known as the Corona Property, located in Sublette County, Wyoming. Our subsidiary received 0.5% of the gross revenues from any production on the leases and is only responsible for its 0.5% share of the costs incurred after the production reaches the sales point.

None of the wells drilled in Wyoming pursuant to our agreements with Ultra achieved commercial production. As a result of the drilling and completion of operations of the three wells, we were indebted to Ultra Resources, Inc. in the amount of US$830,942 as of April 30, 1999. As a result of negotiations between Ultra and our company, the parties entered into an agreement dated August 5, 1999, pursuant to which the debt owing to Ultra was settled by payment to Ultra of US$35,000, and our relinquishment of all of the interests that we had earned under the Farm-In Agreement, except for an interest equal to 20% of Ultra's interest in approximately 10,000 acres in one area called the Lovatt Draw. The interest retained by our company amounted to a 17% working interest in certain leases in the Lovatt Draw, excluding the 40-acre spacing unit where Ultra's Lovatt Draw well is located. As a working interest owner in the Lovatt Draw leases, we had the right, but not the obligation, to participate in any further exploration programs that might be proposed, as well as the obligation to pay our proportionate share of the annual rentals of between US$1.00 and US$2.00 per acre.

Our Business

Our principal business has been the exploration, development and production of oil and natural gas reserves. Our main focus had been on our assets located in the Bon Air Field, Jefferson Davis Parish, Louisiana, although we had received some revenues from our gross overriding royalty interest in our assets in Sublette County, Wyoming.

As noted herein, we have recently acquired interests in oil and gas properties located in Alberta, Canada. To date we have received modest revenues from such interests. However, there are no assurances that any revenue stream derived from such interests will be consistent in the future. To the extent that we receive an uncertain cash flow from our oil and gas revenues and that these amounts are not significant, we are highly dependent on external sources of financing to maintain a positive cash flow.

Sale of Our Assets to Patriot Petroleum Corp. (formerly Patriot Capital Corp.)

Pursuant to a letter of intent dated May 25, 2001 from Patriot Capital Corp. ("Patriot"), we received an offer to purchase our subsidiary's interest in our assets located in Louisiana and Wyoming. Pursuant to the terms of the letter of intent, and a definitive agreement dated August 7, 2001 (the "Patriot Agreement") the consideration to be paid by Patriot for the acquisition of our subsidiary's interest in the Louisiana and Wyoming assets was US$644,419, payable as to US$521,419 for the assets located in Wyoming and US$123,000 for the assets located in Louisiana.

Pursuant to the Patriot Agreement, we sold all of our interests in oil and gas assets located in the States of Louisiana and Wyoming to Patriot, based upon their value as at May 1, 2001, in consideration for the total purchase price of US$644,419. The sale closed on March 1, 2002. Pursuant to the terms of the Patriot Agreement, all income collected or accrued on the oil and gas assets from May 1, 2001 to March 1, 2002 was credited to Patriot. As a result of the income that accrued to Patriot, we entered into an amendment to the Patriot Agreement such that the total purchase price payable was reduced to US$494,734.04 to account for the accrued income.

Two of the directors of Patriot, Donald Sharpe and John Hislop, are also members of our board of directors. As a result, both Mr. Sharpe and Mr. Hislop abstained from voting on the resolution approving the sale of the Louisiana and Wyoming assets to Patriot.

Our board of directors carefully analyzed the performance of our assets located in Louisiana and Wyoming in assessing the merits of the sale of those assets. Our board of directors was of the view that, in light of the new business focus by virtue of the reverse take-over with Chalk discussed earlier in this section, the sale of our Louisiana and Wyoming assets was in our best interests.

The sale of our assets provided our shareholders with the right to dissent from the special resolution regarding the sale of the assets pursuant to Section 184 of the Alberta Business Corporation Act (the "ABCA"). With respect to the special resolution, any shareholder who dissents in compliance with Section 184 of the ABCA would be entitled, in the event that the sale of the our assets became effective, to be paid the fair market value of the common shares held by the dissenting shareholder determined as of the close of business on the last business day before the special resolution is adopted. A shareholder is not entitled to dissent with respect to the sale of our assets if such holder votes any of the common shares beneficially held by it in favour of the special resolution. The execution or exercise of a proxy does not constitute a written objection for purposes of the rights to dissent under the ABCA. The ABCA requires adherence to the procedures established therein and accordingly, each of our shareholders who might desire to exercise rights of dissent should carefully consider and comply with the provisions of Section 184 of the ABCA and consult its legal advisors. We did not receive any notices of dissent from our shareholders in regards to the sale of our Louisiana and Wyoming assets to Patriot.

B.	Business Overview

Present Operations of Our Company

Our current operations consist of holding working interests in various oil and gas properties located in Alberta, Canada. Our working interests range from 18.75% to 68.75% depending upon the property. Our more material properties and interests are discussed below.

On August 2, 2001 we entered into a farm-out agreement with Moxie Exploration Ltd. ("Moxie") pursuant to which we drilled a well in the Jumpbush area of Alberta. We paid $376,418, or 75% of the drilling costs of the well and earned a 37.5% interest in the well and the farm-out lands. The well was put into production in February, 2002. The farm-out lands that are encompassed by our agreement with Moxie are more particularly described as Twp. 20 Rge. 19 W4M: Sections 3 and 22.

Further to our initial agreement with Moxie, on September 21, 2001 we entered into a second farm-out agreement with Moxie. Under this farm-out, we again paid for 75% of the cost to drill and complete a further well in the Jumpbush area of Alberta to thereby earn out 37.5% interest. This well has been drilled and cased to a depth of 757 meters and is waiting on a tie-in to production. Our total cost was $117,371.

We subsequently entered into a further farm-out agreement with Moxie Exploration Ltd. dated October 10, 2001. Pursuant to the terms of the farm-in, we participated for 50% in the drilling of a well in the Eyremore area of Alberta. The cost to us was $177,550 and we acquired a 50% interest in the well. The well commenced production in February, 2002.

We have also entered into a farm-out arrangement with Daybreak Energy Inc. ("Daybreak") in the Wainwright area of Alberta pursuant to an agreement dated September 14, 2001, as amended by an agreement dated October 18, 2001. Under the terms of the farm-in, we paid $79,131 for a 50% interest in the land and paid 100% of the cost to re-enter, drill and complete a well in order to earn a 68.75% interest, after payout, in the prospect. Our cost to drill and complete the well was $146,867. Donald A Sharpe, our president, is a director of Daybreak Energy Inc.

The lands that are encompassed by our farm-out agreement with Daybreak are more particularly described as:

Twp. 43 Rge. 5 W4M: Sections 35, 35, and 16; and

Twp. 43 Rge. 5 W4M: Sections 1, 2, 3, 10, 11 and 12

On November 22, 2001, Daybreak re-entered the well bore in the Wainwright area at 6-2-44-5 W4 targeting the Colony formation. The well was completed and put on production in April, 2002.

We entered into a Farm-in Agreement dated January 24, 2003 with Warrior Energy Corporation ("Warrior"), whereby we can earn an undivided 60% working interest in Block 1 of the farm-in lands, and an undivided 20% working interest in Block 11 of the farm-in lands, by the drilling of a test well, located in the Greencourt Area, Alberta.

We subsequently entered into a Participation Agreement dated February 19, 2003 with Warrior whereby we can earn a 40% interest before pay-out (24% after pay-out) in two wells located in the Morningside Area, Alberta.

Revenues

For the year ended December 31, 2002 we received total revenues of $1,281,645 from our interests in our oil and gas properties located in Alberta, Canada.

Market Prices of Oil and Natural Gas

The market prices of oil and natural gas have historically fluctuated widely and are affected by numerous global factors beyond our control. A decline in such market prices may have an adverse effect on revenues we receive from the sale of oil and gas. A decline in prices will also reduce our exploration efforts and make it more difficult to raise capital.

Governmental Regulation/Environmental Issues

Our oil and gas operations are subject to various United States federal, state and local governmental regulations. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, provincial and local laws and regulations relating primarily to the protection of human health and the environment. To date, expenditures related to complying with these laws, and for remediation of existing environmental contamination, have not been significant in relation to the results of operations of our company. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

C.	Organizational Structure

As of the date of this annual report, we do not have any subsidiaries.

D.	Property, Plants and Equipment

Our executive office is located at Suite 1320 - 925 West Georgia Street, Vancouver, British Columbia, Canada V6C 1G8. We entered into a lease agreement with First Merit Group Ltd. to lease our office space, which is approximately 1500 square feet in size, at a base rent of $31,200 per year. Commencing April, 2001, our base rent increased to $38,400 per year. This space accommodates all of our executive and administrative offices.

Our Jumpbush Area Assets

We hold a working interest of 18.75% to 37.5% in certain oil and gas assets located in the Jumpbush areas of Alberta, Canada.

Our Wainwright Area Assets

We hold a 68.75% working interest in certain oil and gas assets located in the Wainwright area of Alberta, Canada.

Our Eyremore Area Assets

We hold a 50% working interest in certain oil and gas assets located in the Eyremore area of Alberta, Canada.

Our Granlea Area Assets

We hold a 27.75% working interest in certain oil and gas assets located in the Granlea area of Alberta, Canada.

Our Majorville Area Assets

We hold a 35% working interest in certain oil and gas assets located in the Majorville area of Alberta, Canada.

Production History and Drilling Activity

Our oil and gas assets in Alberta, Canada began production during 2002. For the year ended December 31, 2002 gross production from our Alberta assets was 606 mmcf of gas and 12,500 bbl of oil. Of this gross production, our interest was 332 mmcf of gas and 4,700 bbl of oil.

We have 10 productive wells as at March 31, 2003.

As at the date of this Annual Report, the following 18 wells have been drilled on the properties located in Alberta, Canada in which we hold an interest:



|Property    | Well             | Well Type   | Status                           | Working Interest
|----------- | ---------------- | ----------- | -------------------------------- | ----------------
|Jumpbush    | 16-3-20-19W4     | Natural Gas | Shut In                          | 37.50%          
|Jumpbush    | 10-21-20-19W4    | Natural Gas | Producing                        | 37.50%          
|Jumpbush    | 10-22-20-19W4    | Natural Gas | Producing                        | 37.50%          
|Jumpbush    | 6-16-20-19W4     | Natural Gas | Producing                        | 37.50%          
|Jumpbush    | 10-24-20-19W4    | Natural Gas | Producing                        | 37.50%          
|Jumpbush    | 5-17-20-19W4     | Natural Gas | Producing                        | 18.75%          
|Jumpbush    | 1-1-20-19W4      | Oil         | Producing                        | 35.00%          
|Eyremore    | 102/16-8-19-18W4 | Natural Gas | Producing                        | 50.00%          
|Jumpbush    | 6-29-20-19W4     | Natural Gas | Suspended, waiting on pipeline   | 37.50%          
|Jumpbush    | 8-28-20-19W4     | Natural Gas | Shut In                          | 37.50%          
|Jumpbush    | 12-29-19-20W4M   | Natural Gas | Suspended, waiting on pipeline   | 37.50%          
|Majorville  | 15-25-19-20W4    | Natural Gas | Suspended, waiting on completion | 35.00%          
|Jumpbush    | 11-36-19-20W4M   | Natural Gas | Producing                        | 35.00%          
|Granlea     | 6-23             | Natural Gas | Suspended, waiting on completion | 27.75%          
|Granlea     | 16-14            | Natural Gas | Suspended, waiting on completion | 27.75%          
|Greencourt  | 4-20             | Natural Gas | Suspended, waiting on completion | 60.00%          
|Morningside | 8-13-42-1W5M     | Natural Gas | Producing                        | 24.00%          
|Morningside | 14-12-42-1W5M    | Natural Gas | Producing                        | 24.00%          
|Wainwright  | 6-2-44-5W4M      | Natural Gas | Producing                        | 68.75%          
|Jumpbush    | 8-29-38-7W4      | Natural Gas | Suspended, waiting on pipeline   | 50.00%          

Geology and Reserve Summaries

McDaniel & Associates Consultants Ltd. ("McDaniel") independent geological and petroleum engineering consultants of Calgary, Alberta, have prepared a report utilizing escalated cost and price assumptions dated January 1, 2003, evaluating as at January 1, 2003 the crude oil and natural gas reserves attributable to the Assets (the "McDaniel Report"). All of the reserves identified in the McDaniel Report are located in Alberta, Canada. The McDaniel Report is summarized in the table below.

