UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A
                                AMENDMENT NO. 1


(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 31, 2007

[ ]      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: 000-51152

                         PETROHUNTER ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)

                    MARYLAND                                98-0431245
        (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                 Identification No.)

            1875 LAWRENCE STREET, SUITE 1400, DENVER, COLORADO 80203
               (Address of principal executive offices) (Zip Code)

                  Registrant's telephone number: (303) 572-8900

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)

     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 shorter period
    that the registrant was required to file such reports), and (2) has been
                subject to such filing requirements for the past
                             90 days. Yes [X] No [ ]

      Indicate by check mark whether the registrant is a large accelerated
   filer, an accelerated filer, or a non-accelerated filer. See definition of
      "accelerated filer and large accelerated filer" in Rule 12b-2 of the
                           Exchange Act. (Check one):
 Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]

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

  Indicate the number of shares outstanding of each of the issuer's classes of
                common stock, as of the latest practicable date:
           222,928,734 SHARES OF COMMON STOCK, $.001 PAR VALUE, AS OF
                                  MAY 15, 2007



<PAGE>
                                EXPLANATORY NOTE



We are filing this  Amendment No. 1 to Form 10-Q for the quarterly  period ended
March 31, 2007, as originally filed with the SEC on May 21, 2007, to restate our
financial statements and corresponding  financial  information for the quarterly
period ended March 31, 2007.



We  are  restating  the  financial   statements  and   corresponding   financial
information  to  correctly  reflect the timing of the  abandonment  of the South
Bronco  prospect  in the  Piceance  Basin of  Colorado.  The  Form  10-Q for the
quarterly  period ended March 31, 2007 had previously  reported the  abandonment
and resulting  impairment  expense had occurred in the three-month  period ended
March 31, 2007. The  abandonment  actually  occurred in the  three-month  period
ended December 31, 2006. This  restatement  gives effect to the timing change of
the abandonment and the recognition of the impairment expense from the quarterly
period ended March 31, 2007 to the quarterly period ended December 31, 2006.



A more  complete  discussion of this  restatement  is set forth in Note 1 to the
consolidated  financial  statements included in Part I, Item 1 of this Amendment
No. 1. Changes also have been made to Part I, Item 2 -- Management's  Discussion
and Analysis of Financial  Condition and Results of Operations in this Amendment
No. 1, as a result of the restatement.



This Amendment No. 1 continues to speak as of the date of the original Form 10-Q
for the quarterly period ended March 31, 2007 and we have not updated or amended
the disclosures  contained herein to reflect events that have occurred since the
filing of the Form 10-Q,  or modified or updated  those  disclosures  in any way
other than as described in the preceding paragraphs. Accordingly, this Amendment
No.  1  should  be read in  conjunction  with  our  filings  made  with  the SEC
subsequent to the filing of the original Form 10-Q on May 21, 2007.





















                                       2
<PAGE>

                         PETROHUNTER ENERGY CORPORATION
                            (A DEVELOPMENT COMPANY)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS

                                                                    MARCH 31,
                                                                       2007                SEPTEMBER 30,
                                                                    (UNAUDITED)                2006
                                                                 -----------------       -----------------
<S>                                                              <C>                     <C>
Current Assets
   Cash and cash equivalents                                     $      1,702,427        $     10,631,776
   Oil and gas receivables                                              2,133,757                     -
   Oil and gas receivables - related party                                 73,616                  35,656
   Other receivables                                                       19,718                  22,290
   Due from related parties                                                   -                   921,344
   Prepaid expenses and other assets                                        7,383                  30,960
                                                                 -----------------       -----------------
     TOTAL CURRENT ASSETS                                               3,936,901              11,642,026
                                                                 -----------------       -----------------

PROPERTY AND EQUIPMENT, AT COST
   Oil and gas properties under full cost, net                        164,873,003              45,972,784
   Deposit on pending oil and gas property acquisition                  2,243,777                     -
   Furniture and equipment, net                                           746,560                 550,213
                                                                 -----------------       -----------------
                                                                      167,863,340              46,522,997
                                                                 -----------------       -----------------

OTHER ASSETS
   Due from joint interest owner (NOTE 5)                              10,618,987                     -
   Restricted cash                                                      1,101,793               1,076,793
   Deferred financing costs                                               162,016                     -
                                                                 -----------------       -----------------

TOTAL ASSETS                                                     $    183,683,037        $     59,241,816
                                                                 =================       =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued expenses                         $     21,337,684        $      9,644,236
   Note payable - related party - current portion                       2,925,000                     -
   Accrued interest payable                                               350,379                 124,474
   Accrued interest payable - related party                               178,814                     -
   Due to shareholder and related parties                                 889,284                 197,785
   Contracts payable - oil and gas properties                           2,600,000                     -
   Convertible notes payable - in default                                 350,000                     -
   Convertible notes payable                                               50,000                 400,000
                                                                 -----------------       -----------------
     TOTAL CURRENT LIABILITIES                                         28,681,161              10,366,495
                                                                 -----------------       -----------------

NON CURRENT OBLIGATIONS
   Notes payable - related party                                       10,125,000                     -
   Notes payable - net                                                 10,687,121                     -
   Asset retirement obligation                                            326,103                 522,054
                                                                 -----------------       -----------------
                                                                       21,138,224                 522,054
                                                                 -----------------       -----------------

TOTAL LIABILITIES                                                      49,819,385              10,888,549
                                                                 -----------------       -----------------

COMMON STOCK SUBSCRIBED                                                 3,067,500                     -
                                                                 -----------------       -----------------

COMMITMENTS AND CONTINGENCIES (NOTES 4, 5, 8, 9, 10 and 13)
STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value
   Authorized - 1,000,000 shares, issued - none                               -                       -
   Common stock, $.001 par value
   Authorized - 500,000,000 shares
   Issued and outstanding - 222,928,734 and 219,928,734 shares            222,929                 219,929
   Capital in excess of par value                                      81,623,051              70,944,172
   Common stock issuable                                               81,732,450                     -
   Deficit accumulated during the development stage                   (32,782,278)            (22,810,834)
                                                                 -----------------       -----------------
TOTAL STOCKHOLDERS' EQUITY                                            130,796,152              48,353,267
                                                                 -----------------       -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $    183,683,037        $     59,241,816
                                                                 =================       =================
</TABLE>

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

                                       3
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                             (A DEVELOPMENT COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  THREE               THREE
                                                               MONTHS ENDED        MONTHS ENDED
                                                                 MARCH 31            MARCH 31
                                                                   2007                2006
                                                               (UNAUDITED)         (UNAUDITED)
                                                           ------------------   ------------------
<S>                                                        <C>                  <C>
REVENUES
   Oil and gas revenues                                    $       3,359,598    $             -
                                                           ------------------   ------------------

COSTS AND EXPENSES
   Lease operating expenses                                          644,828                  -
   General and administrative                                      4,327,573            1,157,998
   Property development - related                                        -                820,000
   Consulting fees  - related party                                   75,000                  -
   Depreciation, depletion, amortization and accretion               553,170                  -
                                                           ------------------   ------------------
     TOTAL OPERATING EXPENSES                                      5,600,571            1,977,998
                                                           ------------------   ------------------

OTHER INCOME (EXPENSE)
   Interest income                                                     6,330
   Interest expense                                               (1,881,994)            (499,225)
                                                           ------------------   ------------------
     TOTAL  (EXPENSE)                                             (1,875,664)            (499,225)
                                                           ------------------   ------------------

                                                           ------------------   ------------------
NET LOSS                                                   $      (4,116,637)   $      (2,477,223)
                                                           ==================   ==================

NET LOSS PER COMMON SHARE -
   BASIC AND DILUTED                                       $           (0.02)   $           (0.02)
                                                           ==================   ==================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING - BASIC AND DILUTED                               222,562,067          103,271,111
                                                           ==================   ==================
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     CUMULATIVE FROM
                                                                                                        INCEPTION
                                                                 SIX                  SIX            (JUNE 20, 2005)
                                                            MONTHS ENDED         MONTHS ENDED              TO
                                                              MARCH 31             MARCH 31             MARCH 31
                                                                2007                 2006                 2007
                                                            (UNAUDITED)          (UNAUDITED)          (UNAUDITED)
                                                        ------------------   ------------------   ------------------
<S>                                                     <C>                  <C>                  <C>
REVENUES
   Oil and gas revenues                                 $       3,808,474    $             -      $       3,844,130
                                                        ------------------   ------------------   ------------------

COSTS AND EXPENSES
   Lease operating expenses                                       806,628                  -                810,300
   General and administrative                                   7,998,571            1,869,252           22,872,163
   Property development - related                               1,815,000            1,520,000            7,205,000
   Consulting fees  - related party                                75,000                  -                 75,000
   Depreciation, depletion, amortization and accretion          1,190,097                  -              1,263,234
                                                        ------------------   ------------------   ------------------
     TOTAL OPERATING EXPENSES                                  11,885,296            3,389,252           32,225,697
                                                        ------------------   ------------------   ------------------

OTHER INCOME (EXPENSE)
   Interest income                                                 14,389                  -                 17,022
   Interest expense                                            (1,909,012)            (686,660)          (4,417,733)
                                                        ------------------   ------------------   ------------------
     TOTAL  (EXPENSE)                                          (1,894,623)            (686,660)          (4,400,711)
                                                        ------------------   ------------------   ------------------

                                                        ------------------   ------------------   ------------------
NET LOSS                                                $      (9,971,445)    $     (4,075,912)   $     (32,782,278)
                                                        ==================   ==================   ==================

NET LOSS PER COMMON SHARE -
   BASIC AND DILUTED                                    $           (0.05)   $           (0.04)
                                                        ==================   ==================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING - BASIC AND DILUTED                            221,245,401          101,635,556
                                                        ==================   ==================
</TABLE>

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

                                       4
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                             (A Development Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                                   CUMULATIVE FROM
                                                                                                                     INCEPTION
                                                                                SIX                  SIX           (JUNE 20, 2005)
                                                                            MONTHS ENDED         MONTHS ENDED             TO
                                                                             MARCH 31,            MARCH 31,           MARCH 31,
                                                                                2007                 2006                2007
                                                                            (UNAUDITED)          (UNAUDITED)         (UNAUDITED)
                                                                         ------------------   -----------------   ------------------
<S>                                                                      <C>                  <C>                 <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
   Net loss                                                              $      (9,971,445)   $     (4,075,912)   $     (32,782,279)
   Adjustments to reconcile net loss to
   net cash (used) in operating activities
     Stock for expenditures advanced                                                   -                   -                100,000
     Stock based compensation                                                    3,616,724             411,356           13,628,768
     Depreciation, depletion, amortization,
     impairment and accretion                                                    1,190,097                 -              1,263,234
     Stock issued and issuable for financing costs                               1,440,918              95,000            2,863,619
     Amortization of discount on notes payable and deferred
     financing costs                                                               148,122               4,822              148,122
   Changes in assets and liabilities
     Accounts receivable                                                        (2,095,530)            (19,814)          (2,153,476)
     Due from related party                                                        921,344          (1,510,428)                 -
     Prepaids and other                                                             23,578               7,699               14,627
     Accounts payable and accrued expenses                                        (855,451)            (12,595)             524,336
     Due to shareholder and related parties                                        617,883             568,105              815,668
                                                                         ------------------   -----------------   ------------------

NET CASH USED IN OPERATING ACTIVITIES                                           (4,963,760)         (4,531,767)         (15,577,381)
                                                                         ------------------   -----------------   ------------------

CASH FLOWS USED IN INVESTING ACTIVITIES
   Additions to oil and gas properties                                          (5,556,386)         (7,847,782)         (38,337,727)
   Due from joint interest owner                                               (10,618,987)                             (10,618,987)
   Deposit on oil and gas property acquisition                                  (2,243,777)                -             (2,243,777)
   Property and equipment                                                          (94,641)             (3,774)            (647,852)
   Restricted cash                                                                (525,000)            (30,000)          (1,601,793)
                                                                         ------------------   -----------------   ------------------

NET CASH USED IN INVESTING ACTIVITIES                                          (19,038,791)         (7,881,556)         (53,450,136)
                                                                         ------------------   -----------------   ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from the sale of common stock                                              -                                 35,442,500
   Proceeds from common stock subscribed                                         3,067,500                 -              3,067,500
   Proceeds from the sale of notes payable                                      12,500,000                 -             12,500,000
   Payment of notes payable - related party                                       (450,000)                -               (450,000)
   Proceeds from the exercise of warrants                                              -                   -              1,000,000
   Cash received upon recapitalization and merger                                      -                   -                 20,949
   Proceeds from issuance of convertible notes                                         -            11,150,752           20,831,667
   Offering and financing costs                                                    (44,298)             (4,753)          (1,682,672)
                                                                         ------------------   -----------------   ------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                       15,073,202          11,145,999           70,729,944
                                                                         ------------------   -----------------   ------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            (8,929,349)         (1,267,324)           1,702,427

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                  10,631,776           1,250,242                  -
                                                                         ------------------   -----------------   ------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $       1,702,427    $        (17,082)   $       1,702,427
                                                                         ==================   =================   ==================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
   Cash paid for interest                                                $             -                          $       1,028,353
                                                                         ==================   =================   ==================
   Cash paid for income taxes                                            $             -      $            -      $             -
                                                                         ==================   =================   ==================
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
   Stock issued for expenditures advanced                                $             -      $            -      $         100,000
                                                                         ==================   =================   ==================
   Contracts for oil and gas properties                                  $             -      $            -      $      11,773,960
                                                                         ==================   =================   ==================
   Common stock issued for debt conversion                               $             -      $            -      $      22,031,667
                                                                         ==================   =================   ==================
   Common stock issued for commissions on offerings                      $         200,000    $            -      $       3,100,201
                                                                         ==================   =================   ==================
   Common stock issued for property and finders fee on property          $       4,127,770    $      1,700,000    $       6,327,770
                                                                         ==================   =================   ==================
   Debt issued for property, related party                               $      13,500,000    $            -      $      13,500,000
                                                                         ==================   =================   ==================
   Interest capitalized to oil and gas properties                        $         394,803    $            -      $         394,803
                                                                         ==================   =================   ==================
   Convertible debt issued for property                                  $             -      $            -      $       1,200,000
                                                                         ==================   =================   ==================
   Common stock issuable for property and finders fee on property        $      81,275,200    $            -      $      81,275,200
                                                                         ==================   =================   ==================
   Common stock issuable                                                 $         457,250    $            -      $         457,250
                                                                         ==================   =================   ==================
</TABLE>

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

                                       5
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 1 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS



         In January  2007,  the Company  determined  not to proceed with further
         evaluation or  exploration  of its South Bronco project in the Piceance
         Basin  of  Colorado.  This  abandonment  and the  resulting  impairment
         expense of $550,790 were originally reflected in the three-month period
         ended  March  31,  2007.  The  Company   subsequently   determined  the
         abandonment  and  impairment  expense  should have been recorded in the
         quarterly period ended December 31, 2006. On June 13, 2007, the Company
         filed an Amended Form 10-Q for the quarterly  period ended December 31,
         2006 to reflect this timing change.  This restatement for the quarterly
         period ended March 31, 2007  reflects the timing  change for the period
         then ended.



