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

                                   FORM 10-QSB

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

     For the quarterly period ended March 31, 2005

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

                              For the transition period from      to

                        Commission file number 333-118902

                          SIBERIAN ENERGY GROUP, INC.
                          ---------------------------
      (Exact name of the small business issuer as specified in its charter)

          Nevada                                     52-2207080
          ------                                     ----------
(State of incorporation)                 (IRS Employer Identification No.)

          275 Madison Ave, 6th Floor, New York, NY 10016, USA
          ---------------------------------------------------
                    (Address of principal executive offices)

                                 (212) 828-3011
                                 --------------
                           (Issuer's telephone number)

                                      N/A
                                      ---
   (Former name, former address and former fiscal year, if changed since last
                                    report)

                                      NONE

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

At May 12, 2005, there were outstanding 18,805,771 shares of the Issuer's common
stock, $.001 par value per share.

Transitional Small Business Disclosure Format:  Yes [ ] No [X]

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS.


                           SIBERIAN ENERGY GROUP INC.
                          (A DEVELOPMENT STAGE COMPANY)

                             CONDENSED CONSOLIDATED
                               FINANCIAL STATEMENTS

                                 MARCH 31, 2005

<PAGE>

403 Main St., Suite 430
Buffalo, NY  14203
716-856-3300 / fax: 856-2524                      LUMSDEN & MCCORMICK, LLP
www.lumsdencpa.com                                  CERTIFIED PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Siberian Energy Group Inc.

We  have  reviewed  the  accompanying  condensed  consolidated  balance sheet of
Siberian  Energy  Group Inc. (a development stage company) as of March 31, 2005,
and  the  related condensed consolidated statements of operations, stockholders'
equity,  and  cash flows for the three months ended March 31, 2005 and 2004, and
the  cumulative  period  of  development stage activity (January 1, 2003 through
March  31,  2005).   These  financial  statements  are the responsibility of the
Company's  management.

We  conducted  our  review  in  accordance  with standards of the Public Company
Accounting  Oversight  Board  (United  States).  A  review  of interim financial
information  consists principally of applying analytical procedures to financial
data  and  making  inquiries of persons responsible for financial and accounting
matters.  It  is  substantially  less  in  scope  than  an  audit  conducted  in
accordance  with  the  auditing  standards  of  the  Public  Company  Accounting
Oversight  Board,  the  objective  of  which  is  the  expression  of an opinion
regarding  the  financial  statements  taken as a whole.  Accordingly, we do not
express  such  an  opinion.

Based  on our review, we are not aware of any material modifications that should
be  made  to the accompanying interim financial statements referred to above for
them  to  be  in conformity with accounting principles generally accepted in the
United  States  of  America.

We  have previously audited, in accordance with auditing standards of the Public
Company  Accounting  Oversight  Board,  the  consolidated  balance  sheet  as of
December  31,  2004,  and  the  related  consolidated  statements  of income and
retained earnings and cash flows for the year then ended (not presented herein);
and  in  our report dated February 25, 2005, we expressed an unqualified opinion
on those financial statements.  In our opinion, the information set forth in the
accompanying  condensed  consolidated  balance  sheet as of December 31, 2004 is
fairly  stated,  in all material respects, in relation to the balance sheet from
which  it  has  been  derived.

/s/ Lumsden & McCormick, LLP

Lumsden & McCormick, LLP
Buffalo, New York
May 11, 2005


<PAGE>

<TABLE>
<CAPTION>

SIBERIAN ENERGY GROUP INC. (A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS                              (UNADUDITED)
                                                                     MARCH 31,    December 31,
                                                                       2005          2004
<S>                                                                     <C>           <C>
ASSETS
CURRENT ASSETS:
  Cash                                                             $    59,710   $         -
  Prepaid expenses and other                                           134,692       135,052
                                                                   -----------   -----------
                                                                       194,402       135,052
                                                                   -----------   -----------

Geological data, net                                                   750,000       750,000

Oil and gas properties, unproved                                       738,666       734,218

Licenses, net                                                           99,458       108,499

Property and equipment, net                                              1,477         1,820
                                                                   -----------   -----------

                                                                   $ 1,784,003   $ 1,729,589
                                                                   -----------   -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable:
    Related party - stockholders                                   $   535,932   $   517,191
    Others                                                           1,000,588       968,338
  Accrued payroll                                                      895,383       773,524
  Option deposit                                                       100,000             -
                                                                   -----------   -----------
                                                                     2,531,903     2,259,053
                                                                   -----------   -----------

STOCKHOLDERS' EQUITY:
  Common stock - authorized 100,000,000 shares, $.001 par value,
    18,805,771 and 18,805,771 issued and outstanding                    18,806        18,806
  Additional paid-in capital                                         1,212,349     1,210,718
  Accumulated deficit
    Pre-development stage                                             (449,785)     (449,785)
    Development stage                                               (1,479,617)   (1,256,083)
  Accumulated other comprehensive income (loss)                        (49,653)      (53,120)
                                                                   -----------   -----------
                                                                      (747,900)     (529,464)
                                                                   -----------   -----------

                                                                   $ 1,784,003   $ 1,729,589
                                                                   -----------   -----------
</TABLE>

See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>

SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
                                                                              For the
       CONSOLIDATED STATEMENTS OF OPERATIONS                                cumulative
                                                                             period of
                                                                            Development
                                                                           Stage Activity-
                                                     For the three         January 1, 2003
                                                      months ended            through
                                               MARCH 31,       March 31,      March 31,
                                               -------------------------
                                                   2005           2004         2005
<S>                                                 <C>           <C>           <C>
Revenues                                       $         -   $         -   $         -
Expenses:
  Salaries                                         121,918       125,702       890,086
  Professional and consulting fees                  38,348        10,000       257,056
  Rent and occupancy                                24,131         9,821        80,145
  Depreciation and amortization                      9,384         9,288        83,430
  Other                                             29,753        23,659       168,900
                                               ------------  ------------  ------------
    Total expenses                                 223,534       178,470     1,479,617
                                               ------------  ------------  ------------

    Loss before income taxes                       223,534       178,470     1,479,617

Provision for income taxes (benefit)                     -             -             -
                                               ------------  ------------  ------------

    Net loss (development stage)               $   223,534   $   178,470   $ 1,479,617
                                               ------------  ------------  ------------

Basic and diluted loss per common share        $     (0.01)  $     (0.02)  $     (0.11)
                                               ------------  ------------  ------------

Weighted average number of basic and diluted
  common shares outstanding                     18,805,771    11,805,771    13,828,548
                                               ------------  ------------  ------------

</TABLE>

See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>

SIBERIAN ENERGY GROUP INC. (A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the cumulative period of Development Stage Activity - January 1, 2003 through
March 31, 2005

                                                             Common Stock
                                                 -----------------------------------
                                                                          Additional
                                                    Number of              Paid-In
                                                     Shares    Par Value   Capital
                                                 -----------------------------------
<S>                                                    <C>       <C>        <C>
Balance, January 1, 2003 (pre-development stage)   9,805,771  $ 9,806  $  425,292

Loss for the year - 2003                                   -        -           -

Shares issued in acquisition                       2,000,000    2,000      (2,000)
                                                 -----------------------------------

  Balance, December 31, 2003                      11,805,771   11,806     423,292
                                                 -----------------------------------

Loss for the year - 2004                                   -        -           -

Foreign currency translation adjustment                    -        -           -

Shares issued in acquisition                       6,900,000    6,900     743,100

Shares issued for professional services              100,000      100       9,900

Other                                                      -        -      34,426
                                                 -----------------------------------

  Balance, December 31, 2004                      18,805,771   18,806   1,210,718
                                                 -----------------------------------