Total Reserves and Present Worth Values 
Escalating Prices as of January 1, 2003
Proved and Probable Reserves - Unrisked

Total of All Areas

|                                 | Company Share of
Remaining Reserves
(mbbl, mmcf, mlt) | Company Share of Present Worth Values
Before Income Tax (4)(5)(6)
(M$)
|-------------------------------- | ----------------------------------------------------- | ----------------------------------------------------------------------
|                                
|                                 | Gross (1)                                             | Net (2)                                                               
|                                
|Proved Producing Reserves        |                                                       |                                                                       
|                                 | Natural Gas                                           | 1,111.9                                                               
|                                 | Royalty Tax Credit                                    |                                                                       
|                                
|                                 | Total                                                 |                                                                       
|                                 |                                                       |                                                                       
|Proved Non-Producing Reserves    |                                                       |                                                                       
|                                 | Crude Oil                                             | 5.8                                                                   
|                                 | Natural Gas                                           | 132.2                                                                 
|                                
|                                 | Total                                                 |                                                                       
|                                 |                                                       |                                                                       
|Total Proved Reserves            |                                                       |                                                                       
|                                 | Crude Oil                                             | 5.8                                                                   
|                                 | Natural Gas                                           | 1,244.2                                                               
|                                 | Royalty Tax Credit                                    |                                                                       
|                                
|                                 | Total                                                 |                                                                       
|                                 |                                                       |                                                                       
|Total Probable Reserves          |                                                       |                                                                       
|                                 | Crude Oil                                             | 5.8                                                                   
|                                 | Natural Gas                                           | 640.6                                                                 
|                                 | Royalty Tax Credit                                    |                                                                       
|                                
|                                 | Total                                                 |                                                                       
|                                 |                                                       |                                                                       
|Total Proved & Probable Reserves |                                                       |                                                                       
|                                 | Crude Oil                                             | 11.6                                                                  
|                                 | Natural Gas                                           | 1,884.8                                                               
|                                 | Royalty Tax Credit                                    |                                                                       
|                                
|                                 | Total                                                 |                                                                       
|                                 |                                                       |                                                                       
|BOE Reserves & PWV/BOE (3)       |                                                       |                                                                       
|                                 | Proved Producing                                      | 185.3                                                                 
|                                 | Proved Non-Producing                                  | 27.8                                                                  
|                                 | Total Proved                                          | 213.1                                                                 
|                                 | Total Probable                                        | 112.5                                                                 
|                                 | Total Proved & Probable                               | 325.7                                                                 

(1)

(2)

(3)

(4)

(5)

(6)

The values may not necessarily be fair market value of the reserves.

The McDaniel Report contains an evaluation prior to provision for income taxes, interest, abandonment and site restoration costs and general and administrative costs, after deduction of royalties and estimated future capital. It should not be assumed that the discounted net present value estimated by McDaniel represents the fair market value of the reserves. Where the present value is based on escalating or constant price and cost assumptions, there is no assurance that such price and cost assumptions will be attained and variances could be material. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized in the notes following the tables.

We are subject to laws and regulations that control the discharge of materials into the environment, require removal and cleanup in certain circumstances, require the proper handling and disposal of waste materials or otherwise relate to the protection of the environment. In operating and owning petroleum interests, we may be liable for damages and the costs of removing hydrocarbon spills for which we are held responsible. Laws relating to the protection of the environment have in many jurisdictions become more stringent in recent years and may, in certain circumstances, impose strict liability, rendering our company liable for environmental damage without regard to actual negligence or fault. Such laws and regulations may expose us to liability for the conduct of, or conditions caused by, others or for acts of our company. We believe that we have complied in all material respects with applicable environmental laws and regulations.

ITEM 5	Operating and Financial Review and Prospects

The information in this section is presented in accordance with Canadian generally accepted accounting principles, and has not been reconciled to United States generally accepted accounting principles. The following discussion of our financial condition and results of operations for the fiscal years ended December 31, 2002, 2001 and 2000 should be read in conjunction with our consolidated financial statements and related notes included therein included in this annual report in accordance with Item 8 - "Financial Information".

A.	Operating Results

Revenues

For the year ended December 31, 2002 we received revenues totalling $1,281,645 from our interest in our Alberta assets before deduction of royalties. For the year ended December 31, 2001 we received revenues of $604,160. The increase in revenues is due to the production from our oil and gas assets located in Alberta, Canada which went into production during 2002. For the year ended December 31, 1001 we did not receive any revenues from our Canadian oil and gas assets. We recognize our revenues by accruing them in the month earned.

Expenses

During the year ended December 31, 2000, general and administrative expenses were $250,267. This reflects lower office overhead but also an increase in professional fees related to our regulatory filings. For the year ended December 31, 2001, general and administrative expenses increased marginally to $266,808. For the year ended December 31, 2002, general and administrative expenses decreased marginally to $201,245 due to the sale of our US assets.

In 2000, we paid $93,742 in royalties and $43,455 in operating expenses. In 2001, we paid $98,812 in royalties and $52,028 in operating expenses. In 2002 we paid $208,154 in royalties and $162,732 in operating expenses. The increase in royalties and operating expenses from the 2001 to the 2002 fiscal year was as a result of the increased number of producing wells in Alberta, Canada.

Other Income

Over the year ended December 31, 2000, we had interest income of $13,996 and a foreign exchange gain of $13,223. For the year ended December 31, 2001 we had interest income of $20,939 and a foreign exchange gain of $18,556. Over the year ended December 31, 2002 we had interest income of $7,699 and a foreign exchange gain of $28,833.

Pursuant to the Patriot Agreement, we sold all of our interests in oil and gas assets located in the States of Louisiana and Wyoming to Patriot, based upon their value as at May 1, 2001, in consideration for the total purchase price of US$644,419. The sale closed on March 1, 2002. Pursuant to the terms of the Patriot Agreement, all income collected or accrued on the oil and gas assets from May 1, 2001 to March 1, 2002 was credited to Patriot. Given the income that accrued to Patriot, we entered into an amendment to the Patriot Agreement such that the total purchase price payable was reduced to $US494,734.04 to account for the accrued income.

Income Taxes

We have a net capital loss for Canadian tax purposes of $979,000, which is available to carry forward indefinitely to apply against any future taxable capital gains as calculated under the Canadian income tax act. We also have non-capital losses of $2,059,822 to offset future taxable income as calculated under the Canadian income tax act.

Net Income or Loss

Our net income for the year ended December 31, 2002 was $878,125, or $0.14 per share, compared to the year ended December 31, 2001 when the net income was $192,826 or $0.06 per share. The increase was primarily due to the sale of our Wyoming and Louisianna assets and the increases in production from our Alberta assets. For the year ended December 31, 2002 the net income from our Alberta assets was $411,510, as compared to a net loss of $255,939 from our Alberta assets for the year ended December 31, 2001.

We do not believe that inflation will affect our operations at this stage of our development.

B.	Liquidity and Capital Resources

On January 18, 2002 we issued 1,000,000 units (the "Units") at a price of $0.20 per unit, with each Unit consisting of one common share and one non-transferable share purchase warrant, entitling the holder to purchase one additional common share for a period of two (2) years from the issuance of the Units at a price of $0.23 per share pursuant to a private placement of an aggregate of 2,500,000 Units (the "Private Placement") for aggregate proceeds of $500,000. The first closing of the Private Placement closed on November 15, 2001 with the issuance of 1,500,000 Units and the remaining 1,000,000 Units were issued to Cubix Investments Ltd. ("Cubix") on January 18, 2002 following the receipt of shareholder approval at a special meeting held on January 7, 2002. As the issuance of the 1,000,000 Units to Cubix would, if fully converted, potentially result in our "change of control" pursuant to the Policies of the TSX Venture Exchange, under the Policies of the TSX Venture Exchange the issuance of the Units to Cubix required shareholder approval.

On January 9, 2002 we issued 712,500 common shares pursuant to the exercise of 712,500 share purchase warrants at $0.25 per common share, for proceeds of $185,250.

Subsequent to the year ended December 31, 2002 we arranged an operating credit line with the National Bank of Canada consisting of an $850,000 revolving operating demand loan, and a $250,000 non-revolving acquisition and development demand loan. These loans are secured by an Acknowledgement of Debt Revolving Demand Credit Agreement, a General Assignment of Book Debts, a Negative Pledge, and a Floating Charge Demand Debenture from us to National Bank in the principal amount of $5,000,000 securing all of our present and after-acquired real and personal property.

Also subsequent to the year ended December 31, 2002, we completed a non-brokered private placement consisting of 100 convertible debentures valued at $10,000 per debenture for net proceeds of $1,000,000. Each debenture carries interest at the rate of 15% per annum, payable quarterly, in arrears and has a term of three years, expiring on March 28, 2006, as may be extended upon mutual agreement between us and the placees. All or any portion of the outstanding principal sum and accrued interest of each debenture is convertible at the option of the placees into units in the capital of our company at a price of $0.30 per unit if converted during the first two years of the debenture or at a price of $0.33 per unit if converted during the third year of the debenture.

Each unit consists of one common share and one non-transferable share purchase warrant. Each warrant entitles the placees to purchase one additional common share at a price of:

i)	$0.30 per warrant share if the debenture is converted after the date of issuance of the debenture and on or before one year following the date of issuance of the debenture;

ii)	$0.40 per warrant share if the debenture is converted after the first anniversary of the issuance of the debenture and on or before two years following the date of issuance of the debenture; and

iii)	$0.50 per warrant share if the debenture is converted after the second anniversary of the issuance of the debenture and on or before the due date of the debenture.

Related parties to our company subscribed for a total of 69.88 debentures of the total offering of 100 debentures. Proceeds from this private placement will be used to further our exploration and drilling program in Alberta.

We do not plan any further land acquisitions or exploratory programs at this time. Our commitments for capital expenditures are limited to our participation in the Canadian properties in which we have an interest or a right to acquire an interest, and for our office rent. We have sufficient cash from our operations and financing activities to be able to pay for these commitments.

U.S. GAAP

The results of operations discussed above are based on our audited financial statements prepared in accordance with Canadian generally accepted accounting principles. Differences between Canadian generally accepted accounting principles and principles generally accepted in the United States are listed and quantified in Note 11 to our consolidated financial statements included elsewhere in this document. Significant differences between Canadian GAAP and US GAAP include:

- the requirement under US GAAP to record compensation expense when shares or share options are issued or granted to officers at prices below market value at the time of issuance or grant, whereas under Canadian GAAP, compensation expense is generally not recorded under these circumstances;

- the requirement under Canadian GAAP requires that basic earnings per share ("EPS") be based solely on the common shares actually issued and outstanding, whereas U.S. GAAP requires the inclusion of "common stock equivalents" in the calculation of primary EPS when their inclusion would have dilutive effect. Our common stock equivalents are the unexercised common share stock options and share purchase warrants;

As at December 31, 2002 there were no material differences between the loss per share under Canadian generally accepted accounting principles and under United States generally accepted accounting principles. The reasons for the losses are as discussed above under "Results from Operations".

C.	Research and Development, patents, licenses etc.

We do not currently, and did not previously, have research and development policies in place. Over the past three fiscal years, we have not expended any material amounts on research or development of our oil and gas properties.