         The following table sets forth the net effect of the restatement on the
         Consolidated  Statement of Operations  for the three months ended March
         31,  2007,  and  identifies  individual  line  items  impacted  by  the
         restatement.  There  is no  effect  on the  Consolidated  Statement  of
         Operations  for the six months  ended  March 31, 2007 or for the period
         from  inception,  June 20,  2005,  through  March 31,  2007,  or on the
         Company's Consolidated Balance Sheet or Consolidated Statements of Cash
         Flows as of and for the six month period ended March 31, 2007.



<TABLE>
<CAPTION>
                                                                       AS REPORTED            ADJUSTMENTS             RESTATED
<S>                                                                   <C>                     <C>                    <C>
         CONSOLIDATED STATEMENT OF OPERATIONS - THREE
         MONTHS ENDED MARCH 31, 2007
         Depreciation, depletion, amortization and accretion          $   1,103,960           $  (550,790)           $    553,170
                                                                      ============================================================

         Total operating expenses                                         6,151,361              (550,790)              5,600,571
                                                                      ============================================================

         NET LOSS                                                     $  (4,667,427)          $   550,790            $ (4,116,637)
                                                                      ============================================================
</TABLE>

NOTE 2 - ORGANIZATION AND BASIS OF PRESENTATION


         PetroHunter  Energy  Corporation,  formerly known as Digital Ecosystems
         Corp., ("Digital") was incorporated on February 21, 2002 under the laws
         of the State of Nevada.  On February 10, 2006,  Digital  entered into a
         Share Exchange  Agreement (the "Agreement") with GSL Energy Corporation
         ("GSL")  and certain  shareholders  of GSL  pursuant  to which  Digital
         acquired more than 85% of the issued and  outstanding  shares of common
         stock of GSL, in exchange for shares of Digital's  common stock. On May
         12, 2006,  the parties to the Agreement  completed the share  exchange,
         and Digital changed its business to the business of GSL.  Subsequent to
         the  closing  of the  Agreement,  Digital  acquired  all the  remaining
         outstanding  stock of GSL,  and  effective  August  14,  2006,  Digital
         changed its name from Digital  Ecosystems  Corp. to PetroHunter  Energy
         Corporation ("PetroHunter").


                                       6
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 2 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

         GSL was  incorporated  under the laws of the State of  Maryland on June
         20, 2005 for the purpose of acquiring, exploring and developing oil and
         gas  properties.  GSL is  considered  a  development  stage  company as
         defined by Statement of Financial  Accounting Standards ("SFAS") No. 7,
         and its principal  activities since inception have been raising capital
         through  the  sale  of  common  stock  and  convertible  notes  and the
         acquisition  of oil and gas properties in the Western United States and
         Australia.  In  October  2006,  GSL  changed  its  name to  PetroHunter
         Operating  Company.  On November 8, 2005,  GSL formed  Paleotechnology,
         Inc.  ("Paleo")  as a  wholly  owned  subsidiary  for  the  purpose  of
         exploring and developing new products and processes  using  by-products
         of  petroleum   extraction   environments.   On  September   11,  2006,
         PetroHunter  formed  PetroHunter  Heavy Oil Ltd.  ("Heavy  Oil"),  as a
         wholly owned  subsidiary  for the purpose of holding and developing the
         Company's heavy oil assets.  Effective September 30, 2006,  PetroHunter
         acquired 50% of the outstanding  common shares of Sweetpea  Corporation
         Pty Ltd ("Sweetpea"),  an Australian corporation; and effective January
         1, 2007  acquired the  remaining  50%.  Sweetpea is the record owner of
         four exploration permits issued by the Northern Territory of Australia.
         On October 20, 2006, PetroHunter formed PetroHunter Energy NT Ltd., now
         known as PetroHunter  Australia Ltd.  ("PetroHunter  Australia"),  as a
         wholly owned subsidiary,  for the purpose of holding and developing its
         assets in Australia. Collectively, PetroHunter and its subsidiaries are
         referred to herein as the "Company".

         As a result of the Agreement,  GSL became a wholly owned  subsidiary of
         PetroHunter. Since this transaction resulted in the former shareholders
         of GSL  acquiring  control  of  PetroHunter,  for  financial  reporting
         purposes the business  combination  was  accounted for as an additional
         capitalization  of PetroHunter (a reverse  acquisition  with GSL as the
         accounting acquirer).


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         The unaudited  financial  statements included herein were prepared from
         the  records  of the  Company in  accordance  with  generally  accepted
         accounting  principles  in the  United  States  applicable  to  interim
         financial  statements  and  reflect all  adjustments  which are, in the
         opinion of  management,  necessary  to provide a fair  statement of the
         results of operations and financial  position for the interim  periods.
         Such financial statements conform to the presentation  reflected in the
         Company's Form 10-KSB filed with the Securities and Exchange Commission
         for the year ended  September  30,  2006.  The current  interim  period
         reported  herein should be read in conjunction  with the Company's Form
         10-KSB for the year ended September 30, 2006. The results of operations
         for the three and six months  ended March 31, 2007 are not  necessarily
         indicative of the results that may be expected for the full fiscal year
         ending September 30, 2007.


                                       7
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


         BASIS OF ACCOUNTING

         The accompanying  financial  statements have been prepared on the basis
         of  accounting  principles   applicable  to  a  going  concern,   which
         contemplates   the   realization  of  assets  and   extinguishment   of
         liabilities  in  the  normal  course  of  business.  As  shown  in  the
         accompanying  balance  sheet the Company has incurred a cumulative  net
         loss of $32,782,278  for the period from  inception  (June 20, 2005) to
         March 31, 2007, has a working  capital  deficit of $24,744,260 at March
         31, 2007 and has significant  capital  expenditure  commitments.  As of
         March 31,  2007,  the Company has received oil and gas revenue from its
         initial  wells,  and will  require  significant  additional  funding to
         sustain its operations and satisfy its contractual  obligations for its
         planned  oil and gas  exploration  and  development  operations.  These
         factors,  among others,  may indicate that the Company may be unable to
         continue  in  existence.  The  Company's  financial  statements  do not
         include any  adjustments  related to the  realization  of the  carrying
         value of assets or the amounts and  classification  of liabilities that
         might be  necessary  should  the  Company  be  unable  to  continue  in
         existence. The Company's ability to establish itself as a going concern
         is dependent upon its ability to obtain additional financing,  in order
         to fund its planned  operations and ultimately,  to achieve  profitable
         operations.   Management  believes  that  they  can  be  successful  in
         obtaining equity and/or debt financing which will enable the Company to
         continue in existence  and  establish  itself as a going  concern.  The
         Company  has sold  approximately  $72.5  million of notes,  convertible
         notes and common stock through March 31, 2007.  Subsequent to March 31,
         2007  the  Company  has  received  an  additional  $2,500,000  under  a
         mezzanine financing arrangement, and $1,500,000 from a private investor
         pursuant  to a  loan  commitment.  (See  Notes  9 and  13.)  Management
         believes  that the Company  will be  successful  in raising  additional
         funding  to have  sufficient  capital to meet its  obligations  for its
         planned operations.

         DEVELOPMENT STAGE

         The Company is  considered a  development  stage  company as defined by
         Statement of  Financial  Accounting  Standards  ("SFAS") No. 7, and its
         principal  activities since inception have been raising capital through
         the sale of common stock and  convertible  notes and the acquisition of
         oil and gas properties in the Western United States and Australia.  The
         Company has commenced  initial test  production from its first wells in
         the Piceance Basin of Colorado;  however,  management does not consider
         that the Company has  commenced  principal  operations  as of March 31,
         2007.

         BASIS OF PRESENTATION

         The accompanying  consolidated financial statements include PetroHunter
         for the three and six months  ended March 31,  2007.  For the three and
         six months ended March 31, 2006, the consolidated  financial statements
         are those of GSL. All significant  intercompany  transactions have been
         eliminated upon consolidation.



                                       8
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


         OIL AND GAS PROPERTIES

         The Company utilizes the full cost method of accounting for oil and gas
         activities.  Under  this  method,  subject  to a  limitation  based  on
         estimated  value,  all  costs  associated  with  property  acquisition,
         exploration   and   development,   including   costs  of   unsuccessful
         exploration,  are capitalized  within a cost center on a country basis.
         No  gain or  loss  is  recognized  upon  the  sale  or  abandonment  of
         undeveloped  or  producing  oil  and gas  properties  unless  the  sale
         represents a significant portion of oil and gas properties and the gain
         significantly  alters the relationship  between  capitalized  costs and
         proved oil and gas reserves of the cost center. Depreciation, depletion
         and  amortization of oil and gas properties is computed on the units of
         production  method based on proved reserves.  Amortizable costs include
         estimates of future development costs of proved undeveloped reserves.

         Capitalized  costs of oil and gas  properties  may not exceed an amount
         equal to the present value,  discounted at 10%, of the estimated future
         net cash  flows  from  proved oil and gas  reserves  plus the cost,  or
         estimated fair market value, if lower, of unproved  properties.  Should
         capitalized costs exceed this ceiling, an impairment is recognized. The
         present  value of  estimated  future  net cash  flows  is  computed  by
         applying  year end prices of oil and  natural gas to  estimated  future
         production  of  proved  oil  and gas  reserves  as of  year  end,  less
         estimated  future   expenditures  to  be  incurred  in  developing  and
         producing  the proved  reserves and assuming  continuation  of existing
         economic  conditions.  As of March 31, 2007,  the Company has no proved
         reserves,  has  received  revenue from  testing and  production  on its
         initial wells,  and all oil and gas property costs are considered to be
         unevaluated  and are  recorded at the lower of cost or  estimated  fair
         market value.

         ASSET RETIREMENT OBLIGATION

         The  Company  applies  SFAS  143,   "Accounting  for  Asset  Retirement
         Obligations,"  which addresses  financial  accounting and reporting for
         obligations  associated  with the  retirement  of  tangible  long-lived
         assets  and the  associated  asset  retirement  costs.  This  statement
         requires   companies  to  record  the  present  value  of   obligations
         associated  with the  retirement of tangible  long-lived  assets in the
         period in which it is incurred. The liability is capitalized as part of
         the related long-lived asset's carrying amount. Over time, accretion of
         the liability is recognized as an operating expense and the capitalized
         cost is depreciated over the expected useful life of the related asset.
         Asset retirement  obligations ("ARO") relate primarily to the plugging,
         dismantlement,  removal, site reclamation and similar activities of its
         oil and gas properties.

         REVENUE RECOGNITION

         The Company  recognizes  oil and gas  revenues  from its  interests  in
         producing  wells as oil and gas is produced  and sold from these wells.
         The  Company  may have an  interest  with  other  producers  in certain
         properties,  in which case the Company uses the sales method to account
         for gas imbalances. Under this method, revenue is recorded on the basis
         of gas actually sold by the Company.  In addition,  the Company records
         revenue  for its  share of gas  sold by other  owners  that  cannot  be
         volumetrically  balanced  in the future due to  insufficient  remaining
         reserves.  The Company also reduces  revenue for other owners' gas sold
         by the Company that cannot be volumetrically balanced in the future due
         to insufficient  remaining reserves.  The Company's remaining over- and
         under-produced  gas  balancing  positions  will  be  considered  in the
         Company's   proved   reserves.   The  Company  has  no  gas   balancing
         arrangements  in  place  at  March  31,  2007.  Oil and gas sold is not
         significantly different from the Company's product entitlement.


                                       9
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


         IMPAIRMENT


         The  Company  applies  SFAS 144,  "Accounting  for the  Impairment  and
         Disposal of Long-Lived  Assets," which requires that long-lived  assets
         to be held and used be  reviewed  for  impairment  whenever  events  or
         changes in circumstances  indicate that the carrying amount of an asset
         may not be recoverable.  Oil and gas properties accounted for using the
         full cost method of accounting, the method utilized by the Company, are
         excluded from this requirement,  but will continue to be subject to the
         ceiling  test  limitations.   The  Company's  unproved  properties  are
         evaluated  periodically  for the  possibility of potential  impairment.
         During the three months ended  December  31,  2006,  management  of the
         Company   determined   not  to  proceed  with  further   evaluation  or
         exploration  of its  South  Bronco  project  in the  Piceance  Basin of
         Colorado and charged to operations an  impairment  expense of $550,790.
         There was no impairment  expense  recognized for the three-month period
         ended March 31, 2007.


         INCOME TAXES

         The Company has adopted the  provisions  of SFAS 109,  "Accounting  for
         Income   Taxes."  SFAS  109  requires   recognition   of  deferred  tax
         liabilities  and assets for the  expected  future tax  consequences  of
         events  that have been  included  in the  financial  statements  or tax
         returns.  Under this method,  deferred tax  liabilities  and assets are
         determined based on the difference between the financial  statement and
         tax basis of assets and  liabilities  using enacted tax rates in effect
         for the year in which the differences are expected to reverse.

         Temporary  differences  between the time of reporting certain items for
         financial and tax reporting  purposes consist  primarily of exploration
         and  development  costs  on oil and gas  properties,  and  stock  based
         compensation of options granted.

         USE OF ESTIMATES

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America 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 reported
         amounts of revenues and expenses  during the reporting  period.  Actual
         results could differ from those estimates.

         The Company's financial statements are based on a number of significant
         estimates,  including  oil and gas  reserve  quantities,  which are the
         basis for the calculation of depreciation,  depletion and impairment of
         oil and gas  properties,  and  timing  and  costs  associated  with its
         retirement obligations.

         The oil and gas industry is subject,  by its nature,  to  environmental
         hazards  and  clean-up  costs.  At this  time,  management  knows of no
         substantial costs from environmental  accidents or events for which the
         Company may be currently liable. In addition, the Company's oil and gas
         business makes it vulnerable to changes in wellhead prices of crude oil
         and natural gas.  Such prices have been volatile in the past and can be
         expected to be volatile in the future.  By definition,  proved reserves
         are based on current oil and gas prices and estimated  reserves.  Price
         declines reduce the estimated  quantity of proved reserves and increase
         annual amortization expense (which is based on proved reserves).