Loss for three months - 2003                               -        -           -

Foreign currency translation adjustment                    -        -           -

Other                                                      -        -       1,631
                                                 -----------------------------------

  Balance, March 31, 2005                         18,805,771  $18,806  $1,212,349
                                                 -----------------------------------

</TABLE>

See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>

              Accumulated
                 Other
Accumulated  Comprehensive            Comprehensive
Deficit      Income (Loss)     Total      Loss
---------------------------------------------------
<S>              <C>         <C>          <C>

(449,785)    $       -   $ (14,687)

(422,516)             -    (422,516)  $(422,516)
---------------------------------------------------

-                     -           -
------------------------------------

(872,301)             -    (437,203)
------------------------------------

(833,567)             -    (833,567)

-               (53,120)    (53,120)  $(886,687)
---------------------------------------------------

-                     -     750,000

-                     -      10,000

-                     -      34,426
------------------------------------

(1,705,868)     (53,120)   (529,464)
---------------------------------------------------

(223,534)      (223,534)

-                 3,467       3,467   $(220,067)
---------------------------------------------------

-                     -       1,631
---------------------------------------------------

(1,929,402)  $ (49,653)  $(747,900)
-----------------------------------

</TABLE>

See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>

SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
                                                                              For the
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             cumulative
                                                                             period of
                                                                            Development
                                                                           Stage Activity-
                                                         For the three     January 1, 2003
                                                         months ended          through
                                                  ------------------------
                                                    MARCH 31,    March 31,    March 31,
                                                      2005         2004          2005
<S>                                                    <C>          <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss (development stage)                     $(223,534)  $(164,356)  $(1,479,617)
  Depreciation and amortization                        9,384       9,288        83,430
  Common stock issued for professional services            -           -        10,000
  Changes in other current assets and
    current liabilities:
      Prepaid expenses and other                         360     (23,451)     (129,388)
      Accounts payable and accrued expenses          172,850     178,500     2,409,523
      Option deposit                                 100,000           -       100,000
                                                   ------------------------------------
        NET CASH FLOWS FROM OPERATING ACTIVITIES      59,060         (19)      993,948
                                                   ------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for licenses                                -           -      (180,824)
  Expenditures for oil and gas properties             (4,448)          -      (738,666)
  Expenditures for property and equipment                  -           -        (1,158)
  Cash received in acquisition                             -           -             6
                                                   ------------------------------------
        NET CASH FLOWS FOR INVESTING ACTIVITIES       (4,448)          -      (920,642)
                                                   ------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Additional paid-in capital                           1,631           -        36,057
                                                   ------------------------------------
Effect of exchange rates on cash                       3,467           -       (49,653)
                                                   ------------------------------------
    Net increase (decrease) in cash                   59,710         (19)       59,710

Cash - beginning                                           -          38             -
                                                   ------------------------------------
    Cash - ending                                  $  59,710   $      19   $    59,710
                                                   ------------------------------------

</TABLE>

See accompanying notes.

<PAGE>

SIBERIAN ENERGY GROUP INC. (A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------

1.  BASIS  OF  PRESENTATION:

The  accompanying unaudited consolidated financial statements of Siberian Energy
Group  Inc. (the Company) include the accounts of the Company and its 100% owned
subsidiaries.  These  financial  statements  have  been prepared pursuant to the
rules  of the Securities and Exchange Commission (SEC) interim reporting, and do
not  include  all  of the information and note disclosures required by generally
accepted  accounting  principles.  These  consolidated  financial statements and
notes  herein  are  unaudited, but in the opinion of management, include all the
adjustments  (consisting  of  only normal recurring adjustments) necessary for a
fair  presentation  of  the Company's financial position, results of operations,
and  cash  flows  for the periods presented.  Accounting policies used in fiscal
2005  are  consistent  with  those  used  in  2004  and  2003.  These  financial
statements should be read in conjunction with the Company's audited consolidated
financial  statements  and  notes  thereto.  Interim  operating  results are not
necessarily indicative of operating results for any future interim period or the
full  year.

2.  THE  COMPANY  AND  DESCRIPTION  OF  BUSINESS:

The  Company  exists  primarily  to  exploit and develop certain oil and gas and
other  petroleum  products  licenses  issued  by  Russia's  Kurgan  Provincial
Government  for  the  Eastern  part  of  Kurgan  Province.

The  Company operates through its wholly owned subsidiary Zaural Neftegaz (ZNG).
ZNG has its principle place of business in Kurgan City, Kurgan province, Russia,
and  it  is the sole and exclusive owner of the exploration licenses.  In spring
2004, ZNG has begun geological and geophysical exploration works on the licensed
areas.

The  Company  was  incorporated  in  the State of Nevada on August 13, 1997, and
previously provided comprehensive outpatient rehabilitation services to patients
suffering  from  work,  sports  and  accident  related injuries.  All activities
related  to  the  Company's  previous  business  ventures  were  essentially
discontinued  prior  to January 1, 2000.  Predecessor names of the Company since
its  inception  include Trans Energy Group Inc., 17388 Corporation Inc., Talking
Cards  Inc., Oyster King Incorporated and Advanced Rehab Technology Corporation.

3.  ACQUISITIONS:

Acquisition  of  ZNG  took  part  in two steps.  In May 2003, the Company issued
2,000,000  shares  of its common stock for a 51% interest in ZNG.  In June 2004,
the Company purchased the remaining 49% of ZNG in exchange for 6,900,000 shares.
The  activities  of ZNG have been included in the financial statements since the
date  of  initial acquisition, and will be the foundation from which the Company
intends  to  develop  its  business.

No  accounting  value  was  assigned  to the net assets acquired and liabilities
assumed  as  of  the  date  of  the  initial  purchase  of  51%  of  ZNG:

Cash and other current assets                         $     5,310
Property and equipment                                      2,383
                                                      -----------
                                                            7,693
Current liabilities                                        (7,693)
                                                      -----------
  Net assets acquired                                 $         -
                                                      -----------

The  second  step  of  acquisition  happened  a  year  later (June 30, 2004) and
reflected  the  increased  value  of  ZNG.  The  following  table summarizes the
estimated fair values of the assets acquired and liabilities assumed at the date
of  acquisition.  The  Company is in process of obtaining third-party valuations
of  certain  intangible  assets;  thus  the  allocation of the purchase price is
subject  to  refinement.

Cash and other current assets                         $     5,577
Intangible assets (geological data)                       750,000
Oil and gas properties                                    433,444
Exploration licenses                                      126,582
Property and equipment                                      1,150
                                                      -----------
                                                        1,316,753
Current liabilities                                      (972,632)
                                                      -----------
Net assets of subsidiary                              $   344,121
                                                      -----------


<PAGE>

Acquired  intangible  assets  of  $750,000 were assigned to a vast collection of
valuable  Geological Data that has led to, and thus supports the conclusion that
hydrocarbon  deposits exist in the Eastern part of the Kurgan region.  This data
has  been  compiled  by  analyzing  and  interpreting  prior  geological  and
lithographic  exploration  works  in  the  region  and  is  represented  by:

-    Data,  maps  and  reports from the 12 test wells drilled between 1979-1986,
     including  a  lithologic  description  of  rock,  summaries  of geophysical
     research  of  well  shafts  and  a  laboratory  analysis  of  rock  age
-    Profile  sections
-    Correlation  schemes
-    Geological  maps  of  South-West  ZNGralye  (region east of Urals) and West
     Siberia,  pre-Jurassic  period
-    Set  of  maps  based on distance methods of research and interpretations of
     cosmic  and  aerial  photographs.
-    Independent  geological  evaluation  of  oil reserves on the licensed areas
     performed  in  2004.