D.	Trend Information

We are not aware of any other trends, demands uncertainties, commitments or events which are reasonably likely to have a material effect upon our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

ITEM 6	Directors, Senior Management and Employees

A.	Directors and Senior Management

The following table sets forth the names, business experience and function/areas of expertise of each of our directors and officers:

|Name
Office Held
Age                                                                                                    | Area of Experience and Functions in Netco Energy Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Donald A. Sharpe
President, Chief Executive
Officer, Chief Executive Officer, Secretary, Treasurer and Director
Age: 45 | Director since August 15, 1997; President, CEO, CFO, Secretary and Treasurer since June 29, 1999
As President and CEO, Mr. Sharpe is responsible for the day to day operations of our company. As CFO and Treasurer, Mr. Sharpe is primarily responsible for the internal accounting and record keeping, general administration and SEC reporting. As Secretary, Mr. Sharpe is responsible for keeping all records, making all necessary filings, general administration and internal accounting for our company, and as a director, he is responsible for the management and supervision of the affairs and business of our company.
|John R. Hislop
Director
Age: 50                                                                                         | Director since June 29, 1999.
As a director, Mr. Hislop is responsible for the management and supervision of the affairs and business of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Hans Christopher Schultze 
Director
Age: 39                                                                             | Director since March 14, 2003.
As a director, Mr. Schultze is responsible for the management and supervision of the affairs and business of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Donald A. Sharpe, President, CEO, CFO, Secretary, Treasurer and Director

Mr. Sharpe devotes approximately fifty percent (50%) of his working time to the affairs of our company. Mr. Sharpe also serves or has served as: (a) Director and President of Gemini Energy Corp, an oil and gas exploration company listed on the TSX Venture Exchange since October 20, 2000; (b) director of Heartland Oil and Gas Corp., a public resource company since September 2002; (c) director of Watch Resources Ltd., a public resource company since April 2002; (d) director, President and Chief Executive Officer of Capital Charter Corp. from November 1998 to March 2000; (e) director of Result Energy Inc. (formerly Daybreak Resources Corp.), a public resource company, from May 2000 to present; (f) director, President and Chief Executive Officer of Empress Capital Corp., a public resource company, from April 1999 to May 2000; (g) director and President of JABA Inc., a public resource company, from April 1995 to November 1997; (h) President and Chief Executive Officer of Nation Energy, Inc., a public resource company, from June 1999 to present; (i) director, President and Chief Executive Officer of Patriot Petroleum Corp., a public resource company listed on the TSX Venture Exchange, from June 1999 to present; (j) director of UKT Recycling Technologies Inc., a public resource company, from November 1994 to January 1999, Chairman from January 1996 to January 1999, and Chief Executive Officer from January 1996 to January 1998; (k) director of Velvet Exploration Inc., a public resource company, from November 1996 to November 1998; and (l) professional geo-physicist with 20 years of experience in the oil and gas industry, and in the management of public companies.

John R. Hislop, Director

Mr. Hislop devotes approximately five percent (5%) of his working time to the affairs of our company. Since 1990, Mr. Hislop has worked as an independent financial consultant. He also serves or has served as: (a) Director of Gemini Energy Corp, an oil and gas exploration company listed on the TSX Venture Exchange from March 3, 1995 to June 27, 2002 and President from March 13, 1997 to January 28, 1998; (b) director of Ariel Resources Ltd., a public resource company, from December 1991 to March 2000, and Chief Financial Officer from December 1994 to December 1997; (c) director of Cubix Investments Ltd., a public resource and investment company, from February 1994 to present, and President from February 1994 to February 2001; director, (d) President, CEO and CFO of Exxel Energy Corp., a public company, since October 2001; (e) director of Kinysis Pharmaceutical Inc., a public resource company, from July - October 1997, and President, Secretary, Chief Financial Officer and Chief Executive Officer from July - August 1997; (f) director and President of Warrior Energy N.V., a public resource company, from October 1997 to present; (g) director and Secretary of Nation Energy, Inc., a public resource company, from June 1999 to present; (h) director of Patriot Petroleum Corp., from April 1999 to present; (i) director of Spectrum Resources Ltd., a public resource company, from September 1996 to November 1997; (j) director of Ultra Petroleum Corp., a public oil & gas company, from March 1993 to January 18, 2001, President from March of 1993 to May of 1996, and Chief Financial Officer from May of 1996 to September of 1998; (k) President and director of Ultra Holdings Inc., a public resource company, from July 1999 to October 2001; and (l) director of Zconnexx Corporation from November 1998 to May 2000.

Hans Christopher Schultze, Director

Mr. Schultze devotes approximately five percent (5%) of his working time to the affairs of our company. Mr. Schultze has also served or serves as: (a) President and Director of FM Resources Corp., a resource company listed on the TSX Venture Exchange since February 2000; (b) Secretary of Gemini Energy Corp. since October 1998 and Vice President of Exploration of Gemini Energy Corp. since May 1997; (c) secretary of Patriot Petroleum Corp. since June 1999 and (d) geologist with Cominco Ltd. from May 1988 to May 1997.

There are no family relationships between any of our officers and/or directors.

B.	Compensation

Other than as set forth in the table below, our executive officer was not paid and did not earn compensation from our company for performing his duties during the three fiscal year ended December 31, 2002:

|SUMMARY COMPENSATION TABLE                                             
|-----------------------------------------------------------------------
|Name and
Principal
Position                                            
|Salary                                                                 
|Securities
Under
Options/
SARs
Granted                                 
|Donald A. Sharpe
President, CEO, CFO, Secretary, Treasurer and Director

(1)	Pursuant to a Management Consulting Agreement dated June 1, 1999, we pay $5,000 per month in management fees to D. Sharpe Management Inc., a private company controlled by Donald A. Sharpe. A similar agreement was in place for 1998. See "Major Shareholders and Related Party Transactions"

(2)	These options were granted pursuant to our Incentive Stock Option Plan. 200,000 stock options were granted on November 22, 1999 at an exercise price is $0.11 expiring on November 22, 2004. 175,000 stock options were granted on December 7, 1999 at an exercise price of $0.13 expiring on December 7, 2004. As a result of the consolidation of our capital effective July 8, 2000, each outstanding option was subsequently consolidated on a two-for-one basis with a corresponding increase in the exercise price by a factor of two, so that as at the date of this annual report, Mr. Sharpe holds 100,000 stock options exercisable at a price of $0.22 per share, expiring on November 22, 2004, and 87,500 stock options exercisable at a price of $0.26 per share, expiring on December 7,. 2004.

No cash compensation was paid to any of our directors for their services as directors during the fiscal year ended December 31, 2002. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options.

As of the date of this annual report, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer's employment with our company, from a change in control of our company or a change in such officer's responsibilities following a change in control.

C.	Board Practices

The directors are re-elected and the officers are re-appointed at the annual general meeting of shareholders. The last annual meeting was held on June 27, 2002, and each of our current directors and officers will continue to hold his respective office until his successor is elected or appointed, unless his office is earlier vacated under any of the relevant provisions of our Articles or of the ABCA.

There are no service contracts between our company and any of our officers, directors or employees providing for benefits upon termination of employment.

The members of our company's audit committee include Donald Sharpe and John Hislop. The audit committee reviews and approves the scope of the audit procedures employed by our independent auditors, reviews the results of the auditor's examination, the scope of audits, the auditor's opinion on the adequacy of internal controls and quality of financial reporting and our accounting and reporting principles, policies and practices, as well as our accounting, financial and operating controls. The audit committee also reports to the board of directors with respect to such matters and recommends the selection of independent auditors. Before financial statements that are to be submitted to the shareholders at an annual general meeting are considered by the board of directors, such financial statements are submitted to the audit committee for review with the independent auditors, following which the report of the audit committee on the financial statements is submitted to the board of directors.

We do not currently have a remuneration or compensation committee.

D.	Employees

As of December 31, 2002, we did not have any employees, and as of May 31, 2003, we did not have any employees. Our operations are managed by our sole officer, Donald A. Sharpe.

E.	Share Ownership

There were 6,461,829 common shares issued and outstanding as of May 27, 2003. Of the shares issued and outstanding and the stock options granted, our directors and officers owned the following common shares as of May 31, 2003:

|Name
Office Held                                                        | Number of Common Shares
Beneficially Owned as of May 31, 2002 | Percentage(1)
|----------------------------------------------------------------------- | ------------------------------------------------------------- | -------------
|Donald A. Sharpe
President, CEO, CFO, Secretary, Treasurer and Director | 633,500(2)                                                    | 9.3%         
|John R. Hislop
Director                                                 | 592,583(3)                                                    | 8.7%         
|Hans Christopher Schultze
Director                                      | 20,000(4)                                                     | *%           

*	Less than 1%

(1)	Based on 6,461,829 common shares issued and outstanding as at May 31, 2003, and the number of shares issuable upon the exercise of issued and outstanding stock options which are exercisable within 60 days of May 31, 2003.

(2)	Includes 100,000 stock options granted on November 22, 1999 at an exercise price of $0.22, expiring on November 22, 2004, and 87,500 stock options granted on December 7, 1999, at an exercise price of $0.26, expiring on December 7, 2004. In addition, Mr. Sharpe holds 350,000 share purchase warrants entitling him to acquire up to an additional 350,000 common shares at a price of $0.23 per share up to November 15, 2003. In addition, Mr. Sharpe also holds 11.63 convertible debentures entitling him to acquire up to an additional 387,667 common shares and 387,667 share purchase warrants at a price of $0.30 per share if converted at any time until March 28, 2005 or at $0.33 per share if converted at any time from March 29, 2005 to March 28, 2006.

(3)	Includes 93,500 stock options granted on November 22, 1999 at an exercise price of $0.22, expiring on November 22, 2004. In addition, Mr. Hislop holds 350,000 share purchase warrants entitling him to acquire up to an additional 350,000 common shares at a price of $0.23 per share up to November 15, 2003. In addition, Mr. Hislop also holds 43.25 convertible debentures entitling him to acquire up to an additional 1,441,667 common shares and 1,441,667 share purchase warrants at a price of $0.30 per share if converted at any time until March 28, 2005 or at $0.33 per share if converted at any time from March 29, 2005 to March 28, 2006.

(4)	Includes 20,000 stock options granted on February 20, 2003 at an exercise price of $0.27, expiring on February 20, 2008. In addition, Mr. Schultze also holds 3 convertible debentures entitling him to acquire up to an additional 100,000 common shares and 100,000 share purchase warrants at a price of $0.30 per share if converted at any time until March 28, 2005 or at $0.33 per share if converted at any time from March 29, 2005 to March 28, 2006.

The voting rights attached to the common shares owned by our officers and directors do not differ from those voting rights attached to shares owned by people who are not officers or directors of our company.

There were no long-term incentive awards made to our executive officers during the fiscal year ended December 31, 2002. There are no pension plan benefits in place for our executive officers.

Our Incentive Stock Option Plan, as amended by the 2002 Stock Option Plan, effective as of June 27, 2002, provides for the granting of an aggregate of 1,292,365 stock options to officers, directors, employees, consultants and other key personnel of our company. We intend to utilize the stock options available under our 2002 Stock Option Plan to encourage the interest of those persons to whom stock options are granted in the growth and development of our company by providing them with an opportunity to acquire an increased proprietary interest in our company.

Subsequent to our fiscal year ended December 31, 2002 we granted a total of 30,000 stock options to one of our directors and to one of our consultants. The stock options are exercisable at a price of $0.27 per share until February 20, 2008.

ITEM 7	Major Shareholders and Related Party Transactions

A.	Major Shareholders

There were 6,461,829 of our common shares issued and outstanding as of May 27, 2003. The following table sets forth, as of May 27, 2003, persons known to us to be the beneficial owner of more than five (5%) of our common shares:

|Name of Shareholder       | No. of Common
Shares Owned | Percentage of 
Outstanding
Common Shares
|------------------------- | -------------------------- | ----------------------------------------
|Cubix Investments Ltd.(1) | 1,000,000                  | 15.48%                                  
|Donald Sharpe             | 446,000(1)                 | 6.9%                                    
|John Hislop(2)            | 499,083(3)                 | 7.38%                                   



(1)

(2)

(3)

The voting rights of our major shareholders do not differ from the voting rights of holders of our shares who are not major shareholders.

