**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **FORM
        10-KSB**
  x
                ANNUAL
                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                    ACT OF
                    1934
  For
          the
          fiscal year ended **December
          31, 2006**
  o
                TRANSITION
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF
                    1934
  For
        the
        transition period from o to o
  Commission
        file number **0-31444**
  **Altus
                  Explorations, Inc.**(Name
                  of small business issuer in its
                  charter)


**Nevada**
            
            **98-0361119**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**5868
                Westheimer Suite 308 Houston, TX**
            
            **77057**(Address
                of principal executive offices)
            
            (Zip
                Code)




Issuer's
      telephone number  713.222.0336




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




Title
                of each class
              **Nil**
            
            Name
                of each exchange on which registered
              **Nil**




Securities
      registered pursuant to Section 12(g) of the Act:




**Common
                Shares, par value $0.001**(Title
                of class)




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      125(d) of the Exchange Act o




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 o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. o












Registrant
      is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o;   No
x




Registrant’s
      revenues for its most recent fiscal year were $1,596.




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed based on the average bid and asked prices as of March
      22, 2007, was approximately $483,190.




The
      number of shares outstanding of the issuer’s common equity as of March 22, 2007,
      was 46,572,792
      shares of common stock, par value par value $.001.




DOCUMENTS
      INCOPRORATED BY REFERENCE




If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (a) any annual report to security holders: (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to Rule
      424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24,
      1990).






Transitional
      Small Business Disclosure Format (Check one):   Yes o;   No
x







**PART
      I**




**Item
                1.**
            **Description
                of Business.**




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




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




Our
      financial statements are stated in United States Dollars (US$) and are prepared
      in accordance with United States Generally Accepted Accounting Principles.
      In
      this annual report, unless otherwise specified, all dollar amounts are expressed
      in United States dollars. All references to "common shares" refer to the common
      shares in our capital stock.




As
      used
      in this annual report, the terms "we", "us", "our", and "Altus" mean Altus
      Explorations Inc., unless otherwise indicated.




*Our
      Current Business*




We
      are an
      independent resource company primarily engaged in the exploration and
      development of oil and gas opportunities located in the domestic United States.
      We do not hold proved, producing or revenue generating oil and gas properties.
      We currently hold 48.45 gross acres in Freestone County under an oil and gas
      lease originally executed on June 12, 2003 which has been extended twice for
      two
      additional years each.




The
      interests under the oil and gas lease had been held by production from the
      T.E.
      Lane gas well. The Lane Unit gas well ceased production during the fourth
      quarter 2005, and the operator determined that it was not economically viable
      to
      restore the well to production. Unless the lease is extended by Altus pursuant
      to the lease provisions the lease will expire on June 12, 2007. We have not
      made
      a determination whether Altus will extend the lease prior to its expiration.




We
      continue to seek out oil and gas opportunities that may be economic and within
      our ability to raise financing necessary for us to progress an opportunity.
      Our
      ability to progress the exploration and development of oil and natural gas
      opportunities in the past, and in the future is heavily dependent on our ability
      to secure financing sufficient to allow us to fund our initiatives, to meet
      operating and working capital requirements, and to act on future opportunities
      as they arise.




***United
      States Natural Gas and Oil Industry***




The
      natural gas and oil industry in the United States is highly competitive,
      experiences significant commodity price volatility and is subject to substantial
      local, state and federal regulations concerning matters such as permitting,
      drilling and environmental requirements. We are primarily targeting the
      exploration, exploitation, development and production of natural gas reserves
      to
      meet the U.S. consumers' robust appetite for energy.




Several
      natural gas forecasts project continuing declining levels of domestic natural
      gas production and reserves in the lower 48 states while demand for natural
      gas
      is forecast to continue to grow. The growth in demand is heavily driven by
      increasing levels of power generation necessary to meet electric demand in
      the
      United States and to accomplish the conversion of existing power generation
      facilities to a cleaner burning fuel source, such as natural gas. World crude
      oil prices remain high which puts upward pressure on crude oil prices in the
      United States and facilitates capital investments to explore and develop crude
      oil reserves on-shore and off-shore the U.S.


4




The
      U.S.
      oil industry is heavily dominated by major integrated oil and gas companies
      and
      numerous independent oil companies. Many of these companies possess and employ
      financial and human resources substantially greater than ours. Prices for oil
      production and production levels are subject to wide fluctuations and depend
      on
      numerous factors beyond a companies control including economic conditions,
      foreign imports and political condition in the U.S. and in oil producing rich
      countries, actions of OPEC, and governmental and legislative regulation and
      policies.




***Competition***




The
      oil
      and gas industry is intensely competitive. We compete with numerous individuals
      and companies, including many major oil and gas companies, which have
      substantially greater technical, financial and operational resources and staffs.
      Accordingly, there is a high degree of competition for desirable oil and gas
      leases, suitable properties for drilling operations and necessary drilling
      equipment, as well as for access to funds. We cannot predict if the necessary
      funds can be raised or that any projected work will be completed. Our budget
      anticipates our acquisition of additional acreage. This acreage may not become
      available or if it is available for leasing, that we may not be successful
      in
      acquiring the leases. There are other competitors that have operations in same
      areas and the presence of these competitors could adversely affect our ability
      to acquire additional leases.




***Market
      Prices of Oil and Natural Gas***




The
      market prices of oil and natural gas have historically fluctuated widely and
      are
      affected by numerous global factors beyond our control. A decline in such market
      prices may have an adverse effect on revenues we receive from the sale of oil
      and gas. A decline in prices will also reduce our exploration efforts and make
      it more difficult to raise capital. Decreases in natural gas and oil prices
      could have an adverse effect on the carrying value of our oil and gas
      investments, and our ability to be profitable, and to achieve positive cash
      flows.




***Government
      Regulations and Supervision***




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




***Product
      Research and Development***




Our
      business plan is focused on the long-term exploration and development of our
      recently acquired oil and gas interests, as well as the exploration and
      development of our mineral properties. We do not anticipate that we will expend
      any significant funds on product research over the twelve months.




***Employees***




Currently
      there are no full time or part-time employees of our company (other than our
      directors and officers who, at present, have not signed employment or consulting
      agreements with us). We do not expect any material changes in the number of
      employees over the next 12 month period (although we may enter into employment
      or consulting agreements with our officers or directors). We do and will
      continue to outsource contract employment as needed.


5




However,
      if we are successful in our initial and any subsequent drilling programs we
      may
      retain additional employees as it becomes economically warranted to do so.




***Purchase
      or Sale of Equipment***




We
      do not
      intend to purchase any significant equipment over the twelve
      months.




**RISK
      FACTORS**




Much
      of
      the information included in this annual report includes or is based upon
      estimates, projections or other "forward-looking statements". Such
      forward-looking statements include any projections or estimates made by us
      and
      our management in connection with our business operations. While these
      forward-looking statements, and any assumptions upon which they are based,
      are
      made in good faith and reflect our current judgment regarding the direction
      of
      our business, actual results will almost always vary, sometimes materially,
      from
      any estimates, predictions, projections, assumptions, or other future
      performance suggested herein. We undertake no obligation to update
      forward-looking statements to reflect events or circumstances occurring after
      the date of such statements.




Such
      estimates, projections or other "forward-looking statements" involve various
      risks and uncertainties as outlined below. We caution readers of
      this annual report that important factors in some cases have affected and,
      in the future, could materially affect actual results and cause actual results
      to differ materially from the results expressed in any such estimates,
      projections or other "forward-looking statements". In evaluating us, our
      business and any investment in our business, readers should carefully consider
      the following factors.




***We
      have limited operating history and losses that we expect to continue into the
      future.***




We
      have
      not yet realized any significant revenues. We have limited operating history
      upon which an evaluation of our future success or failure can be made. Since
      our
      inception we have experienced sustained and significant losses. Our ability
      to
      achieve and maintain profitability and positive cash flow is dependent upon
      the
      following:




-
            Our
                ability to locate a profitable resource
                property;




-
            Our
                ability to secure financing to fund capital
                investments;




-
            Our
                ability to generate revenues; and




-
            Our
                ability to reduce exploration costs.




Based
      upon current plans, we expect to incur operating losses in future periods.
      This
      will happen because there are expenses associated with exploration of our oil
      and gas interests. We may not be successful in generating revenues in the
      future. Failure to generate revenues will cause us to go out of business.




***If
      we do not raise enough money for exploration, we will have to delay exploration
      or go out of business.***




We
      are in
      an early development stage and we need additional financing before we are able
      to continue our exploration efforts. We are working to arrange financing, but
      we
      may be unable to raise financing. If we are not able to raise any financing
      we
      will have to delay our exploration or go out of business.