All  Geological  data  is  transformed  into  digital format, which enhances its
market  potential.  Estimated  useful  life  of  the  Geological Data covers the
period  of  anticipated  oil  producing  activities  on  the  licensed  area  of
approximately  25  years  starting 2006.  Therefore it will be amortized over 25
years  starting  January  2006.  Geological  data  will be tested for impairment
based on the results of seismic and other exploration works, which are currently
under  way.

On  June  28,  2004,  the  Company  also  opened  a  Canadian subsidiary through
acquisition  of  100% of the outstanding common shares of the newly incorporated
Siberian  Energy  Group  (Canada).  Purchase  price  equaled  $7,  which  also
represents  the  book  value  of  the capital subsidiary.  Siberian Energy Group
(Canada)  was  purchased  for  the  purpose  of  opening  an  office in Toronto,
Ontario.

4.  GOING  CONCERN:

These financial statements have been prepared assuming the Company will continue
as  a gong concern, however, since inception of its current endeavor in 2003, it
has  not  earned  any revenues and is considered to be in the development stage,
which raises substantial doubt about its ability to continue as a going concern.

Management  is  of  the  opinion that sufficient financing will be obtained from
external sources to provide the Company with the ability to continue the process
of  development  to  achieve  commercial  production  and  sales  of  products.

For  the  cumulative  period ended March 31, 2005, the Company has obtained cash
financing  from  organizing  stockholders  and  employees  in the form of loans,
advances  and  deferred  salaries.  However,  there  can  be  no certainty as to
availability of continued financing in the future.  Failure to obtain sufficient
financing may require the Company to reduce its operating activities.  A failure
to  continue  as a going concern would then require stated amounts of assets and
liabilities  be  reflected  on  a  liquidation basis which could differ from the
going  concern  basis.

On January 24, 2005, the Company entered into an Option Agreement and Memorandum
of  Understanding with a third party (Party), which was subsequently replaced by
a  new  Option  Agreement,  entered  into on April 28, 2005 (Option).  Under the
Option,  the Company gave the Party the right to participate with the Company in
a  joint  venture  company for inter alia the exploration and development of the
Company's four (4) licenses for exploration in the Kurgan region of Siberia (the
Joint  Venture).  If  the  Party  chooses to exercise the Option and participate
with  the  Company  in  the Joint Venture, the Company will transfer 100% of the
Company's  ownership  interest in ZNG to the Joint Venture, and the Company will
transfer  50%  of  the Joint Venture interest to the Party for a nominal sum and
the  agreement  by  the  Party to provide future funding to the Joint Venture as
detailed  in  the  Option.  Pursuant  to  the  Option,  the  Party  is currently
conducting  due  diligence  on  the Company's licenses (the Due Diligence).  The
Party  has  paid  the Company $100,000 for the right to exercise the Option.  In
conjunction with the Option Agreement the party provided a loan facility to ZNG.
The  Loan  agreement for the total $1,267,860 was signed on April 28, 2005.  The
loaned  amounts  will  be  used  as  specified  in the agreement, which includes
payment  of outstanding amounts for geological works performed to date, salaries
of  employees  for  the  period  April  to  July  2005  and research work toward
potential  new fields.  The Company is acting as a guarantor to the issued loan.


<PAGE>

5.  LOSS  PER  COMMON  SHARE:

Basic  and  diluted loss per common share is computed using the weighted average
number  of  common  shares  outstanding  during the period.  Shares issuable for
common  stock  options  may have had a dilutive effect on earnings per share had
the  Company  generated  income  during  the  periods  through  March  31, 2005.

6.  SUBSEQUENT  EVENT:

Effective  May  2,  2005, the stockholders approved an amendment to its Restated
Articles  of  Incorporation.  The  amendment  affected  a  1 for 2 reverse stock
split,  re-authorized  100,000,000  shares of common stock, par value $0.001 per
share, and authorized 10,000,000 shares of preferred stock, par value $0.001 per
share.  Shares of preferred stock may be issued from time to time in one or more
series,  each of which shall have distinctive designation or title as determined
by  the  Board  of  Directors  prior  to  the  issuance  of  any shares thereof.

<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     All statements in this discussion and elsewhere in this report that are not
historical  are  forward-looking statements within the meaning of Section 21E of
the  Securities  Exchange  Act  of  1934,  as amended.   Statements preceded by,
followed  by  or  that  otherwise  include  the  words  "believes",  "expects",
"anticipates", "intends", "projects", "estimates", "plans", "may increase", "may
fluctuate"  and  similar  expressions  or  future  or  conditional verbs such as
"will",  "should",  "would",  "may" and "could" are generally forward-looking in
nature and not historical facts.  These forward-looking statements were based on
various  factors  and  were derived utilizing numerous important assumptions and
other  important  factors  that  could cause actual results to differ materially
from those in the forward-looking statements. Forward-looking statements include
the  information concerning our future financial performance, business strategy,
projected  plans  and  objectives.  These  factors  include,  among  others, the
factors  set  forth  under the heading "Risk Factors."  Although we believe that
the  expectations reflected in the forward-looking statements are reasonable, we
cannot  guarantee  future  results,  levels  of  activity,  performance  or
achievements.  Most of these factors are difficult to predict accurately and are
generally  beyond our control. We are under no obligation to publicly update any
of  the  forward-looking statements to reflect events or circumstances after the
date  hereof  or to reflect the occurrence of unanticipated events.  Readers are
cautioned  not  to  place  undue  reliance  on these forward-looking statements.

OVERVIEW

     Siberian Energy Group Inc. is a development stage investment and management
company  that  intends to target high potential long term investments in Russia.
The Company intends to provide western management experience and ready access to
investment  capital for medium and large cap resource companies, specifically in
the  oil  and  gas  industry.  The  Company  actively  evaluates  investment
opportunities  throughout Russia. Pursuant to its strategy, the Company acquired
an  emerging  Russian  oil and gas exploration company, Zaural Neftegaz ("ZNG").
ZNG  is  a  development  stage  oil  and  gas exploration company located in the
Western Siberian Region of Russia. The majority of the Company's current efforts
are  focused  on operating and raising capital for ZNG, of which there can be no
assurance.  The  Company opened Siberian Energy Group (Canada) ("SEG Canada") to
help  facilitate  business  ventures with Canadian Farm-in partners and to allow
the  Company  to  open  a Canadian office in Toronto, Ontario. SEG Canada is not
expected  to  perform  any large-scale business operations, but rather to act on
behalf  of  the  Company.  Except  as  expressly indicated or unless the context
otherwise  requires,  the  "Company," "we," "our," "us," or "SEG" means Siberian
Energy  Group  Inc.,  a  Nevada  corporation,  and  its  subsidiaries.

     ZNG  aims  to  develop  an  oil  and  gas  industry in the Kurgan region of
South-West  Siberia,  Russia  by  discovering  new  hydrocarbon  fields. ZNG has
compiled  data  in  the  Eastern  part  of  the Kurgan region by analyzing prior
geological,  geophysical and lithographic exploration works in the region, data,
maps,  and  reports  from  12  test  wells  drilled  between  1979-1986, profile
sections,  correlation  schemes,  and  geographic  maps  of  the  region.

     After  analyzing  the  eight  available blocks suggested by the Ministry of
Natural Resources, ZNG chose to concentrate its activities on four areas located
in the Eastern part of the Kurgan region and applied for licenses covering these
areas.  Currently  ZNG holds four, 5-year exploration licenses expiring in March
2008,  for concessions covering a total territory of 643,000 acres. Mokrousovsky
is the largest, encompassing a total of 240,000 acres, followed by West Suersky,
which  covers  230,000  acres,  Privolny,  which  covers  123,000  acres,  and
Orlovo-Pashkovsky,  which  covers  50,000  acres.