                                       10
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


         LOSS PER COMMON SHARE

         Basic  (loss)  per  share is based on the  weighted  average  number of
         common shares outstanding  during the period.  Diluted (loss) per share
         reflects the potential dilution that could occur if securities or other
         contracts to issue common stock were exercised or converted into common
         stock.  Convertible  equity  instruments  such  as  stock  options  and
         convertible  debentures  are excluded from the  computation  of diluted
         loss  per  share,  as the  effect  of the  assumed  exercises  would be
         anti-dilutive.  The dilutive  weighted  average number of common shares
         outstanding  excluded  potential  common  shares from stock options and
         warrants of  approximately  48,701,500  for the period  ended March 31,
         2007.

         SHARE BASED COMPENSATION

         The Company had followed  Accounting  Principles  Board ("APB") Opinion
         No.   25,"Accounting  for  Stock  Issued  to  Employees,"  and  related
         interpretations,  through  September  30,  2005 which  resulted  in the
         accounting for grants of awards to employees at their  intrinsic  value
         in the consolidated financial statements. Additionally, the Company has
         recognized  compensation expense in the financial statements for awards
         granted to  non-employees,  which must be re-measured each period under
         the  mark-to-market,  as  required  under EITF 96-18,  "Accounting  for
         Equity  Instruments  That  Are  Issued  to  Other  Than  Employees  for
         Acquiring or in  Conjunction  with  Selling,  Goods or  Services."  The
         Company previously adopted the provisions of SFAS No. 123,  "Accounting
         for Stock-Based  Compensation," as amended by SFAS No. 148, "Accounting
         for Stock-Based  Compensation  --Transition  and  Disclosure,"  through
         disclosure only.

         Effective October 1, 2005, the Company adopted SFAS123(R),  "Accounting
         for Stock-Based  Compensation,"  using the modified prospective method,
         which  results in the  provisions  of SFAS 123(R) being  applied to the
         consolidated  financial  statements  on a  going-forward  basis.  Prior
         periods  have not been  restated.  SFAS 123(R)  requires  companies  to
         recognize  share-based payments to employees as compensation expense on
         a fair value  method.  Under the fair value  recognition  provisions of
         SFAS  123(R),  stock-based  compensation  cost is measured at the grant
         date based on the fair value of the award and is  recognized as expense
         over the service period, which generally represents the vesting period.
         The expense  recognized  over the service period is required to include
         an estimate of the awards that will be forfeited.  Previously,  no such
         forfeitures have occurred. The Company is assuming no forfeitures going
         forward based on the Company's historical  forfeiture  experience.  The
         fair  value of stock  options  is  calculated  using the  Black-Scholes
         option-pricing model.





                                       11
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


         SHARE BASED COMPENSATION (Continued)

         As of March 31, 2007,  options to purchase an  aggregate of  33,295,000
         shares  of the  Company's  common  stock  were  outstanding,  of  which
         10,759,000 are exercisable. These options were granted to the Company's
         officers,  directors and  consultants  in August of 2005 and 2006,  and
         February 2007,  generally vesting 20% at grant date and 20% per year on
         the anniversary of the grant date for the next four years.  Each option
         has an exercise  price equal to the fair market  value per share of the
         Company's common stock at the date of grant and each option expires and
         terminates,  if not exercised  sooner,  five years from the grant date.
         Stock-based  compensation  expense of $2,055,591 and $3,616,724  before
         tax, was charged to  operations as  compensation  expense for the three
         and six months ended March 31, 2007.

         CASH AND CASH EQUIVALENTS

         For purposes of  reporting  cash flows,  the Company  considers as cash
         equivalents  all highly  liquid  investments  with a maturity  of three
         months or less at the time of  purchase.  Restricted  cash at March 31,
         2007 consists of certificates of deposit  underlying  letters of credit
         for exploration permits, state and local plugging and abandonment bonds
         and guarantees to vendors.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments,   which  potentially  subject  the  Company  to
         concentrations  of credit risk,  consist of cash. The Company maintains
         cash accounts at one financial  institution.  The Company  periodically
         evaluates  the  credit  worthiness  of  financial   institutions,   and
         maintains   cash  accounts   only  in  large  high  quality   financial
         institutions,  thereby  minimizing  exposure  for deposits in excess of
         federally  insured amounts.  On occasion,  the Company may have cash in
         banks in excess of federally insured amounts. The Company believes that
         credit risk associated with cash is remote.

         FAIR VALUE

         The  carrying   amount   reported  in  the  balance   sheet  for  cash,
         receivables,   prepaids,   accounts  payable  and  accrued  liabilities
         approximates fair value because of the immediate or short-term maturity
         of these financial instruments.

         Based upon the borrowing rates  currently  available to the Company for
         loans with  similar  terms and  average  maturities,  the fair value of
         convertible notes approximates their carrying value.

         OFF BALANCE SHEET ARRANGEMENTS

         The Company has no off balance sheet arrangements.



                                       12

<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 4 - AGREEMENT WITH MAB RESOURCES LLC


         Effective  January 1, 2007,  the Company and MAB  Resources LLC ("MAB")
         entered  into  an  Acquisition  and  Consulting   Agreement  (the  "MAB
         Consulting Agreement"),  as amended, which replaced in its entirety the
         Management  and  Development  Agreement (the  "Development  Agreement")
         entered  into July 1, 2005,  and  materially  revised the  relationship
         between  MAB and  the  Company.  MAB is a  Delaware  limited  liability
         company  and the  largest  shareholder  of the  Company.  MAB is in the
         business of oil and gas exploration and development. Under the terms of
         the Consulting Agreement:

         o    The  Company's  working interest in all its oil and gas properties
              doubled (from 50% undivided interest in the properties to 100%);
         o    The Company's prior obligation to carry MAB for its 50% portion of
              the first $700 million in capital costs was eliminated;
         o    The  Company's  aggregate  monthly  payments to MAB related to the
              existing properties were reduced  from $600,000 to (i) $25,000 for
              consulting,  plus (ii) $225,000 for payments under a $13.5 million
              promissory note  as  partial consideration for MAB's assignment of
              its previous undivided 50% working interest in the properties;
         o    MAB's  3% overriding royalty was increased to 5% (the "Override"),
              but the  Override  does  not  apply  to  the Company's Piceance II
              properties,  and does  not apply  to the extent  that the Override
              would  cause the Company's net  revenue interest  under an oil and
              gas lease to be less than 75%;
         o    MAB  will  receive  7% of  the  issued and  outstanding  shares of
              PetroHunter  Australia, as  of the date  that the Company receives
              PetroHunter Australia  shares in  consideration for  the Company's
              assignment of its rights and obligations in the Northern Territory
              (Australia) permits to PetroHunter Australia.

         The  MAB  Consulting  Agreement  also  provides  for  the  issuance  of
         50,000,000  shares of the  Company's  common  stock to MAB. MAB has the
         right and opportunity to receive up to an additional 50,000,000 shares,
         to be issued over a  five-year  period in  specified  numbers of shares
         that are tied to the Company's performance in booking reserves. The MAB
         Consulting Agreement, including the monthly payments to MAB, terminates
         after five years,  except MAB's  overriding  royalty  continues for the
         life of the properties.

         The Company has  accounted  for the  acquisition  component  of the MAB
         Consulting   Agreement  in  accordance  with  the  purchase  accounting
         provisions  of  SFAS  141  "Business  Combinations."  Accordingly,  the
         Company  has  capitalized  as oil and gas  properties  the  $13,500,000
         promissory note and the $81,000,000 fair market value of the 50,000,000
         shares  issued  to MAB,  based on the  trading  price of the  Company's
         common stock on the trading date  immediately  preceding  the effective
         date of the  transaction.  The  $25,000 per month  consulting  fees are
         charged to operations as incurred.

         Commencing July 1, 2005 and continuing  through  December 31, 2006, the
         Company and MAB operated pursuant to the Development  Agreement,  and a
         series of individual  property agreements  (collectively,  the "EDAs").
         The Development Agreement sets forth: (a) MAB's obligation to assign to
         the Company a minimum 50% undivided interest in any and all oil and gas
         assets which MAB  acquires  from third  parties in the future;  and (b)
         MAB's and the Company's long-term  relationship regarding the ownership
         and operation of all jointly-owned  properties.  Each of the Properties
         acquired was covered by a property-specific EDA that is consistent with
         the terms of the Development Agreement.


                                       13
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 5 - OIL AND GAS PROPERTIES



         Commencing  effective July 1, 2005 and continuing  through December 31,
         2006, the Company entered into a Management and  Development  Agreement
         (the  "Development   Agreement")  and  a  series  of  property-specific
         Exploration  and  Development  Agreements  (collectively,  the  "EDAs")
         pursuant to the Development  Agreement with MAB.  Effective  January 1,
         2007,  the  Development  Agreement and the EDA's were replaced in their
         entirety by the  Consulting  Agreement  with MAB as discussed in Note 4
         above.


         The  following  description  of the  Company's  oil  and  gas  property
         acquisitions  for the period from  October 1, 2006 to December 31, 2006
         is pursuant to the original  Development  Agreement and related  EDA's.
         All references to the Company's obligations to pay "project development
         costs"  pertaining  to the  following  properties  means the  specified
         amount of capital  expenditures  (for each such  property),  which were
         credited  against the  Company's  obligation to carry MAB for MAB's 50%
         portion of such expenditures.

         On November  28,  2006,  MAB entered  into an  agreement  with  Maralex
         Resources,  Inc. and Adelante Oil & Gas, LLC (collectively,  "Maralex")
         for the  acquisition  and  development of the Jack's Pocket Prospect in
         Garfield County, Colorado (the "Maralex Agreement"). Under the terms of
         the Maralex  Agreement,  an initial  payment of $100,000  was made upon
         execution  and the  balance  of  $2.9  million  cash  and  issuance  of
         2,428,100  shares of the Company's  common stock was due on January 15,
         2007.  The  Company  has  recorded  the $2.9  million  obligation  as a
         contract  payable and the fair market  value of the shares to be issued
         of $4,127,770, based on the closing price of the Company's common stock
         as of the date of the Maralex  Agreement.  Effective  January 12, 2007,
         the Maralex  Agreement  was amended to extend the payment  terms of the
         cash due through  March 15, 2007,  and increase the number of shares to
         be issued by 571,900,  to a total of 3,000,000  shares.  On January 16,
         2007, the Company issued  3,000,000  shares to the sellers and recorded
         as interest expense, transaction finance costs of $983,668 representing
         the market  value of the  571,900  incremental  shares.  On January 17,
         2007,  the  Company  made a payment  of  $500,000  on the  amount  due.
         Effective March 26, 2007, the Maralex  Agreement was further amended to
         increase the amount of cash due under the  Agreement by $200,000 and to
         amend  the  payment  terms  to  $325,000  due on  April  20,  2007  and
         $2,275,000  due on April 30, 2007.  The  incremental  $200,000 has been
         recorded as interest  expense in the three months ended March 31, 2007.
         The Company is currently  negotiating to further  extend the terms.  In
         the event the Company is not able to reach an  agreement  to extend the
         terms, the Company might become subject to a penalty or damages related
         to its failure to timely meet its obligations.

         On November  14, 2006,  the Company and Lakes Oil N.L.  entered into an
         agreement (the "Lakes Agreement") under which they will jointly develop
         Lakes Oil's onshore petroleum prospects (focusing on unconventional gas
         resources) in the  Gippsland  and Otway basins in Victoria,  Australia.
         The arrangement is subject to various conditions  precedent,  including
         completion  of  satisfactory   due  diligence,   and  the  satisfactory
         processing of certain  retention  lease  applications.  Under the Lakes
         Agreement,   the  Company  or  its  subsidiary  company  Sweetpea  will
         initially  farm into  33-1/3% of Lakes  Oil's  permits by  spending  $7
         million in Lakes Oil's permits. In addition, the Company will subscribe
         for $3 million  in new  shares in Lakes Oil at 1.5 cents  (Australian).
         The Company  will also have the right to increase its position in Lakes
         Oil's permits with two further 16-2/3% farm-in  tranches of $10 million
         each,  exercisable within 12 months and 24 months,  respectively,  from
         the date of the first  closing  under the  Agreement  (the  "Closing").
         Under the Lakes Agreement,  the Company has the right to participate in
         the same proportion in any permits which are non-contiguous to existing
         permits  acquired by Lakes within two years from the  Closing,  and any
         contiguous  permits  acquired by Lakes moving forward,  and the Company
         has a first right of refusal in other permits  acquired by Lakes within
         five years from the  Closing.  The  Company  is to assume  Lakes  Oil's
         position as operator of the permits.


                                       14
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 5 - OIL AND GAS  PROPERTIES (CONTINUED)


         On December 29,  2006,  the Company  entered into an agreement  ("PSA")
         with  Galaxy  Energy  Corporation   ("Galaxy")  and  its  wholly  owned
         subsidiary,  Dolphin Energy Corporation  ("Dolphin"),  a related party,
         for the  Company to  purchase,  through  its wholly  owned  subsidiary,
         PetroHunter  Operating  Company,  all of Galaxy's and Dolphin's oil and
         gas  interests in the Powder  River Basin of Wyoming and  Montana.  The
         controlling  owner of  PetroHunter's  largest single  shareholder  (MAB
         Resources  LLC) is Marc A.  Bruner.  Mr.  Bruner is a 14.3%  beneficial
         shareholder  of  Galaxy  and the  father  of the  President  and  Chief
         Executive  Officer  of Galaxy.  Dolphin  owns an  average  86%  working
         interest in 197 oil and gas wells in the Powder River Basin. Twenty-two
         wells are  currently  selling gas at an average  rate of 850,000  cubic
         feet a day. The remaining  wells are in various  stages of  dewatering,
         shut-in waiting on pipeline, or waiting to be completed.

         The PSA  provides  for the Company to pay $45 million to acquire all of
         Galaxy's and  Dolphin's  oil and gas  interests  in Sheridan,  Johnson,
         Converse and  Campbell  Counties in Wyoming,  and in Big Horn,  Custer,
         Powder River and Rosebud  Counties in Montana.  The purchase price will
         be $20  million  in cash and $25  million  in shares  of the  Company's
         common stock. Closing of the transaction will be subject to approval by
         Galaxy's senior  lenders,  approval in its discretion of all matters by
         the  Company's  Board of  Directors,  including  the Company  receiving
         financing  on terms  acceptable  to it,  and  various  other  terms and
         conditions.  Closing of the transaction, which was originally scheduled
         to occur by February 28, 2007,  has been  extended  until May 31, 2007.
         Either  party  may  terminate  the  agreement  if the  closing  has not
         occurred by May 31,  2007.  The Company has paid to Galaxy a $2 million
         earnest  money  payment  due under the terms of the  agreement  and has
         advanced an additional  $243,777 towards  operating costs of the assets
         to be acquired.  In the event the sale is not consummated,  the amounts
         advanced to Galaxy will be  converted  to  unsecured  notes  payable by
         Galaxy to the Company.