As of May 27, 2003, the registrar and transfer agent for our company reported that there were 6,461,829 common shares issued and outstanding. Of those common shares issued and outstanding, 5,963,985 common shares were registered to Canadian residents (13 shareholders), 464,844 common shares were registered to residents of the United States (31 shareholders) and 33,000 common shares were registered to residents of other foreign countries (1 shareholder).

To the best of our knowledge, our company is not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person.

There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the control of our company, except that Cubix has the right to acquire a further 1,000,000 of our common shares upon the exercise of share purchase warrant which, if exercised, would result in Cubix holding 26.8% of our issued and outstanding common shares.

B.	Related Party Transactions

Pursuant to the terms of a Management Consulting Agreement with D. Sharpe Management Inc., dated June 1, 1999, we pay D. Sharpe Management Inc. the sum of $60,000 per year in consulting fees. Our CEO, CFO and President, Donald A. Sharpe, is the sole director, officer and shareholder of D. Sharpe Management Inc. Under the agreement, we pay D. Sharpe Management Inc. a monthly management fee of $5,000 and will reimburse expenses to a maximum of $600 per month. Unless notice is given by either party, the agreement is automatically renewed for a further one month term. There are no provisions in the agreement that allow for additional compensation in the event of our change of control or the termination of the agreement with D. Sharpe Management Inc.

Two members of our board of directors, Donald Sharpe (who is also our President, CEO, CFO, Secretary, and Treasurer) and John Hislop, are also directors of Patriot Petroleum Corp. We entered into the Patriot Agreement, pursuant to which Patriot purchased our subsidiary's interest in our assets located in Louisiana and Wyoming. Pursuant to the terms of the Patriot Agreement, the consideration to be paid by Patriot for the interest in our assets in Louisiana and Wyoming is US$644,419, payable as US$521,419 for the assets located in Wyoming and US$123,000 for the assets located in Louisiana. The sale closed on March 1, 2002. Pursuant to the terms of the Patriot Agreement, all income collected or accrued on the oil and gas assets from May 1, 2001 to March 1, 2002 was credited to Patriot. Given the income that accrued to Patriot, we entered into an amendment to the Patriot Agreement such that the total purchase price payable was reduced to $US494,734.04 to account for the accrued income. Both Mr. Sharpe and Mr. Hislop abstained from voting on any resolution approving the sale of the assets located in Louisiana and Wyoming to Patriot.

None of the following persons was indebted to Netco or to our subsidiary at any time during the last three fiscal years:

1.	any of our directors or officers; and

2.	any associate of any such director or officer.

ITEM 8		Financial Information

Our financial statements are stated in Canadian dollars and are prepared in accordance with Canadian Generally Accepted Accounting Principles. In this annual report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars.

All Audited Statements are in Canadian dollars.

Financial Statements Filed as Part of the Annual Report:

Financial Statements of Netco Energy Inc. for the Years Ended December 31, 2002, 2001, and 2000 (audited), reported on by Lancaster & David, Chartered Accountants:

Auditor's Report dated April 25, 2003, as to disclosure changes for generally accepted accounting principles in the United States

Consolidated Balance Sheets as at December 31, 2002 and 2001

Consolidated Statements of Income and Deficit for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

Notes to Financial Statements

Legal Proceedings

There are no pending legal proceedings to which Netco or our subsidiary is a party or of which any of our property is the subject. There are no legal proceedings to which any of the directors, officers or affiliates or any associate of any such directors, officers or affiliates of either our company or our subsidiary is a party or has a material interest adverse to us.

Dividend Distributions

Holders of our common shares are entitled to receive such dividends as may be declared from time to time by our board of directors, in the board's discretion, out of funds legally available for that purpose. We intend to retain future earnings, if any, for use in the operation and expansion of our business and does not intend to pay any cash dividends in the foreseeable future.

B.	Significant Changes

None.

ITEM 9		The Offer and Listing

Price History

Full Financial Years

The annual high and low market prices for the five most recent full financial years (January 1, 1998 through December 31, 2002) on the TSX Venture Exchange (formerly the Canadian Venture Exchange) were as follows:



|Year/Period Ended | High  | Low   
|----------------- | ----- | ------
|December 31, 1998 | $1.55 | $0.045
|December 31, 1999 | $0.28 | $0.02 
|December 31, 2000 | $0.90 | $0.19 
|December 31, 2001 | $0.75 | $0.23 
|December 31, 2002 | $0.52 | $0.24 

Full Financial Quarters (two most recent financial years)

The high and low market prices for each full financial quarter for the two most recent full fiscal years, and for subsequent financial quarters, on the TSX Venture Exchange were as follows:

|Quarter Ended      | High          | Low          
|------------------ | ------------- | -------------
|December 31, 2002  | $0.30         | $0.24        
|September 30, 2002 | $0.39         | $0.24        
|June 30, 2001      | $0.52         | $0.33        
|March 31, 2001     | $0.43         | $0.25        
|December 31, 2001  | $0.50         | $0.23        
|September 30, 2001 | $0.61         | $0.25        
|June 30, 2001(1)   | not available | not available
|March 31, 2001(1)  | $0.75         | $0.45        

(1)	There is no data available with respect to our common shares between February 28, 2001 and July 11, 2001, due to the halt in trading as a result of our proposed acquisition of Chalk.com Network (Holding) Corporation.



Most Recent 6 Months

The high and low market prices for each of the most recent six months (December 1, 2001 through May 31, 2002) on the TSX Venture Exchange were as follows:

|Month Ended       | High  | Low   
|----------------- | ----- | ------
|December 31, 2002 | $0.30 | $0.24 
|January 31, 2003  | $0.28 | $0.25 
|February 28, 2003 | $0.35 | $0.25 
|March 31, 2003    | $0.32 | $0.27 
|April 30, 2003    | $0.40 | $0.28 
|May 31, 2003      | $0.33 | $0.305

C.	Markets

Our common shares trade on the TSX Venture Exchange. Our symbol is "NEI" and our CUSIP number is 64108H-10-9.

ITEM 10		Additional Information

B.	Memorandum and Articles of Association

Our Articles provide as follows:

(a)	A director who is, in any way, directly or indirectly interested in a proposed contract or transaction with our company shall disclose the nature and extent of his interest at a meeting of the directors in accordance with the provisions of the ABCA, and the contract shall be submitted to our board of directors or our shareholders for approval. A director shall not vote in respect of any contract or transaction with our 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.

(b)	Subject to the provisions of any ordinary resolution, the remuneration of the directors may from time to time be determined by the directors themselves.

(c)	The directors may, at their discretion and subject to any restrictions in our Articles or in the ABCA, authorize us to borrow any sum of money and may raise or secure the repayment of such sum of money in such manner and upon such terms and conditions as the directors of our company think fit.

(d)	There are no provisions with respect to the retirement of a director or the non-retirement of a director under an age requirement.

(e)	A director is not required to hold a share in the capital of our company as qualification for his office.

With respect to the above noted matters, there are generally no significant differences between Canadian and U.S. law.

Rights, Preference and Restrictions

Common Shares

All of the authorized common shares of our company, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common shares are entitled to one vote for each common share held of record on all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the board of directors, in its discretion, out of funds legally available therefore. Our Articles do not provide for cumulative voting.

Upon liquidation, dissolution or winding up of our company, holders of common shares are entitled to receive pro rata our assets, if any, remaining after payments of all debts and liabilities. No common shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. There are no restrictions on the repurchase or redemption of common shares by our company while there is any arrearage in the payment of dividends or sinking fund instalments.

With respect to the rights, preferences and restrictions attaching to our common shares, there are generally no significant differences between Canadian and United States law as the board of directors, or the applicable corporate statute, will determine the rights, preferences and restrictions attaching to each class of a company's shares.

Changes to Our Common Shares

Provisions as to the modification, amendment or variation of the rights attaching to our common shares are contained in the ABCA. The ABCA requires approval by a special resolution (ie. approved by at least two-thirds of the votes cast at a meeting of our shareholders or consented to in writing by each of the shareholders entitled to vote) of our company's shareholders in order to effect any of the following changes:

(a)	create new classes of shares;

(b)	change the designation of all or any of its shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued;

(c)	change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same of a different number of shares of other classes or series;

(d)	divide a class of shares, whether issued or unissued, into series, and fix the number of shares in each series and the rights, privileges, restrictions and conditions of that series;

(e)	cancel a class or series of shares where there are no issued or outstanding shares of that class or series;

(f)	authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions of that series;

(g)	authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares or any series; and

(h)	revoke, diminish or enlarge any authority conferred under clauses [(h) and (i)] (of the ABCA).

Generally, there are no significant differences between Canadian and United States law with respect to changing the rights of shareholders as most state corporation statutes require shareholder approval (usually a majority) for any such changes that affect the rights of shareholders.

Annual General Meetings and Extraordinary General Meetings

Annual General Meetings (an "AGM") must be held once every financial year, within 15 months of the previous AGM. Under the ABCA, we must give our shareholders written notice of an AGM not less than 21 days and not more than 50 days before the AGM is to be held. The ABCA also requires that we publish, notice of the record date with respect to the AGM in a newspaper published or distributed in the place where our registered office is located, and in each place in Canada that we have a transfer agent, not less than 7 days before the record date, which may be not less than 21 days and not more than 50 days prior to the AGM.

Our directors may, whenever they think fit, convene an Extraordinary General Meeting (an "EGM"). An EGM may also be requisitioned by one or more shareholders of our company so long as such shareholders own not less than 5% of the issued and outstanding shares at the date such shareholders requisition an EGM. Within 21 days of receiving such requisition, our directors must call a meeting, failing which any shareholder who signed the requisition may call the meeting.

All shareholders entitled to attend and vote at an AGM or an EGM will be admitted to the meeting.

Most state corporation statutes require a public company to hold an annual meeting for the election of directors and for the consideration of other appropriate matters. The state statutes also include general provisions relating to shareholder votings and meetings. Apart from the timing of when an AGM must be held and the percentage of shareholders required to call a AGM or EGM, there are generally no material differences between Canadian and United States law respecting AGMs and EGMs.

Rights to Own Securities

There are no limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights.

Except as provided in the Investment Canada Act, there are no limitations under the applicable laws of Canada or by our charter or other constituent documents of our company on the right of foreigners to hold or vote common shares or other securities of our company.

The Investment Canada Act will prohibit implementation, or if necessary, require divestiture of an investment deemed "reviewable" under the Investment Canada Act by an investor that is not a "Canadian" as defined in the Investment Canada Act (a "non-Canadian"), unless after review the Minister responsible for the Investment Canada Act ("the Minister") is satisfied that the "reviewable" investment is likely to be of net benefit to Canada. An investment in our common shares by a non-Canadian would be reviewable under the Investment Canada Act if it was an investment to acquire control of our company and the value of our assets was $5 million or more. A non-Canadian would be deemed to acquire control of our company for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of our outstanding common shares (or less than a majority but controlled our company in fact through the ownership of one-third or more of our outstanding common shares ) unless it could be established that, on the acquisition, our company was not controlled in fact by the acquirer through the ownership of such common shares. Certain transactions in relation to our common shares would be exempt from review under the Investment Canada Act, including, among others, the following:

1.	acquisition of common shares by a person in the ordinary course of that person's business as a trader or dealer in securities;

2.	acquisition of control of our company in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act; and

3.	acquisition of control of our company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control of our company, through the ownership of voting interests, remains unchanged.

The Investment Canada Act was amended with the World Trade Organization Agreement to provide for special review thresholds for "WTO Investors" of countries belonging to the World Trade Organization, among others, nationals and permanent residents (including "WTO Investor controlled entities" as defined in the Investment Canada Act). Under the Investment Canada Act, as amended, an investment in our common shares by WTO Investors would be reviewable only if it was an investment to acquire control of our company and the value of our assets was equal to or greater than a specified amount (the "Review Threshold"), which is published by the Minister after its determination for any particular year. The Review Threshold is currently $209 million for the year 2001.