<PAGE>

     Following  detailed  data  collection,  survey and seismic testing ZNG will
proceed  with  development  of  one block at a time. The Company feels that this
strategy has numerous benefits including: 1) increasing the speed of development
by  concentrating  ZNG's efforts and resources; 2) potentially reducing the need
for  additional capital if early blocks generate revenue for the Company; and 3)
generating  revenues which may pay for future development costs and provide cash
that  will  help  to  finance  the  development  of  subsequent  blocks.

     The  West-Suersky  block  was  chosen  by the Company as the most promising
block, and the Company has already started studies on this area. The Company has
performed  gravimetric  surveys  and  the  field  part  of 2-dimensional seismic
studies  through  experienced and reputable oil and gas service organizations in
Russia,  "Bazhenov Geophysical Expedition" and JSC "Bashneftegeofizika." ZNG has
not  begun  exploratory  drilling  yet,  as  it  is awaiting the two-dimensional
seismic  study  results.  Currently "Bashneftegeofizika" is processing data they
collected during the summer of 2004 and preparing it for interpretation in order
to identify the most prospective sites for drilling. The Company anticipates the
results  of  this  processing  to  be  competed  in  the second quarter of 2005.

     ZNG has also hired GeoData Consulting, an international geosciences service
company, which provides daily independent supervisions of the exploration works,
helping  to  add  assurance  to  the  accuracy  of  the  forthcoming  results.

     The  Company has not started production and is not currently generating any
cash,  which  makes  it difficult for it to pay its maturing obligations, as the
Company's  assets  are  illiquid. However, the Company believes that in the long
run a number of trends will favorably affect its liquidity. These trends include
the  steady  trend  of  economic  growth  in Russia in the recent years which is
improving the liquidity of our potential customers, and may favorably impact the
Company's  debt  management  and the increasing overall credit rating in Russia,
which  the  Company  hopes  will lead to increased foreign investment in Russian
companies,  like  ZNG.

PLAN  OF  OPERATIONS  FOR  THE  NEXT  TWELVE  MONTHS

     The  Company  believes it can satisfy its cash requirements during the next
twelve  months  through  funding  provided  by  existing  stockholders,  without
committing  to  the  scheduled  program  of  oil  fields  development in Russia.
However,  additional  external  funding  is  required in order to align with the
Company's  exploration  and  development program. It is anticipated that private
equity  from  the  current  investor group will finance initial surveys up to $1
million.  The  Company  expects  to  finance  a  secondary  survey  and  initial
exploration  to the point of establishing proven reserves, if commercial amounts
of  hydrocarbon  are  discovered,  through  equity  financing, conducted through
institutional  partners, and/or debt. This cost is estimated at approximately $5
million and includes drilling of an exploratory and a prospecting well, followed
if  necessary by additional geological research to quantify the deposits. Future
exploration  and  development  is expected to be financed through debt which SEG
believes  will  be  forthcoming if reserves are proven. However, the Company can
give  no  assurances that it will be successful in finding hydrocarbon reserves.

     The  following  actions  are  planned  for  the  next twelve months: Office
analysis of field materials projected onto gravimetric diagrams (1:50,000 scale)
and  seismic  works;  their  complex  interpretation  with  the  subsequent
recommendation for placing exploratory wells. Drilling is projected to begin the
third  quarter of 2005 and results on the initial wells are expected as early as
the  fourth  quarter  of  2005.

     The  Company  currently  has  no  plans to purchase any plant facilities or
significant equipment within the next 12 months. The Company does not expect any
significant  changes  in  the  number  of  employees  during the next 12 months.

<PAGE>

     In  the  past,  the  Company  has  obtained  cash financing from organizing
stockholders  in  the  form  of  loans  and  advances.  However, there can be no
certainty  as  to the availability of continued financing in the future. Failure
to  obtain  sufficient financing may require the Company to reduce its operating
activities.  A  failure to continue as a going concern would then require stated
amounts  of  assets and liabilities to be reflected on a liquidation basis which
could  differ  from  the  going  concern  basis.

ESTIMATE  OF  AMOUNT  OF  TIME  SPENT  ON  RESEARCH  AND  DEVELOPMENT

     A  business  plan  was  developed  over the course of three months in 2003.
During  that  time  period,  market  research  was  conducted.  These costs were
directly  borne  by  the  Company  and  are  not being transferred to customers.
Research  and  development  activities  in the oil and gas field are the primary
activities  of  the  Company  at  the  current  time.  The Company has conducted
gravimetric  and seismic works on the licensed areas. Costs incurred as of March
31,  2005  were  $690,000.

     CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES

     Our  discussion  and  analysis  of  our  financial condition and results of
operations  is  based  upon  our unaudited financial statements, which have been
prepared  in  accordance  with  accounting  principals generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,  and  related  disclosure  of any contingent assets and
liabilities.  On  an  on-going  basis,  we  evaluate  our estimates. We base our
estimates  on  various  assumptions  that  we believe to be reasonable under the
circumstances,  the  results  of which form the basis for making judgments about
carrying  values  of  assets  and liabilities that are not readily apparent from
other  sources.  Actual  results may differ from these estimates under different
assumptions  or  conditions.

     We  believe  the  following  critical  accounting  policy  affects our more
significant  judgments  and  estimates  used in the preparation of our financial
statements:

     Going  Concern
     --------------

     The  Company's  financial  statements  have been prepared assuming that the
Company  will  continue  as  a  going  concern,  however, since inception of its
current  endeavors  in  2003,  the  Company  has  not earned any revenues and is
considered  to be in the development stage, which raises substantial doubt about
its  ability  to continue as a going concern. The Company is of the opinion that
sufficient  financing  will  be  obtained  fro  external  sources to provide the
Company  with  the  ability  to  continue  the process of development to achieve
commercial  production  and  sales  of products. For the cumulative period ended
March  31,  2005,  the  Company  has  obtained  cash  financing  from organizing
stockholders and employees in the form of loans, advances and deferred salaries.
As  discussed  elsewhere  in  this  report,  the Company obtained debt financing
subsequent  to  March  31, 2005. There can be no certainty as to availability of
continued  financing  in  the future. Failure to obtain sufficient financing may
require the Company to reduce its operating activities. A failure to continue as
a  going  concern  would  require stated amounts of assets and liabilities to be
reflected  on  a  liquidation  basis  which  could differ from the going concern
basis.

RESULTS  OF  OPERATIONS

Three  Months ended March 31, 2005 Compared to Three Months Ended March 31, 2004
--------------------------------------------------------------------------------

     The  Company  had  no  revenues for either the three months ended March 31,
2004,  or  the  three  months  ended  March  31,  2005.

<PAGE>

     Total  expenses  increased  $45,064  (or  25.3%) for the three months ended
March  31,  2004  to  $178,470  for  the  three months ended March 31, 2005. The
increase  was  due to an increase in professional and consulting fees of $28,348
(or  283.5%)  from  $10,000 for the three months ended March 31, 2004 to $38,348
for  the three months ended March 31, 2005, an increase in rent and occupancy on
$14,310  (or  145.7%)  from  $9,821 for the three months ended March 31, 2004 to
$24,131  for the three months ended March 31, 2005, and increase in depreciation
and  amortization  increased  $96 (or 1%) from $9,288 for the three months ended
March  31,  2004  to  $9,384  for  the three months ended March 31, 2005, and an
increase  in  other  expenses  increased  $6,094 (or 25.8%) from $23,659 for the
three  months  ended  March 31, 2004 to $29,753 for the three months ended March
31, 2005, which were slightly offset by a decrease in salaries of $3,784 (or 3%)
from  $125,702  for  the  three  months ended March 31, 2004 to $121,918 for the
three  months  ended  March  31,  2005.  Total  expenses  increased  because  of
additional  costs  associated  with our status as a public company, the lease of
office  space in Russia and Canada that began in January 2005, and other factors
such  as  an  increase  in  our  efforts  to  raise  capital.