         On March 21, 2007,  the Company  entered into a Partial  Assignment  of
         Contract and Guarantee (the  "Assignment")  with MAB.  Pursuant to this
         Assignment, the Company assigned MAB its right to purchase an undivided
         45%  interest  in oil and gas  interests  in the Powder  River Basin of
         Wyoming and Montana,  which right PetroHunter  obtained in the PSA with
         Galaxy. As consideration for the Assignment,  MAB assumed the Company's
         obligation  under the PSA to pay  Galaxy  $25  million  in  PetroHunter
         common stock.  MAB also agreed to indemnify  the Company  against costs
         relating to or arising out of the  termination  or breach of the PSA by
         Galaxy or Dolphin, and MAB agreed to guarantee the payment of principal
         and interest due to the Company in the event the PSA does not close.

         The  Company's  exploration  projects  continue  to be  evaluated,  and
         management  believes  that the  carrying  costs of these  projects  are
         recoverable.  Should the  Company be  unsuccessful  in its  exploration
         activities,  the carrying  cost of these  prospects  will be charged to
         operations.  The Company charged to operations all property development
         costs  incurred to MAB under the related  EDA's.  None of the Company's
         projects had production as of the date of acquisition  and, as of March
         31, 2007,  the Company had received  revenues from initial  testing and
         production on certain of its projects.


                                       15
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 6 - DUE FROM JOINT INTEREST OWNER



         The Company has been in negotiations  with an unrelated third party oil
         and gas operator (the "Third Party") to exchange leasehold interests in
         certain oil and gas leases in the  Piceance  Basin of Colorado  held by
         the  Company  for  interests  in certain oil and gas leases held by the
         Third Party in the  Piceance  Basin.  During the six months ended March
         31, 2007, the Company had drilled, as operator,  seven wells on oil and
         gas leases which are subject to the above-described  negotiations.  The
         Company's  record title interest in the leases on which the seven wells
         were drilled is currently  15.4%.  As of March 31, 2007 the Company has
         recorded  only its share of costs in the seven  wells,  based  upon its
         15.4%  record  title  interest,  as Oil  and  Gas  Properties,  and has
         recorded the 84.6% of costs  incurred on behalf of the Third Party,  as
         Due From Joint Interest  Owner.  At March 31, 2007, this amount totaled
         $10,618,987.   In  the  event   the   negotiations   are   successfully
         consummated,  the  Company's  interest in those leases will increase to
         100% and the balance Due From Joint Interest Owner will be reclassified
         to Oil  and Gas  Properties.  In the  event  the  negotiations  are not
         successfully  consummated,   the  Third  Party  will  be  obligated  to
         reimburse  the Company  for all costs  incurred  for the Third  Party's
         84.6% working  interest.  Management  believes the transaction  will be
         successfully  consummated in the third quarter of fiscal 2007, and that
         the amounts  classified as Due from Joint  Interest  Owner at March 31,
         2007 will subsequently be reclassified to Oil and Gas Properties.



NOTE 7 - ASSET RETIREMENT OBLIGATION


         SFAS 143,  "Accounting  for Asset  Retirement  Obligations,"  addresses
         financial accounting and reporting for obligations  associated with the
         retirement  of  tangible  long-lived  assets and the  associated  asset
         retirement  costs.  This  statement  requires  companies  to record the
         present value of obligations associated with the retirement of tangible
         long-lived assets in the period in which it is incurred.  The liability
         is  capitalized  as part of the  related  long-lived  asset's  carrying
         amount.  Over time,  accretion  of the  liability is  recognized  as an
         operating  expense and the  capitalized  cost is  depreciated  over the
         expected  useful  life  of  the  related  asset.  The  Company's  asset
         retirement obligations relate primarily to the plugging, dismantlement,
         removal,  site  reclamation  and similar  activities of its oil and gas
         properties.

         The following table  summarizes  activity related to the accounting for
         asset  retirement  obligations  for the six months ended March 31, 2007
         and 2006:

<TABLE>
<CAPTION>
                                                                     2007          2006
                                                               -----------------------------
<S>                                                            <C>             <C>
         Asset retirement obligations, beginning of period     $    522,054    $          -
         Liabilities incurred                                        15,755               -
         Revisions to estimates                                    (213,825)
         Liabilities settled                                              -               -
         Accretion expense                                            2,119               -
                                                               -------------   -------------

         Asset retirement obligations, end of period           $    326,103    $          -
                                                               =============   =============
</TABLE>


                                       16
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 8 - CONVERTIBLE NOTES


         Prior to the merger with GSL on May 12, 2006, Digital entered into five
         separate  loan  agreements,  aggregating  $400,000,  due one year  from
         issuance,  commencing  October 11, 2006. The loans bear interest at 12%
         per annum,  are  unsecured,  and are  convertible  at the option of the
         lender, at any time during the term of the loan or upon maturity,  at a
         price per share  equal to the  closing  price of the  Company's  common
         shares on the OTC.BB market on the day preceding notice from the lender
         of its intent to convert the loan.  As of March 31,  2007,  the Company
         was in  default  on  payment  of an  aggregate  $350,000  of notes that
         matured.


         In December 2006, PetroHunter  Australia,  commenced the sale, pursuant
         to a private  placement,  of up to $50,000,000 of convertible notes. As
         of January 8, 2007,  the Company had  received  proceeds of  $1,530,000
         from the  offering.  In  February  2007,  the  Company  terminated  the
         offering,  agreeing to refund $30,000 to four investors, and converting
         $1,500,000  from one investor as the initial funding under a Credit and
         Security Agreement entered into January 9, 2007. (See Note 10.)



NOTE 9 - NOTE PAYABLE - RELATED PARTY



         Effective  January  1, 2007,  in  conjunction  with the MAB  Consulting
         Agreement, the Company issued a $13.5 million promissory note (the "MAB
         Note") as partial  consideration  for MAB's assignment of its undivided
         50% working  interest in the oil and gas  properties  (Note 4). The MAB
         Note  bears  interest  at a rate  equal to LIBOR and  requires  monthly
         principal  payments of $225,000  plus interest  commencing  January 31,
         2007. As of March 31, 2007, the outstanding balance of the MAB Note was
         $13,050,000 of which $2,925,000 was currently due.



NOTE 10 - NOTES PAYABLE


         On January 9, 2007,  the  Company  entered  into a Credit and  Security
         Agreement (the  "Financing")  with Global  Project  Finance AG, a Swiss
         company,  for  mezzanine  financing in the amount of $15  million.  The
         Financing  provides  for an interest  rate of 6.75% over prime,  and is
         secured by a first perfected lien on the Company's  assets,  limited to
         the  specific  portion  of the  assets to which the loan  proceeds  are
         applied by the Company. The Company has applied most of the proceeds of
         this loan to its drilling and  development  operations  in the Piceance
         Basin,  Colorado.  The  terms of the  Financing  also  provide  for the
         issuance of 1,000,000  warrants of the Company's  shares upon execution
         of the  Financing,  and an  additional  200,000  warrants,  for each $1
         million  draw  down  of the  credit  facility  up to $15  million.  The
         warrants  will be  exercisable  for five  years  after  the date of the
         Financing.  The exercise price of the warrants will be equal to 120% of
         the  weighted  average  price of the  Company's  stock  for the 30 days
         immediately  prior to each warrant issuance date. The fair value of the
         warrants  was  estimated  as of each  respective  issue  date under the
         Black-Scholes  pricing model,  with the following  assumptions:  common
         stock based on market price of at issue date, zero dividends,  expected
         volatility  of 69.6%% to 71.4%,  risk free  interest  rate of 4.75% and
         expected life of 2.5 years. The fair value of the debenture warrants of
         $1,953,719  was  recorded  as a  discount  to the  note  and  is  being
         amortized  over the life of the note.  During  the three  months  ended
         March 31, 2007,  amortization of discount in the amount of $140,841 was
         included in interest expense.


         Global  Project  Finance  AG  and  its  controlling   shareholder  were
         shareholders  of the Company prior to the  Financing.  The initial draw
         down  of  $1,500,000  was  converted  from  the  PetroHunter  Australia
         convertible  note  offering  (see Note 8). As of March  31,  2007,  the
         Company has drawn down $12,500,000 on the credit facility.



                                       17
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 11 - STOCKHOLDERS' EQUITY


         COMMON STOCK


         In conjunction  with the  acquisition  of properties  under the Maralex
         Agreement  (see  Note 5) the  Company  issued  3,000,000  shares of its
         common stock as partial consideration for the acquisition.


         COMMON STOCK SUBSCRIBED

         On  November  6,  2006,  the  Company  commenced  the sale of a maximum
         $125,000,000  pursuant  to a  private  placement  of units at $1.50 per
         unit.  Each unit  consisted of one share of the Company's  common stock
         and  one-half  common  stock  purchase  warrant.  A whole  common stock
         purchase  warrant  entitled  the  purchaser to acquire one share of the
         Company's  common stock at an exercise price of $1.88 per share through
         December 31, 2007. In February 2007, the Board of Directors  determined
         that the composition of the units being offered would be  restructured,
         and those investors who had subscribed in the offering would be offered
         the opportunity to rescind their subscriptions or to participate on the
         same terms as ultimately defined for the restructured  offering.  As of
         March 31, 2007, the Company has received  subscriptions  for $3,067,500
         for the sale of  units  pursuant  to the  private  placement,  of which
         $2,250,000 was from a related party,  and has recorded the proceeds and
         outstanding   subscriptions   from  the   offering  as  "Common   Stock
         Subscribed".

         COMMON STOCK ISSUABLE

         The  Company  has  agreed  to  issue  its  common   stock  for  certain
         transactions as described  below. As of March 31, 2007, the shares have
         not been issued and the value of the shares,  calculated based upon the
         trading  price of the stock on the  commitment  date,  is  included  in
         "Common Stock Issuable" as of that date:
             o    50,000,000  shares  in connection with the MAB Consulting
                  Agreement (see Note 3) as  partial  consideration for the
                  acquisition, valued at $81,000,000;
             o    424,528 shares related to the cash investment of $300,000
                  from an unrelated third  party, valued at $450,000;
             o    256,000  shares  to  a unrelated  consultant  as  partial
                  consideration  for  finders fees  and consulting services
                  related  to the Maralex Agreement (see Note 4), valued at
                  $382,450; and
             o    121,250   shares  to   an   unrelated   individual,   for
                  commissions on the sale of the Company's convertible debt
                  offering   in   2006,   valued  at  $200,000. This amount
                  represents the settlement of a previous dispute regarding
                  the  amount  of   commission  on   the   debt   offering.
                  Accordingly,  the  $200,000  has been recorded as finance
                  costs and charged to  operations  as  interest expense in
                  the three months ended March 31, 2007.

         STOCK OPTION PLAN

         The  Company  adopted  the 2005  Stock  Option  Plan (the  "Plan"),  as
         amended.  Under the Plan,  stock  options may be granted at an exercise
         price not less than the fair market value of the Company's common stock
         at the date of grant. Options may be granted to key employees and other
         persons who  contribute to the success of the Company.  The Company has
         reserved  40,000,000  shares of common stock for the plan. At March 31,
         2007, options to purchase 6,705,000 shares were available to be granted
         pursuant to the stock option plan.


                                       18
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 11 - STOCKHOLDERS' EQUITY (CONTINUED)


         In February 2007, the Company  granted  500,000  options to each of two
         directors.  The options were granted at an exercise  price of $1.38 per
         share and vest 50% at grant and 50% one year from grant.  There were no
         options cancelled, forfeited or exercised during the period ended March
         31,  2007.  The fair  value  of  options  granted  during  the  period,
         calculated  using the Black Scholes  option pricing model and under the
         following  assumptions:  expected  option term,  2.75 years;  risk free
         interest rate,  4.75%;  dividend  yield,  -0- and expected  volatility,
         70.35%, resulted in a fair value of $0.66 per share.

         WARRANTS

         The following  stock  purchase  warrants were  outstanding at March 31,
         2007:

            NUMBER OF SHARES          EXERCISE PRICE             EXPIRY DATE
             34,442,500 (1)               $1.00                      2011
              3,500,000 (2)             $1.30-$2.10                  2012

         (1) During 2006, the Company issued  35,442,500 stock purchase warrants
         in  conjunction  with the unit sale of common  stock.  The warrants are
         exercisable  for a period of five  years  from date of  issuance  at an
         exercise price of $1.00 per share.


         (2)  Pursuant  to the Credit and  Security  Agreement  entered  into on
         January 9, 2007 (Note 10) the Company issued  1,000,000  stock purchase
         warrants  upon  execution of the Credit  Agreement,  and an  additional
         2,500,000  warrants  for  draws  on  the  facility.  The  warrants  are
         exercisable for five years from the date of draw. The exercise price of
         the warrants is 120% of the  weighted  average  price of the  Company's
         stock for the 30 days immediately prior to each warrant issuance date.



NOTE 12 - RELATED PARTY TRANSACTIONS



         During the three  months  ended  March 31,  2007,  pursuant  to the MAB
         Agreement and the $13.5 million  promissory note issued thereunder (see
         Note 4), the Company  incurred  interest  expense of $179,719  and made
         principal payments of $450,000.  As of March 31, 2007, the Company owed
         MAB principal and accrued  interest of  $13,229,719  under the terms of
         the promissory note.


         During  the six months  ended  March 31,  2007,  the  Company  incurred
         $75,000 of consulting fees pursuant to the MAB Agreement and $1,815,000
         in property  development  costs to MAB under the Development  Agreement
         between  MAB and the  Company.  At March 31,  2007,  in addition to the
         amount due under the promissory note as discussed  above,  MAB was owed
         $779,331 by the Company.


         On March 21, 2007,  the Company  entered into a Partial  Assignment  of
         Contract and Guarantee (the  "Assignment")  with MAB.  Pursuant to this
         Assignment, the Company assigned MAB its right to purchase an undivided
         45%  interest  in oil and gas  interests  in the Powder  River Basin of
         Wyoming and Montana,  which right the Company  obtained in the PSA with
         Galaxy (see Note 5). As consideration  for the Assignment,  MAB assumed
         the  Company's  obligation  under the PSA to pay Galaxy $25  million in
         PetroHunter  common  stock.  MAB also agreed to  indemnify  the Company
         against costs  relating to or arising out of the  termination or breach
         of the PSA by Galaxy  or  Dolphin,  and MAB  agreed  to  guarantee  the
         payment of  principal  and interest due to the Company in the event the
         PSA does not close.



                                       19
<PAGE>
                         PETROHUNTER ENERGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 12 - RELATED PARTY TRANSACTIONS (CONTINUED)


         At March 31, 2007, the Company is owed $73,619 from MAB for oil and gas
         revenues for its share of initial  production  earned through  December
         31, 2006 pursuant to the Development and EDA agreements with MAB.

