----

----

|   |                                                                              |
|--------|-----------------------------------------------------------------------------------|
| [X]    | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| For the quarterly period ended June 30, 2010 |
|----------------------------------------------|

| [   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT |
|-----------------|----------------------------------------------------------------------------|

| NEVADA                                                         | 52-2207080                       |
|----------------------------------------------------------------|----------------------------------|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer IdentificationNo.) |

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

----

| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|---------------------------------------------------------|

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company)       |   |        |          |   |         |    |
|----------------------------------------------------------------|--------|-------------|---------------|--------|--------------|---------|
|                                                           |   |        |          |   |         |    |
| Condensed Consolidated Balance Sheets                          |   | (Unaudited) |          |   |         |    |
|                                                           |   | June 30,    |          |   | December 31, |    |
|                                                           |   | 2010        |          |   | 2009         |    |
|                                                           |   |        |          |   |         |    |
| Assets                                                         |   |        |          |   |         |    |
| Current assets:                                                |   |        |          |   |         |    |
| Cash                                                           |   | $      |  505     |   |         | $  |  751 |   |
| Prepaid expenses and other                                     |   |        | 586           |   |         |    | 569 |   |
|                                                           |   |        | 1,091         |   |         |    | 1,320 |   |
|                                                           |   |        |          |   |         |    |   |   |
| Investment in ZNG, Ltd., at equity                             |   |        | -             |   |         |    | - |   |
|                                                           |   |        |          |   |         |    |   |   |
| Investment in KNG, at equity                                   |   |        | -             |   |         |    | - |   |
|                                                           |   |        |          |   |         |    |   |   |
| Oil and gas properties, unproved                               |   |        | -             |   |         |    | - |   |
|                                                           |   |        |          |   |         |    |   |   |
| Property and equipment, net                                    |   |        | 959           |   |         |    | 1,267 |   |
|                                                           |   |        |          |   |         |    |   |   |
|                                                           |   | $           | 2,050         |   |         | $       | 2,587 |   |
|                                                           |   |        |          |   |         |    |   |   |
| Liabilities and Stockholders' Equity                           |   |        |          |   |         |    |   |   |
| Current liabilities:                                           |   |        |          |   |         |    |   |   |
| Accounts payable:                                              |   |        |          |   |         |    |   |   |
| Related party - stockholders                                   |   | $           | 539,931       |   |         | $       | 523,906 |   |
| Related party - Baltic Petroleum, interest at 14%              |   |        | 72,148        |   |         |    | 68,848 |   |
| Others                                                         |   |        |  719,661 |   |         |    |  606,831 |   |
| Accrued payroll                                                |   |        | 1,319,607     |   |         |    | 1,152,054 |   |
|                                                           |   |        | 2,651,347     |   |         |    | 2,351,639 |   |
|                                                           |   |        |          |   |         |    |   |   |
| Stockholders' equity:                                          |   |        |          |   |         |    |   |   |
| Common stock - authorized 100,000,000 shares, $.001 par value, |   |        |          |   |         |    |   |   |
|   18,705,550 issued and outstanding                  |   |        | 18,706        |   |         |    | 18,706 |   |
| Additional paid-in capital                                     |   |        | 13,161,691    |   |         |    | 13,161,691 |   |
| Accumulated deficit                                            |   |        |          |   |         |    |   |   |
| Pre-development stage                                          |   |        | (449,785      | )      |         |    | (449,785 | ) |
| Development stage                                              |   |        | (15,365,819   | )      |         |    | (15,072,720 | ) |
| Accumulated other comprehensive income (loss)                  |   |        | (14,090       | )      |         |    | (6,944 | ) |
|                                                           |   |        | (2,649,297    | )      |         |    | (2,349,052 | ) |
|                                                           |   |        |          |   |         |    |   |   |
|                                                           |   | $           | 2,050         |   |         | $       | 2,587 |   |
|                                                           |   |        |          |   |         |    |   |   |
| See accompanying notes.                                        |   |        |          |   |         |    |   |   |