     Net loss for the three months ended March 31, 2005 increased by $45,064 (or
25.3%)  from  $178,470  for the three months ended March 31, 2004 to 223,534 for
the  three  months  ended March 31, 2005. Although net loss increased, basic and
diluted  loss  per  common  share  decreased by $0.01 from $(0.02) for the three
months  ended  March  31,  2004  to $(0.01) for the three months ended March 31,
2005.  The  decrease  in  basic and diluted loss per common share was due to the
issuance  of  additional  shares  during  2004.

LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  March  31,  2005, the Company's current assets were $194,692, which
consisted  of  cash of $59,710 and prepaid expenses and other of $134,692. Total
assets  for  the  Company as of March 31, 2005 were $1,784,003. The total assets
consisted  of  $750,000 of net geological data, $738,666 of unproved oil and gas
properties,  $99,458  of net licenses, and $1,820 of net property and equipment.
The  $750,000  of  geological  data includes, data, maps and reports from the 12
test  wells  drilled  between  1979-1986,  including a lithologic description of
rock, summaries of geophysical research of well shafts and a laboratory analysis
of rock age; profile sections; correlation schemes; geological and set maps; and
an  independent  geological  evaluation  of  oil  reserves on the licensed areas
performed  in  2004.

     As  of  March  31, 2005, the Company had current liabilities of $2,531,903.
This  was  due  to  $1,000,588 of accounts payable to other parties, $535,932 of
accounts  payable  to  related  parties  which  includes $130,444 payable to the
Company's  Chief  Executive  Officer,  and $145,144 payable to a Director of the
Company,  $895,383  of  accrued  payroll, which includes $455,674 which  is owed
to the Company's current officers and directors, and $100,000 of option  deposit
from  BP.

     As  of  March  31,  2005,  the  Company  had  negative  working  capital of
$2,337,501.

     For  the  three months ended March 31, 2005, the Company had $59,060 in net
cash  flows  from  operating  activities.  This was primarily attributable to an
increase  in  accounts  payable and accrued expenses of $172,850 and an increase
option  deposit  of  $100,000  that  were  offset  by  net  loss  of  $223,534.

     The Company spent $4,448 in net cash flows for investing activities for the
three  months ended March 31, 2005, which consisted entirely of expenditures for
oil  and  gas  properties

     During  this  period,  the Company had $1,631 in additional paid-in capital
relating  to  an  adjustment  made in consolidating ZNG. The Company's effect of
exchange  rate  on  cash  was  $3,467 for the three months ended March 31, 2005.

     The  Company received $100,000 from Baltic Petroleum Limited ("BP") for the
option  that  the  Company gave to BP to participate with the Company in a joint
venture  company for, among other things, the exploration and development of the
Company's  four  licenses  for  exploration  in  the Kurgan region of Siberia as
discussed  in "Item 5. Other Information" under the heading "Subsequent Events."
In  conjunction  with  the  Option,  BP  provided  ZNG  with  a loan facility of
$1,267,860  for  specific  purposes  which  include  the payment for outstanding
amounts for geological works, salaries to employees for the period from April to
July  2005,  and  research  work  toward  potential new fields.  The Company has
guaranteed  the  loan  facility  and  has  granted  BP  a  security interest and
continuing  lien on the Company's right, title and interest in, to the Company's
100%  participatory  interest in ZNG.  The Company is taking additional steps in
an  attempt to raise equity capital and/or to borrow additional funds. There can
be  no  assurance  that any new capital will be available to the Company or that
adequate  funds  for  the  Company's  operations,  whether  from  the  Company's
financial  markets,  or  other  arrangements will be available when needed or on
terms  satisfactory  to the Company. The Company has no further commitments from
officers, directors or affiliates to provide funding. The failure of the Company
to  obtain  adequate  additional  financing  may  require  the Company to delay,
curtail  or  scale  back some or all of its operations. Any additional financing
may  involve  dilution  to  the  Company's  then-existing  shareholders.

<PAGE>

RISK FACTORS

     Our  securities  are  highly  speculative  and  should only be purchased by
persons who can afford to lose their entire investment in our Company. If any of
the  following risks actually occur, our business and financial results could be
negatively  affected  to a significant extent. The Company's business is subject
to  many  risk  factors,  including  the  following:

RISK  OF  CONTINUING  OUR  BUSINESS  PLAN  WITHOUT  ADDITIONAL  FINANCING

     We depend to a great degree on the ability to attract external financing in
order  to  conduct  future  exploratory  and development activities. The Company
believes  it  can  satisfy  its  cash requirements during the next twelve months
through  funding  provided  by  existing stockholders, without committing to the
scheduled  program  of  oil  fields  development  in Russia. However, additional
external  funding  is  required in order to align with the Company's exploration
and  development program. It is anticipated that private equity from the current
investor group will finance initial surveys up to $1 million. An issue of shares
is  expected  to finance a secondary survey and initial exploration to the point
of  establishing  proven  reserves,  if  commercial  amounts  of hydrocarbon are
discovered.  This  cost  is  estimated  at approximately $5 million and includes
drilling  of  an  exploratory  and  a prospecting well, followed if necessary by
additional  geological research to quantify the deposits. Future exploration and
development  is  expected to be financed through debt which SEG believes will be
forthcoming  if reserves are proven. However, the Company can give no assurances
that  it will be successful in finding hydrocarbon reserves. If we are unable to
raise  the  additional  funds  required  for  planned exploration and extraction
activities,  our  Company may be forced to abandon its current business plan. If
you  invest  in  our Company and we are unable to raise the required funds, your
investment  could  become  worthless.

ADDITIONAL  FINANCING  REQUIRED  AND  TIME  BEFORE  THE  COMPANY  IS EXPECTED TO
GENERATE  REVENUES

     The Company anticipates the need for approximately $15,000,000 prior to the
Company's  expected  generation  of  any revenues. Currently the Company has not
raised  any  of  this financing and the Company can make no assurances that this
financing  will ever be raised. The Company also does not expect to generate any
revenues  until 2006, assuming the $15,000,000 can be raised, of which there can
be  no  assurance.  Therefore,  investors  should  keep in mind that even if the
Company  is  able  to  raise  the substantial amounts of additional financing it
requires,  it  could still be years before the Company generates any revenue, if
ever. If the Company does not raise the $15,000,000 which it anticipates needing
to  generate  revenues,  which  if generated, will likely not be great enough to
solely  sustain the Company, the Company may be forced to abandon or curtail its
current  business  plan.

OUR  AUDITORS  HAVE  EXPRESSED  SUBSTANTIAL  DOUBT AS TO WHETHER OUR COMPANY CAN
CONTINUE  AS  A  GOING  CONCERN

     Our  Company  is  in  its  early  development  stage,  as planned principal
activities  have  not  begun. We have not generated any revenues since inception
and  have  incurred substantial losses. These factors among others indicate that
the  Company  may  be unable to continue as a going concern, particularly in the
event  that  it  cannot  generate sufficient cash flow to conduct its operations
and/or  obtain  additional  sources  of  capital  and  financing.

<PAGE>

WE  LACK  AN  OPERATING  HISTORY  WHICH  YOU  CAN USE TO EVALUATE US, MAKING ANY
INVESTMENT  IN  OUR  COMPANY  RISKY

     Our Company lacks a long standing operating history which investors can use
to  evaluate  our  Company's  previous earnings. Therefore, an investment in our
Company  is  risky because we have no business history and it is hard to predict
what  the  outcome  of  our  business  operations  will  be  in  the  future.