***We
      may not have access to all of the supplies and materials we need to begin
      exploration that could cause us to delay or suspend operations.***




Competition
      and unforeseen limited sources of supplies and equipment in the energy industry
      could result in occasional spot shortages of supplies or the lack of
      availability of required equipment, such as drilling rigs.


6




***We
      do not have enough money to complete the explorations proposed in properties
      and
      consequently may have to cease or suspend our operations unless we are able
      to
      raise additional financing.***




We
      do not
      have enough money to commence first stages of the exploration and development
      of
      all of our prospects. We will require additional funding to complete subsequent
      phases of exploration and development. Because we are conducting exploration
      on
      undeveloped projects, we do not know how much we will have to spend to find
      out
      if there is oil and gas on our property. It could cost as little as $1,000,000
      and as much as $10,000,000 to find out. If it turns out that we are not able
      to
      raise enough money to complete our exploration program, we will try to raise
      additional funds from a public offering, a private placement or loans. At the
      present time, we are pursuing initiatives to raise additional money, but there
      are no assurances that we would be able to raise additional money in the future.
      If we need additional money and cannot raise it, we will have to suspend or
      cease operations.




***We
      have a limited operating history and if we are not successful in continuing
      to
      grow our business, then we may have to scale back or even cease our ongoing
      business operations.***




We
      have
      no history of substantial revenues from operations, and currently do not hold
      any proved, producing or revenue generating oil and gas interests. We have
      yet
      to generate positive earnings and there can be no assurance that we will ever
      operate profitably. Our company has a limited operating history and our success
      is significantly dependent on a successful acquisition, drilling, completion
      and
      production program. We will be subject to all the risks inherent in the
      establishment of a developing enterprise and the uncertainties arising from
      the
      absence of a significant operating history. We may be unable to locate
      recoverable reserves or operate on a profitable basis. We are in the development
      stage and potential investors should be aware of the difficulties normally
      encountered by enterprises in the development stage. If our business plan is
      not
      successful, and we are not able to operate profitably, investors may lose some
      or all of their investment in our company.




***Because
      of the early stage of development and the nature of our business, our securities
      are considered highly speculative.***




Our
      securities must be considered highly speculative, generally because of the
      nature of our business and the early stage of our development. We are engaged
      in
      the business of exploring and, if warranted, developing commercial reserves
      of
      oil and gas. Our properties are in the exploration stage only and are without
      known reserves of oil and gas. Accordingly, we have not generated any revenues
      nor have we realized a profit from our operations to date and there is little
      likelihood that we will generate any revenues or realize any profits in the
      short term. Any profitability in the future from our business will be dependent
      upon locating and developing economic reserves of oil and gas, which itself
      is
      subject to numerous risk factors as set forth herein. Since we have not
      generated any revenues, we will have to raise additional monies through the
      sale
      of our equity securities or debt in order to continue our business
      operations.




***As
      our properties are in the exploration and development stage there can be no
      assurance that we will establish commercial discoveries on our
      properties.***




Exploration
      for technically and commercially recoverable reserves of oil and gas is subject
      to a number of risk factors. Few properties that are explored are ultimately
      developed into producing oil and/or gas wells. Even if reserves located are
      technically recoverable, they may not be commercially recoverable in the
      existing market.




***The
      potential profitability of oil and gas ventures depends upon factors beyond
      the
      control of our company***




The
      potential profitability of oil and gas properties is dependent upon many factors
      beyond our control. For instance, world prices and markets for oil and gas
      are
      unpredictable, highly volatile, potentially subject to governmental fixing,
      pegging, controls, or any combination of these and other factors, and respond
      to
      changes in domestic, international, political, social, and economic
      environments. Additionally, due to worldwide economic uncertainty, the
      availability and cost of funds for production and other expenses have become
      increasingly difficult, if not impossible, to project. These changes and events
      may materially affect our financial performance.


7




Adverse
      weather conditions can also hinder drilling operations. A productive well may
      become uneconomic in the event water or other deleterious substances are
      encountered which impair or prevent the production of oil and/or gas from the
      well. In addition, production from any well may be unmarketable if it is
      impregnated with water or other deleterious substances. The marketability of
      oil
      and gas which may be acquired or discovered will be affected by numerous factors
      beyond our control. These factors include the proximity and capacity of oil
      and
      gas pipelines and processing equipment, market fluctuations of prices, taxes,
      royalties, land tenure, allowable production and environmental protection.
      These
      factors cannot be accurately predicted and the combination of these factors
      may
      result in our company not receiving an adequate return on invested
      capital.




***Competition
      in the oil and gas industry is highly competitive and there is no assurance
      that
      we will be successful in acquiring the leases.***




The
      oil
      and gas industry is intensely competitive. We compete with numerous individuals
      and companies, including many major oil and gas companies, which have
      substantially greater technical, financial and operational resources and staffs.
      Accordingly, there is a high degree of competition for desirable oil and gas
      leases, suitable properties for drilling operations and necessary drilling
      equipment, as well as for access to funds. We cannot predict if the necessary
      funds can be raised or that any projected work will be completed. Our budget
      anticipates our acquisition of additional acreage. This acreage may not become
      available or if it is available for leasing, that we may not be successful
      in
      acquiring the leases. There are other competitors that have operations in same
      areas and the presence of these competitors could adversely affect our ability
      to acquire additional leases.




***The
      marketability of natural resources will be affected by numerous factors beyond
      our control which may result in us not receiving an adequate return on invested
      capital to be profitable or viable.***




The
      marketability of natural resources which may be acquired or discovered by us
      will be affected by numerous factors beyond our control. These factors include
      market fluctuations in oil and gas pricing and demand, the proximity and
      capacity of natural resource markets and processing equipment, governmental
      regulations, land tenure, land use, regulation concerning the importing and
      exporting of oil and gas and environmental protection regulations. The exact
      effect of these factors cannot be accurately predicted, but the combination
      of
      these factors may result in us not receiving an adequate return on invested
      capital to be profitable or viable.




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




Oil
      and
      gas operations are subject to federal, state, and local laws relating to the
      protection of the environment, including laws regulating removal of natural
      resources from the ground and the discharge of materials into the environment.
      Oil and gas operations are also subject to federal, state, and local laws and
      regulations which seek to maintain health and safety standards by regulating
      the
      design and use of drilling methods and equipment. Various permits from
      government bodies are required for drilling operations to be conducted; no
      assurance can be given that such permits will be received. Environmental
      standards imposed by federal, provincial, or local authorities may be changed
      and any such changes may have material adverse effects on our activities.
      Moreover, compliance with such laws may cause substantial delays or require
      capital outlays in excess of those anticipated, thus causing an adverse effect
      on us. Additionally, we may be subject to liability for pollution or other
      environmental damages which it may elect not to insure against due to
      prohibitive premium costs and other reasons. To date we have not been required
      to spend any material amount on compliance with environmental regulations.
      However, we may be required to do so in future and this may affect our ability
      to expand or maintain our operations.




***Exploration
      and production activities are subject to certain environmental regulations
      which
      may prevent or delay the commencement or continuance of our
      operations.***




In
      general, our exploration and production activities are subject to certain
      federal, state and local laws and regulations relating to environmental quality
      and pollution control. Such laws and regulations increase the costs of these
      activities and may prevent or delay the commencement or continuance of a given
      operation. Compliance with these laws and regulations has not had a material
      effect on our operations or financial condition to date. Specifically, we are
      subject to legislation regarding emissions into the environment, water
      discharges and storage and disposition of hazardous wastes. In addition,
      legislation has been enacted which requires well and facility sites to be
      abandoned and reclaimed to the satisfaction of state authorities. However,
      such
      laws and regulations are frequently changed and we are unable to predict the
      ultimate cost of compliance. Generally, environmental requirements do not appear
      to affect us any differently or to any greater or lesser extent than other
      companies in the industry.


8




We
      believe that our historical and current operations comply, in all material
      respects, with all applicable environmental regulations.




Our
      operating partners maintain insurance coverage customary to the industry;
      however, we are not fully insured against all possible environmental
      risks.




***Exploratory
      drilling involves many risks and we may become liable for pollution or other
      liabilities which may have an adverse effect on our financial
      position.***




Drilling
      operations generally involve a high degree of risk. Hazards such as unusual
      or
      unexpected geological formations, power outages, labor disruptions, blow-outs,
      sour gas leakage, fire, inability to obtain suitable or adequate machinery,
      equipment or labour, and other risks are involved. We may become subject to
      liability for pollution or hazards against which it cannot adequately insure
      or
      which it may elect not to insure. Incurring any such liability may have a
      material adverse effect on our financial position and operations.