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company) |   |          |       |   |         |   |       |            |   |   |
|----------------------------------------------------------|--------|---------------|------------|--------|--------------|--------|------------|-----------------|--------|--------|
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   | For the |   |
| Condensed Consolidated Statements of Operations          |   |          |       |   |         |   |       |            |   |   |   |   |   | cumulative |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   | period of |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   | Development |   |
|                                                     |   | For the three |       |   | For the six  |   |       | Stage Activity- |   |
|                                                     |   | months ended  |       |   | months ended |   |       | January 1, 2003 |   |
|                                                     |   | June 30,      |       |   | June 30,     |   |       | June 30,        |   |   | June 30, |   |   | through |   |
|                                                     |   | 2010          |       |   | 2009         |   |       | 2010            |   |   | 2009 |   |   | June 30, 2010 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |
| Revenues and other income:                               |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |
| Management fees from joint venture                       |   | $             | -          |   |         | $      | -          |            |   | $      | - |   |   | $ | - |   |   | $ | 1,135,000 |   |
| Gain from entrance into joint venture                    |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 364,479 |   |
| Other                                                    |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 6,382 |   |
| Total revenues and other income                          |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 1,505,861 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                                 |   |          | 82,700     |   |         |   | 102,926    |            |   |   | 164,500 |   |   |   | 183,526 |   |   |   | 3,970,358 |   |
| Professional and consulting fees                         |   |          | 58,393     |   |         |   | 61,009     |            |   |   | 118,544 |   |   |   | 114,360 |   |   |   | 5,212,485 |   |
| Rent and occupancy                                       |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 237,226 |   |
| Depreciation and amortization                            |   |          | 167        |   |         |   | 152        |            |   |   | 335 |   |   |   | 299 |   |   |   | 105,193 |   |
| Finance charges and interest                             |   |          | 1,661      |   |         |   | 1,701      |            |   |   | 3,420 |   |   |   | 3,699 |   |   |   | 122,524 |   |
| Marketing and other                                      |   |          | 3,284      |   |         |   | 16,438     |            |   |   | 6,300 |   |   |   | 23,993 |   |   |   | 2,070,877 |   |
| Total expenses                                           |   |          | 146,205    |   |         |   | 182,226    |            |   |   | 293,099 |   |   |   | 325,877 |   |   |   | 11,718,663 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from disposition of loan receivable - affliate      |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 29,500 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from sale of investment                             |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 669,570 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss on deemed disposition of oil and                    |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| gas properties, unproved                                 |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 3,928,000 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Impairment charge on investment                          |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | 525,947 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                                 |   |          | 146,205    |   |         |   | 182,226    |            |   |   | 293,099 |   |   |   | 325,877 |   |   |   | 15,395,819 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes (benefit)                     |   |          | -          |   |         |   | -          |            |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (development stage)                             |   | $             | 146,205    |   |         | $      | 182,226    |            |   | $      | 293,099 |   |   | $ | 325,877 |   |   | $ | 15,395,819 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per common share                  |   | $             | (0.01      | )      |         | $      | (0.01      | )               |   | $      | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (1.19 | ) |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of basic and                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| diluted common shares outstanding                        |   |          | 18,705,550 |   |         |   | 18,652,803 |            |   |   | 18,705,550 |   |   |   | 18,649,176 |   |   |   | 12,952,538 |   |
|                                                     |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes.                                  |   |          |       |   |         |   |       |            |   |   |   |   |   |   |   |   |   |   |   |   |