Change in Control

There are no provisions in our Articles or By-laws that would have the effect of delaying, deferring or preventing a change in control of our company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our company.

The ABCA does not contain any provisions that would have the effect of delaying, deferring or preventing a change of control of our company. Generally, there are no significant differences between Canadian and United States law in this regard, as many state corporation statutes also do not contain such provisions and only empower a company's board of directors to adopt such provisions.

Ownership Threshold

There are no provisions in our Articles or Bylaws or in the ABCA governing the threshold above which shareholder ownership must be disclosed. The Securities Act (Alberta) requires that we disclose, in our annual general meeting proxy statement, holders who beneficially own more than 10% of our issued and outstanding shares. Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. United States federal securities laws require a company to disclose, in its Annual Report on Form 20-F, holders who own more than 5% of a company's issued and outstanding shares.

Changes in the Capital of our Company

There are no conditions imposed by our Articles which are more stringent than those required by the ABCA.

C.	Material Contracts

Pursuant to the terms of a Management Consulting Agreement with D. Sharpe Management Inc., dated June 1, 1999, we pay D. Sharpe Management Inc. the sum of $60,000 per year in consulting fees. Our CEO, CFO and President, Donald A. Sharpe, is the sole director, officer and shareholder of D. Sharpe Management Inc. Under the agreement, we pay Mr. Sharpe a monthly management fee of $5,000 and will reimburse expenses to a maximum of $600 per month. Unless notice is given by either party, the agreement is automatically renewed for a further one month term. There are no provisions in the agreement that allow for additional compensation in the event of a change of control of Netco or the resignation, retirement or termination of Mr. Sharpe's employment.

On March 27, 2000, we entered into an Amending Agreement with First Merit Group Ltd. and Armada Ventures Inc., which amended the Office Space and Support Services Agreement dated October 1, 1999. Pursuant to the Office Space and Support Services Agreement, we agreed to pay a base rent of $31,200 per year to First Merit Group Ltd., in exchange for the use of certain office space and equipment, and for certain office services. The Amending Agreement extended the Office Space and Support Services Agreement through February 28, 2001. On February 1, 2001, we entered into a further Amending Agreement, extending the Office Space and Support Services Agreement.

On August 2, 2001 we entered into a farm-out agreement with Moxie Exploration Ltd. ("Moxie") pursuant to which we drilled a well in the Jumpbush area of Alberta. We were to pay 75% of the drilling costs of the well to earn a 37.5% interest in the well and the farm-out lands.

Further to our initial agreement with Moxie, on September 21, 2001 we entered into a second farm-out agreement with Moxie. Under this farm-out, we again paid for 75% of the cost to drill and complete a further well in the Jumpbush area of Alberta to thereby earn out 37.5% interest.

We subsequently entered into a further farm-out agreement with Moxie Exploration Ltd. dated October 10, 2001. Pursuant to the terms of the farm-in, we participated for 50% in the drilling of a well in the Eyremore area of Alberta.

We have also entered into a farm-out arrangement with Result Energy Inc. (formerly Daybreak Energy Inc.) in the Wainwright area of Alberta pursuant to an agreement dated September 14, 2001, as amended by an agreement dated October 18, 2001. Under the terms of the farm-in, we paid $79,131 for a 50% interest in the land and paid 100% of the cost to re-enter, drill and complete a well in order to earn a 68.75% interest, after payout, in the prospect.

On January 24, 2003 we entered into a farm-in agreement with Warrior Energy Corporation. Under this farm-in agreement we can earn an undivided 60% working interest in Block 1 of the farm-in lands, and an undivided 20% working interest in Block 11 of the farm-in lands, by the drilling of a test well, located in the Greencourt Area, Alberta.

On February 19, 2003 we entered into a participation agreement with Warrior Energy Corporation to earn a 40% interest before pay-out (24% after pay-out) in two wells located in the Morningside Area, Alberta.

D.	Exchange Controls

There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident holders of our common shares. Any remittances of dividends to United States residents and to other non-residents are, however, subject to withholding tax. See "Taxation" below.

E.	Taxation

Canadian Federal Income Taxation

We consider that the following summary fairly describes the principal Canadian federal income tax consequences applicable to a holder of our common shares who at all material times deals at arm's length with our company, who holds all common shares as capital property, who is resident in the United States, 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 of our company in connection with carrying on a business in Canada (a "non-resident holder"). It is assumed that the common shares will at all material times be listed on a stock exchange that is prescribed for purposes of the Income Tax Act(Canada) (the "ITA") and regulations thereunder. Investors should be aware that the Canadian federal income tax consequences applicable to holders of our common shares will change if, for any reason, we cease to be listed on a prescribed stock exchange. Accordingly, holders and prospective holders of our common shares should consult with their own tax advisors with respect to the income tax consequences of them purchasing, owing and disposing of our common shares should we cease to be listed on a prescribed stock exchange.

This summary is based upon the current provisions of the ITA, the regulations thereunder, the Canada-United States Tax Convention as amended by the Protocols thereto (the "Treaty") as at the date of the registration statement and the currently publicly announced administrative and assessing policies of the Canada Customs and Revenue Agency (the "CCRA"). This summary does not take into account Canadian provincial income tax consequences. This description is not exhaustive of all possible Canadian federal income tax consequences and does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial action. This summary does, however, take into account all specific proposals to amend the ITA and regulations thereunder, publicly announced by the Government of Canada to the date hereof.



This summary does not address potential tax effects relevant to our company or those tax considerations that depend upon circumstances specific to each investor. Accordingly, holders and prospective holders of our common shares should consult with their own tax advisors with respect to the income tax consequences to them of purchasing, owning and disposing of common shares in our company.

Dividends

The ITA provides that dividends and other distributions deemed to be dividends paid or deemed to be paid by a Canadian resident corporation (such as our company) to a non-resident of Canada shall be subject to a non-resident withholding tax equal to 25% of the gross amount of the dividend of deemed dividend. Provisions in the ITA relating to dividend and deemed dividend payments to and gains realized by non-residents of Canada, who are residents of the United States, are subject to the Treaty. The Treaty may reduce the withholding tax rate on dividends as discussed below.

Article X of the Treaty as amended by the US-Canada Protocol ratified on November 9, 1995 provides a 5% withholding tax on gross dividends or deemed dividends paid to a United States corporation which beneficially owns at least 10% of the voting stock of the company paying the dividend. In cases where dividends or deemed dividends are paid to a United States resident (other than a corporation) or a United States corporation which beneficially owns less than 10% of the voting stock of a company, a withholding tax of 15% is imposed on the gross amount of the dividend or deemed dividend paid. We would be required to withhold any such tax from the dividend and remit the tax directly to CCRA for the account of the investor.

The reduction in withholding tax from 25%, pursuant to the Treaty, will not be available:

(a)	if the shares in respect of which the dividends are paid formed part of the business property or were otherwise effectively connected with a permanent establishment or fixed base that the holder has or had in Canada within the 12 months preceding the disposition, or

(b)	the holder is a U.S. LLC which is not subject to tax in the U.S.

The Treaty generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization exclusively administering a pension, retirement or employee benefit fund or plan, if the organization is resident in the U.S. and is exempt from income tax under the laws of the U.S.

Capital Gains

A non-resident holder is not subject to tax under the ITA in respect of a capital gain realized upon the disposition of one of our shares unless the share represents "taxable Canadian property" to the holder thereof. Our common shares will be considered taxable Canadian property to a non-resident holder only if-.

(a)	the non-resident holder;

(b)	persons with whom the non-resident holder did not deal at arm's length- or

(c)	the non-resident holder and persons with whom he did not deal at arm's length,

owned not less than 25% of the issued shares of any class or series of our company at any time during the five year period preceding the disposition. In the case of a non-resident holder to whom shares of our company represent taxable Canadian property and who is resident in the United States, no Canadian taxes will generally be payable on a capital gain realized on such shares by reason of the Treaty unless:

(a)	the value of such shares is derived principally from real property (including resource property) situated in Canada,

(b)	the holder was resident in Canada for 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 a resident of Canada,

(c)	they formed part of the business property or were otherwise effectively connected with a permanent establishment or fixed base that the holder has or bad in Canada within the 12 months preceding the disposition, or

(d)	the holder is a U.S. LLC which is not subject to tax in the U.S.

If subject to Canadian tax on such a disposition, the taxpayer's capital gain (or capital loss) from a disposition is the amount by which the taxpayer's proceeds of disposition exceed (or are exceeded by) the aggregate of the taxpayer's adjusted cost base of the shares and reasonable expenses of disposition. For Canadian income tax purposes, the "taxable capital gain" is equal to one-half of the capital gain.

United States Federal Income Taxation

The following is a discussion of the material United States Federal income tax consequences, under current law, applicable to a U.S. Holder (as defined below) of our common shares who holds such shares as capital assets. 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 on the Internal Revenue Code of 1986, as amended (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 recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

The discussion below does not address potential tax effects relevant to our company or those tax considerations that depend upon circumstances specific to each investor. In addition, this discussion does not address the tax consequences that may be relevant to particular investors subject to special treatment under certain U.S. Federal income tax laws, such as, dealers in securities, tax-exempt entities, banks, insurance companies and non-U.S. Holders. Purchasers of the common stock should therefore satisfy themselves as to the overall tax consequences of their ownership of the common stock, including the State, local and foreign tax consequences thereof (which are not reviewed herein), and should consult their own tax advisors with respect to their particular circumstances.

U.S. Holders

As used herein, a "U.S. Holder" includes a beneficial holder of common shares of our company who is a citizen or resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or of any political subdivision thereof, any trust if a US court is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust, any entity created or organized in the United States which is taxable as a corporation for U.S. tax purposes and any other person or entity whose ownership of common shares of our company is effectively connected with the conduct of a trade or business in the United States. 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, non-resident alien individuals or foreign corporations whose ownership of our common shares is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their shares through the exercise of employee stock options or otherwise as compensation.

Dividend Distribution on Shares of our Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to the common shares of our company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that we have current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be deducted or may be credited against actual tax payable, subject to certain limitations and other complex rules, against the U.S. Holder's United States Federal taxable income. See "Foreign Tax Credit" below. To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital to the extent of the shareholder's basis in the common shares of our company and thereafter as gain from the sale or exchange of the common shares of our company. Preferential tax rates for net long term capital gains may be applicable to a U.S. Holder which is an individual, estate or trust.

In general, dividends paid on our common shares will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.

Foreign Tax Credit

A U.S. Holder who pays (or who has had withheld from distributions) Canadian income tax with respect to the ownership of our common shares may be entitled, at the election of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. This election is made on a year-by-year basis and generally applies to all foreign income 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 share 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 world-wide taxable income. In determining the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern income such as "passive income", "high withholding tax interest", "financial services income", "shipping income" and certain other classifications of income. A U.S. Holder who is treated as a domestic U.S. corporation owning 10% or more of our voting stock is also entitled to a deemed paid foreign tax credit in certain circumstances for the underlying foreign tax of our company related to dividends received or Subpart F income received from us. (See the discussion below of Controlled Foreign Corporations). The availability of the foreign tax credit and the application of the limitations on the foreign tax credit are fact specific and holders and prospective holders of our common shares should consult their own tax advisors regarding their individual circumstances.

Disposition of Common Shares

If a "U.S. Holder" is holding shares as a capital asset, a gain or loss realized on a sale of our common shares will generally be a capital gain or loss, and will be long-term if the shareholder has a holding period of more than one year. However, gains realized upon sale of our common shares may, under certain circumstances, be treated as ordinary income, if we were determined to be a "collapsible corporation" within the meaning of Code Section 341 based on the facts in existence on the date of the sale (See below for definition of "collapsible corporation"). The amount of gain or loss recognized by a selling U.S. Holder will be measured by the difference between (i) the amount realized on the sale and (ii) his tax basis in our common shares. Capital losses are deductible only to the extent of capital gains. However, in the case of taxpayers other than corporations (U.S.)$3,000 ($1,500 for married individuals filing separately) of capital losses are deductible against ordinary income annually. In the case of individuals and other non-corporate taxpayers, capital losses that are not currently deductible may be carried forward to other years. In the case of corporations, capital losses that are not currently deductible are carried back to each of the three years preceding the loss year and forward to each of the five years succeeding the loss year.