         In June 2006, the Company entered into an Office Sharing Agreement with
         Falcon Oil & Gas Ltd. ("Falcon") for office space in Denver,  Colorado,
         of which Falcon is the lessee. Under the terms of the agreement, Falcon
         and the Company share, on an equivalent  employee cost basis, all costs
         related to the office space,  including rent,  office  operating costs,
         furniture  and  equipment  and  any  other  expenses   related  to  the
         operations  of the  corporate  offices.  The 75%  owner of the  largest
         single  shareholder of the Company is also the Chief Executive  Officer
         and a Director of Falcon.  At March 31,  2007,  Falcon owed the Company
         $109,952  for  Falcon's  share  of  costs  incurred   pursuant  to  the
         agreement.

         During  the six months  ended  March 31,  2006,  the  Company  incurred
         consulting  fees  related to services  provided by its  officers in the
         aggregate  amount of  $420,531;  and  incurred  $1,520,000  in property
         development  costs to MAB under the Development  Agreement  between MAB
         and the Company.


NOTE 13 - COMMITMENTS AND CONTINGENCIES


         ENVIRONMENTAL

         Oil and gas producing activities are subject to extensive environmental
         laws and  regulations.  These  laws,  which  are  constantly  changing,
         regulate  the  discharge  of  materials  into the  environment  and may
         require the Company to remove or mitigate the environmental  effects of
         the disposal or release of petroleum or chemical  substances at various
         sites. Environmental expenditures are expensed or capitalized depending
         on their  future  economic  benefit.  Expenditures  that  relate  to an
         existing  condition  caused by past  operations and that have no future
         economic  benefit  are  expensed.  Liabilities  for  expenditures  of a
         noncapital  nature are recorded when  environmental  assessment  and/or
         remediation is probable, and the costs can be reasonably estimated.

         CONTINGENCIES

         The  Company  may from  time to time be  involved  in  various  claims,
         lawsuits,   and  disputes  with  third   parties,   actions   involving
         allegations of discrimination,  or breach of contract incidental to the
         operations  of its business.  The Company is not currently  involved in
         any  such  incidental   litigation  which  it  believes  could  have  a
         materially  adverse  effect on its  financial  condition  or results of
         operations.


NOTE - 14 - SUBSEQUENT EVENTS



         In April 2007, the Company received additional advances of $2.5 million
         under the terms of the Credit and Security Agreement (see Note 10); and
         additional  advances  from the same lender of $1.5 million  pursuant to
         another loan agreement presently being negotiated.



                                       20
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our Consolidated
Financial Statements and related notes appearing elsewhere in this Form 10-Q.

         PetroHunter Energy Corporation ("PetroHunter"), formerly Digital
Ecosystems Corp. ("Digital"), through the operations of its wholly owned
subsidiary, PetroHunter Operating Company, is a global oil and gas exploration
and production company with primary assets consisting of a working interest in
oil and gas leases and related interests in various oil and natural gas
prospects, including approximately 220,000 net acres in Colorado, Utah and
Montana and approximately seven million net acres in the Northern Territory of
Australia. The properties are managed and operated in three groups: Heavy Oil,
Piceance Basin, and Australia.

         PetroHunter Operating Company (formerly GSL Energy Corporation) was
formed in June 2005 as a Maryland corporation, and on May 12, 2006 completed a
stock exchange by which its stockholders received more than 85% of Digital's
outstanding stock (the "Stock Exchange"). The business of PetroHunter Operating
Company became the business of Digital. Subsequent to May 2006, Digital acquired
all the remaining outstanding stock of PetroHunter Operating Company, and
effective August 14, 2006, Digital changed its name from Digital Ecosystems
Corp. to PetroHunter Energy Corporation and changed its domicile to Maryland.
Digital was incorporated on February 21, 2002 under the laws of the State of
Nevada.

         In October 2006, GSL Energy Corporation ("GSL") changed its name to
PetroHunter Operating Company. On November 8, 2005, GSL formed Paleotechnology,
Inc. ("Paleo") as a wholly-owned subsidiary for the purpose of exploring and
developing new products and processes using by-products of petroleum extraction
environments. On September 11, 2006, PetroHunter formed PetroHunter Heavy Oil
Ltd. as a wholly-owned subsidiary for the purpose of holding and developing its
heavy oil assets. Effective September 30, 2006, PetroHunter acquired 50% of the
outstanding common shares of Sweetpea Corporation Pty Ltd ("Sweetpea"), an
Australian corporation; and effective January 1, 2007 acquired the remaining
50%. Sweetpea is the record owner of four exploration permits issued by the
Northern Territory of Australia. On October 20, 2006, PetroHunter formed
PetroHunter Energy NT Ltd., now known as PetroHunter Australia Ltd.
("PetroHunter Australia") for the purpose of holding and developing its assets
in Australia. Collectively, PetroHunter and its subsidiaries are referred to
herein as the "Company," "we," "us" or "our".

         As a result of the Stock Exchange, GSL, now known as PetroHunter
Operating Company, became a wholly owned subsidiary of our Company. Since this
transaction resulted in the former shareholders of GSL acquiring control of our
Company, for financial reporting purposes the business combination was accounted
for as an additional capitalization of the Company (a reverse acquisition with
GSL as the accounting acquirer). In accounting for this transaction:

         i.       GSL was deemed to be the purchaser and parent company for
                  financial reporting purposes. Accordingly, its net assets were
                  included in the consolidated balance sheet at their historical
                  book value; and

         ii.      Control of the net assets and business of the Company was
                  acquired effective May 12, 2006 for no consideration.


                                       21
<PAGE>

         PetroHunter Operating Company is considered a development stage company
as defined by Statement of Financial Accounting Standards ("SFAS") No. 7, and
its principal activities since inception have been raising capital through the
sale of common stock and convertible notes and the acquisition of oil and gas
properties in the Western United States and Australia.

MAB RESOURCES LLC

         Effective January 1, 2007, we entered into an entered into an
Acquisition and Consulting Agreement (the "Consulting Agreement"), as amended,
with MAB Resources LLC ("MAB"), which replaced in its entirety the Management
and Development Agreement (the "Development Agreement") entered into July 1,
2005, and materially revised our relationship with MAB. MAB is a Delaware
limited liability company and our largest shareholder. MAB is in the business of
oil and gas exploration and development. Under the terms of the Consulting
Agreement:

             o    Our working interest in all our oil and gas properties doubled
                  (from 50% undivided interest in the properties to 100%);
             o    Our prior obligation to carry MAB for its 50% portion of the
                  first $700 million in capital costs was eliminated;
             o    Our aggregate monthly payments to MAB related to the existing
                  properties were reduced from $600,000 to (i) $25,000 for
                  consulting, plus (ii) $225,000 for payments under a $13.5
                  million promissory note as partial consideration for MAB's
                  assignment of its previous undivided 50% working interest in
                  the properties;
             o    MAB's 3% overriding royalty was increased to 5% (the
                  "Override"), but the Override does not apply to our Piceance
                  II properties, and does not apply to the extent that the
                  Override would cause our net revenue interest under an oil and
                  gas lease to be less than 75%;
             o    MAB will receive 7% of the issued and outstanding shares of
                  PetroHunter Australia, as of the date that we receive
                  PetroHunter Australia shares in consideration for our
                  assignment of our rights and obligations in the Northern
                  Territory (Australia) permits to PetroHunter Australia.

         The new agreement also provides for the issuance of 50 million shares
of our common stock to MAB. MAB has the right and opportunity to receive up to
an additional 50 million shares, to be issued over a five-year period in
specified numbers of shares that are tied to our performance in booking
reserves. The entire Consulting Agreement, including the monthly payments to
MAB, terminates after five years, except MAB's overriding royalty continues for
the life of the properties.

         The transfer of MAB's working interest for our shares (including the
carried interest), the revised override and MAB foregoing monthly capital cost
advances, were analyzed by an independent economic evaluator, who, in a report
dated April 10, 2007, concluded the transaction was fair to our existing
shareholders.

         Commencing July 1, 2005 and continuing through December 31, 2006, we
and MAB operated pursuant to the Development Agreement, and a series of
individual property agreements (collectively, the "EDAs"). The Development
Agreement set forth: (a) MAB's obligation to assign to us a minimum 50%
undivided interest in any and all oil and gas assets which MAB acquired from
third parties in the future; and (b) our long-term relationship with MAB
regarding the ownership and operation of all jointly-owned properties. Each of
the Properties acquired was covered by a property-specific EDA that was
consistent with the terms of the Development Agreement.


                                       22
<PAGE>

PROPOSED ACQUISITION OF POWDER RIVER BASIN PROPERTIES

         On December 29, 2006, we entered into a Purchase and Sale Agreement
(the "PSA") with Galaxy Energy Corporation ("Galaxy") and its wholly owned
subsidiary, Dolphin Energy Corporation ("Dolphin"). Pursuant to the PSA, we
agreed to purchase all of Galaxy's and Dolphin's oil and gas interests in the
Powder River Basin of Wyoming and Montana (the "Powder River Basin Assets").

         Marc A. Bruner, who is the controlling owner of our largest
shareholder, also is a 14.3% beneficial shareholder of Galaxy. Marc A. Bruner is
the father of Marc E. Bruner, the President, Chief Executive Officer and
director of Galaxy. Marc E. Bruner is the stepson of Carmen J. Lotito, the Chief
Financial Officer and a director of the Company.

         The purchase price for Powder River Basin Assets is $45 million, with
$20 million to be paid in cash and $25 million to be paid in shares of our
common stock.

         Closing of the transaction is subject to approval by Galaxy's secured
noteholders, approval of all matters in its discretion by our Board of
Directors, including the Company obtaining outside financing on terms acceptable
to its Board of Directors, and various other terms and conditions. Either party
may terminate the agreement if closing has not occurred by May 31, 2007.

         In January 2007, we paid to Galaxy a $2 million earnest money payment
due under the terms of the agreement. In the event the closing does not occur
for any reason other than a material breach by us, the deposit shall convert
into a promissory note (the "Note"), payable to us, and shall be an unsecured
subordinated debt of both Galaxy and Dolphin, which is payable only after
repayment of Galaxy's and Dolphin's senior indebtedness.

         We became the contract operator of the Powder River Basin Assets
beginning January 1, 2007. At closing, the operating expenses incurred by us as
the contract operator will be credited toward the purchase price, or if closing
does not occur, will be added to the principal amount of the Note.

         On March 21, 2007, we entered into a Partial Assignment of Contract and
Guarantee (the "Assignment") with MAB. Pursuant to this Assignment, we assigned
MAB our right to purchase an undivided 45% interest in oil and gas interests in
the Powder River Basin Assets, which right we obtained in the PSA with Galaxy.
As consideration for the Assignment, MAB assumed our obligation under the PSA to
pay Galaxy $25 million in PetroHunter common stock. MAB also agreed to indemnify
us against costs relating to or arising out of the termination or breach of the
PSA by Galaxy or Dolphin, and MAB agreed to guarantee the payment of principal
and interest due to us in the event the PSA does not close.







                                       23
<PAGE>

PRODUCTION AND PRICES

         The following table sets forth information regarding net production of
oil and natural gas, and certain price and cost information for quarters ended
March 31, 2007, December 31, 2006 and the fiscal year ended September 30, 2006.
We did not have any production during the comparable periods of the prior year.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                       FOR THE QUARTER              FOR THE QUARTER           FOR THE FISCAL YEAR
                                       ENDED MARCH 31,               ENDED DECEMBER                   ENDED
                                            2007                        31, 2006               SEPTEMBER 30, 2006
------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                          <C>                             <C>
PRODUCTION DATA:
------------------------------------------------------------------------------------------------------------------
Natural gas (Mcf)                             495,764                      142,229                          5,822
------------------------------------------------------------------------------------------------------------------
Oil (Bbls)                                      3,485                          584                            -0-
------------------------------------------------------------------------------------------------------------------
AVERAGE PRICES:
------------------------------------------------------------------------------------------------------------------
Natural gas (per Mcf)                           $5.59                        $5.17                          $6.12
------------------------------------------------------------------------------------------------------------------
Oil (per Bbl)                                  $54.13                       $58.29                             --
------------------------------------------------------------------------------------------------------------------
</TABLE>

PRODUCTIVE WELLS

         The following table summarizes information at March 31, 2007, relating
to the productive wells in which we owned a working interest as of that date.
Productive wells consist of producing wells and wells capable of production.
Gross wells are the total number of producing wells in which we have an
interest, and net wells are the sum of our fractional working interests owned in
gross wells.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                     GROSS                                                NET
--------------------------------------------------------------------------------------------------------------------------------
LOCATION                            OIL               GAS             TOTAL             OIL               GAS             TOTAL
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>              <C>             <C>               <C>              <C>
Colorado                             --                22               22               --               7.2              7.2
--------------------------------------------------------------------------------------------------------------------------------
Utah                                 --                --               --               --                --               --
--------------------------------------------------------------------------------------------------------------------------------
Montana                               2                --                2              2.0                --               2.0
--------------------------------------------------------------------------------------------------------------------------------
Australia                            --                --               --               --                --               --
--------------------------------------------------------------------------------------------------------------------------------
TOTAL                                 2                22               24              2.0                7.2              9.2
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

ACREAGE POSITIONS

         As of March 31, 2007, we owned interests in the following developed and
undeveloped acreage positions. Undeveloped acreage refers to acreage that has
not been placed in producing units.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                              DEVELOPED                                        UNDEVELOPED
----------------------------------------------------------------------------------------------------------------------
LOCATION                        GROSS ACRES               NET ACRES               GROSS ACRES               NET ACRES
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                     <C>                 <C>                     <C>
Colorado                              480.0                   102.2                  25,759.0                19,736.8
----------------------------------------------------------------------------------------------------------------------
Utah                                      0                       0                 173,738.0               173,738.0
----------------------------------------------------------------------------------------------------------------------
Montana                                80.0                    80.0                  93,515.0                72,734.0
----------------------------------------------------------------------------------------------------------------------
Australia                                 0                       0               7,000,000.0             7,000,000.0
----------------------------------------------------------------------------------------------------------------------
TOTAL                                 560.0                   182.2               7,293,012.0             7,266,208.8
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>


SUMMARY OF DEVELOPMENT AND EXPLORATION PROJECTS AND PLAN OF OPERATIONS

         The following is an update of our production and exploration areas and
significant projects. While actively pursuing specific production and
exploration activities in each of the following areas, we continually review
additional acquisition opportunities in our core areas that meet our exploration
criteria.

HEAVY OIL PROPERTIES

         GREAT SALT LAKE, UTAH. We have 173,738 net mineral acres under lease
(covered by approximately 78 leases) on two principal properties, the West Rozel
Field and Gunnison Wedge prospect in the Great Salt lake of Utah. Careful review
of our drilling plan has resulted in planning to drill six vertical wells in the
West Rozel Field. The six wells have been sited according to geology and the
Utah State drilling regulations. Permits are being prepared for the six wells.
Site visit was conducted to meet with the land owner for access to the lake from
Little Valley Harbor.