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company)                                        |   |                                                |       |       |      |        |    |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|------------|-----------|-------------|---------|
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Condensed Consolidated Statements of Stockholders' Equity                                       |   |                                                |       |       |      |        |    |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| For the cumulative period of Development Stage Activity - January 1, 2003 through June 30, 2010 |   |                                                |       |       |      |        |    |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                            |   | Common Stock                                        |       | Additional |      |        |    |   | Other |   |   |   |   |   |   |   |
|                                                                                            |   |        Number of |       | Paid-In    |      | Accumulated |    |   |       Comprehensive |   |   | Comprehensive |   |
|                                                                                            |   | Shares                                              |       |       | Par Value |        | Capital |   | Deficit |   |   | Income (Loss) |   |   | Total |   |   | Loss |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2003 (pre-development stage)                                                |   |                                                | 4,902,886  |       |      | $           | 4,903   |   | $ | 430,195 |   | $ | (449,785 | ) |   | $ | - |   |   | $ | (14,687 | ) |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2003                                                                        |   |                                                | -          |       |      |        | -       |   |   | - |   |   | (422,516 | ) |   |   | - |   |   |   | (422,516 | ) |   | $ | (422,516 | ) |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued in acquisition (ZNG)                                                              |   |                                                | 1,000,000  |       |      |        | 1,000   |   |   | (1,000 | ) |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2003                                                                      |   |                                                | 5,902,886  |       |      | $           | 5,903   |   | $ | 429,195 |   | $ | (872,301 | ) |   | $  | - |   |   | $ | (437,203 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2004                                                                        |   |                                                | -          |       |      |        | -       |   |   | - |   |   | (833,567 | ) |   |   | - |   |   |   | (833,567 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |       |      |        | -       |   |   | - |   |   | - |   |   |   | (53,120 | ) |   |   | (53,120 | ) |   | $ | (886,687 | ) |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued in acquisition (ZNG)                                                              |   |                                                | 3,450,000  |       |      |        | 3,450   |   |   | 746,550 |   |   | - |   |   |   | - |   |   |   | 750,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for professional services                                                         |   |                                                | 50,000     |       |      |        | 50      |   |   | 9,950 |   |   | - |   |   |   | - |   |   |   | 10,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                                                                                           |   |                                                | -          |       |      |        | -       |   |   | 34,426 |   |   | - |   |   |   | - |   |   |   | 34,426 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2004                                                                      |   |                                                | 9,402,886  |       |      | $           | 9,403   |   | $ | 1,220,121 |   | $ | (1,705,868 | ) |   | $ | (53,120 | ) |   | $ | (529,464 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2005                                                                        |   |                                                | -          |       |      |        | -       |   |   | - |   |   | (1,153,686 | ) |   |   | - |   |   |   | (1,153,686 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |       |      |        | -       |   |   | - |   |   | - |   |   |   | 50,614 |   |   |   | 50,614 |   |   | $ | (1,103,072 | ) |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for professional services                                                         |   |                                                | 385,000    |       |      |        | 385     |   |   | 197,829 |   |   | - |   |   |   | - |   |   |   | 198,214 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for accrued salaries                                                              |   |                                                | 1,700,000  |       |      |        | 1,700   |   |   | 301,871 |   |   | - |   |   |   | - |   |   |   | 303,571 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants granted for professional services                                                      |   |                                                | -          |       |      |        | -       |   |   | 310,000 |   |   | - |   |   |   | - |   |   |   | 310,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2005                                                                      |   |                                                | 11,487,886 |       |      | $           | 11,488  |   | $ | 2,029,821 |   | $ | (2,859,554 | ) |   | $ | (2,506 | ) |   | $ | (820,751 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2006                                                                        |   |                                                | -          |       |      |        | -       |   |   | - |   |   | (4,072,788 | ) |   |   | - |   |   |   | (4,072,788 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |       |      |        | -       |   |   | - |   |   | - |   |   |   | (1,939 | ) |   |   | (1,939 | ) |   | $ | (4,074,727 | ) |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for employee stock option plan and warrants                                       |   |                                                | 195,000    |       |      |        | 195     |   |   | 45,305 |   |   | - |   |   |   | - |   |   |   | 45,500 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for geological data                                                               |   |                                                | 1,900,000  |       |      |        | 1,900   |   |   | 3,323,100 |   |   | - |   |   |   | - |   |   |   | 3,325,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for professional services                                                         |   |                                                | 1,139,499  |       |      |        | 1,140   |   |   | 2,120,320 |   |   | - |   |   |   | - |   |   |   | 2,121,460 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants granted for professional services                                                      |   |                                                | -          |       |      |        | -       |   |   | 1,201,960 |   |   | - |   |   |   | - |   |   |   | 1,201,960 |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares cancelled                                                                                |   |                                                | (609,424   | )          |      |        | (610    | ) |   | 610 |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