WE  MAY CONTINUE TO BE UNPROFITABLE AND MAY NOT GENERATE PROFITS TO CONTINUE OUR
BUSINESS  PLAN

     As  a development stage company, we have no revenues or profits to date and
our  net cumulative deficit attributable to our development stage as of December
31, 2004, was $1,256,083, and the total cumulative deficit was $1,705,868, which
included  $449,785 of pre-development stage deficit. We have $773,524 in accrued
and  unpaid  salaries.  The  Company  is  currently  being  funded  by  existing
shareholders  but  it  will need an additional $1,000,000 to complete geological
works  which  are  underway. There is a risk that we will never begin production
and  our  Company  will  never  generate  any  revenues.  If  throughout our oil
exploration  we  find  no  viable  wells, we will likely be forced to curtail or
abandon  our  business  plan. If this happens, you could lose your investment in
our  Company. If we are unable to generate profits, we will be forced to rely on
external  financing,  of  which  there  is  no  guarantee,  to continue with our
business  plan.

WE  HAVE A POOR FINANCIAL POSITION AND IF WE DO NOT GENERATE REVENUES, WE MAY BE
FORCED  TO  ABANDON  OUR  BUSINESS  PLAN

     Our  Company currently has a poor financial position. We have not generated
any  revenues or begun production on any wells. There is a risk that we will not
find  enough,  or  even  any, viable wells needed to generate enough profits for
your investment in our Company to appreciate. If we never generate any revenues,
our  Company  may  be  forced  to  abandon its business plan and your shares may
become  worthless.

OUR  BUSINESS  IS  SPECULATIVE  AND  RISKY  AND  IF  THE  COMPANY  DOES NOT FIND
HYDROCARBON  RESERVES,  WE  MAY  BE  FORCED  TO  CURTAIL  OUR  BUSINESS  PLAN

     There is a risk that we will not find any hydrocarbon reserves and the cost
of exploration will become too high for us to continue as a corporation. If this
happens,  your  investment  in  our  Company  could  become  devalued.

OUR  DRILLING  LICENSES  MAY  NOT BE EXTENDED OR WE MAY NOT GAIN THE APPROVAL OF
FEDERAL  AND  STATE GOVERNMENT AGENCIES TO CONVERT OUR EXPLORATION LICENSES INTO
PRODUCTION  LICENSES.

     The  Company holds four (4) exploration licenses acquired on March 7, 2003,
to  explore  four  individual properties in the Kurgan province of Russia. These
licenses require the Company to conduct seismic surveys on the properties and to
report  any  discoveries  to the regional government. The licenses are currently
classified  as  5-year  exploration  licenses  and  are convertible into 25-year
production  licenses  upon  discovery of hydrocarbon reserves. Additionally, the
Company  can  request  and  may  be granted an extension if the Company can show
initiative  to  continue and finalize all exploratory activities on the licensed
areas.  Therefore,  under the Russian Ministry of Natural Resources ("Ministry")
current  policies,  the  Company's  exploration  licenses  may  be  extended
indefinitely as long as all of the terms and conditions of the licenses are met.
The  Ministry  may not withdraw the licenses at the end of the initial five-year
period,  or  thereafter, if the exploration activities are ongoing and privately
funded.  However,  there  is a risk that the Company will not have the financial
resources on March 7, 2008, at the end of the five-year license term, to conduct
exploration  activities  which  will satisfy the license agreement and allow the
Company  to extend the term of the license until viable resources are discovered
and  the license can be converted into a production licenses, of which there can
be  no assurances. Additionally, the Company may require the approval of federal
and  state  government  agencies  for  conversion of its exploration licenses to
production  licenses,  which  may  not  be granted. If the Company's exploration
licenses  expire  because the Company cannot show the initiative to continue and
finalize  exploration activities at the end of the initial five-year term of the
licenses, or the government does not allow the Company's exploration licenses to
be  converted into production licenses, it would cause the Company's revenues to
decrease,  which in turn would lead to a decrease in the value of any securities
held  by  investors  in  the  Company.

<PAGE>

IF  WE  DO  PRODUCE  OIL,  WE  WILL  BE  REQUIRED  TO  SELL 70% OF OUR CRUDE OIL
PRODUCTION  IN  THE  DOMESTIC  RUSSIAN MARKET, LEAVING ONLY 30% OF OUR CRUDE OIL
PRODUCTION  TO  BE  SOLD  IN  THE  MORE  LUCRATIVE  FOREIGN  MARKETS.

     There  is a risk that if commercial hydrocarbon reserves are discovered, of
which  there  is  no  assurance,  that the Company will be constrained as to the
amounts  it  can export to foreign markets. Currently it is more advantageous to
export  crude  oil, because domestic Russian prices of Urals blend oil are lower
than foreign market prices. However, Russia has export quota restrictions on the
amount  of  oil  which  any  company  can export to foreign markets. The current
percentage  of  crude  oil allowed to be exported to foreign markets is 30%. The
remaining  70%  cannot  be  exported as crude oil, but only as a refined product
such  as  gasoline  or kerosene. If the Company fails to refine its products, if
any,  it  will  be required to sell 70% of its crude oil in the domestic Russian
market.  If  the  Company  decides  to  refine the oil it finds, if any, it will
entail  substantial  expenditures.  Even  if  we are able to produce oil, we may
still not be able to generate enough revenues to recoup the costs of exploration
and  production,  because  we  will  only  be  able to sell 30% of our crude oil
production  to  the  larger  more lucrative foreign markets. If we are unable to
generate  sufficient  revenues, we may be forced to abandon our business plan or
curtail  future  exploration  activities.

OUR  INDUSTRY  IS COMPETITIVE AND AS SUCH COMPETITIVE PRESSURES COULD PREVENT US
FROM  OBTAINING  PROFITS

     The  main  factor determining success in the oil exploration and extraction
industry  is  finding  viable  wells. If our Company is unable to find producing
wells  and  our competition is, it is likely that our Company will be driven out
of  business.  Additionally,  our  industry  is  subject  to significant capital
requirements  and  as  such,  larger  companies  such  as  LUKoil,  BP-TNK,
Surgutneftegaz and Sibneft may have an advantage should they compete with us for
exploration licenses, because they may have resources substantially greater than
ours.  Investors  should take into account the above factors and understand that
if  we are unable to raise additional capital or generate the profits we require
for  greater  exploration, the Company may be forced to liquidate its assets and
an  investment  in  our  Company  could  become  worthless.

WE  RELY  ON KEY PERSONNEL AND IF THEY LEAVE OUR COMPANY OUR BUSINESS PLAN COULD
BE  ADVERSELY  EFFECTED

     We  rely  on  the  Company's  Chief  Executive  Officer and Chief Financial
Officer,  David  Zaikin and Elena Pochapski respectively, as well as ZNG's Chief
Executive Officer and Technical Director, Oleg V. Zhuravlev and Vladimir V. Eret
respectively,  for  the  success  of our Company, all of whom are employed under
contracts. Their experience and input create the foundation for our business and
they  are  responsible  for  the  directorship  and  control  over the Company's
development activities. The Company does not hold "key  man" insurance on any of
these  individuals.  Moving  forward,  should  they be  lost for any reason, the
Company  will  incur  costs associated with recruiting replacement personnel and
any  potential  delays  in  operations.  If  we  are unable to  replace  Messrs.
Zhuravlev and Eret with other suitably trained geologists and geophysicists from
within  Russia or other oil bearing nations such as USA, Canada, Norway, UK, and
Kazakhstan,  the  Company  may  be  forced to scale back or curtail its business
plan.  As  a result of this, any securities you hold in our Company could become
devalued.