         PetroHunter is negotiating an extension to the current acquisition
agreement due to delays caused by the previous negotiations between the Utah
government and interested parties. These negotiations are complete and this
allows for our permitting to be undertaken.

         FIDDLER CREEK, MONTANA. We have completed major geologic studies on the
23,795 net acres on four anticlines on the northern portion of the Big Horn
Basin, which extends from north central Wyoming into southern Montana. These
properties encompass significant portions of Roscoe Dome, Dean Dome, Fiddler
Creek and MacKay Domes, which we believe have significant estimated in place oil
reserves. These structures are large asymmetric anticlines with proven
production from several Cretaceous horizons; i.e., the Upper Greybull Sandstone,
the Lower Greybull Sandstone and the Pryor Sandstone. The geology studies have
identified locations that appear to have the most potential. The current program
is in Fiddler Creek for one re-completion, one vertical well and one horizontal
well; Roscoe Dome has two re-completions and one horizontal well; Dean Dome is
one re-completion and two vertical wells. As the program proceeds refinements
will be made based on results.

         PROMISED LAND, MONTANA. We have acquired 49,120 net acres in a resource
play evaluating heavy oil reservoirs in Jurassic Swift Formation and lower
Cretaceous Bow Island and Sunburst Sandstone reservoirs in north central
Montana. The Swift reservoirs were deposited in a shallow marine to estuarine
depositional setting. The Swift sandstones are commonly oil saturated in the
area, and most well tests report oil shows in the Swift. The reservoirs are up
to 60 feet thick and composed of high quality sandstone, averaging about 20
percent porosity and permeabilities range up to one Darcy. The oil gravities
range from 10o to 22o API with viscosities of 1500 centipoise to greater than
50,000 centipoise at 125oF. Additional conventional petroleum potential is
possible in Devonian Duperow and Nisku formations, and in the Mississippian
Madison Formation. We are now evaluating a seismic program to better define
locations for an initial drilling program.

         We do not have any drilling commitments with respect to this property.

         PLAN OF OPERATIONS. We anticipate that, over the next twelve months, we
will incur the following costs related to our heavy oil prospects in Montana and
Utah:

             o     $5,000,000 to $7,000.000 to add land in Montana in areas
                   where we have already completed acquisitions;


                                       25
<PAGE>

             o     $7,000,000 to $14,000,000 in connection with the Fiddler
                   Creek project, to include drilling, completion and production
                   facilities; and

             o     $15,000,000 to $21,000,000 in connection with the Great Salt
                   Lake project, to include project design, project equipment
                   procurement, site infrastructure development and initial
                   drilling.

PICEANCE BASIN, COLORADO PROPERTIES

         BUCKSKIN MESA PROJECT. A 26-square mile 3D seismic survey has been
licensed, re-processed, and interpreted to focus initial drilling in areas of
thickest pay and enhanced fracturing. We have acquired approximately 20,000 net
acres of leasehold in Rio Blanco County, Colorado. We have applied for and
received six approved drilling permits to test targets in the Cretaceous Mesa
Verde Group. We have drilled and cased our first well at Buckskin mesa, the
Anderson 6-16, with a total depth of 10,785 feet. Log analysis indicates a gross
pay interval in excess of 3,500 feet, with a net pay of 600 feet. Gas shows
during drilling averaged 3,000 units with peaks as high as 20,000 units. We have
drilled and cased the Anderson 13-19 to a total depth of 10,835 feet. This well
also had gas shows during drilling. Log analysis of the second well indicates
net pay of 572 feet.  The third well, Lake 16-21, was cased on April 9, 2007 and
has net sandstone pay of 590 feet.


         PICEANCE II PROJECT. As of March 31, 2007, we had interests in 19
producing wells, 18 wells waiting on completion, and 1 well is being drilled.

         Production is from frac-stimulated perforations in stacked sands of the
fluvial Williams Fork formation.

         On November 28, 2006, we executed a purchase and sale agreement with
Maralex Resources, inc. and Adelante oil & Gas, LLC (collectively "Maralex") for
the acquisition and development of 2,000 net acres in the Jack's Pocket Prospect
in Garfield County, Colorado. Under the terms of the agreement, an initial
payment of $100,000 was made upon execution and the balance of $2.9 million cash
and issuance of 2,428,100 shares of our common stock was due on January 15,
2007. Effective January 12, 2007, the agreement was amended to extend the
payment terms of the cash due through March 15, 2007, and increase the shares to
be issued to 3 million. These shares have been issued as of January 31, 2007.
Effective March 26, 2007, the agreement was further amended to extend the
payment terms. We are obligated to drill four wells on these leases during 2007.

         The Company has been in negotiations with an unrelated third party oil
and gas operator (the "Third Party") to exchange leasehold interests in certain
oil and gas leases in the Piceance Basin of Colorado held by the Company for
interests in certain oil and gas leases held by the Third Party in the Piceance
Basin. During the six months ended March 31, 2007, the Company had drilled, as
operator, seven wells on oil and gas leases which are subject to the above
described negotiations. The Company's record title interest in the leases on
which the seven wells were drilled is currently 15.4%. As of March 31, 2007 the
Company has recorded only its share of costs in the seven wells, based upon its
15.4% record title interest, as oil and gas properties, and has recorded the
84.6% of costs incurred on behalf of the Third Party, as Due From Joint Interest
Owner. At March 31, 2007 this amount totaled $10,618,987. In the event the
negotiations are successfully consummated the Company's interest in those leases
will increase to 100% and the balance Due From Joint Interest Owner will be
reclassified to Oil and Gas Properties. In the event the negotiations are not
successfully consummated, the Third Party will be obligated to reimburse the
Company for all costs incurred for the Third Party's 84.6% working interest.
Management believes the transaction will be successfully consummated in the
third quarter of fiscal 2007, and that the amounts


                                       26
<PAGE>


classified as Due from Joint Interest Owner at March 31, 2007 will subsequently
be reclassified to Oil and Gas Properties.

         PLAN OF OPERATIONS. We expect that the development of our Colorado
properties will include: (i) continued drilling of wells in the southern portion
of the Piceance Basin, where we expect to complete at lease 12 wells for
additional gas production, and design and construction of a two-mile low
pressure gathering system to connect these wells to market.

         Associated with the development of our Colorado properties, we
anticipate that, over the next twelve to twenty-four months, we will incur costs
of $8,000,000 to $32,000,000 to add leasehold in the Piceance II and Buckskin
mesa project areas.

AUSTRALIAN PROPERTIES

         BEETALOO BASIN. Plans are to begin drilling in the Beetaloo Basin
around July 1, 2007. To date, seven drilling locations have been identified
based on extensive geological and geophysical analysis. These locations have
been cleared through the Northern Land Council, responsible for protecting
Native Lands, and permits have been submitted to the Department of Primary
Industries, Fisheries and Mines located in Darwin, Northern Territory. Final
drilling approval is expected in May. These locations have been staked and will
be formally surveyed, also in May. Preparing drilling pads and access lines will
commence the last week of May.

         Sweetpea has signed a Letter of Intent with Century Resources to
provide a drilling rig for the drilling operations. The rig is currently
scheduled to begin mobilizing to the Beetaloo Basin on June 15, 2007. In
preparation for the drilling program, a drilling yard has been constructed in
the permit area. Casing and other necessary materials are being ordered and will
arrive before the first of June.

         From July through November of 2006, 686 kilometers of new 2D seismic
data were acquired throughout the Beetaloo Basin. Additionally, 1000 kilometers
of previously acquired 2D seismic data were reprocessed. Along, with the other
existing 1500 kilometers of 2D seismic data that have not been reprocessed,
geologic structure maps have been generated for the basin. Ongoing work is
proceeding to delineate drilling locations beyond the initial seven locations.

         The exploration drilling program for 2007 will test several play
concepts within the basin. Hydrocarbon potential exists in shallow, conventional
structures (in the form of oil), and in deeper unconventional reservoirs,
including fractured shales and basin centered gas accumulations. The
unconventional plays may be gas and/or oil. All of the exploration wells are
planned to reach a total depth in the Bessie Creek Sandstone formation. The
deepest penetration is expected to be 3000 meters.

         Sweetpea currently controls 7 million contiguous acres in the Beetaloo
Basin. Applications for another 1.5 million acres have been submitted to the
Territory's Ministry. Sweetpea owns the existing four permits.

         GIPPSLAND AND OTWAY BASINS. On November 14, 2006, we entered into an
agreement with Lakes Oil N.L. ("Lakes Oil"), under which we will jointly develop
Lakes Oil's onshore petroleum prospects (focusing on unconventional gas
resources) in the Gippsland and Otway basins in Victoria, Australia. Under an
amendment to the original agreement, completion of the agreement is scheduled
for June 30, 2007 with PetroHunter, or our subsidiary company, Sweetpea, farming
into 33-1/3 of Lakes Oil's permits by spending $7 million on exploration
efforts. In addition, we will subscribe for $3 million in new shares in Lakes
Oil at 1.5 cents (Australian). We also have the right to increase our position
in Lakes Oil's


                                       27
<PAGE>

permits with two further 16-2/3% farm-in tranches of $10 million each,
exercisable within 12 months and 24 months, respectively.

         Under the agreement, Sweetpea will be the operator of the permits, but
has signed a sub operator agreement with Lakes Oil to take advantage of their
infrastructure in Victoria.

           NORTHWEST SHELF AREA. Effective February 19, 2007, the Commonwealth
of Australia granted to Sweetpea an exploration permit in the shallow, offshore
waters of Western Australia. The permit, WA-393-P, has a six-year term and
encompasses almost 20,000 acres.

         PLAN OF OPERATIONS. In Australia we plan to explore and develop
portions of the 7,000,000 acres of the project area in the Northern Territory of
Australia (Beetaloo Basin). During 2007, we plan to drill a minimum of eight
wells in the exploration permit blocks. We anticipate that, over the next twelve
months, we will incur $45,000,000 to $60,000,000 in costs related to drilling,
well completion and a potential delineation seismic program.

         Under the agreement with Lakes Oil, we or our subsidiary company,
Sweetpea, will initially farm into 33-1/3% of Lakes Oil's permits by spending $7
million in Lakes Oil's permits. In addition, we will subscribe for $3 million in
new shares in Lakes Oil at 1.5 cents (Australian).

CURRENT FINANCING ACTIVITIES

         To fund the planned operations described above and our fixed
commitments for operating leases, delay rentals, property development fees and
consulting fees and note payments to MAB totaling approximately $2,700,000 for
the fiscal year ended September 30, 2007, we are engaging in financing
activities. On November 6, 2006, we commenced an offering of up to $125,000,000
pursuant to a private placement of units at $1.50 per unit. Each unit consisted
of one share of our common stock and one-half common stock purchase warrant. A
whole common stock purchase warrant entitled the purchaser to acquire one share
of our common stock at an exercise price of $1.88 per share through December 31,
2007. As of March 31, 2007, we had received $3,067,500 from the sale of units
pursuant to the private placement. In February 2007, our board of directors
determined that the composition of the units being offered would be
restructured, and those investors who had subscribed in the offering would be
offered the opportunity to rescind their subscriptions or to participate on the
same terms as ultimately defined for the restructured offering.


         In December 2006, PetroHunter Australia commenced the sale, pursuant to
a private placement, of up to $50,000,000 of convertible notes. As of January 8,
2007, the Company had received proceeds of $1,530,000 from the offering. In
February 2007, PetroHunter Australia terminated the offering, agreeing to refund
$30,000 to four investors, and converting $1,500,000 from one investor as the
initial funding under a Credit and Security Agreement entered into January 9,
2007, as described below.


         On January 9, 2007, we entered into a Credit and Security Agreement
(the "Financing") with Global Project Finance AG, a Swiss company, for mezzanine
financing in the amount of $15 million. The Financing provides for an interest
rate of 6.75% over prime, and is secured by a first perfected lien on the
Company's assets, limited to the specific portion of the assets to which the
loan proceeds are applied by the Company. We have applied most of the proceeds
of this loan to its drilling and development operations in the Piceance Basin,
Colorado. The terms of the Financing also provide for the issuance of warrants
to purchase 1,000,000 of our common shares upon execution of the Financing, and
an additional 200,000 warrants, for each $1 million draw down of the credit
facility up to $15 million. The warrants will be exercisable for five years
after the date of the Financing. The exercise price of the warrants will be
equal


                                       28
<PAGE>

to 120% of the weighted average price of our stock for the 30 days immediately
prior to each warrant issuance date. Global Project Finance AG and its
controlling shareholder were shareholders of the Company prior to the Credit
Agreement. As April 30, 2007, we had drawn down all $15,000,000 on the credit
facility.

         Subsequent to March 31, 2007, we received an additional $1.5 million
advance from Global Project Finance AG, in anticipation of a borrowing facility
currently being negotiated. The terms of the borrowing facility have not been
finalized as of the date of this report, but are expected to be similar to the
terms of the Financing.

LIQUIDITY AND CAPITAL RESOURCES

         We had not commenced principal operations or earned significant revenue
as of March 31, 2007, and are considered a development stage company. During the
period from inception to March 31, 2007, we incurred a cumulative net loss of
$32,782,278 and at that date have a working capital deficit of $24,744,260. In
order to fund our planned exploration and development of oil and gas properties,
we will require significant additional funding. We have sold approximately $72.5
million of notes, convertible notes and common stock from inception through
March 31, 2007, and our management believes that we will be successful in
raising additional funding to have sufficient capital to meet our obligations
for our planned operations for at least the next twelve months.

         The Company at March 31, 2007 is vastly different from its existence at
March 31, 2006. At March 31, 2006, we had been operating for approximately nine
months, had no employees, and had acquired an interest in two properties, West
Rozel and Buckskin Mesa, aggregating approximately 12,400 net mineral acres.
During the 2006 fiscal year and the first six months of the current fiscal year,
we added 16 employees, moved to offices in Denver, Colorado, and acquired an
interest in properties aggregating approximately 7,207,000 acres.

         We funded the acquisition of these properties and the increased level
of activity primarily through the sale of debt and equity securities for cash.
We also issued 8,800,000 shares, valued at $0.50 per share, as partial
consideration for the acquisition of oil and properties and as consideration for
a finder's fee on an oil and gas prospect. At March 31, 2007, we had a working
capital deficit of $24,744,260 and cash of $1,702,427. In addition, we will need
to raise additional funds for our planned operations and acquisitions.