|                                                                                            |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2006                                                                      |   |                                                | 14,112,961 |       |      | $           | 14,113  |   | $ | 8,721,116 |   | $ | (6,932,342 | ) |   | $ | (4,445 | ) |   | $ | 1,798,442 |   |   |   |   |   |
|   See accompanying notes                                                              |   |                                                |       |       |      |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company)                                        |   |                                                |       |   |       |   |   |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|--------|------------|--------|--------|
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Statements of Stockholders' Equity                                                 |   |                                                |       |   |       |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For the cumulative period of Development Stage Activity - January 1, 2003 through June 30, 2010 |   |                                                |       |   |       |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                            |   | Common Stock                                        |       |   | Additional |   |   | Other |   |   |   |   |   |   |   |
|                                                                                            |   |        Number of |       |   | Paid-In    |   |   | Accumulated |   |   |   Comprehensive |   |   | Comprehensive |   |
|                                                                                            |   | Shares                                              |       |   | Par Value  |   |   | Capital |   |   | Deficit |   |   | Income (Loss) |   |   | Total |   |   | Loss |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                                                | 14,112,961 |   |       | $      | 14,113 |   |   | $ | 8,721,116 |   |   | $ | (6,932,342 | ) |   | $ | (4,445 | ) |   | $ | 1,798,442 |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2007                                                                        |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | (2,060,487 | ) |   |   | - |   |   |   | (2,060,487 | ) |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | - |   |   |   | (9,804 | ) |   |   | (9,804 | ) |   | $ | (2,070,291 | ) |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for employee stock option plan and warrants                                       |   |                                                | 566,935    |   |       |   | 567    |   |   |   | (567 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for geological data                                                               |   |                                                | 200,000    |   |       |   | 200    |   |   |   | 349,800 |   |   |   | - |   |   |   | - |   |   |   | 350,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for accrued salaries                                                              |   |                                                | 788,000    |   |       |   | 788    |   |   |   | 1,444,618 |   |   |   | - |   |   |   | - |   |   |   | 1,445,406 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for licenses                                                                      |   |                                                | 2,000,000  |   |       |   | 2,000  |   |   |   | 1,318,000 |   |   |   | - |   |   |   | - |   |   |   | 1,320,000 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for professional services                                                         |   |                                                | 715,134    |   |       |   | 715    |   |   |   | 1,070,395 |   |   |   | - |   |   |   | - |   |   |   | 1,071,110 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants granted for professional services                                                      |   |                                                | -          |   |       |   | -      |   |   |   | 150,394 |   |   |   | - |   |   |   | - |   |   |   | 150,394 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, December 31, 2007                                                                |   |                                                | 18,383,030 |   |       | $      | 18,383 |   |   | $ | 13,053,756 |   |   | $ | (8,992,829 | ) |   | $ | (14,249 | ) |   | $ | 4,065,061 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2008                                                                        |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | (5,863,560 | ) |   |   | - |   |   |   | (5,863,560 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | - |   |   |   | 27,019 |   |   |   | 27,019 |   |   | $ | (5,836,541 | ) |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for professional services and accrued salaries                                    |   |                                                | 155,000    |   |       |   | 155    |   |   |   | 41,595 |   |   |   | - |   |   |   | - |   |   |   | 41,750 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants granted for professional services                                                      |   |                                                | -          |   |       |   | -      |   |   |   | 6,303 |   |   |   | - |   |   |   | - |   |   |   | 6,303 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for loan repayment and related interest                                           |   |                                                | 107,520    |   |       |   | 108    |   |   |   | 10,645 |   |   |   | - |   |   |   | - |   |   |   | 10,753 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, December 31, 2008                                                                |   |                                                | 18,645,550 |   |       | $      | 18,646 |   |   | $ | 13,112,299 |   |   | $ | (14,856,389 | ) |   | $ | 12,770 |   |   | $ | (1,712,674 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year - 2009                                                                        |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | (666,116 | ) |   |   | - |   |   |   | (666,116 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | - |   |   |   | (19,714 | ) |   |   | (19,714 | ) |   | $ | (685,830 | ) |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for accrued salaries                                                              |   |                                                | 60,000     |   |       |   | 60     |   |   |   | 3,540 |   |   |   | - |   |   |   | - |   |   |   | 3,600 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options vested to employees and directors                                                       |   |                                                | -          |   |       |   | -      |   |   |   | 45,852 |   |   |   | - |   |   |   | - |   |   |   | 45,852 |   |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, December 31, 2009                                                                |   |                                                | 18,705,550 |   |       | $      | 18,706 |   |   | $ | 13,161,691 |   |   | $ | (15,522,505 | ) |   | $ | (6,944 | ) |   | $ | (2,349,052 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for six months - 2010                                                                      |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | (293,099 | ) |   |   | - |   |   |   | (293,099 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                         |   |                                                | -          |   |       |   | -      |   |   |   | - |   |   |   | - |   |   |   | (7,146 | ) |   |   | (7,146 | ) |   | $ | (300,245 | ) |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, June 30, 2010                                                                    |   |                                                | 18,705,550 |   |       | $      | 18,706 |   |   | $ | 13,161,691 |   |   | $ | (15,815,604 | ) |   | $ | (14,090 | ) |   | $ | (2,649,297 | ) |   |   |   |   |