OUR  PROJECTIONS,  ESTIMATES  AND  STATISTICAL  ANALYSIS  MAY  BE  INACCURATE OR
SUBSTANTIALLY  WRONG,  WHICH  MAY  PREVENT  US  FROM EXECUTING OUR BUSINESS PLAN

     Risks  from these factors are intertwined with the risky nature inherent in
the  oil  and  gas industry. Projections on future revenues as well as costs and
required  capital  expenditures  are  based  on  estimates. Business statistical
analysis  is  used  in projection of drilling success ratios, average production
costs, world oil price fluctuations and their correspondence to Russian domestic
market,  etc.  If  our  projections  or  estimates  are wrong or our statistical
analysis faulty, our revenues may be adversely affected which could keep us from
executing our business strategy. As an investor, if this happens your securities
in our Company could be adversely affected and you could lose your investment in
our  Company.

<PAGE>

INVESTORS  MAY  FACE  SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK
DUE  TO  FEDERAL  REGULATIONS  OF  PENNY  STOCKS

     Since  our  Common  Stock  is  listed  on  the OTC Bulletin Board under the
trading  symbol  "SIBN,",  it  is  subject  to  the requirements of Rule 15(g)9,
promulgated  under the Securities Exchange Act, and will be as long as the price
of  our  Common  Stock is below $5.00 per share. Under such rule, broker-dealers
who  recommend low-priced securities to persons other than established customers
and  accredited  investors  must  satisfy  special  sales practice requirements,
including  a  requirement  that  they make an individualized written suitability
determination for the purchaser and receive the purchaser's consent prior to the
transaction.  The  Securities Enforcement Remedies and Penny Stock Reform Act of
1990,  also  requires  additional  disclosure  in  connection  with  any  trades
involving  a stock defined as a penny stock. Generally, the Commission defines a
penny stock as any equity security not traded on an exchange or quoted on NASDAQ
that  has  a market price of less than $5.00 per share. The required penny stock
disclosures  include  the  delivery,  prior  to any transaction, of a disclosure
schedule  explaining  the  penny  stock market and the risks associated with it.
Such  requirements  could  severely limit the market liquidity of the securities
and  the ability of purchasers to sell their securities in the secondary market.

ITEM 3.     CONTROLS AND PROCEDURES.

     Evaluation  of  disclosure  controls  and  procedures.  Our Chief Executive
Officer  and  Chief Financial Officer, after evaluating the effectiveness of our
"disclosure  controls and procedures" (as defined in the Securities Exchange Act
of  1934  Rules  13a-15(e) and 15d-15(e)) as of the end of the period covered by
this  quarterly  report  (the  "Evaluation Date"), have concluded that as of the
Evaluation  Date,  our  disclosure  controls  and  procedures  were  effective.

Changes  in internal control over financial reporting. There were no significant
changes  in our internal control over financial reporting during our most recent
fiscal  quarter that materially affected, or are reasonably likely to materially
affect,  our  internal  control  over  financial  reporting.

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS.

     From  time  to  time,  we  may  become  party  to litigation or other legal
proceedings  that  we  consider  to  be  a  part  of  the ordinary course of our
business.  We  are  not  currently  involved  in  legal  proceedings  that could
reasonably  be  expected  to  have  a  material  adverse effect on our business,
prospects,  financial condition or results of operations. We may become involved
in  material  legal  proceedings  in  the  future.

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

     On  April  4, 2005, ZNG entered into an agreement effective March 29, 2005,
whereby  ZNG  agreed  to transfer 2,000,000 shares of the Company's common stock
held  by  ZNG  to  an  individual for 50,000 Russian rubles (or approximately US
$1,798  based  on  the exchange rate on March 29, 2005).  The Company originally
issued  the  shares  to  ZNG in connection with the Company's acquisition of ZNG
which  occurred  on  May 29, 2003, with respect to 51% of ZNG, and May 24, 2004,
with  respect  to  the  remaining 49% of ZNG, with the intention that the shares
would  be  distributed  and  not  maintained  by  ZNG.  The  shares had not been
transferred  as  of  the  filing  of  this report.  The Company and ZNG claim an
exemption  from  registration  afforded by Section 4(2) of the Securities Act of
1933  since the foregoing issuance to ZNG and transfer to the individual did not
involve  a  public  offering, ZNG took, and the individual will take, the shares
for  investment  and  not  resale  and  the  Company  took,  and  ZNG will take,
appropriate  measures  to  restrict transfer. No underwriters or agents were (or
will  be)  involved  in the foregoing issuance (or transfer) and no underwriting
discounts were (or will be) paid by the Company (or ZNG).

ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES.

None.

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

     The Company did not submit any matters to a vote of security holders during
the period covered by this report; however, see the disclosure in "Item 5. Other
Information" under the heading "Subsequent Events" regarding an amendment to the
Company's  Articles  of  Incorporation  that  was approved by written consent to
action  without  a  meeting of a majority of the Company's shareholders on April
22,  2005.

<PAGE>

ITEM  5.     OTHER  INFORMATION.

RELATED  PARTY  TRANSACTIONS

     Oleg  V.  Zhuravlev,  Chief  Executive  Officer  of  ZNG,  entered  into an
employment  agreement on January 1, 2004, which will be in effect until December
31,  2008.  Additionally,  Mr.  Zhuravlev  entered  into  a stock option plan on
January  1, 2003.  Under that plan, 200,000 options vested to him in 2004, at an
exercise  price  of  $0.10  per  share.  As of March 31, 2005, 65,000 additional
options  had  vested  to  him  at  an  exercise  price  of  $.30  per  share.

     Vladimir  V.  Eret,  Chief  Operating  Officer of ZNG, signed an employment
agreement  with  the  Company  on January 1, 2003, which will be in effect until
December  31,  2008.  Mr.  Eret  also  entered into a stock option plan with the
Company  on  January  1, 2004. Under the stock option plan, Mr. Eret was granted
168,000  options  in 2004, exercisable at $0.10 per share. As of March 31, 2005,
he had  been  granted  42,000  additional options exercisable at $.30 per share.

     Sergey Potapov, Vice President of ZNG, entered into an employment agreement
with the Company on January 1, 2003 which will be valid until December 31, 2008.
He  also  entered  into  a  stock option plan at the same time as his employment
agreement.  Under his stock option plan, Mr. Potapov was granted 168,000 options
in  2004,  exercisable  at  $0.10  per share.  As of March 31, 2005, he had been
granted  42,000  additional  options  exercisable  at  $.30  per  share.

     David  Zaikin,  the  Company's  Chief  Executive  Officer,  entered into an
employment agreement and a stock option agreement with the Company on January 1,
2003,  which will be in effect until December 31, 2008. In 2003, 200,000 options
vested  to Mr. Zaikin under his stock option agreement, exercisable at $0.07 per
share.  In  2004,  200,000  options vested to Mr. Zaikin under this stock option
agreement,  exercisable  at  $0.10  per  share.  As  of  March  31, 2005, 65,000
additional  options  had  vested  to him at an exercise price of $.30 per share.

     Elena  Pochapski,  the  Company's  Chief Financial Officer, entered into an
employment  agreement and a stock option agreement with the Company on August 1,
2003,  which will be valid until December 31, 2008. Under her stock option plan,
Mrs.  Pochapski  vested 200,000 options in 2003, exercisable at $0.07 per share,
and an additional 200,000 options in 2004, exercisable at $0.10 per share. As of
March 31, 2005, 65,000 additional options had vested to her at an exercise price
of  $.30  per  share.

     Effective June 30, 2004, the Company purchased the remaining 49% interest
of Zaural Neftegaz for 6.9 million common shares of Siberian Energy Group Inc.,
at $.025 (US) per share for a total of $172,500.