***Any
      change to government regulation/administrative practices may have a negative
      impact on our ability to operate and our
      profitability.***




The
      laws,
      regulations, policies or current administrative practices of any government
      body, organization or regulatory agency in the United States or any other
      jurisdiction, may be changed, applied or interpreted in a manner which will
      fundamentally alter the ability of our company to carry on our
      business.




The
      actions, policies or regulations, or changes thereto, of any government body
      or
      regulatory agency, or other special interest groups, may have a detrimental
      effect on us. Any or all of these situations may have a negative impact on
      our
      ability to operate and/or our profitably.




***We
      do not own any resource properties. We hold working and revenue interests in
      various oil and gas leases***




We
      do not
      own any resource properties. We hold an oil and gas lease interest in Freestone
      County, Texas. Unless we are able to pay our costs associated with retaining
      the
      lease interest our interest will be lost entirely.




***Because
      the SEC imposes additional sales practice requirements on brokers who deal
      in
      our shares that are penny stocks, some brokers may be unwilling to trade them.
      This means that you may have difficulty in reselling your shares and may cause
      the price of the shares to decline.***




Our
      shares qualify as penny stocks and are covered by Section 15(g) of the
      Securities Exchange Act of 1934, which imposes additional sales practice
      requirements on broker/dealers who sell our securities in this offering or
      in
      the aftermarket. In particular, prior to selling a penny stock, broker/dealers
      must give the prospective customer a risk disclosure document that: contains
      a
      description of the nature and level of risk in the market for penny stocks
      in
      both public offerings and secondary trading; contains a description of the
      broker/dealers' duties to the customer and of the rights and remedies available
      to the customer with respect to violations of such duties or other requirements
      of Federal securities laws; contains a brief, clear, narrative description
      of a
      dealer market, including "bid" and "ask" prices for penny stocks and the
      significance of the spread between the bid and ask prices; contains the toll
      free telephone number for inquiries on disciplinary actions established pursuant
      to section 15(A)(i); defines significant terms used in the disclosure document
      or in the conduct of trading in penny stocks; and contains such other
      information, and is in such form (including language, type size, and format),
      as
      the SEC requires by rule or regulation. Further, for sales of our securities,
      the broker/dealer must make a special suitability determination and receive
      from
      you a written agreement before making a sale to you. Because of the imposition
      of the foregoing additional sales practices, it is possible that brokers will
      not want to make a market in our shares. This could prevent you from reselling
      your shares and may cause the price of the shares to decline.


9




***Our
      officers and directors beneficially own a total of 600,000 shares of our
      company. They may sell some of their shares in the future, which could cause
      the
      price of our common stock to fall, which will reduce the value of your shares.***




Our
      officers and directors beneficially own a total of 600,000 shares of stock,
      which is approximately 1.3% of the issued and outstanding number of shares.
      Subject to all holding periods under applicable securities laws, they will
      likely sell a portion or all of their stock in the future. If they do sell
      their
      stock into the market, the sales may cause the market price of the stock to
      drop.




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




The
      U.S.
      Securities and Exchange Commission has adopted regulations which generally
      define "penny stock" to be any equity security that has a market price (as
      defined) less than $5.00 per share or an exercise price of less than $5.00
      per
      share, subject to certain exceptions. Our securities are covered by the penny
      stock rules, which impose additional sales practice requirements on
      broker-dealers who sell to persons other than established customers and
      "accredited investors". The term "accredited investor" refers generally to
      institutions with assets in excess of $5,000,000 or individuals with a net
      worth
      in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
      with their spouse. The penny stock rules require a broker-dealer, prior to
      a
      transaction in a penny stock not otherwise exempt from the rules, to deliver
      a
      standardized risk disclosure document in a form prepared by the SEC which
      provides information about penny stocks and the nature and level of risks in
      the
      penny stock market. The broker-dealer also must provide the customer with
      current bid and offer quotations for the penny stock, the compensation of the
      broker-dealer and its salesperson in the transaction and monthly account
      statements showing the market value of each penny stock held in the customer's
      account. The bid and offer quotations, and the broker-dealer and salesperson
      compensation information, must be given to the customer orally or in writing
      prior to effecting the transaction and must be given to the customer in writing
      before or with the customer's confirmation. In addition, the penny stock rules
      require that prior to a transaction in a penny stock not otherwise exempt from
      these rules, the broker-dealer must make a special written determination that
      the penny stock is a suitable investment for the purchaser and receive the
      purchaser's written agreement to the transaction. These disclosure requirements
      may have the effect of reducing the level of trading activity in the secondary
      market for the stock that is subject to these penny stock rules. Consequently,
      these penny stock rules may affect the ability of broker-dealers to trade our
      securities. We believe that the penny stock rules discourage investor interest
      in and limit the marketability of, our common stock.




***We
      do not expect to declare or pay any dividends.***




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




***Anti-Takeover
      Provisions***




We
      do not
      currently have a shareholder rights plan or any anti-takeover provisions in
      our
      By-laws. Without any anti-takeover provisions, there is no deterrent for a
      take-over of our company, which may result in a change in our management and
      directors.




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




Our
      By-laws contain provisions with respect to the indemnification of our officers
      and directors against all costs, charges and expenses, including an amount
      paid
      to settle an action or satisfy a judgment, actually and reasonably incurred
      by
      him, including an amount paid to settle an action or satisfy a judgment in
      a
      civil, criminal or administrative action or proceeding to which he is made
      a
      party by reason of his being or having been one of our directors or
      officers.


10




**Item
                2.**
            **Description
                of Property.**




Our
      principal offices are located at 5868 Westheimer Road, Suite 308, Houston,
      Texas. Our telephone number is (713) 222-0336. During the fiscal years ended
      December 31, 2006 and 2005, we incurred total annual rent of $12,800 and
      $19,200, respectively.




The
      properties in which we hold our interests do not have any productive natural
      or
      oil wells at the date hereof.




***Our
      Texas Freestone County Property***




As
      of
      December 31, 2006 we hold a 100% working interest in a 48.45 acre oil and gas
      lease located in Freestone County, Texas. The lease expires on June 12, 2007
      unless extended by Altus.




**Item
                3.**
            **Legal
                Proceedings.**




We
      know
      of no material, active or pending legal proceedings against us, nor are we
      involved as a plaintiff in any material proceedings or pending litigation.
      There
      are no proceedings in which any of our directors, officers or affiliates, or
      any
      registered beneficial shareholder are an adverse party or has a material
      interest adverse to us.




**Item
                4.**
            **Submissions
                of Matters to a Vote of Security
                Holders.**




None.


11




**PART
      II**




**Item
      5.**  **Market
      for Common Equity and Related Stockholder Matters.**




On
      January 13, 2003, our common stock received approval for quotation on the
      National Association of Securities Dealers Inc.'s Over-the-Counter Bulletin
      Board under the name "Altus Explorations, Inc." and under the symbol "ATUX".
      The
      following table reflects the high and low bid information for our common stock
      for each fiscal quarter during the fiscal years ended December 31, 2003, 2004,
      2005 and 2006. The bid information was obtained from Yahoo! Finance and reflects
      inter-dealer prices, without retail mark-up, markdown or commission, and may
      not
      necessarily represent actual transactions.







**Quarter
                Ended**(1)
            **High**(2)
            **Low**(2)March
                31, 2003
            0.01
            0.01June
                30, 2003
            0.02
            0.02September
                30, 2003
            0.02
            0.02December
                31, 2003
            2.00
            0.00March
                31, 2004
            3.60
            0.80June
                30, 2004
            1.60
            0.79September
                30, 2004
            0.97
            0.41December
                31, 2004
            0.50
            0.19March
                31, 2005
            0.95
            0.23June
                30, 2005
            0.80
            0.22September
                30, 2005
            0.35
            0.16December
                31, 2005
            0.22
            0.05March
                31, 2006
            0.08
            0.05June
                30, 2006
            0.10
            0.03September
                30, 2006
            0.04
            0.01December
                31, 2006
            0.03
            0.01




(1) Our
      common stock received approval for quotation on January 13, 2003. The first
      trade occurred December 10, 2003.




(2) On
      November 6, 2003, we affected an 8 for 1 forward split of our common stock
      and
      on February 24, 2004 we effected a 4 for 1 forward split, as a result all stock
      prices have been adjusted on a post-split basis.




On
      March
      22, 2007, the closing price for the common stock as reported by the quotation
      service operated by the OTC Bulletin Board was $.012 per share.




As
      of
      March 31, 2007, there were 271 holders of record of our common stock with
      22,645,290 shares held in street name through Cede & Co.. As of such date,
      46,572,792 common shares were issued and outstanding.