|                                                                                            |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes.                                                                         |   |                                                |       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company)            |   |   |     |   |   |   |     |            |   |
|---------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|-----------------|--------|
|                                                                |   |   |     |   |   |   |     | For the         |   |
| Condensed Consolidated Statements of Cash Flows                     |   |   |     |   |   |   |     | cumulative      |   |
|                                                                |   |   |     |   |   |   |     | period of       |   |
|                                                                |   |   |     |   |   |   |     | Development     |   |
|                                                                |   |   |     |   |   |   |     | Stage Activity- |   |
|                                                                |   |   |     |   |   |   |     | January 1, 2003 |   |
|                                                                |   |   |     |   |   |   |     | through         |   |
|                                                                |   |   |     |   |   |   |     | June 30,        |   |
| For the six months ended June 30,                                   |   | 2010   |     |   | 2009   |   |     | 2010            |   |
|                                                                |   |   |     |   |   |   |     |            |   |
| Operating activities:                                               |   |   |     |   |   |   |     |            |   |
| Net loss (development stage)                                        |   | $      | (293,099 | )      |   | $      | (325,877 | )               |   | $ | (15,365,819 | ) |
| Depreciation and amortization                                       |   |   | 335      |   |   |   | 299      |            |   |   | 105,193 |   |
| Common stock and warrants issued                                    |   |   |     |   |   |   |     |            |   |   |   |   |
| for professional services and salaries and geological data          |   |   | -        |   |   |   | 26,526   |            |   |   | 7,231,933 |   |
| Gain from entrance into joint venture                               |   |   | -        |   |   |   | -        |            |   |   | (364,479 | ) |
| Loss on disposition of office furniture                             |   |   | -        |   |   |   | -        |            |   |   | 1,029 |   |
| Loss on sale of investment, including deconsolidation of subsidiary |   |   | -        |   |   |   | -        |            |   |   | 823,692 |   |
| Loss on deemed disposition of oil and gas properties, unproved      |   |   | -        |   |   |   | -        |            |   |   | 3,928,000 |   |
| Impairment charge on investment                                     |   |   | -        |   |   |   | -        |            |   |   | 525,947 |   |
| Changes in other current assets and                                 |   |   |     |   |   |   |     |            |   |   |   |   |
| current liabilities:                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Management fee receivable                                           |   |   | -        |   |   |   | -        |            |   |   | 110,000 |   |
| Prepaid expenses and other assets                                   |   |   | (17      | )      |   |   | (15      | )               |   |   | (263,978 | ) |
| Accounts payable and accrued expenses                               |   |   | 299,708  |   |   |   | 305,406  |            |   |   | 4,291,125 |   |
| Net operating activities                                            |   |   | 6,927    |   |   |   | 6,339    |            |   |   | 1,022,643 |   |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Investing activities:                                               |   |   |     |   |   |   |     |            |   |   |   |   |
| Expenditures for licenses and related                               |   |   | -        |   |   |   | -        |            |   |   | (528,961 | ) |
| Expenditures for oil and gas properties                             |   |   | -        |   |   |   | -        |            |   |   | (770,750 | ) |
| Expenditures for property and equipment                             |   |   | -        |   |   |   | -        |            |   |   | (6,244 | ) |
| Proceeds of disposition of office furniture                         |   |   | -        |   |   |   | -        |            |   |   | 107 |   |
| Loan to affiliate                                                   |   |   | -        |   |   |   | -        |            |   |   | (29,500 | ) |
| Cash received in acquisition                                        |   |   | -        |   |   |   | -        |            |   |   | 6 |   |
| Cash received from entrance into joint venture                      |   |   | -        |   |   |   | -        |            |   |   | 175,000 |   |
| Net investing activities                                            |   |   | -        |   |   |   | -        |            |   |   | (1,160,342 | ) |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Financing activities:                                               |   |   |     |   |   |   |     |            |   |   |   |   |
| Net proceeds from demand loans                                      |   |   | -        |   |   |   | -        |            |   |   | 72,500 |   |
| Common stock issued for employee stock option plan                  |   |   | -        |   |   |   | -        |            |   |   | 45,500 |   |
| Additional paid-in capital                                          |   |   | -        |   |   |   | -        |            |   |   | 34,426 |   |
| Net financing activities                                            |   |   | -        |   |   |   | -        |            |   |   | 152,426 |   |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Effect of exchange rates on cash                                    |   |   | (7,173   | )      |   |   | (6,319   | )               |   |   | (14,222 | ) |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Net change in cash                                                  |   |   | (246     | )      |   |   | 20       |            |   |   | 505 |   |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Cash - beginning                                                    |   |   | 751      |   |   |   | 739      |            |   |   | - |   |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| Cash - ending                                                       |   | $      | 505      |   |   | $      | 759      |            |   | $ | 505 |   |
|                                                                |   |   |     |   |   |   |     |            |   |   |   |   |
| See accompanying notes.                                             |   |   |     |   |   |   |     |            |   |   |   |   |