A "collapsible corporation" is a corporation that is formed or availed principally to manufacture, construct, produce, or purchase prescribed types or property that the corporation holds for less than three years and that generally would produce ordinary income on its disposition, with a view to the stockholders selling or exchanging their stock and thus realizing gain before the corporation realizes two thirds of the taxable income to be derived from prescribed property. Prescribed property includes: stock in trade and inventory; property held primarily for sale to customers in the ordinary course of business; unrealized receivables or fees, consisting of rights to payment for noncapital assets delivered or to be delivered, or services rendered or to be rendered to the extent not previously included in income, but excluding receivables from selling property that is not prescribed; and property gain on the sale of which is subject to the capital gain/ordinary loss rule. Generally, a shareholder who owns directly or indirectly 5 percent or less of the outstanding stock of the corporation may treat gain on the sale of his shares as capital gain.

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. Our management is of the opinion that there is little, if not, any likelihood that we will be deemed a "Foreign Personal Holding Company", a "Foreign Investment Company" or a "Controlled Foreign Corporation" (each as defined below) under current and anticipated conditions.

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 our 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 our gross income for such year was derived from certain passive sources (e.g., from dividends received from its subsidiaries), we would be treated as a "foreign personal holding company." In that event, U.S. Holders that hold common shares in our capital would be required to include in income for such year their allocable portion of our passive income which would have been treated as a dividend had that passive income actually been distributed.

Foreign Investment Company

If 50% or more of the combined voting power or total value of our 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 we are found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that we 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 our common shares to be treated as ordinary income rather than capital gains.

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.

Section 1297 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 we qualify as a PFIC on his pro-rata share of our (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) our taxable year ends, regardless of whether such amounts are actually distributed. Such an election, once made shall apply to all subsequent years unless revoked with the consent of the IRS.

A QEF election also allows the Electing U.S. Holder to (i) generally 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 our 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 our annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the Electing U.S. Holder is an individual, such an interest charge would be not deductible.

The procedure a U.S. Holder must comply with in making an 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 we are 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, we qualified as a PFIC in a prior year, then the U.S. Holder may make an "Unpedigreed QEF Election" by recognizing 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 qualification date (Deemed Sale Election) or (ii) if we are a controlled foreign corporation ("CFC"), the Holder's pro rata share of the corporation's earnings and profits (Deemed Dividend Election) (But see "Elimination of Overlap Between Subpart F Rules and PFIC Provisions"). The effect of either the deemed sale election or the deemed dividend election is to pay all prior deferred tax, to pay interest on the tax deferral and to be treated thereafter as a Pedigreed QEF as discussed in the prior paragraph. With respect to a situation in which a Pedigreed QEF election is made, if we no longer qualify 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 our company. An "excess distribution" is any current-year distribution in respect of PFIC stock that represents a rateable portion of the total distributions in respect of the stock during the year that exceed 125 percent of the average amount of distributions in respect of the stock during the three preceding years.

A Non-electing U.S. Holder generally 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 our first taxable year during such U.S. Holder's holding period and beginning after January, 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 deferred 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 an individual is not allowed a deduction for interest on the deferred tax liability. The portions of gains and distributions that are not characterized as "excess distributions" are subject to tax in the current year under the normal tax rules of the Internal Revenue Code.

If we are a PFIC for any taxable year during which a Non-electing U.S. Holder holds common shares, then we 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 generally 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 we are a PFIC and the U.S. Holder holds our shares) (a "Unpedigreed 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, generally adverse, rules will apply with respect to the common shares while we are 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 our company. 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 II A 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 includible 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 as discussed above generally 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 co-ordination 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 our company is owned, directly or indirectly, by U.S. Holders, each of whom own after applying rules of attribution 10% or more of the total combined voting power of all classes of stock of our company, we 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 our company and our earnings invested in "U.S. property" (as defined by Section 956 of the Code). In addition, under Section 1248 of the Code if we are considered a CFC at any time during the five year period ending with the sale or exchange of its stock, gain from the sale or exchange of common shares of our company by such a 10% U.S. Holder of our common stock at any time during the five year period ending with the sale or exchange is treated as ordinary dividend income to the extent of our earnings and profits attributable to the stock sold or exchanged. Because of the complexity of Subpart F, and because we 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 we 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 U.S Holders for any periods in which Subpart F does not apply (for example he is no longer a 10% Holder or we are no longer a CFC) 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 our company as if those shares had been sold.

ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES OF OUR COMPANY.

H.	Documents on Display

The documents concerning our company may be viewed at the offices of our corporate solicitor, Clark, Wilson, Suite 800 - 885 West Georgia Street, Vancouver, British Columbia V6C 3H1, during normal business hours.

I.	Subsidiary Information

As at the date of this annual report, we do not have any wholly-owned subsidiaries. Our previously wholly-owned subsidiary, Green River Petroleum (USA) Inc., a company incorporated on October 13, 1997, under the laws of the State of Wyoming, was dissolved by the State of Wyoming.

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.

ITEM 15	Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this report, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and chief executive officer. Based upon that evaluation, our company's president and chief executive officer concluded that our company's disclosure controls and procedures are effective. There have been no significant changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.

ITEM 16	Reserved

PART III

ITEM 17	Financial Statements

Refer to Item 18 - Financial Statements

ITEM 18	Financial Statements

Financial Statements Filed as Part of the Annual Report:

Financial Statements of Netco Energy Inc. for the Years Ended December 31, 2002, 2001, and 2000 (audited), reported on by Lancaster & David, Chartered Accountants:

Auditor's Report dated April 25, 2003 as to disclosure changes for generally accepted accounting principles in the United States

Consolidated Balance Sheets as at December 31, 2002 and 2001

Consolidated Statements of Income and Deficit for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

Notes to Financial Statements







NETCO ENERGY INC.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002





AUDITORS' REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|LANCASTER & DAVID     | Incorporated Partners                      
|--------------------- | -------------------------------------------
|CHARTERED ACCOUNTANTS | David E. Lancaster, CA
Michael J. David, CA







|AUDITORS' REPORT
|----------------



To the Shareholders of Netco Energy Inc.

We have audited the consolidated balance sheets of Netco Energy Inc. as at December 31, 2002 and 2001 and the consolidated statements of loss and deficit and cash flows for each of the three years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian 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 December 31, 2002 and 2001 and the results of its operations and its cash flows for each of the three years then ended in accordance with Canadian generally accepted accounting principles.







"Lancaster & David"CHARTERED ACCOUNTANTS

Vancouver, BC
April 25, 2003





|New Westminster Office- Suite 404, 960 Quayside Drive, New Westminster, BC, Canada, V3M 6G2 Facsimile: 604.524.9837Vancouver Office - Suite 3240, 666 Burrard Street, Vancouver, BC, Canada, V6C 2X8 Facsimile:604.602.0867
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Telephone:604.717.5526                                                                                                                                                                                                     





NETCO ENERGY INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31(Prepared in Canadian dollars)

|                                                     
|-----------------------------------------------------
|                                                     
|                                                     
|                                                     
|                                                     
|ASSETS                                               
|                                                     
|CURRENT                                              
|Cash and short-term investments                      
|Accrued revenues                                     
|Prepaids and other                                   
|                                                     
|                                                     
|                                                     
|PROPERTY AND EQUIPMENT(Note 4)                       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|LIABILITIES                                          
|CURRENT                                              
|Accounts payable and accrued liabilities             
|Deposit (Note 4)                                     
|                                                     
|                                                     
|                                                     
|LIABILITY TO ISSUE SHARES                            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|SHAREHOLDERS' EQUITY                                 
|                                                     
|SHARE CAPITAL (Note 5)                               
|Issued at December 31, 2002 - 6,461,829 common shares
|(December 31, 2001 - 4,749,329 common shares)        
|DEFICIT                                              
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     





|"Donald A. Sharpe"         |  | "Hans Christopher Schultze"         
|-------------------------- |  | ------------------------------------
|Donald A. Sharpe -Director |  | Hans Christopher Schultze - Director

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





NETCO ENERGY INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
FOR THE YEARS ENDED DECEMBER 31(Prepared in Canadian dollars)

|                                    |  | 2002          | 2001          | 2000         
|----------------------------------- |  | ------------- | ------------- | -------------
|                                   
|                                   
|                                    |  |               |               |              
|                                    |  |               |               |              
|REVENUE                             |  |               |               |              
|Petroleum and natural gas           |  | $ 1,281,645   | $ 604,160     | $ 592,072    
|Royalties                           |  | (208,154)     | (94,812)      | (93,742)     
|                                   
|                                    |  |               |               |              
|                                    |  | 1,073,491     | 509,348       | 498,330      
|Gain from oil and gas properties    |  | 443,079       | -             | -            
|Foreign exchange gain               |  | 28,833        | 18,556        | 13,223       
|Interest and other income           |  | 7,699         | 20,939        | 13,996       
|                                   
|                                    |  |               |               |              
|                                    |  | 1,553,102     | 548,843       | 525,549      
|                                   
|                                    |  |               |               |              
|                                    |  |               |               |              
|EXPENSES                            |  |               |               |              
|Depletion and depreciation          |  | 311,000       | 37,181        | 150,419      
|General and administration          |  | 201,245       | 266,808       | 250,267      
|Operating                           |  | 162,732       | 52,028        | 43,456       
|                                   
|                                    |  |               |               |              
|                                    |  | 674,977       | 356,017       | 444,142      
|                                   
|                                    |  |               |               |              
|NET INCOME FOR THE YEAR             |  | 878,125       | 192,826       | 81,407       
|                                    |  |               |               |              
|DEFICIT, beginning of year          |  | (7,760,058)   | (7,952,884)   | (8,034,291)  
|                                   
|                                    |  |               |               |              
|DEFICIT, end of year                |  | $ (6,881,933) | $ (7,760,058) | $ (7,952,884)
|                                   
|                                    |  |               |               |              
|                                    |  |               |               |              
|                                    |  |               |               |              
|                                    |  |               |               |              
|                                    |  |               |               |              
|EARNINGS PER SHARE(Note 2)          |  |               |               |              
|Basic                               |  | $ 0.14        | $ 0.06        | $ 0.03       
|Diluted                             |  | $ 0.13        | $ 0.05        | $ 0.02       
|                                    |  |               |               |              
|Weighted average shares outstanding |  |               |               |              
|Basic                               |  | 6,462,000     | 3,466,000     | 2,741,000    
|Diluted                             |  | 6,805,000     | 4,211,000     | 4,047,000    
|                                    |  |               |               |              