Our
      common shares are issued in registered form. The Nevada Agency and Trust
      Company, 50 Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone:
      775.322.0626; Facsimile: 775.322.5623 is the registrar and transfer agent for
      our common shares. We have no other exchangeable securities.


12




*Dividend
      Policy*




We
      have
      not paid any cash dividends on our common stock and have no present intention
      of
      paying any dividends on the shares of our common stock. Our current policy
      is to
      retain earnings, if any, for use in our operations and in the development of
      our
      business. Our future dividend policy will be determined from time to time by
      our
      board of directors.




*Recent
      Sales of Unregistered Securities*




For
      the
      twelve month period ended December 31, 2006, no shares were issued. For the
      twelve month period ended December 31, 2005, we issued 3,978,466 shares of
      common stock which were exempt from registration under the Securities Act of
      1933. All securities issued during 2005 are “restricted securities” within the
      meaning of the Securities Act. No securities were issued during the year
      2004.




On
      September 23, 2005 we issued 1,718,750 shares pursuant to Excalibur’s exercise
      of its right to convert its convertible loan of $250,000 plus accrued interest,
      originally made to Altus on September 20, 2004, to common shares at a conversion
      rate of $.16 per share. The securities were issued pursuant to the exemption
      from registration provided by Section 4(2) of the Securities Act of 1933 for
      non
“U.S. Persons” as defined by Regulation S of the Securities Act.




On
      February 17, 2006 the Board of Directors approved the issuance of a total of
      2,259,716 common shares with a par value of $.001 in capital stock of Altus
      to former officers and directors of Altus in satisfaction of accounts
      payables due to Milton Cox, Bassam Nastat and Don Sytsma, or their affiliates,
      for unpaid services and amounts paid by them on the behalf of Altus totalling
      $238,078 as of December 30, 2005. The conversion of payables to common stock
      was
      based on a conversion rate of two times (2) of the weighted average price per
      share for the last ten (10) trading days of December 2005, or a conversion
      rate
      $.10536 per share. The securities were issued pursuant to the exemption from
      registration provided “Accredited Investor” as the term is defined in Regulation
      D under the Securities Act of 1933.


13




**Item
                6.**
            **Management
                Discussion and Analysis and Plan of
                Operation.**




***Results
      of Operations.***




We
      incurred losses for the years ended December 31, 2006 and 2005 of $124,911
      and
      $1,962,541, respectively. Losses in 2006 were attributable to general and
      administrative expenses and the write down of our Texas oil and gas investment
      which was not extended in 2006. The losses in 2005 were principally associated
      with the impairment write down of our investment in the Freestone oil and gas
      prospect and general and administrative expenses.




In
      2006,
      we incurred general and administrative expenses totalling $85,010 and a non-cash
      impairment charge of $30,467 for our oil and gas investment in Wharton County,
      Texas. Approximately 63% of our general and administrative expenses, or $53,606,
      during the year 2006 were associated with costs incurred as a public company
      to
      remain compliant with statutory filing and reporting requirements. General
      and
      administrative expenses during 2005 totalled $547,274.




The
      reduction in general administrative expenses from 2005 to 2006 was the result
      of
      our scaling back of company activities while we restructure the company and
      strive to strengthen our financial position. In 2006 we directed our limited
      resources to oil and gas prospects that are consistent with our ability to
      raise
      financing to fund capital investments. Additionally, in 2005 our general and
      administrative expenses included charges totalling $222,199 associated with
      the
      fair value amortization of stock options issued in 2004.




In
      2005,
      we recorded an impairment loss (non-cash) of $1,118,493 associated with the
      write down of our Freestone properties to its estimated net realizable value
      of
      zero due to the substantial capital investment necessary to develop this
      acreage, and Altus’ inability at the present time to fund such costs. For 2005
      we also issued 2,259,716 shares of common stock for amounts due to former
      directors and officers which totalled $238,078 associated with unpaid services
      fees and expenses paid on our behalf during 2005. No compensation or fees for
      services were paid or accrued for officers and directors by Altus during 2006.




Other
      non-cash charges incurred in 2005 included our settlement of outstanding
      borrowings and accrued interest under loans from CodeAmerica totalling $263,932
      in exchange for transferring our interests in the Kansas Lake Creek Prospect
      to
      CodeAmerica In connection with the transfer we recorded a noncash loss on the
      disposition totalling $108,788.




***Financial
      Condition, Liquidity and Capital Resources***




As
      of
      December 31, 2006 we do not hold any proved, producing or revenue generating
      oil
      and gas investments. We hold unexpired oil and gas lease acreage of
      approximately 48.45 acres gross in Freestone County, Texas. If the lease is
      not
      renewed by June 12, 2007, our interests in the lease will expire.




Our
      ability to secure capital financing has been very limited historically, and
      in
      particular our ability to source funding sufficient to allow us to participate
      in large scale drilling and development programs. In connection with the
      reassessment of our core competencies and our initiative to strengthen Altus’
financial position, our attention and priorities during 2006 were focused on
      identifying oil and gas opportunities that require capital investment levels
      that are consistent with our capacity to secure financing to fund our
      participation in prospects. During 2007 we intend to continue to direct our
      resources toward prospects that are viable for us to participate in.




At
      year
      end December 31, 2005 we engaged an independent consulting economist to assess
      the carrying value of our oil and gas investments in Freestone County, Texas,
      Louisiana and Alaska as carried on Altus’ books. This evaluation resulted in our
      recording noncash impairment losses for our oil and gas investments located
      in
      Freestone County, Texas totalling $1,118,493, and impairment charges totalling
      $150,332 for costs incurred by Altus in the evaluation of possible prospects
      in
      Louisiana and Alaska.




At
      December 31, 2006 payables to non-related parties totalled $8,365 as compared
      to
      $38,410 at December 31, 2005. The reduction of third party payables from 2005
      to
      2006 is a result of our scaling back of activities in 2006 and advances from
      shareholders used to fund payments to non-related party vendors. Accounts
      payable and advances from related parties and/or shareholders totalled $34,017
      and $87,750, respectively at December 31, 2006 or $121,767 in
      total.


14




As
      of
      December 30, 2005, we had accounts payables due to former officers and directors
      of Altus totalling $238,078; these were related to unpaid fees for services
      for
      the years 2004 and 2005, and for amounts paid by them on behalf of Altus. On
      February 17, 2006, our Board of Directors approved the issuance of a total
      of
      2,259,716 common shares with a par value of $.001 in common stock of Altus
      to
      former officers and directors of Altus in satisfaction of $238,078 accounts
      payables due to them as of December 30, 2005. The conversion of payables to
      common stock was effective December 30, 2005, and was based on a conversion
      rate
      of two times (2) the weighted average price per share for the last ten (10)
      trading days of December 2005, or a conversion rate $0.10536 per share. Also
      in
      connection with our initiatives to settle and satisfy our outstanding
      obligations at December 31, 2005, we transferred our interests in the Kansas
      Lake Creek Prospect to CodeAmerica in exchange for the outstanding principal
      and
      accrued interest totalling $263,932 under our loan agreement with
      CodeAmerica.




At
      December 31, 2006 we had cash totalling $5,060 as compared to $411 at the
      year-end 2005. The increase in cash was due to shareholder advances made to
      Altus to fund its obligations.




*Cash
      Requirements*




Our
      projection for cash requirements for the twelve month period ending December
      31,
      2007 totals approximately $200,000, of which we have allocated 100% for use
      in
      our identification and assessment of oil and gas opportunities that require
      capital investments at levels consistent with our ability to secure and close
      financing to further develop the opportunities identified.




*Product
      Research and Development*




Our
      business plan is focused on the exploration and development of our oil and
      gas
      interests.




We
      do not
      anticipate that we will expend any significant funds on research and development
      over the next twelve months.




*Purchase
      of Significant Equipment*




We
      do not
      intend to purchase any significant equipment over the next twelve
      months.




*Employees*




Currently
      we have no full time or part-time employees. We utilize short term contractors
      as necessary. Our directors and officers provide services on a month to month
      basis pursuant to oral arrangements, but have not signed employment or
      consulting agreements with us. We do not expect any material changes in the
      number of employees over the next 12 month period. We may enter formal written
      service agreements with our directors and officers in the future. We expect
      to
      continue to outsource contract employment as needed. Depending on the level
      of
      success of our exploration and development initiatives, we may retain full
      or
      part-time employees in the future.