----

| SIBERIAN ENERGY GROUP INC. (A Development Stage Company) |   |
|----------------------------------------------------------|--------|

| Notes to Condensed Consolidated Financial Statements |   |
|------------------------------------------------------|--------|

| Restricted common shares issued for                            |   |   |      |
|----------------------------------------------------------------|--------|--------|-----------|
|   oil and gas properties, unproved in 2006           |   |   | 1,900,000 |   |
| Restricted common shares issued in                             |   |   |      |   |
|   connection with license acquisition by KNG in 2007 |   |   | 2,000,000 |   |
| Restricted common shares issued in 2006                        |   |   | 200,000   |   |
| Total restricted common shares issued                          |   |   | 4,100,000 |   |
|                                                           |   |   |      |   |
| Stock warrants issued in 2006                                  |   |   |      |   |
| for purchase option                                            |   |   | 250,000   |   |

----

----

----

----

|   | o      | to begin 2D seismic works during the 2009-2010 fieldwork season and to perform not less than 176.26 linear kilometers of seismic profiles on Karabashky-61 and 158 linear kilometers on Karabashky-67 (minimal density of the profile not less than 1 linear kilometer per 1 square kilometer of license area), and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                |
|   | o      | no later than 2011, to start drilling an exploratory well and to complete not less than 2 exploratory wells by April 1, 2012.                                                                                                                                                                                  |

|   | · | Prepare annual programs and budgets pursuant to the Operating Agreement and the licensing agreements for the Blocks; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | Begin 2D seismic works on the Blocks during the 2009-2010 fieldwork season and perform not less than 176.26 linear kilometers of seismic profiles on the Karabashky-61 Block and not less than 158 linear kilometers of seismic works on the Karabashky-67 Block; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Start drilling an exploratory well no later than 2011, and complete no less than 2 exploratory wells by April 1, 2012; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Provide adequate financing to carry out KNG’s planned activities; and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | Supervise implementation of all programs and budgets and provide written progress reports on a quarterly basis relating to KNG’s activities and programs. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