         Prior to the acquisition of PetroHunter Operating Company in May 2006,
we entered into five separate loan agreements, aggregating $400,000, due one
year from issuance, commencing October 11, 2006. The loans bear interest at 12%
per annum, are unsecured, and are convertible, at the option of the lender at
any time during the term of the loan or upon maturity, at a price per share
equal to the closing price of our common stock on the OTC Bulletin Board on the
day preceding notice from the lender of its intent to convert the loan. As of
March 31, 2007, we were in default on payment of an aggregate of $350,000 of
notes.


         CASH USED IN OPERATING ACTIVITIES. Primarily as a result of our net
loss of $9,971,445, we used cash of $4,963,760 for six months ended March 31,
2007. See "Results of Operations" below for the discussion of our operating
expenses. The principal adjustments to reconcile the net loss to net cash used
in operating activities were stock based compensation of $3,616,724, as a result
of stock options issued to employees and consultants; depreciation, depletion,
amortization, impairment and accretion of $1,190,097; and common stock issued
for financing costs of $1,440,918. In comparison, we used $4,531,767 of cash in
operations for the six months ended March 31, 2006.



                                       29
<PAGE>

         CASH USED IN INVESTING ACTIVITIES. We used cash of $19,038,791 in
investing activities during the six months ended March 31, 2007, primarily for
our additions to our oil and gas properties of $5,556,386, costs incurred on
behalf of joint interest owners of $10,618,987, and deposits on oil and gas
property acquisitions of $2,243,777. Depending on the outcome of current
negotiations with third party joint interest owners, the amount expended on
behalf of the joint interest owner will either be reclassified to additions to
oil and gas properties, or will be collected in the form of cash payments from
the joint interest owner. We also used $525,000 for restricted cash, which are
certificates of deposit underlying letters of credit for exploration permits,
state and local bonds and guarantees to vendors. During the six months ended
March 31, 2006, we used $7,847,782 for additions to oil and gas properties.

         We currently anticipate our capital budget will be approximately
between $165 and $260 million for the period ending December 31, 2007, which we
plan to use for a diverse portfolio of development and exploration wells in our
core areas of operation. If we are unable to obtain capital through the sale of
our securities or a credit facility or otherwise, our ability to execute our
development plans could be greatly limited. We may consider selling down a
portion of our interests in some of our exploration and development projects to
industry partners to generate additional funds to finance our 2007 capital
budget.

         CASH PROVIDED BY FINANCING ACTIVITIES. Cash provided by financing
activities in the six months ended March 31, 2007 consisted of proceeds from
promissory notes sold under a Credit and Security Agreement of $12,500,000 and
proceeds from the sale of units in our private placement shares for gross
proceeds of $3,067,500. Total cash provided by financing activities was
$15,073,202, resulting in cash of $1,702,427 at March 31, 2007.

         It is anticipated that the continuation and future development of our
business will require additional, substantial, capital expenditures. We believe
cash flow from our existing producing wells and wells soon to be connected will
provide sufficient funds to meet our ongoing administration and operating
expenditures; however, our capital expenditure budget for the period ending
December 31, 2007 will depend on our success in selling additional prospects for
cash, the level of industry participation in our exploration projects, the
availability of debt or equity financing, and the results of our activities. We
anticipate spending approximately between $165 and $260 million on exploration
and development activities during the period ending December 31, 2007. To limit
capital expenditures, we may form industry alliances and exchange an appropriate
portion of our interest for cash and/or a carried interest in our exploration
projects. We may need to raise additional funds to cover capital expenditures.
These funds may come from cash flow, equity or debt financings, a credit
facility, or sales of interests in our properties, although there is no
assurance additional funding will be available or that it will be available on
satisfactory terms.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31, 2006

         OIL AND GAS REVENUES. We generated our first revenues during the last
quarter of our fiscal year ending September 30, 2006 from initial testing and
production of natural gas wells in the Piceance Basin of Colorado. Revenues
increased significantly for the quarter ended March 31, 2007 as the 12 wells,
which had commenced production in late 2006, produced for the entire three-month
period and 8 additional wells recorded initial production during the period. We
sold 495,764 mcf of natural gas and 3,485 barrels of oil, generating $3,359,598
($5.59/mcf and $54.13/bbl) of production revenues for the three months ended
March 31, 2007, as compared to none for the three months ended March 31, 2006.
We recorded lease operating expenses of $644,828 ($1.25/mcfe) and depreciation,
depletion and amortization (DD&A) expense of $508,953 ($0.98/mcfe) for the 2007
period.


                                       30
<PAGE>

         GENERAL AND ADMINISTRATIVE. Due to the substantially increased level of
activity during the three months ended March 31, 2007 as compared to the three
months ended March 31, 2006, general and administrative expenses increased by
$3,169,575 or 274%.

         For the quarters ended March 31, 2007 and 2006, we recorded general and
administrative costs of $4,327,573 and $1,157,998, respectively, as summarized
below:

-------------------------------------------------------------------------------
                                                THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------------------------------
                                               2007                    2006
-------------------------------------------------------------------------------
Consulting fees                           $     367,539          $     222,688
-------------------------------------------------------------------------------
Insurance                                        76,613                  3,040
-------------------------------------------------------------------------------
Investor relations                              151,464                273,555
-------------------------------------------------------------------------------
Legal                                           431,680                278,675
-------------------------------------------------------------------------------
Salaries                                        597,954                      -
-------------------------------------------------------------------------------
Stock based compensation                      2,055,591                300,678
-------------------------------------------------------------------------------
Travel and entertainment                        313,160                 59,151
-------------------------------------------------------------------------------
Director fees                                    22,500                      -
-------------------------------------------------------------------------------
Office lease and expenses                       155,649                 12,708
-------------------------------------------------------------------------------
Audit and accounting                            114,601                  5,912
-------------------------------------------------------------------------------
Other expenses                                   40,822                  1,591
-------------------------------------------------------------------------------
                                          $   4,327,573          $   1,157,998
-------------------------------------------------------------------------------

    o    Consulting fees increased in 2007 due the significant growth of the
         business after successful completion of fund raising activities and the
         increased use of consultants for fundraising activities, shareholder
         relations, and corporate activities.
    o    Insurance increased due to medical insurance benefits provided for
         employees, cost of insurance to cover office furnishings and equipment,
         and directors and officers insurance.
    o    Investor relations decreased in 2007 compared to 2006 when we were in
         the process of becoming a public company through the Stock Exchange in
         May 2006.
    o    Legal expenses increased in 2007 due to growth of the business,
         particularly with regard to new financings, the renegotiation of the
         MAB Acquisition and Consulting Agreement, and the costs of public
         company reporting and compliance.
    o    Increased salary expense in 2007 reflects the fact we had no employees
         at March 31, 2006 compared to 16 employees as of March 31, 2007.
    o    Increased stock based compensation expense in 2007 reflects
         significantly more options granted and vested as of March 31, 2007 as
         compared to March 31, 2006.
    o    Increased travel and entertainment expenses reflect the growth of the
         business, the level of operational activity both domestically and in
         Australia, and the increases in staff.
    o    Increased director fees reflect compensation paid to three outside
         directors in 2007 versus none in 2006.
    o    Increased office expenses reflects costs of our existing offices in
         Denver and Salt Lake City in 2007.
         In 2006, the Company had no office facilities.
    o    Increased accounting and audit fees reflect the growth of the business,
         complexity of the transactions entered into and the resultant audit and
         review requirements subsequent to becoming a public reporting entity
         effective May 2006.


                                       31
<PAGE>

         PROPERTY DEVELOPMENT - RELATED. During the three months ended March 31,
2006, we incurred $820,000 in property development costs to MAB, as compared to
$0 in 2007. This reduction follows the execution of the new Acquisition and
Consulting Agreement with MAB, which was effective January 1, 2007, under which
we no longer incur property development costs to MAB.


         DEPRECIATION, DEPLETION, AMORTIZATION, IMPAIRMENT AND ACCRETION
EXPENSE. We recorded depreciation on furniture and fixtures of $43,555,
depletion of oil and gas properties of $508,953, and accretion of asset
retirement obligation (ARO) of $662 during the three months ended March 31,
2007. For the corresponding period of 2006 we incurred no such expenses, due to
the early stage of our business and having no revenue from oil and gas
operations.



         OPERATING EXPENSES.  Total operating expenses for 2007 were $5,600,571,
as compared to $1,977,998 in 2006.


         INTEREST EXPENSE. We incurred interest and financing expenses of
$1,881,994 for 2007, as compared to $499,225 for 2006. The increase in 2007
relates primarily to financing costs paid in common stock to extend the payment
terms of pending acquisitions of oil and gas properties of $1,133,668 in 2007
compared to none in 2006.


         NET LOSS. As a result of the expenses described above, we incurred a
loss of $4,116,637 for 2007 as compared to $2,477,223 for 2006, increasing the
loss accumulated since inception to $32,782,278.


SIX MONTHS ENDED MARCH 31, 2007 COMPARED TO SIX MONTHS ENDED MARCH 31, 2006

         OIL AND GAS REVENUES. During the six months ended March 31, 2007 we
sold 637,993 mcf of natural gas and 4,069 barrels of oil, generating $3,808,474
($5.62/mcf and $54.29/bbl) of production, as compared to none for the six months
ended March 31, 2006. We recorded lease operating expenses of $806,628
($1.22/mcfe) and DD&A of $58,721 ($0.84/mcfe) for the 2007 period.

         GENERAL AND ADMINISTRATIVE. Due to the substantially increased level of
activity during the six months ended March 31, 2007 as compared to the six
months ended March 31, 2006, general and administrative expenses increased by
$6,129,319 or 328%.

         For the six months ended March 31, 2007 and 2006, we recorded general
and administrative costs of $7,998,571 and $1,869,252, respectively, as
summarized below:

-----------------------------------------------------------------------------
                                               SIX MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------------
                                               2007                 2006
-----------------------------------------------------------------------------
Consulting fees                            $    603,313         $    505,579
-----------------------------------------------------------------------------
Insurance                                       145,737               11,367
-----------------------------------------------------------------------------
Investor relations                              431,911              307,420
-----------------------------------------------------------------------------
Legal                                           620,812              349,826
-----------------------------------------------------------------------------
Salaries                                      1,152,096                    -
-----------------------------------------------------------------------------
Stock based compensation                      3,616,724              506,356
-----------------------------------------------------------------------------
Travel and entertainment                        779,253              120,510
-----------------------------------------------------------------------------
Director fees                                    33,000                    -
-----------------------------------------------------------------------------
Office lease and expenses                       327,731               28,196
-----------------------------------------------------------------------------
Audit and accounting                            177,221               35,912
-----------------------------------------------------------------------------
Other expenses                                  110,773                4,086
-----------------------------------------------------------------------------
                                           $  7,998,571         $  1,869,252
-----------------------------------------------------------------------------


                                       32
<PAGE>


    o    Consulting fees increased in 2007 due the significant growth of the
         business and the increased use of consultants for fundraising
         activities and shareholder relations.
    o    Insurance increased due to medical insurance benefits provided for
         employees and cost of insurance to cover office furnishings and
         equipment, and directors and offices insurance coverage.
    o    Investor relations increased in 2007 compared to 2006, particularly in
         the first fiscal quarter of 2007 during which time we employed several
         investor relations consultants to present our business plans to
         potential investors as part of fundraising efforts.
    o    Legal expenses increased in 2007 due to growth of the business,
         particularly with regard to new financings, the renegotiation of the
         MAB Acquisition and Consulting Agreement, and the incremental costs of
         public company reporting and compliance.
    o    Increased salary expense in 2007 reflects the fact we had no employees
         at March 31, 2006 compared to 16 employees as of March 31, 2007.
    o    Increased stock based compensation expense in 2007 reflects
         significantly more options granted and vested as of March 31, 2007 as
         compared to March 31, 2006.
    o    Increased travel and entertainment expenses reflect the growth of the
         business, the level of operational activity both domestically and in
         Australia, and the increases in professional staff. Additional travel
         of staff was required during the fundraising activities discussed
         above.
    o    Increase in director fees reflects compensation paid to three outside
         directors in 2007 versus none in 2006.
    o    Increased office expenses reflect costs of our existing offices in
         Denver and Salt Lake City in 2007 In 2006, the Company had no office
         facilities
    o    Increased accounting and audit fees reflect the growth of the business,
         complexity of the transactions entered into and the resultant audit
         review requirements.

         PROPERTY DEVELOPMENT - RELATED. During the six months ended March 31,
2007, we incurred $1,815,000 in property development costs to MAB, as compared
to $1,520,000 in 2006. The increase reflects costs associated with additional
properties acquired in the second half of fiscal 2006. All 2007 costs were
incurred in the first three months of fiscal 2007. Effective January 1, 2007, we
executed a new Acquisition and Consulting Agreement with MAB under which we no
longer incur property development costs to MAB.

         DEPRECIATION, DEPLETION, AMORTIZATION, IMPAIRMENT AND ACCRETION
EXPENSE. We recorded depreciation on furniture and fixtures of $80,097,
depletion of oil and gas properties of $558,405, impairment expenses of
$550,790, and accretion of ARO of $805 during the six months ended March 31,
2007. For the corresponding period of 2006 we incurred no such expenses, due to
the early stage of our business.

         OPERATING EXPENSES.  Total operating expenses for 2007 were
$11,885,296, as compared to $3,389,252 in 2006.

         INTEREST EXPENSE. We incurred interest and financing expenses of
$1,909,012 for 2007, as compared to $686,660 for 2006. The increase relates
primarily to financing costs paid in common stock to extend the payment terms of
pending acquisitions of oil and gas properties of $1,133,668 in 2007 compared to
none in 2006.

GOING CONCERN

         We have incurred a cumulative net loss $32,782,278 for the period from
inception to March 31, 2007 and at March 31, 2007 have a working capital deficit
of $24,744,260. We require significant

                                       33
<PAGE>

additional funding to sustain our operations and satisfy our contractual
obligations for our planned oil and gas exploration and development operations.
Our ability to establish the Company as a going concern is dependent upon our
ability to obtain additional financing, in order to fund our planned operations
and ultimately, to achieve profitable operations.

OFF-BALANCE SHEET ARRANGEMENTS

         From time to time, we enter into off-balance sheet arrangements and
transactions that can give rise to off-balance sheet obligations. As of March
31, 2007, the off-balance sheet arrangements and transactions that we have
entered into include operating lease agreements. We do not believe that these
arrangements are reasonably likely to materially affect our liquidity or
availability of, or requirements for, capital resources.