*Going
      Concern*





The
      accompanying financial statements have been prepared assuming we will continue
      as a going concern. As shown in the accompanying financial statements, we
      incurred a net loss of $124,911 and $1,962,541 during 2006 and 2005,
      respectively. Our future is dependent upon our ability to obtain financing
      and
      upon future profitable operations from the development of our oil and gas
      properties. Management plans to fund operations through equity offerings,
      financings, mergers, joint ventures or other means available to us. There can
      be
      no assurance that we will be able to complete a transaction, or that a
      transaction would be on terms favorable to Altus or its shareholders. The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts of and
      classification of liabilities that might be necessary in the event Altus cannot
      continue in existence. These conditions raise substantial doubt about our
      ability to continue as a going concern.


15




We
      intend
      to raise additional financing to fund our capital expenditure and working
      capital needs into year 2007 primarily through private placements.




*Recently
      Issued Accounting Standards*


In
        July
        2006, the Financial Accounting Standards Board ("FASB") issued FASB
        Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
        Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
        accounting for uncertainty in income tax positions. This Interpretation requires
        that Altus recognize in its financial statements the impact of a tax position
        if
        that position is more likely than not of being sustained on audit, based
        on the
        technical merits of the position. The provisions of FIN 48 are effective
        for
        Altus on January 1, 2007, with the cumulative effect of the change in accounting
        principle, if any, recorded as an adjustment to opening retained earnings.
        Altus
        is currently evaluating the impact of adopting FIN 48 on its financial position,
        cash flows, and results of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
        157"), which clarifies the definition of fair value, establishes guidelines
        for
        measuring fair value, and expands disclosures regarding fair value measurements,
        SFAS 157 does not require and new fair value measurements and eliminates
        inconsistencies in guidance found in various prior accounting pronouncements.
        SFAS 157 will be effective for Altus on January 1, 2008. Altus is currently
        evaluating the impact of adopting SFAS 157 on its financial position, cash
        flows, and results of operations.




APPLICATION
      OF CRITICAL ACCOUNTING POLICIES




Our
      financial statements and accompanying notes are prepared in accordance with
      generally accepted accounting principles in the United States. Preparing
      financial statements requires management to make estimates and assumptions
      that
      affect the reported amounts of assets, liabilities, revenue, and expenses.
      These
      estimates and assumptions are affected by management's application of accounting
      policies. We believe that understanding the basis and nature of the estimates
      and assumptions involved with the following aspects of our consolidated
      financial statements is critical to an understanding of our balance sheet,
      the
      statements of operations and stockholders' equity, and the cash flows statements
      included elsewhere in this filing.


16




**Item
                7.**
            **Financial
                Statements.**




Our
      financial statements are stated in United States Dollars (US$) and are prepared
      in accordance with accounting principles generally accepted in the United States
      of America.




The
      Report of Independent Registered Public Accounting Firm of Malone & Bailey,
      P:C for the audited financial statements for the years ended December 31, 2006
      and 2005 is included herein immediately preceding the audited financial
      statements.




***Altus
      Explorations, Inc. (audited):***




Report
      of
      Independent Registred Public Accounting Firm, dated April 2, 2007




Balance
      Sheets as at December 31, 2006 and 2005




Statements
      of Operations for the years ended December 31, 2006 and December 31, 2005




Statements
      of Changes in Stockholders' Equity for the year ended December 31, 2006 and
      December 31, 2005




Statements
      of Cash Flows for the years ended December 31, 2006 and December 31, 2005




Notes
      to
      the Financial Statements





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Board of Directors


Altus
      Explorations, Inc.


Houston,
      Texas





We
      have
      audited the accompanying balance sheets of Altus Explorations, Inc. as of
      December 31, 2006 and 2005, and the related statements of operations,
      stockholders’ deficit, and cash flows for each of the two years then ended.
      These financial statements are the responsibility of Altus's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Altus Explorations, Inc. as of
      December 31, 2006 and 2005, and the results of its operations and its cash
      flows
      for each of the two years then ended in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assumed that Altus
      Explorations, Inc. will continue as a going concern. As discussed in Note 2
      to
      the financial statements, Altus's recurring losses from operations and the
      need
      to raise additional financing in order to fund its oil and gas exploration
      and
      development activity and satisfy vendors and other creditor obligations raise
      substantial doubt about its ability to continue as a going concern. Management’s
      plans as to these matters are also described in Note 2. The 2006 financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.











Malone
      & Bailey, PC


www.malone-bailey.com


Houston,
      Texas





April
      2,
      2007


18




ALTUS
      EXPLORATIONS, INC.


BALANCE
      SHEETS





December
                31,2006
            
            2005ASSETSCurrent
                assetsCash
            
            $
            5,060
            
            $
            411Accrued
                receivable and accrued revenues
            
            
            -
            
            
            4,863Total
                current assets
            
            
            5,060
            
            
            5,274Oil
                and natural gas properties, full cost methodSubject
                to amortization, net
            
            
            -
            
            
            30,467Other
                property and equipment, net
            
            
            453
            
            
            4,725TOTAL
                ASSETS
            
            $
            5,513
            
            $
            40,466LIABILITIES
                AND STOCKHOLDERS' DEFICITCurrent
                liabilities:Accounts
                payable
            
            $
            8,365
            
            $
            38,410Accounts
                payable - related party
            
            
            34,017
            
            
            6,764Advances
                from shareholders
            
            
            87,750
            
            
            -Total
                current liabilities
            
            
            130,132
            
            
            45,174CommitmentsSTOCKHOLDERS'
                DEFICIT:Common
                stock, $.001 par value, 800,000,000 shares authorized, 46,572,792
                shares
                issued and outstanding at December 31, 2006 and 2005
            
            
            46,573
            
            
            46,573Additional
                paid in capital
            
            
            5,983,973
            
            
            5,978,973Accumulated deficit
            
            
            (6,155,165
            )
            
            (6,030,254
            )Total
                stockholders' equity (deficit)
            
            
            (124,619
            )
            
            (4,708
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
            
            $
            5,513
            
            $
            40,466







*The
      accompanying notes are an integral part of these statements.*




19


**ALTUS
      EXPLORATIONS, INC.**


**STATEMENTS
      OF OPERATIONS**


**For
      the Years Ended December 31, 2006 and 2005**








2006
            
            2005Revenues
            
            $
            1,596
            
            $
            74,421Operating
                expensesLease
                operating
            
            
            1,758
            
            
            47,796Loss
                on disposition properties
            
            
            -
            
            
            108,788Impairment
                of oil and gas investments
            
            
            30,467
            
            
            1,268,825General
                and administrative
            
            
            85,010
            
            
            547,274Depreciation
                and depletion
            
            
            4,272
            
            
            25,003Total
                operating expenses
            
            
            121,507
            
            
            1,997,686Loss
                from operations
            
            
            119,911
            
            
            1,923,265Interest
                expense
            
            
            5,000
            
            
            39,276Net
                loss
            
            $
            (124,911
            )
            $
            (1,962,541
            )Net
                loss per share:Basic
                and diluted
            
            $
            (0.00
            )
            $
            (0.05
            )Weighted
                average sharesoutstanding:Basic
                and diluted
            
            
            46,572,792
            
            
            42,881,569








*The
      accompanying notes are an integral part of these statements.*




20


**ALTUS
      EXPLORATIONS, INC.**


**STATEMENTS
      OF STOCKHOLDERS' DEFICIT**


**For
      the Years Ended December 31, 2006 and 2005**





Common
                StockShares
            
            Amount
            
            Additional
                paid
            
            Accumulated
            
            Subscriptionin
                capital
            
            Deficit
            
            Receivable
            
            TotalBalance,
                December 31, 2004
            
            
            42,594,326
            
            $
            42,594
            
            $
            5,247,675
            
            $
            (4,067,713
            )
            $
            -
            
            $
            1,222,556Issuance
                of common stock in connection with conversion of payables due related
                parties
            
            
            2,259,716
            
            
            2,260
            
            
            235,818
            
            
            -
            
            
            -
            
            
            238,078Issuance
                of common stock in connection with conversion of Excalibur
                Note
            
            
            1,718,750
            
            
            1,719
            
            
            273,281
            
            
            -
            
            
            -
            
            
            275,000Stock
                option fair amortization
            
            
            -
            
            
            -
            
            
            222,199
            
            
            -
            
            
            -
            
            
            222,199Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,962,541
            )
            
            -
            
            
            (1,962,541
            )Balance,
                December 31, 2005
            
            
            46,572,792
            
            $
            46,573
            
            $
            5,978,973
            
            $
            (6,030,254
            )
            $
            -
            
            $
            (4,708
            )Imputed
              interest on shareholder advances
            
            
            
            
            
            
            
            
            5,000
            
            
            
            
            
            
            
            
            5,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (124,911
            )
            
            -
            
            
            (124,911
            )Balance,
                December 31, 2006
            
            
            46,572,792
            
            $
            46,573
            
            $
            5,983,973
            
            $
            (6,155,165
            )
            $
            -
            
            $
            (124,619
            )