----

----

----

----

|   | (1)    | actual or anticipated variations in our results of operations; |
|--------|--------|----------------------------------------------------------------|
|   |   |                                                           |
|   | (2)    | our ability or inability to generate new revenues;             |
|   |   |                                                           |
|   | (3)    | the number of shares in our public float;                      |

|   | (4)    | increased competition;                                                   |
|--------|--------|--------------------------------------------------------------------------|
|   |   |                                                                     |
|   | (5)    | the political atmosphere in Russia; and                                  |
|   |   |                                                                     |
|   | (6)    | conditions and trends in the oil, gas, and energy industries in general. |

----

----

| Exhibit No. | Description of Exhibit                                                                                              |
|-------------|---------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                |
| 10.1(1)     | Option Agreement with Baltic Petroleum Limited dated April 28, 2005                                                 |
|        |                                                                                                                |
| 10.2(1)     | License Agreement between OOO Zauralneftegaz and Baltic Petroleum Limited dated April 28, 2005                      |
|        |                                                                                                                |
| 10.3(1)     | Loan Agreement between OOO Zauralneftegaz and Baltic Petroleum Limited dated April 28, 2005                         |
|        |                                                                                                                |
| 10.4(1)     | Guarantee by Siberian Energy Group, Inc. dated April 28, 2005                                                       |
|        |                                                                                                                |
| 10.5(1)     | Pledge and Security Agreement between Siberian Energy Group, Inc. and Baltic Petroleum Limited dated April 28, 2005 |

| 10.6(2) | Option Agreement with Baltic Petroleum Limited dated April 28, 2005                            |
|---------|------------------------------------------------------------------------------------------------|
|    |                                                                                           |
| 10.7(2) | License Agreement between OOO Zauralneftegaz and Baltic Petroleum Limited dated April 28, 2005 |

| 10.8(2)        | Loan Agreement between OOO Zauralneftegaz and Baltic Petroleum Limited dated April 28, 2005                                  |
|----------------|------------------------------------------------------------------------------------------------------------------------------|
|           |                                                                                                                         |
| 10.9(2)        | Guarantee by Siberian Energy Group, Inc. dated April 28, 2005                                                                |
|           |                                                                                                                         |
| 10.10(2)       | Pledge and Security Agreement between Siberian Energy Group, Inc. and Baltic Petroleum Limited dated April 28, 2005          |
|           |                                                                                                                         |
| 10.11(3)       | Clarification to the Contract of Purchase and Sale of the Share in Charter Capital of LLC "Zauralneftegaz" dated 15 May 2004 |
|           |                                                                                                                         |
| 10.12(3)       | Agreement with Business - Standard (translated from Russian version)                                                    |
|  10.13(3) | Supplementary Agreement to Business - Standard Agreement (translated from Russian version)                                   |
|           |                                                                                                                         |
| 10.14(3)       | Supplementary Agreement No. 2 to Business - Standard Agreement (translated from Russian version)                             |