SCHEDULE OF CONTRACTUAL OBLIGATIONS

         The following table summarizes our obligations and commitments to make
future payments under our notes payable, operating leases, employment contracts
and consulting agreement for the periods specified as of March 31, 2007.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                PAYMENTS DUE BY PERIOD
------------------------------------------------------------------------------------------------------------------------------------
                                                                         LESS THAN                                         MORE THAN
    CONTRACTUAL OBLIGATIONS (1)<F1>                       TOTAL           1 YEAR          1-3 YEARS        3-5 YEARS        5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>              <C>              <C>                <C>
Convertible Notes Payable
   Principal                                          $    400,000     $   400,000      $          -     $          -       $     -
   Interest                                                 48,000          48,000                 -                -             -
Notes Payable Principal & Interest
      Related Party (2)<F2>                             14,919,778       3,738,110         6,220,660        4,961,008             -
      Other                                             17,063,082       2,174,383        14,888,699                -             -


------------------------------------------------------------------------------------------------------------------------------------
Office, Equipment Leases & Other                           830,388         185,907           389,129          255,352             -
------------------------------------------------------------------------------------------------------------------------------------
TOTAL                                                 $ 33,261,248     $ 6,546,400      $ 21,498,488     $  5,216,360       $     -
------------------------------------------------------------------------------------------------------------------------------------
--------------------
<FN>
(1)<F1>  We have excluded asset retirement obligations because we are not able
         to precisely predict the timing for these amounts.

(2)<F2>  Interest payments were calculated using actual interest rates charged
         through March 31, 2007 and 5.44% thereafter.
</FN>
</TABLE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our Financial
Statements.

         OIL AND GAS PROPERTIES. We utilize the full cost method of accounting
for oil and gas activities. Under this method, subject to a limitation based on
estimated value, all costs associated with property acquisition, exploration and
development, including costs of unsuccessful exploration, are capitalized within
a cost center. No gain or loss is recognized upon the sale or abandonment of
undeveloped or producing oil and gas properties unless the sale represents a
significant portion of oil and gas properties and the gain significantly alters
the relationship between capitalized costs and proved oil and gas reserves


                                       34
<PAGE>

of the cost center. Depreciation, depletion and amortization of oil and gas
properties are computed on the units of production method based on proved
reserves. Amortizable costs include estimates of future development costs of
proved undeveloped reserves.

         Capitalized costs of oil and gas properties may not exceed an amount
equal to the present value, discounted at 10%, of the estimated future net cash
flows from proved oil and gas reserves plus the cost, or estimated fair market
value, if lower, of unproved properties. Should capitalized costs exceed this
ceiling, an impairment is recognized. The present value of estimated future net
cash flows is computed by applying year end prices of oil and natural gas to
estimated future production of proved oil and gas reserves as of year end, less
estimated future expenditures to be incurred in developing and producing the
proved reserves and assuming continuation of existing economic conditions. As of
March 31, 2007, we have no proved reserves, have received revenue from testing
and production on our initial wells, and all oil and gas property costs are
considered to be unevaluated and are recorded at the lower of cost or estimated
fair market value.

         ASSET RETIREMENT OBLIGATION. We apply SFAS 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement requires companies to record
the present value of obligations associated with the retirement of tangible
long-lived assets in the period in which it is incurred. The liability is
capitalized as part of the related long-lived asset's carrying amount. Over
time, accretion of the liability is recognized as an operating expense and the
capitalized cost is depreciated over the expected useful life of the related
asset. Asset retirement obligations ("ARO") relate primarily to the plugging,
dismantlement, removal, site reclamation and similar activities of its oil and
gas properties. At March 31, 2007, we had recorded an ARO of $326,103 for our
initial wells under progress.

         SHARE BASED COMPENSATION. On October 1, 2005, we adopted SFAS 123(R),
"Accounting for Stock-Based Compensation," using the modified prospective
method, which results in the provisions of SFAS 123(R) being applied to the
consolidated financial statements on a going-forward basis. Prior periods have
not been restated. SFAS 123(R) requires companies to recognize share-based
payments to employees as compensation expense on a fair value method. Under the
fair value recognition provisions of SFAS 123(R), stock-based compensation cost
is measured at the grant date based on the fair value of the award and is
recognized as expense over the service period, which generally represents the
vesting period. The expense recognized over the service period is required to
include an estimate of the awards that will be forfeited. Previously, no such
forfeitures have occurred. We are assuming no forfeitures going forward based on
our historical forfeiture experience. The fair value of stock options is
calculated using the Black-Scholes option-pricing model.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). The interpretation clarifies the accounting for uncertainty in income
taxes recognized in a company's financial statements in accordance with SFAS
109, "Accounting for Income Taxes." Specifically, the pronouncement prescribes a
recognition threshold and a measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The interpretation also provides guidance on the related
derecognition, classification, interest and penalties, accounting for interim
periods, disclosure and transition of uncertain tax positions. The
interpretation will be effective for the fiscal year beginning October 1, 2007
for the Company. The adoption of FIN 48 is not expected to have a material
impact on our consolidated financial position, results of operations and cash
flows.


                                       35
<PAGE>

         In September 2006, the FASB issued SFAS 157, "Fair Value Measurements."
This Statement defines fair value as used in numerous accounting pronouncements,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosure related to the use of fair value
measures in financial statements. The Statement is to be effective for the
Company's financial statements issued in 2009; however, earlier application is
encouraged. We are currently evaluating the timing of adoption and the impact
that adoption might have on our financial position or results of operations.

          In September 2006, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 108 ("SAB 108"). Due to diversity in
practice among registrants, SAB 108 expresses SEC staff views regarding the
process by which misstatements in financial statements are evaluated for
purposes of determining whether financial statement restatement is necessary.
SAB 108 was effective for the Company on October 1, 2006. The adoption of SAB
108 had no impact on our financial position or results from operations.

         In December 2006, the FASB issued FASB Staff Position ("FSP") EITF
00-19-2, "Accounting for Registration Payment Arrangements." This FSP specifies
that the contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement should be separately
recognized and measured in accordance with FASB Statement No. 5, "Accounting for
Contingencies." This FSP is effective immediately for registration payment
arrangements and the financial instruments subject to those arrangements that
are entered into or modified subsequent to December 21, 2006. For registration
payment arrangements and financial instruments subject to those arrangements
that were entered into prior to December 21, 2006, the guidance in the FSP will
be effective for the fiscal year beginning October 1, 2007 for the Company. The
adoption of this FSP is not expected to have a material impact on our financial
position or results from operations.

         On February 15, 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities." This Statement
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. SFAS No. 159 is effective for our
financial statements issued in 2009. We are currently evaluating the impact that
the adoption of SFAS No. 159 might have on our financial position or results of
operations.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our primary market risk relates to changes in the pricing applicable to
the sales of gas production in the Piceance Basin in Colorado. This risk will
become more significant to us as our production increases in this area. Although
we are not using derivatives at this time to mitigate the risk of adverse
changes in commodity prices, we may consider using them in the future.







                                       36

<PAGE>


ITEM 4.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         As of the end of the period covered by this report, our management
carried out an evaluation, under the supervision and with the participation of
our principal executive officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
Based on this evaluation, our principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures
lack adequate staff and procedures in order to be effective. Subsequent to the
end of the period covered by this report we have implemented procedures to
remediate this control deficiency by completing the implementation of an
accounting system designed for oil and gas producing companies and will be
hiring additional staff.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

         In connection with the evaluation of our internal controls during our
last fiscal quarter, our principal executive officer and principal financial
officer have determined that there have been no changes to our internal controls
over financial reporting that has materially affected, or is reasonably likely
to materially affect, our internal controls over financial reporting.



















                                       37
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Not Applicable.

ITEM 1A. RISK FACTORS

There were no material changes from the risk factors disclosed in our Form
10-KSB for the fiscal year ended September 30, 2006.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2007, a wholly-owned subsidiary of the
registrant, PetroHunter Australia Ltd., sold convertible notes in the aggregate
amount of $25,000 to three accredited investors pursuant to the exemption from
registration contained in Rule 506 of Regulation D.

The registrant sold 986,667 units, each unit consisting of one share of common
stock and one-half common stock purchase warrant, to four accredited investors
pursuant to the exemption from registration contained in Rule 506 of Regulation
D. No underwriters were used.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

ITEM 5.  OTHER INFORMATION

Not Applicable.

ITEM 6.  EXHIBITS

--------------------------------------------------------------------------------
REGULATION
   S-K
  NUMBER                                EXHIBIT
--------------------------------------------------------------------------------
    2.1        Stock Exchange Agreement dated February 10, 2006 by and among
               Digital Ecosystems Corp., GSL Energy Corporation, MABio Materials
               Corporation and MAB Resources LLC (incorporated by reference to
               Exhibit 10.8 to the Company's quarterly report on Form 10-QSB for
               the quarter ended December 31, 2005, filed February 16, 2006)
--------------------------------------------------------------------------------
    2.2        Amendment No. 1 to Stock Exchange Agreement dated March 31, 2006
               (incorporated by reference from Exhibit 10.1 to the Company's
               current report on Form 8-K dated March 31, 2006, filed April 7,
               2006)
--------------------------------------------------------------------------------


                                       38
<PAGE>
--------------------------------------------------------------------------------
REGULATION
   S-K
  NUMBER                                EXHIBIT
--------------------------------------------------------------------------------
    2.3        Amendment No. 5 to Stock Exchange Agreement dated May 12, 2006
               (incorporated by reference from Exhibit 10.1 to the Company's
               current report on Form 8-K dated May 12, 2006, filed May 15,
               2006)
--------------------------------------------------------------------------------
    2.4        Purchase and Sale Agreement dated December 29, 2006 between
               Dolphin Energy Corporation and Galaxy Energy Corporation and
               PetroHunter Operating Company and PetroHunter Energy Corporation
               (incorporated by reference to Exhibit 2.1 to the Company's
               current report on Form 8-K dated December 29, 2006, filed January
               4, 2007)
--------------------------------------------------------------------------------
    2.5        Second Amendment to Purchase and Sale Agreement dated February
               28, 2007 (incorporated by reference to Exhibit 2.2 to the
               Company's amended current report on Form 8-K dated December 29,
               2006, filed March 2, 2007)
--------------------------------------------------------------------------------
    2.6        Partial Assignment of Contract and Guarantee between PetroHunter
               Energy Corporation, PetroHunter Operating Company and MAB
               Resources LLC, dated March 21, 2007 (incorporated by reference to
               Exhibit 2.1 to the Company's current report on Form 8-K dated
               March 21, 2007, filed March 22, 2007)
--------------------------------------------------------------------------------
    2.7        Third Amendment to Purchase and Sale Agreement dated March 30,
               2007 (incorporated by reference to Exhibit 2.3 to the Company's
               amended current report on Form 8-K dated December 29, 2006, filed
               April 2, 2007)
--------------------------------------------------------------------------------
    2.8        Fourth Amendment to Purchase and Sale Agreement dated April 30,
               2007 (incorporated by reference to Exhibit 2.4 to the Company's
               amended current report on Form 8-K dated December 29, 2006, filed
               May 1, 2007)
--------------------------------------------------------------------------------
    3.1        Articles of Incorporation (incorporated by reference to Exhibit A
               to the Information Statement filed July 17, 2006)
--------------------------------------------------------------------------------
    3.2        Bylaws (incorporated by reference to Exhibit B to the Information
               Statement filed July 17, 2006)
--------------------------------------------------------------------------------
   10.1        Business Consultant Agreement dated October 1, 2005 (incorporated
               by reference to Exhibit 10.1 to the Company's current report on
               Form 8-K dated October 1, 2005, filed October 28, 2005)
--------------------------------------------------------------------------------
   10.2        Marketing Management Contract dated October 15, 2005
               (incorporated by reference to Exhibit 10.1 to the Company's
               current report on Form 8-K dated October 1, 2005, filed October
               28, 2005)
--------------------------------------------------------------------------------
   10.3        Loan Agreement with Carnavon Trust Reg. Dated for reference
               October 11, 2005 (incorporated by reference to Exhibit 10.3 to
               the Company's quarterly report on Form 10-QSB for the quarter
               ended September 30, 2005, filed November 21, 2005)
--------------------------------------------------------------------------------
   10.4        Loan Agreement with Carnavon Trust Reg. Dated for reference
               December 5, 2005 (incorporated by reference to Exhibit 10.6 to
               the Company's quarterly report on Form 10-QSB for the quarter
               ended December 31, 2005, filed February 16, 2006)
--------------------------------------------------------------------------------


                                       39
<PAGE>
--------------------------------------------------------------------------------
REGULATION
   S-K
  NUMBER                                EXHIBIT
--------------------------------------------------------------------------------
   10.5        Loan Agreement with Carnavon Trust Reg. Dated for reference
               February 2, 2006 (incorporated by reference to Exhibit 10.7 to
               the Company's quarterly report on Form 10-QSB for the quarter
               ended December 31, 2005, filed February 16, 2006)
--------------------------------------------------------------------------------
   10.6        2005 Stock Option Plan (incorporated by reference from Exhibit
               4.1 to the Company's annual report Form 10-KSB for the fiscal
               year ending March 31, 2006, filed on July 14, 2006)
--------------------------------------------------------------------------------
   10.7        Management and Development Agreement Between MAB Resources LLC
               and GSL Energy Corporation (Amended and Restated) Effective
               July 1, 2005 (incorporated by reference from Exhibit 10.4 to the
               Company's annual report Form 10-KSB for the fiscal year ending
               March 31, 2006, filed on July 14, 2006)
--------------------------------------------------------------------------------
   10.8        Acquisition and Consulting Agreement between MAB Resources LLC
               and PetroHunter Energy Corporation Effective January 1, 2007
               (incorporated by reference to Exhibit 10.1 to the Company's
               amended current report on Form 8-K dated January 9, 2007, filed
               May 4, 2007)
--------------------------------------------------------------------------------
   10.9        Credit and Security Agreement dated as of January 9, 2007 between
               PetroHunter Energy Corporation and PetroHunter Operating Company
               and Global Project Finance AG (incorporated by reference to
               Exhibit 10.2 to the Company's current report on Form 8-K dated
               January 9, 2007, filed January 11, 2007)
--------------------------------------------------------------------------------
   31.1        Rule 13a-14(a) Certification of Thomas Ahlbrandt
--------------------------------------------------------------------------------
   31.2        Rule 13a-14(a) Certification of Carmen J. Lotito
--------------------------------------------------------------------------------
   32.1        Certification of Thomas Ahlbrandt Pursuant to 18 U.S.C. Section
               1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
               Act Of 2002
--------------------------------------------------------------------------------
   32.2        Certification of Carmen J. Lotito Pursuant to 18 U.S.C. Section
               1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
               Act Of 2002
--------------------------------------------------------------------------------









                                       40

<PAGE>
                                   SIGNATURES

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

                                       PETROHUNTER ENERGY CORPORATION
                                       (REGISTRANT)


Date:  June 12, 2007                   By: /s/ CARMEN J. LOTITO
                                          --------------------------------------
                                          Carmen J. Lotito
                                          Chief Financial Officer and Treasurer
                                          (Principal Financial Officer and
                                          Principal Accounting Officer)























                                       41