*The
      accompanying notes are an integral part of these
      statements.*


21





**ALTUS
      EXPLORATIONS, INC.**


**STATEMENTS
      OF CASH FLOWS**


**For
      the Years Ended December 31, 2006 and 2005**





Year
                Ended
              December
                31,2006
            
            2005CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (124,911
            )
            $
            (1,962,541
            )Adjustments
                to reconcile net deficit to cash used by operating
                activities:Impairment
                of oil and gas properties
            
            
            30,467
            
            
            1,268,825Depreciation,
                depletion and amortization
            
            
            4,272
            
            
            25,003Imputed
                interest on advances from shareholders
            
            
            5,000
            
            
            -Loss
                on disposition of oil and gas properties
            
            
            -
            
            
            108,788Write
                off note payable - related party
            
            
            -
            
            
            (3,250
            )Stock
                option intrinsic value amortization
            
            
            -
            
            
            222,199Net
                change in:Accounts
                receivable and accrued revenues
            
            
            4,863
            
            
            (4,862
            )Accounts
                payable and accrued expenses
            
            
            (30,046
            )
            
            26,151Accounts
                payable - related parties
            
            
            27,253
            
            
            218,322Proceeds
                from shareholder advances
            
            
            87,750
            
            
            -Accrued
                interest - convertible loan
            
            
            -
            
            
            17,945Accrued
                interest - note payable related party
            
            
            -
            
            
            21,332CASH
                FLOWS USED IN OPERATING ACTIVITIES
            
            
            4,649
            
            
            (62,089
            )CASH
                FLOWS FROM INVESTING ACTIVITIESInvestment
                in oil and gas properties
            
            
            -
            
            
            (150,000
            )CASH
                FLOWS USED IN INVESTING ACTIVITIES
            
            
            -
            
            
            (150,000
            )CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from note payable - related party
            
            
            -
            
            
            208,000CASH
                FLOWS PROVIDED BY FINANCING ACTIVITIES
            
            
            -
            
            
            208,000NET
                INCREASE (DECREASE) IN CASH
            
            
            4,649
            
            
            (4,089
            )Cash,
                beginning of period
            
            
            411
            
            
            4,500Cash,
                end of period
            
            $
            5,060
            
            $
            411Cash
                paid for:Interest
            
            
            -
            
            
            -Income
                taxes
            
            
            -
            
            
            -Supplemental
                Non-cash Disclosures:Conversion
                of note payable-convertible loan
            
            $
            -
            
            $
            275,000Conversion
                of accounts payable to related parties
            
            
            -
            
            
            238,078







*The
      accompanying notes are an integral part of these
      statements.*


22


**ALTUS
      EXPLORATIONS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**




**NOTE
      1 - SUMMARY OF ACCOUNTING POLICIES**





Nature
      of
      business





Altus
      Explorations, Inc. was incorporated in Nevada on November 2, 2001. Altus is
      engaged in the acquisition and exploration for oil and natural gas.




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 the reported amounts of revenues and expenses
      during the reporting periods. Actual results could materially differ from those
      estimates.




Cash
      and
      Cash Equivalents




Cash
      and
      cash equivalents include cash and all highly liquid financial instruments with
      purchased maturities of three months or less.





Property
      and Equipment





Property
      and equipment is valued at cost. Additions are capitalized and maintenance
      and
      repairs are charged to expense as incurred. Gains and losses on dispositions
      of
      equipment are reflected in operations. Depreciation is provided using the
      straight-line method over the estimated useful lives of the assets, which are
      three years for computers and seven years for furniture. Accumulated
      depreciation was $13,374 and $9,101 as of December 31, 2006 and 2005,
      respectively.




Impairment
      of Assets





Altus
      reviews the carrying value of its long-lived assets annually or whenever events
      or changes in circumstances indicate that the historical cost-carrying value
      of
      an asset may no longer be appropriate. Altus assesses recoverability of the
      carrying value of the asset by estimating the future net cash flows expected
      to
      result from the asset, including eventual disposition. If the future net cash
      flows are less than the carrying value of the asset, an impairment loss is
      recorded equal to the difference between the asset's carrying value and fair
      value.




Income
      Taxes




Income
      taxes are computed using the asset and liability method. Under the asset and
      liability method, deferred income tax assets and liabilities are determined
      based on the differences between the financial reporting and tax bases of assets
      and liabilities and are measured using the currently enacted tax rates and
      laws.
      A valuation allowance is provided for the amount of deferred tax assets that,
      based on available evidence, are not expected to be realized.


23




Basic
      and
      Diluted Loss per Share




Basic
      earnings per share are presented in accordance with Financial Accounting
      Standards Statement 128, and are calculated on the basis of the weighted average
      shares outstanding during the year. Diluted earnings per share include the
      impact of common stock equivalents using the treasury stock method when the
      effect is dilutive. There were no dilutive securities during the periods
      presented.




Oil
      and
      Gas Properties




Altus
      follows the full cost method of accounting for its oil and gas properties.
      Under
      this method, all productive and non-productive exploration and development
      costs
      incurred for the purpose of finding oil and gas reserves are capitalized. Such
      capitalized costs include lease acquisition, geological and geophysical work,
      delay rentals, drilling, completing and equipping oil and gas wells, together
      with internal costs directly attributable to property acquisition, exploration
      and development activities.




The
      costs
      of Altus's oil and gas properties, including the estimated future costs to
      develop proved reserves, are depreciated using a composite units-of-production
      rate based on estimates of proved reserves. Investments in unproved properties
      and major development projects are not amortized until proved reserves
      associated with the projects can be determined or until impairment occurs.
      If
      the results of an assessment indicate that the properties are impaired, then
      the
      amount of the impairment is added to the capitalized costs to be amortized.
      Net
      capitalized costs are limited to a capitalization ceiling, calculated on a
      quarterly basis as the sum of the present value, discounted at 10%, of estimated
      future net revenues from proved reserves, based on current economic and
      operating conditions, plus the lower of cost or estimated fair value of unproved
      properties, less related income tax effects.




Sales
      of
      proved and unproved properties are accounted for as adjustments of capitalized
      costs with no gain or loss recognized, unless such adjustments would
      significantly alter the relationship between capitalized costs and proved oil
      and gas reserves.





Depreciation
      and depletion of oil and gas properties is computed using the unit-of-production
      method based on estimated proven reserves. All costs, including an estimate
      of
      future development, restoration, dismantlement and abandonment costs, are
      included in the depreciable base. The costs of investments in unproved
      properties are excluded from the calculation until the costs are evaluated
      and
      proved reserves established.





Revenue
      and Cost Recognition





Altus
      uses the sales method of accounting for natural gas and oil revenues. Under
      this
      method, revenues are recognized based on the actual volumes of gas and oil
      sold
      to purchasers. The volume sold may differ from the volumes to which Altus is
      entitled based on our interest in the properties. Costs associated with
      production are expensed in the period incurred.





Concentrations





Trade
      accounts receivables are generated from companies with significant oil and
      gas
      marketing activities, which would be impacted by conditions or occurrences
      affecting that industry. In 2005, approximately 42% of oil and gas revenues
      were
      attributable to one customer. Altus performs ongoing credit evaluations of
      its
      customers and, generally, requires no collateral. Altus is not aware of any
      significant credit risk relating to its customers and has not experienced any
      credit loss associated with such receivables. There were no outstanding accounts
      receivable as of December 31, 2006.


24


New
      Accounting Standards





Altus
      adopted Statement of Financial Accounting Standards No. 123R, *Share-Based
      Payment* effective January 1, 2006. Accordingly, Altus began recording compensation
      expense associated with stock options and other forms of equity compensation
      in
      accordance with SFAS No. 123R, as interpreted by SEC Staff Accounting Bulletin
      No. 107. Prior to January 1, 2006, Altus had accounted for stock options
      according to the provisions of Accounting Principles Board Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      related interpretations, and therefore no related compensation expense was
      recorded for awards granted with no intrinsic value. Altus adopted the modified
      prospective transition method provided for under SFAS No. 123R, and,
      consequently has not retroactively adjusted results from prior periods. Under
      this transition method, compensation cost associated with the issuance of stock
      options will be recognized as a quarterly amortization based on the grant-date
      fair value estimated in accordance with the provisions of SFAS No.
      123R.