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



NETCO ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31(Prepared in Canadian dollars)

|                                                      |  | 2002      | 2001        | 2000     
|----------------------------------------------------- |  | --------- | ----------- | ---------
|                                                     
|                                                     
|                                                      |  |           |             |          
|                                                      |  |           |             |          
|CASH FLOWS PROVIDED BY (USED FOR):                    |  |           |             |          
|                                                      |  |           |             |          
|OPERATING ACTIVITIES                                  |  |           |             |          
|Net income for the year                               |  | $ 878,125 | $ 192,826   | $ 81,407 
|Adjust for non-cash items:                            |  |           |             |          
|Depletion and depreciation                            |  | 311,000   | 37,181      | 150,419  
|Gain from oil and gas properties                      |  | (443,079) | -           | -        
|Foreign exchange gain                                 |  | (28,833)  | (18,556)    | (13,223) 
|                                                     
|                                                      |  |           |             |          
|                                                      |  | 717,213   | 211,451     | 218,603  
|                                                     
|                                                      |  |           |             |          
|Net change in non-cash working capital items:         |  |           |             |          
|Prepaids and other                                    |  | (195,917) | 5,392       | 55,865   
|Accrued oil and gas revenues                          |  | (366,574) | 123,721     | (177,744)
|Accounts payable and accrued liabilities              |  | 82,203    | 3,689       | 22,973   
|                                                     
|                                                      |  |           |             |          
|                                                      |  | (480,288) | 132,802     | (98,906) 
|                                                     
|                                                      |  |           |             |          
|                                                      |  | 236,925   | 344,253     | 119,697  
|                                                     
|                                                      |  |           |             |          
|FINANCING ACTIVITIES                                  |  |           |             |          
|Liability to issue shares                             |  | (185,250) | 185,250     | -        
|Proceeds from issuance of share capital               |  | 385,250   | 312,000     | 3,250    
|                                                     
|                                                      |  |           |             |          
|                                                      |  | 200,000   | 497,250     | 3,250    
|                                                     
|                                                      |  |           |             |          
|INVESTING ACTIVITIES                                  |  |           |             |          
|Deposit received (Note 4)                             |  | (25,000)  | 25,000      | -        
|Additions to property and equipment, net of disposals |  | (552,453) | (1,089,005) | 77,874   
|                                                     
|                                                      |  |           |             |          
|                                                      |  | (577,453) | (1,064,005) | 77,874   
|                                                     
|                                                      |  |           |             |          
|(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      |  | (140,527) | (222,502)   | 200,821  
|                                                      |  |           |             |          
|CASH AND CASH EQUIVALENTS, beginning of year          |  | 262,862   | 485,364     | 284,543  
|                                                     
|                                                      |  |           |             |          
|CASH AND CASH EQUIVALENTS, end of year                |  | $ 122,335 | $ 262,862   | $485,364 
|                                                     
|                                                      |  |           |             |          
|                                                      |  |           |             |          
|                                                      |  |           |             |          
|SUPPLEMENTARY CASH FLOW INFORMATION(Note 3)           |  |           |             |          



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

NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 1 - NATURE OF OPERATIONS
|-----------------------------
|                             

The Company's principal business activity is the exploration, development and production of oil and natural gas reserves located in Canada. During the prior fiscal year, the Company entered into an agreement to sell all of its US oil and natural gas interests.

|NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|---------------------------------------------------
|                                                   

These consolidated financial statements are expressed in Canadian dollars except where noted and have been prepared in accordance with accounting principles generally accepted in Canada, which differ from those in the United States as explained in Note 11. All share and per share information have been retroactively restated to reflect the share consolidation (1:5) on July 6, 1999 and the share consolidation (1:2) on October 2, 2000.

Principles of consolidation

These financial statements have been prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiary, Green River Petroleum (USA) Inc. All significant intercompany balances and transactions have been eliminated.

Property and equipment

The Company follows the full cost method of accounting for oil and gas properties. Under this method, all costs associated with the acquisition of, exploration for and the development of petroleum and natural gas reserves are capitalized, recognizing one cost centre per country. All of the Company's oil and gas interests are held in two cost centres: Canada and the United States. Such costs include land acquisition costs, geological and geophysical expenses, costs of drilling both productive and non-productive wells, and related overhead charges. Such costs do not necessarily reflect present values. Proceeds from the sale of oil and gas properties reduce capitalized costs, with no gain or loss recognized, unless such a sale would significantly alter the rate of depletion.

Costs directly associated with the acquiring and evaluating of unproved properties are initially excluded from the costs subject to depletion. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proven reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to the costs subject to depletion.

The costs related to a cost centre from which there is production is depleted on the unit of production method based on estimated proven reserves as determined by independent reservoir engineers. For purposes of the calculation, oil and natural gas reserves are converted into a common unit of measure on the basis of ten thousand cubic feet of gas to one barrel of oil.

In applying the full cost method, the Company calculates a ceiling test which restricts the capitalized costs less accumulated depletion from exceeding an amount equal to the estimated undiscounted value of future net revenues from proven oil and gas reserves, based on period end prices. If the net carrying cost of the oil and gas properties exceeds the ultimate recoverable amount, the excess amount is charged against operations as additional depletion.

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

Depreciation of office equipment is provided using the declining balance basis at the rate of 20% and 30% per annum.

Earnings per share

The earnings per share figures are calculated using the weighted monthly average number of shares outstanding during the respective years, after giving retroactive effect to the share consolidation (1:5) on July 6, 1999 and the share consolidation (1:2) on October 2, 2000. The calculation of fully diluted earnings per share figures considered the potential exercise of outstanding share purchase options and warrants or other contingent issuances (i.e. Special Warrant financing) to the extent each option, warrant or contingent issuance was dilutive.

Cash and cash equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2002 and 2001, the Company had no cash equivalents.



NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|---------------------------------------------------------------

Foreign currency translation

The consolidated financial statements are presented in Canadian dollars. The Company and its subsidiary are considered to be integrated operations and the accounts are translated using the temporal method. Under this method, foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalents using foreign exchange rates that prevailed at the balance sheet date. Non-monetary items are translated at historical exchange rates, except for items carried at their market value, which are translated at the rate of exchange in effect at the balance sheet date. Revenue and expense items are translated at average rates of exchange during the year, except for depletion and depreciation, which are translated at the same rates of exchange as the related assets. Exchange gains or losses arising on foreign currency translation are included in the determination of operating results for the year.

Estimates, Assumptions and Measurement Uncertainty

The preparation of financial statements in conformity 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 revenues and expenses during the period. Actual results could differ from those estimates. The amounts recorded for depletion, depreciation and amortization of petroleum and natural gas properties and equipment and the provision for future site restoration and abandonment costs are based on estimates. The ceiling test is based on estimates of proved reserves, production rates, oil and gas prices, future costs and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant.

Financial instruments

The fair values of cash and cash equivalents, accrued revenues, prepaids and other, and accounts payable and accrued liabilities were estimated to approximate their carrying values due to the immediate or short term maturity of these financial instruments. The Company operates in Canada and the United States, giving rise to significant exposure to market risks from changes in interest rates and foreign exchange rates. The financial risk is the risk to the Company's earnings that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. Management does not believe the Company is exposed to significant credit or interest rate risks.

Stock-based compensation plans

The Company has an incentive stock-based compensation plan, which is described in Note 6. Effective January 1, 2002 the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants with respect to stock-based compensation and other stock-based payments. The new recommendations require that stock-based payments to non-employees be accounted for using a fair value based method of accounting. The recommendations encourage, but do not require, the use of a fair valued based method to account for stock-based compensation to employees. The Company has elected to continue recording stock-based compensation to employees using an intrinsic value based method and will disclose pro forma information on the fair value of options issued during the period in the notes to the financial statements. As no stock options or stock-based payments were made to employees during the year ended December 31, 2002, no pro forma information is provided in these financial statements. The adoption of this new accounting policy has no cumulative effect on the prior period's financial statements.

|NOTE 3 - SUPPLEMENTARY CASH FLOW INFORMATION
|--------------------------------------------
|                                            
|                                            
|                                            
|                                            
|CASH AND CASH EQUIVALENTS CONSISTS OF:      
|Cash                                        
|Short-term investments                      
|                                            
|                                            
|                                            
|                                            
|                                            
|Interest paid                               
|Income Taxes paid                           







NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 4 - PROPERTY AND EQUIPMENT
|-------------------------------
|                               
|Cost                           
|                               
|                               
|                               
|Oil and gas properties         
|Office equipment               
|                               
|                               
|                               
|                               

|Oil and gas properties allocated by cost centre: |  |  |             |            
|------------------------------------------------ |  |  | ----------- | -----------
|                                                 |  |  |             |            
|United States                                    |  |  |             |            
|Sublette County, Wyoming                         |  |  | $ -         | $ 14,894   
|Jefferson Davis Parish, Louisiana                |  |  | -           | 284,911    
|                                                
|                                                 |  |  |             |            
|                                                 |  |  | -           | 299,805    
|                                                
|Canada                                           |  |  |             |            
|Alberta                                          |  |  | 2,127,293   | 1,113,028  
|                                                
|                                                 |  |  |             |            
|                                                 |  |  | $ 2,127,293 | $ 1,412,833
|                                                

At December 31, 2002 the amount of costs that were related to undeveloped land excluded from the depletion base amounted to $624,721 (2001 - $1,127,922).

The Company entered into a formal agreement dated August 7, 2001 with Patriot Petroleum Corp. ("Patriot") to sell all its interests in the oil and gas properties located in Louisiana and Wyoming. Patriot, a public company with common directors and officers, is listed on the Canadian Venture Exchange ("CDNX") and was classified as a Capital Pool Company as defined by the policies of the CDNX. The sale price was US$644,419, subject to adjustment for revenues received by the Company from May 1, 2001 until closing of the transaction in March 2003. The Company received a non-refundable deposit of $25,000. This agreement was subject to certain conditions precedent including receipt of regulatory and non-interested director and shareholder approvals.

|NOTE 5 - SHARE CAPITAL
|----------------------
|                      

Authorized:

Unlimited number of preferred shares without par value

Issued:

|                               | Common Shares | Value      
|------------------------------ | ------------- | -----------
|                              
|                              
|                               |               |            
|Balance at December 31, 2000   | 3,199,329     | $ 8,937,234
|                              
|                               |               |            
|Issued during the year:        |               |            
|- by exercise of stock options | 25,000        | 5,500      
|- by exercise of warrants      | 25,000        | 6,500      
|- by Private Placement         | 1,500,000     | 300,000    
|                              
|                               |               |            
|                               | 1,550,000     | 312,000    
|                              
|                               |               |            
|Balance at December 31, 2001   | 4,749,329     | 9,249,234  
|Issued during the year:        |               |            
|- by exercise of warrants      | 712,500       | 185,250    
|- by Private Placement         | 1,000,000     | 200,000    
|                              
|                               |               |            
|                               | 1,712,500     | 385,250    
|                              
|                               |               |            
|Balance at December 31, 2002   | 6,461,829     | $ 9,634,484
|                              







NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 5 - SHARE CAPITAL(continued)
|---------------------------------
|                                 

Share purchase warrants are outstanding to purchase 2,500,000 common shares exercisable at a price of $0.23 per common share on or before November 15, 2003.

The Company completed a non-brokered private placement consisting of 1,000,000 units at a price of $0.20 per unit for total proceeds of $200,000, to a public company listed on the TSX Venture Exchange. A director of the Company is a director and shareholder of the public company. Each unit consisted of one common share and one non-transferable share purchase warrant entitling the holder to acquire one additional common share at a price of $0.23 per share exercisable over a two year period.

During the prior year, the Company completed a non-brokered private placement consisting of 1,500,000 flow through units at a price of $0.20 per unit for total proceeds of $300,000. Each unit consisted of one common share and one non-transferable share purchase warrant entitling the holder to acquire an additional common share exercisable at a price of $0.23 per share on or before November 23, 2003. Proceeds of the private placement were used for the Company's exploration drilling program in Alberta.

|NOTE 6 - STOCK OPTION PLAN
|--------------------------
|                          

The Company's Board of Directors approved the adoption of a stock incentive plan (the "2002 Stock Option Plan") dated June 27, 2002 in accordance with the policies of the TSX Venture Exchange. The Board of Directors is authorized to grant options to directors, officers, consultants or employees to acquire up to a maximum of 1,292,365 common shares. The exercise price of options granted under the 2002 Stock Option Plan shall be as determined by the Board of Directors when such options are granted, subject to any limitations imposed by any relevant stock exchange or regulatory authority. The maximum number of options that may be granted to any one person must not exceed 5% of the common shares outstanding at the time of the grant. Any options granted under the 2002 Stock Option Plan shall vest in the Optionee as follows: 33.33% six months from date of grant, 33.33% twelve months from date of grant, and the remaining 33.33% eighteen months from the date of grant.