     As  of  March  31,  2005,  no  stock  options  had  been  exercised.

SUBSEQUENT  EVENTS

     In  April  2005,  the  Company  opened  an  office  in  Toronto  Canada.

     On  April 12, 2005, the Company appointed Timothy G. Peara to the Company's
board  of  directors.

<PAGE>

     On  April  28,  2005,  the  Company  entered  into an Option Agreement (the
"Option")  with  BP  which  replaced  an  Option  Agreement  and  Memorandum  of
Understanding  that  the  Company  had entered into with BP on January 24, 2005.
Under  the Option, the Company gave BP the right to participate with the Company
in  a  joint  venture  company  for,  among  other  things,  the exploration and
development  of the Company's four licenses for exploration in the Kurgan region
of  Siberia  (the  "Joint  Venture").  If  BP chooses to exercise the Option and
participate  with  the  Company  in the Joint Venture, the Company will transfer
100%  of  the  Company's ownership interest in ZNG to the Joint Venture, and the
Company  will transfer 50% of the Joint Venture interest to BP for a nominal sum
and  the  agreement  by  BP  to  provide  future funding to the Joint Venture as
detailed  in the Option.  Pursuant to the Option, BP is currently conducting due
diligence  on  the Company's licenses.  BP has paid the Company $100,000 for the
right  to  exercise  the  Option.  In conjunction with the Option, BP provided a
loan  facility  to ZNG.  The loan agreement (the "Loan Agreement") for the total
of  $1,267,860 was signed on April 28, 2005.  The loaned amounts will be used as
specified  in  the  agreement, which includes payment of outstanding amounts for
geological  works  performed, salaries of employees for the period from April to
July 2005, and research work toward potential new fields.  The Company is acting
as guarantor to the issued loan.  The Company granted BP a security interest and
continuing  lien on the Company's right, title and interest in, to the Company's
100%  participatory  interest  in ZNG to secure ZNG's obligations under the Loan
Agreement  and  the  Company's  own  obligations  under  the guarantee.  Also in
conjunction  with the Option, ZNG entered into a license agreement (the "License
Agreement")  with BP. The License Agreement was signed on April 28, 2005.  Under
the  License  Agreement,  ZNG  granted BP an exclusive, royalty-free, worldwide,
perpetual  license to use certain two-dimensional seismic, gravimetric and other
geological  data  (the  "Data")  owned by or to be acquired by ZNG.  BP uses and
will  continue  to  use  the  Data  to  re-process  it into amended formats (the
Results").  BP  granted  ZNG a non-exclusive, royalty-free, worldwide, perpetual
license  to  use  the  Results  when  they  become  available.  We disclosed the
material  terms  of  the  Option,  the Loan Agreement and the License Agreement,
including  the  Company's  guarantee  and the security interest that the Company
granted  to  BP,  in a report of Form 8-K to be filed with the Securities and
Exchange Commission  (the  "Commission").

     The  Company  filed  a  Certificate  of  Amendment  to  its  Articles  of
Incorporation  with the Secretary of State of Nevada, which became effective May
2,  2005.  The  Amendment  affected  a  1:2  reverse  stock split, re-authorized
100,000,000  shares  of common stock, par value $0.001 per share, and authorized
10,000,000  shares  of preferred stock, par value $0.001 par value per share.  A
majority  of the Company's shareholder approved the Amendment by written consent
to  action  without  a  meeting  on April 22, 2005.  The number of shares of the
Company  outstanding  on  the date the written consent was signed was 18,805,771
shares  and  the  number  of  shares  which  voted  to approve the Amendment was
approximately  13,542,692 shares, which represented a majority of the issued and
outstanding  shares of the Company.  As a result of the Amendment, the Company's
common  stock  began  trading  under the new stock symbol "SIBN" on May 2, 2005.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT NO.     DESCRIPTION OF EXHIBIT
-----------     ----------------------

3.1 (1)         Original Articles of Incorporation of the Company then called
                "Advanced Rehab Technology Corporation."
3.2 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation
                filed March 9, 2001, changing the Company's name to "Talking
                Cards, Inc."
3.3 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation
                filed February 12, 2002, changing the Company's name to
                "Osterking Incorporated."
3.4 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation filed December 3, 2002, changing the Company's
                name to "17388 Corporation Inc."
3.5 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation filed May 5, 2003, changing the Company's name to
                "Trans Energy Group Inc."
3.6 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation filed December 3, 2003, changing the Company's
                name to "Siberian Energy Group Inc."
3.7 (2)         Certificate of Amendment to the Company's Articles of
                Incorporation filed April 25, 2005, affecting a 1:2 reverse
                stock split, re-authorizing 100,000,000 shares of common
                stock, par value $0.001 per share, and authorizing 10,000,000
                shares of preferred stock, par value $0.001 par value per share
10.1 (3)        Option Agreement with Baltic Petroleum Limited dated April 28,
                2005
10.2 (3)        License Agreement between OOO Zauralneftegaz and Baltic
                Petroleum Limited dated April 28, 2005
10.3 (3)        Loan Agreement between OOO Zauralneftegaz and Baltic Petroleum
                Limited dated April 28, 2005
10.4 (3)        Guarantee by Siberian Energy Group, Inc. dated April 28, 2005
10.5 (3)        Pledge and Security Agreement between Siberian Energy Group,
                Inc. and Baltic Petroleum Limited dated April 28, 2005
21.1 (4)        Subsidiaries of Company
31.1*           Certification by Chief Executive Officer pursuant to 15 U.S.C.
                Section 7241, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
31.2*           Certification by Chief Financial Officer pursuant to 15 U.S.C.
                Section 7241, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
32.1*           Certification by Chief Executive Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002
32.2*           Certification by Chief Financial Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002

*     Filed  herein.

<PAGE>

(1)  Filed  as  Exhibit  3.1  to  the Company's Form SB-2 Registration Statement
     filed with the Commission on September 10, 2004, and incorporated herein by
     reference.
(2)  Filed  as  Exhibits  3.2,  3.3,  3.4,  3.5,  3.6, 3.7, respectively, to the
     Company's  Form  8-K  filed  with  the  Commission  on  May  2,  2005,  and
     incorporated  herein  by  reference.
(3)  Filed  as Exhibit 10.1, 10.2, 10.3, 10.4 and 10.5 to the Company's Form 8-K
     to be filed  with  the  Commission.
(4)  Filed  as  Exhibit  21.1  to  the  Company's  Form  10-KSB  filed  with the
     Commission  on  March  28,  2005,  and  incorporated  herein  by reference.

REPORTS ON FORM 8-K

     The Company did not file any reports on Form 8-K with the Commission during
the  quarter  for  which  this  report  is  filed.

     The Company filed the following two reports on Form 8-K with the Commission
subsequent  to  the  quarter  for  which  this  report  is  filed.

(1)  Report  on  Form  8-K  filed  on May 2, 2005, to report an amendment to the
     Company's  Articles  of  Incorporation.
(2)  Report  on  Form 8-K to be filed to report the material terms of
     our  Option  Agreement,  Loan  Agreement,  License  Agreement, and Security
     Agreement  with  Baltic  Petroleum  Limited  and  our  Guarantee.

                                   SIGNATURES

     In  accordance  with  the  requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        SIBERIAN  ENERGY  GROUP,  INC.
                                        ------------------------------

                                        By:  /s/  David  Zaikin
                                           --------------------
                                        Name:  David  Zaikin
                                             ------------------
                                        Title:  Chief  Executive  Officer
                                              ---------------------------
                                        Date:  May  18,  2005
                                             ----------------

<PAGE>