----

|     |                                                                                                                            |
|----------|---------------------------------------------------------------------------------------------------------------------------------|
| 10.15(3) | Deed of Amendment between ZNG and BP                                                                                            |
|     |                                                                                                                            |
| 10.16(3) | Deed of Amendment between the Company and BP                                                                                    |
|     |                                                                                                                            |
| 10.17(4) | Joint Venture Shareholders' Agreement with Baltic Petroleum (E&P) Limited and Zauralneftegaz Limited dated October 14, 2005 |
|     |                                                                                                                            |
| 10.18(5) | Amendment to the Employment Agreement Dated August 1, 2003, with Elena Pochapski                                                |
|     |                                                                                                                            |
| 10.19(5) | Form of Waiver Agreement                                                                                                        |
|     |                                                                                                                            |
| 10.20(6) | Loan Agreement between OOO Zauralneftegaz and Caspian Finance Limited                                                           |
|     |                                                                                                                            |
| 10.21(6) | Deed of Novation between Baltic Petroleum Limited, Caspian Finance Limited and OOO Zauralneftegaz                               |
|     |                                                                                                                            |
| 10.22(6) | Deed of Release                                                                                                                 |
|     |                                                                                                                            |
| 10.23(6) | Release of Pledge                                                                                                               |
|     |                                                                                                                            |
| 10.24(6) | Guarantee                                                                                                                       |
|     |                                                                                                                            |
| 10.25(6) | Debenture                                                                                                                       |
|     |                                                                                                                            |
| 10.26(6) | Agreement for the Pledge of the Participatory Interest in OOO Zauralneftegaz (Russian translation removed)                      |
|     |                                                                                                                            |
| 10.27(6) | Sale and Purchase Agreement                                                                                                     |

| 10.28(8)     | Option Agreement with Key Brokerage         |
|--------------|---------------------------------------------|
|    |                                        |
| 10.29(8)     | Warrant Agreement with Key Brokerage        |
|         |                                        |
| 10.30(9)     | July 26, 2006 Deed of Agreement             |
|         |                                        |
| 10.31(10)    | Consulting Agreement with Business Standard |

| 10.32(11) | Addition to the Loan Agreement of November 9, 2005                                                                  |
|-----------|---------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                |
| 10.33(11) | Gross Overriding Royalty Agreement                                                                                  |
|      |                                                                                                                |
| 10.34(12) | Amendment No. 2 to the Employment Agreement Dated August 1, 2003 with Elena Pochapski                               |
|      |                                                                                                                |
| 10.35(13) | Deed of Variation to the Loan Agreement Dated 9th of November 2005, Entered into in June 2007                       |
|      |                                                                                                                |
| 10.36(15) | Agreement of Purchase and Sale with Limited Liability Company Neftebitum, Sergey V. Prokopiev, and Oleg G. Shelepov |
|      |                                                                                                                |
| 10.37(15) | Operating Agreement with Limited Liability Company Neftebitum                                                       |
|      |                                                                                                                |
| 10.38(16) | One Year Extension to the Employment Agreement of August 1, 2004 with David Zaikin                                  |
|      |                                                                                                                |
| 10.39(16) | One Year Extension to the Employment Agreement of August 1, 2004 with Elena Pochapski                               |

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|      |                                                                                                 |
|-----------|------------------------------------------------------------------------------------------------------|
| 10.40(16) | Stock Option Agreement for David Zaikin                                                              |
|      |                                                                                                 |
| 10.41(16) | Stock Option Agreement for Elena Pochapski                                                           |
|      |                                                                                                 |
| 10.42(17) | Extension of Employment Agreement of David Zaikin                                                    |
|      |                                                                                                 |
| 10.43(17) | Extension of Employment Agreement of Elena Pochapski                                                 |
|      |                                                                                                 |
| 21.1(14)  | Subsidiaries                                                                                         |
|      |                                                                                                 |
| 31.1*     | Certificate of the Chief Executive Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002    |
|      |                                                                                                 |
| 31.2*     | Certificate of the Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002    |
|      |                                                                                                 |
| 32.1*     | Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|      |                                                                                                 |
| 32.2*     | Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|      |                                                                                                 |
| 99.1(7)   | Glossary                                                                                             |

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|                   | SIBERIAN ENERGY GROUP INC.     |
|------------------------|--------------------------------|
|                   |                           |
| DATED: August 16, 2010 | By: /s/ David Zaikin           |
|                   | David Zaikin                   |
|                   | Chief Executive Officer        |
|                   | (Principal Executive Officer)  |
|                   |                           |
| DATED: August 16, 2010 | By: /s/ Elena Pochapski        |
|                   | Elena Pochapski                |
|                   | Chief Financial Officer        |
|                   | (Principal Accounting Officer) |

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