Stock
      awards outstanding under Altus's current plans are fully vested, therefore
      there
      is no unrecognized compensation cost related to nonvested options. No options
      were granted or exercised during the twelve months ended December 31, 2006.
      During the twelve months ended December 31, 2005, Altus recognized $222,199
      in
      share-based compensation expense. Had compensation cost for our share-based
      compensation plan been determined consistent with SFAS No. 123R, Altus's net
      income and earnings per share would have been reduced to the following pro
      forma
      amounts:


Year
                  Ended
                December
                  31,
                2005Net
                  loss, as reported
              
              $
              (1,962,541
              )Add:
                  Stock based intrinsic value included in report loss
              
              
              222,199Less:
                  Total stock-based employee compensation expense determined under
                  the fair
                  value based method for all awards
              
              
              (979,102
              )Pro-forma
                  net loss
              
              $
              (2,719,444
              )Basis
                  and diluted net loss per shareAs
                  reported
              
              $
              (0.05
              )Pro-forma
              
              $
              (0.06
              )







The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: dividend yield $0, expected volatility of 117%, risk-free interest
      rate of 1.5%, and expected lives of 10 years.





NOTE
      2 -
      GOING CONCERN





Altus'
      financial statements have been presented on the basis that it will continue
      as a
      going concern, which contemplates the realization of assets and satisfaction
      of
      liabilities in the normal course of business. Altus has incurred net losses
      of
      $124,911 and $1,962,541 for the years ended December 31, 2006 and 2005,
      respectively. This condition raises substantial doubt about Altus' ability
      to
      continue as a going concern. The financial statements do not include any
      adjustments to reflect the possible future effects on the recoverability and
      classification of assets or the amounts and classification of liabilities that
      may result from the outcome of these uncertainties.


25


There
      are
      no assurances that Altus will be able to secure financing to sustain its working
      capital requirements or sufficient to make the capital expenditure investments
      necessary for it to establish recurring cash flows from operations that are
      critical to Altus’ ability to continue as a viable oil and gas operating entity.
      Additionally, capital financing secured through private placement, public
      offerings or bank financing may not be adequate for Altus to meet its funding
      requirements or may not be at commercially reasonable terms necessary to achieve
      sustained positive operating cash flows. If adequate working capital is not
      available Altus may be required to curtail or cease its operations.








NOTE
      3 -
      INCOME TAXES





Deferred
      income taxes are recorded at the expected tax rate of 34%. Statement of
      Financial Accounting Standards No. 109 “Accounting for Income Taxes” requires
      that deferred tax assets be reduced by a valuation allowance if it is more
      or
      likely than not that some portion or all of the deferred tax asset will not
      be
      realized.




2006
            
            2005Deferred
                tax asset attributable to:Net
                operating loss
            
            $
            915,000
            
            $
            875,000Less:
                valuation allowance
            
            
            (915,000
            )
            
            (875,000
            )Total
            
            $
            -
            
            $
            -





Year
      2006
      and 2005 net operating loss carryforwards begin to expire in 2022.








NOTE
      4 -
      CONVERTIBLE LOAN AGREEMENTS





In
      January 2006 certain shareholders of Altus commenced making advances to Altus
      to
      allow it to sustain its operating requirements, to fund payments to third-party
      vendors, and to remain compliant with its public company reporting obligations.
      At December 31, 2006 Altus had received advances from the shareholders totalling
      $87,750, and accounts payables to one shareholder for expenses funded during
      2006 for it to continue operations, which total $34,017 at December 31, 2006.
      On
      March 8, 2007 Altus entered into Convertible Loan Agreements (the “Loans”) with
      the shareholders that mature on December 31, 2007, and require payment of all
      outstanding principal and interest in full on January 2, 2008 for the then
      outstanding balances due for amounts loaned to Altus by the shareholders.





The
      Loans
      interest rates are 12% per annum payable in arrears upon the maturity of the
      Loans. Pursuant to the Loans the lenders agreed to forego interest that accrued
      during 2006, and provide for interest on the outstanding Loan balances to
      commence January 1, 2007. The Loans are convertible at the holders'
      option into common stock at the lower of ten day average share price
      immediately preceding the date of the Loans or the ten day average common share
      price immediately preceding the date that a Lender provides Notice of Conversion
      to Altus, but in no circumstance at a conversion rate of less than $0.001
      per common share. The Loans are secured by the assets of Altus, and provide
      that
      in the occurrence of certain events the Loans’ maturities are accelerated. Altus
      may prepay the Loans at anytime without penalty or bonus. Altus does not believe
      the terms of th Loans contain any provisions that would require treatment as
      derivatives under SFAS No. 133 and EITF 00-19.


26


NOTE
      5 -
      RELATED PARTY TRANSACTIONS





*Shareholder
      Advances to Company and Convertible Loan Agreements*





On
      March
      8, 2007 Altus entered into Convertible Loan Agreements (the “Loans”) with
      CodeAmerica Investments, LLC, Paragon Capital, LLC and DLS Energy Associates,
      LLC to provide for repayment of amounts paid on the behalf of Altus and advances
      to Altus by shareholders during 2006 in order for Altus to meet its operating
      requirements, provide funding for payments to third-party vendors, and to allow
      it to remain compliant with its public company reporting obligations. At
      December 31, 2006 Altus had advances from the shareholders totalling $87,750,
      and accounts payables to one shareholder for expenses funded during 2006 for
      it
      to continue operations, which total $34,017 at December 31, 2006. See Note
      4 -
      Convertible Loan Agreements.





*CodeAmerica
      Loan Agreement and Sale of Kansas Property*





On
      January 1, 2005, Altus entered into a Loan Agreement with CodeAmerica
      Investments LLC, a company owned by our former President, Milton Cox, to provide
      funds principally to develop its Kansas Lake Creek oil and gas properties and
      to
      meet its working capital requirements. At the date of the Loan Agreement, Altus
      had advances from CodeAmerica totalling $34,600 which were included in the
      loan
      balance. The loan provided for an interest rate of 10% per annum and was due
      on
      demand. The Loan Agreement was secured by all present and after acquired assets
      of Altus that are not otherwise pledged or used as collateral for other
      financing transactions of Altus.




At
      December 31, 2005, Altus had a balance due to CodeAmerica under the Loan
      Agreement totalling $242,600 plus accrued interest of $21,332. The outstanding
      balance due CodeAmerica under the Loan Agreement as of December 31, 2005 was
      extinguished through the transfer of Altus’ interests in the Kansas Lake Creek
      acreage to CodeAmerica. The estimated present value of discounted future net
      cash flows for Altus’ interest in the Kansas Lake Creek Prospect totalled
      approximately $15,000 at December 31, 2005.





*Accounts
      Payables to Former Officers and Directors of Company*




At
      December 31, 2005, Altus had accounts payables due to former officers and
      directors of Altus totalling $238,078 for unpaid services and amounts paid
      by
      them on behalf of Altus. In connection with the restructuring of Altus’
financial position, on February 17, 2006, Altus issued a total of 2,259,716
      common shares to former officers and directors in satisfaction of the $238,078
      accounts payable to them. The conversion of payables to common stock was based
      on a conversion rate of two times (2) of the weighted average price per share
      for the last ten (10) trading days of December 2005, or a conversion rate
      $0.10536 per share.





*Orbit
      Energy, L.L.C.*





Orbit
      Energy, L.L.C. served as the operator of the Kansas Lake Creek Prospect. On
      November 18, 2005 the President and Chief Operating Officer of Orbit, Greg
      Thompson, was appointed as a Director of Altus. On February 1, 2006, Greg
      Thompson was named President of Altus. For the year ended December 31, 2005,
      Altus’s net share of operator fees paid to Orbit for the operation of the Lake
      Creek wells totalled $11,250. No fees were paid by Altus to Orbit during the
      year 2006.





*Oil
      and Gas Property*




27





During
      the fourth quarter 2005, the T.E. Lane gas unit ceased production and
      the operator apprised Altus that it was not economically viable to restore
      production. The Freestone County lease acreage acquired by Altus from
      CodeAmerica was primarily being held by production from the T.E. Lane well
      and
      once the well ceased production the associated Freestone County oil and gas
      lease acreage held by Altus began to expire. Altus currently holds unexpired
      acreage of 48.45 gross under the Keith oil and gas lease in Freestone County,
      and pursuant to the oil and gas lease Altus’ interest in the remaining lease
      will expire if not extended by June 12, 2007. The T.E. Lane unit was fully
      inpaired during 2006.




NOTE
      6 -
      ASSET RETIREMENT OBLIGATIONS





In
      2001,
      the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations” which
      was adopted by Altus in 2002 when Altus first acquired oil and gas properties.
      SFAS 143 requires entities to record the fair value of a liability for asset
      retirement obligations (“ARO”) in the period in which it is incurred and a
      corresponding increase in the carrying amount of the related long-lived asset.
      The present value of the estimated asset retirement cost is capitalized as
      part
      of the carrying amount of the long-lived asset and is depreciated over the
      useful life of the asset. Altus accrues an abandonment liability associated
      with
      its oil and gas wells when those assets are placed in service. The ARO is
      recorded at its estimated fair value and accretion is recognized over time
      as
      the discounted liability is accreted to its expected settlement value. Fair
      value is determined by using the expected future cash outflows discounted at
      Altus’s risk-free interest rate. No market risk premium has been included in
      Altus’ calculation of the ARO balance. Altus’s net ARO liability at December 31,
      2006 is zero as estimated salvage value of property and equipment exceeds the
      expected retirement obligation.