A summary of the changes in the Company's common share purchase options is presented below:

|                           | December 31, 2002 |                                   | December 31, 2001
|-------------------------- | ----------------- | --------------------------------- | -----------------
|                          
|                           | Number            | Weighted 
Average 
Exercise
Price |                  
|                          
|                          
|                           |                   |                                   |                  
|Balance, beginning of year | 331,000           | $ 0.25                            |                  
|Granted                    | -                 | -                                 |                  
|Exercised                  | -                 | -                                 |                  
|Forfeited / Cancelled      | -                 | -                                 |                  
|                          
|                           |                   |                                   |                  
|Balance, end of year       | 331,000           | $ 0.25                            |                  
|                          



|               | Outstanding       |                                                         | Exercisable                      
|-------------- | ----------------- | ------------------------------------------------------- | ---------------------------------
|Exercise Price | Number of 
shares | Weighted 
Average 
Remaining
Contractual Life(in years) | Weighted
Average 
Exercise 
Price
|              
|              
|               |                   |                                                         |                                  
|$0.22          | 193,500           | 1.89                                                    | 4.60                             
|$0.26          | 87,500            | 1.93                                                    | 2.60                             
|$0.33          | 50,000            | 2.65                                                    | 3.75                             
|              
|               |                   |                                                         |                                  
|               | 331,000           |                                                         | $0.25                            
|              





NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 7 - RELATED PARTY TRANSACTIONS
|-----------------------------------
|                                   

During the year, the Company incurred $60,000 (2001 - $60,000) in management fees to a director.

The Company entered into a purchase agreement with Patriot Petroleum Corp. ("Patriot") to sell the Company's interest in its oil and gas properties located in Wyoming and Louisiana. Patriot has directors and officers in common with the Company. Refer to Note 4.



|NOTE 8 - INCOME TAXES
|---------------------
|                     

The Company has non-capital losses for Canadian income tax purposes of approximately $1,169,000 (2001 - $865,000), which may by used to reduce future taxable income in Canada, expiring between 2002 and 2008. The Company has a net capital loss of $979,000 (2001 - $979,000), which can be carried forward to set against future taxable capital gains. The Company has unclaimed exploration and development expenditures of approximately $2,059,822 (2001 - $815,000) which can be deducted for income tax purposes in Canada in future years at the Company's discretion.

In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The amount of the future tax asset considered realizable could change materially in the near term based on future taxable income during the carry forward period. A valuation allowance has been provided against all net future tax assets, as realization of such net assets is uncertain.

|NOTE 9 - SEGMENTED INFORMATION
|------------------------------
|                              

The Company is primarily engaged in oil and gas exploration in Canada and the United States. Segmented operations and identifiable assets are as follows:



|                              |  |  |  | 2002        | 2001       
|----------------------------- |  |  |  | ----------- | -----------
|                             
|                             
|                              |  |  |  |             |            
|Income (Loss) from Operations |  |  |  |             |            
|Canada                        |  |  |  | $ 411,510   | $ (255,939)
|United States                 |  |  |  | 466,615     | 448,764    
|                             
|                              |  |  |  |             |            
|                              |  |  |  | $ 878,125   | $ 192,826  
|                             
|                              |  |  |  |             |            
|                              |  |  |  | 2002        | 2001       
|                             
|                             
|                              |  |  |  |             |            
|Identifiable Assets           |  |  |  |             |            
|Canada                        |  |  |  | $ 2,809,646 | $ 1,354,677
|United States                 |  |  |  | 63,621      | 383,261    
|                             
|                              |  |  |  |             |            
|                              |  |  |  | $ 2,873,267 | $ 1,737,938
|                             
|                              |  |  |  |             |            







NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 10 - SUBSEQUENT EVENTS
|---------------------------
|                           

a)	The Company completed a non-brokered private placement consisting of 100 Convertible Debentures (the "Debentures") valued at $10,000 per debenture to net the Company proceeds of $1,000,000. Each Debenture carries interest at the rate of 15% per annum, payable quarterly, in arrears and has a term of three years, expiring on March 28, 2006, as may be extended upon mutual agreement of the Company and the placees. All or any portion of the outstanding principal sum and accrued interest of each Debenture is convertible at the option of the placees into units in the capital of the Company at a price of $0.30 per unit if converted during the first two years of the Debenture or at a price of $0.33 per unit if converted during the third year of the Debenture.

Each unit will consist of one common share and one non-transferable share purchase warrant. Each warrant entitles the placees to purchase one additional common share at a price of:

(i)	$0.30 per warrant share if the debenture is converted after the date of issuance of the Debenture and on or before one year following the date of issuance of the Debenture;

(ii)	$0.40 per warrant share if the debenture is converted after the first anniversary of the issuance of the Debenture and on or before two years following the date of issuance of the Debenture; and

(iii)	$0.50 per warrant share if the debenture is converted after the second anniversary of the issuance of the Debenture and on or before the due date of the Debenture.

Any shares issued are subject to a four-month hold period expiring July 28, 2003. The warrants will expire on the earlier of the due date of the Debenture or two years from the issuance of the warrant upon conversion of the Debenture. Related parties subscribed for 69.88 Debentures of the total offering of 100 debentures. Proceeds are to be used to further the Company's exploration drilling program in Alberta.

b)	Stock options were granted pursuant to the Company's 2002 Stock Option Plan to a director and an employee to purchase up to 30,000 common shares at a price of $0.27 per share expiring February 20, 2008, subject to regulatory approval.

Subsequent to December 31, 2002, stock options to acquire 50,000 common shares at a price of $0.33 per share were cancelled.

(c)	The Company has obtained credit facilities with the National Bank of Canada consisting of an $850,000 revolving operating demand loan, and a $250,000 non-revolving acquisition and development demand loan. These loans are secured by an Acknowledgement of Debt Revolving Demand Credit Agreement, a General Assignment of Book Debts, a Negative Pledge, and a Floating Charge Demand Debenture from the Company to the Bank in the principal amount of $5,000,000 securing all of the Company's present and after-acquired real and personal property.

(d)	The Company entered into a Farm in Agreement dated January 24, 2003 with Warrior Energy Corporation ("Warrior"), the Company can earn an undivided 60% working interest in Block 1 of the Farm in Lands, and an undivided 20% working interest in Block 11 of the Farm in Lands, by the drilling of a Test Well, located in the Greencourt Area, Alberta. The Company entered into a Participation Agreement dated February 19, 2003 with Warrior to earn a 40% interest before Pay-out (24% after pay-out) in two wells located in the Morningside Area, Alberta.

(e)	The Company received loan proceeds of $348,750, in consideration for the issuance of promissory notes ("Notes"), dated March 14, 2003. A director of the Company advanced $200,000. The Notes bear interest at 15% per annum, payable quarterly in arrears. These Notes were repaid in full on April 15, 2003 together with accrued interest of $4,729.







NETCO ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002

|NOTE 11 - RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPALS ("Canadian GAAP" and "US GAAP")
|-------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                               

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada ("Canadian GAAP"), which differ in certain respects from those principles and practices that the Company would have followed had its consolidated financial statements been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP"). Comprehensive earnings are the same as net earnings under US GAAP for all periods presented. The following summarizes the significant differences between Canadian GAAP and US GAAP:

a)	Stock based compensation: As described in Note 6, the Company has granted stock options to certain directors and employees. These options are granted for services provided to the Company. For US GAAP purposes, Statement of Financial Accounting Standards No. 123 ("FAS 123") requires that an enterprise recognize, or at its option, disclose the impact of the fair value of stock options and other forms of stock-based compensation in the determination of income. The Company has elected under FAS 123 to continue to measure compensation cost on the intrinsic value basis set out in APB Opinion No. 25. As stock options are granted at exercise prices based on the market price of the Company's shares at the date of grant, no compensation cost is recognized. However, under SFAS 123, the impact on net income and income per share of the fair value must be measured and disclosed on a fair value based method on a pro forma basis.

The fair value of the employee's purchase rights, pursuant to stock options, under SFAS 123, was estimated using the Black-Scholes model with the following assumptions: risk free interest rate was 5%, expected volatility of 70% to 80%, an expected option life of two years to five years and no expected dividends.

If compensation expense had been determined pursuant to SFAS 123, the Company's net loss and net loss per share for fiscal 2000, 1999 and 1998 would have been as follows:



|                                        | Period ended December 31
|--------------------------------------- | ------------------------
|                                       
|                                        | 2002                    
|                                       
|                                       
|                                        |                         
|Net income (loss) for the year          |                         
|As reported, under Canadian and US GAAP | $ 878,125               
|Pro forma                               | $ 878,125               
|                                        |                         
|Basic earnings (loss) per share         |                         
|As reported, under Canadian and US GAAP | $ 0.14                  
|Pro forma                               | $ 0.14                  
|                                        |                         
|Diluted earnings (loss) per share       |                         
|As reported, under Canadian and US GAAP | $ 0.13                  
|Pro forma                               | $ 0.13                  
|                                        |                         
|                                        |                         



b)	Oil and gas properties: Under



ITEM 19	Exhibits

Exhibits Required by Form 20-F

Exhibit Number / Description

(1)	Articles of Incorporation and By-laws:

1.1	Articles of Incorporation, effective May 21, 1993 (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.2	By-Laws, effective May 21, 1993 (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.3	Articles of Amendment, dated July 6, 1999 (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.4	Articles of Amendment, dated October 1995 (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.5	Certificate of Change of Name, dated July 20, 1999 (British Columbia) (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.6	Certificate of Amendment (Articles), dated July 6, 1999(incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

1.7	Certificate of Amendment (Articles), dated July 28, 2000 (incorporated by reference from our Form 20-F Registration Statement, effective February 26, 2001)

(2)	Instruments Defining Rights of Holders of Equity Securities Being Registered

2.1	See Exhibits 1.1 and 1.2 above

(4)	Material Contracts

4.1	Amendment Agreement (Office Space and Support Services Agreement) between Netco Energy Inc., First Merit Group Ltd. and Armada Ventures Inc., dated February 1, 2001 (incorporated by reference from our Form 20-F Annual Report, filed on June 29, 2001)

4.2	Letter Agreement between Netco Energy Inc. and Daybreak Energy Inc., dated September 14, 2001 (incorporated by reference from our Form 20-F Annual Report, filed on June 28, 2002)

4.3	Amended Letter Agreement between Netco Energy Inc. and Daybreak Energy Inc, dated October 18, 2001 (incorporated by reference from our Form 20-F Annual Report, filed on June 28, 2002)

4.4	Letter Agreement between Netco Energy Inc. and Moxie Exploration Ltd., dated August 2, 2001

4.5	Letter Agreement between Netco Energy Inc. and Moxie Exploration Ltd., dated September 21, 2001 (incorporated by reference from our Form 20-F Annual Report, filed on June 28, 2002)

4.6	Letter Agreement between Netco Energy Inc. and Moxie Exploration Ltd., dated October 10, 2001

4.7	Area of Mutual Interest Agreement between Netco Energy Inc. and Moxie Exploration Ltd., dated October 9, 2001 (incorporated by reference from our Form 20-F Annual Report, filed on June 28, 2002)

4.8	Floating Charge Demand Debenture, dated January 31, 2003, with National Bank of Canada**

4.9	Form of Convertible Debenture**

(8)	Subsidiaries

None

(10)	Other

10.1	Section 906 Certification under Sarbanes-Oxley Act of 2002 of Donald Sharpe, dated June 30, 2003**



** Filed herewith.



SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, hereunto duly authorized.

Dated : June 30, 2003



Netco Energy Inc.



Per:	/s/ Donald A. SharpeDonald A. Sharpe, President
(Principal Executive, Financial and Accounting Officer)





CERTIFICATIONS

I, Donald A. Sharpe, certify that:

1.	I have reviewed this annual report on Form 20-F of Netco Energy Inc.;

2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to date 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 day within 90 days prior to the filing date of the 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 functions):

(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 procedures for financial reporting; and

6.	The registrant's other certifying officers and I have indicated in this annual report whether 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:	June 30, 2003

Signature:   /s/ Donald A. Sharpe
Title:	    President
(Principal Executive Officer, Financial and Accounting Officer)