NOTE
      7 -
      COMMITMENTS





Altus
      currently has no office lease commitments or obligations.








NOTE
      8 -
      COMMON STOCK AND WARRANTS




On
      February 17, 2006, Altus issued 2,259,716 common shares to former officers
      and
      directors in satisfaction of accounts payable due to Milton Cox, Bassam Nastat
      and Don Sytsma for unpaid services and amounts paid by them on the behalf of
      Altus totalling $238,078. The conversion of payables to common stock was based
      on a conversion rate of two times (2) of the weighted average price per share
      for the last ten (10) trading days of December 2005, or a conversion rate
      $0.10536 per share.


28




On
      September 23, 2005, Altus issued 1,718,750 common shares pursuant to a
      convertible loan agreement with Excalibur Investment Corp. dated September
      20,
      2004. Excalibur exercised its conversion rights under the loan and converted
      the
      outstanding principal loan balance of $250,000 plus accrued interest of $25,000
      at a conversion rate of $0.16 per common share.


NOTE
        9 -
        STOCK OPTION PLAN
 
 On
        2004,
        Altus established a stock option plan pursuant to which 5,483,040 common
        shares
        were reserved for issuance. During 2004, Altus granted 4,325,000 stock options
        to directors, executive officers and employees. The options had an exercise
        price of $0.425 and a term of 10 years. All options were vested as of December
        30, 2005. No share based compensation expense was recognized in the year
        ended
        December 31, 2006.
 
 Summary
        information regarding options is as follows:
 
 Options
              
              Weighted
                Average
                Share
                  Price
              
              Intrinsic
                Value
              
              Weighted
                Average
                LifeOutstanding
                  at December 31, 2005
              
              
              4,325,000
              
              $
              0.425Year
                  ended December 31, 2005;Granted,
                  exercised, forfeited
              
              
              -
              
              
              -
              
              
              
              
              
              -Outstanding
                  at December 31, 2006
              
              
              4,325,000
              
              $
              0.425
              
              $
              -
              
              
              7.9
                  yearsExercisable
                  at December 31, 2006
              
              
              4,325,000
              
              $
              0.425
              
              $
              -
              
              
              7.9
                  years
 
 No
        options were granted during the years ended December 31, 2006 and
        2005.




29




SUPPLEMENTAL
      INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES


(UNAUDITED)




Pursuant
        to Statment of Financial Accounting Standards No. 69, Disclosures About Oil
        and
        Gas Producing Activitites ("FAS 69"), t he
        standardized measure of discounted future net cash flows is computed by applying
        year-end prices of oil and gas to the estimated future production of proved
        oil
        and gas reserves, less estimated future expenditures (based on year-end costs)
        to be incurred in developing and producing the proved reserves, less estimated
        future income tax expenses (based on year-end statutory tax rates) to be
        incurred on pre-tax net cash flows less tax basis of the properties and
        available credits, and assuming continuation of existing economic conditions.
        The estimated future net cash flows are then discounted using a rate of 10
        percent per year to reflect the estimated timing of the future cash
        flows.




There
        are
        numerous uncertainties inherent in estimating quantities of proved reserves
        and
        projecting future rates of production. The following reserve data related
        to the
        properties represents estimates only and should not be construed as being
        exact.
        The reliability of these estimates at any point in time depends on both the
        quality and quantity of the technical and economic data, the performance
        of the
        reservoirs, as well as extensive engineering judgment. Consequently, reserve
        estimates are subject to revision as additional data becomes available during
        the producing life of a reservoir. The evolution of technology may also result
        in the application of improved recovery techniques, such as supplemental
        or
        enhanced recovery projects, which have the potential to increase
        reserves beyond those currently envisioned.
 
 Estimates
        of proved reserves are derived from quantities of crude oil and natural gas
        that geological and engineering data demonstrate with reasonable certainty
        to be recoverable in future years from known reservoirs under existing operating
        and economic conditions and rely upon a production plan and strategy. Altus
        has
        no proved reserves at December 31 , 2006.




Proved
      Developed and Undeveloped Gas Reserves, at year end (net):


For
                the Years Ended December 31,2006
              **(Mcf)**
            
            2005
              **(Mcf)**Beginning
                of year
            
            
            93,880
            
            
            8,825,702Purchases
                of minerals in place
            
            
            -
            
            
            -Extensions,
                discoveries and improved recovery
            
            
            -
            
            
            104,062Sale
                of reserves
            
            
            -
            
            
            (4,494
            )Production
            
            
            
            
            
            (10,981
            )Expiration
                of carried lease interest
            
            
            (93,880
            )
            
            -Revision
                of previous estimates
            
            
            -
            
            
            (8,820,409
            )End
                of Year
            
            
            -
            
            
            93,880Proved
                Developed Reserves at End of Year
            
            
            -




Capitalized
        Costs of Oil and Gas Producing Activities
 
 The
        following table sets forth the aggregate amounts of capitalized costs relating
        to the Altus' oil and gas producing activities and the related accumulated
        depletion as of December 31, 2006 and 2005:
 
 **2006**
              
              **2005**Asset
                  retirement obligations
              
              $
              -
              
              $
              -Proved
                  properties being depleted
              
              
              -
              
              
              30,467Less:
                  Accumulated depletion
              
              
              -
              
              
              -Net
                  capitalized costs
              
              $
              -
              
              $
              30,467
 
 Costs
        Incurred in Oil and Gas Producing Activities
 
 The
        following table reflects the costs incurred in oil and gas property acquisition,
        exploration and development activities during the years ended December 31,
        2006
        and 2005:
 
 **2006**
              
              **2005**Exploration
                  costs
              
              $
              -
              
              $
              -Development
                  costs
              
              
              -
              
              
              150,000Net
                  capitalized costs
              
              $
              -
              
              $
              150,000
  Standardized
        Measure of Discounted Future Net Cash Flows:


December
                31,2006
            
            2005Future
                cash inflows
            
            $
            590,274
            
            $
            845,575Future
                production costs
            
            
            -
            
            
            (98,353
            )Future
                development costs
            
            
            -
            
            
            -Future
                income taxes
            
            
            -
            
            
            -Future
                net cash flows
            
            
            (590,274
            )
            
            747,22210%
                annual discount for estimatedtiming
                of cash flows
            
            
            -
            
            
            (156,948
            )Standardized
                Measure of Discounted Future Net Cash Flows
            
            $
            0
            
            $
            590,274





Changes
      in Standardized Measure of Discounted Future Net Cash Flows:


For
                the Years Ended December 31,2006
            
            2005Beginning
                of the year
            
            $
            590,274
            
            $
            12,036,147Purchase
                of mineral in place
            
            
            -
            
            
            -Extensions,
                discoveries and improved recovery
            
            
            -
            
            
            263,964Development
                costs incurred during the year
            
            
            -
            
            
            150,000Sales
                of oil and gas produced, net of production costs
            
            
            -
            
            
            (26,625
            )Disposition
                of properties
            
            
            -
            
            
            (383,499
            )Accretion
                of discount
            
            
            -
            
            
            (688,476
            )Net
                changes in future production costs
            
            
            -
            
            
            (1,912,739
            )Net
                change in estimated future development costs
            
            
            -
            
            
            (12,500,000
            )Expiration
                of carried lease interest
            
            
            (590,274
            )
            
            -Revision
                in estimated timing of cash flows
            
            
            -
            
            
            (2,908,162
            )Net
                change in income taxes
            
            
            -
            
            
            6,559,664End
                of the Year
            
            $
            0
            
            $
            590,274


30




**Item8.**
                **Changes
                    In and Disagreements with Accountants on Accounting and Financial
                    Disclosure.**




None




**Item
                8A.**
            **Controls
                and Procedures.**




As
      required by Rule 13a-15 under the Exchange Act, as of the end of the period
      covered by this report, being December 31, 2006, we carried out an evaluation
      of
      the effectiveness of the design and operation of our company’s disclosure
      controls and procedures. This evaluation was performed under the supervision
      and
      with the participation of our management, including our president and chief
      officer. Based upon that evaluation, our chief executive officer and chief
      financial officer concluded that our disclosure controls and procedures are
      effective as of the end of the period covered by this report. There
      have been no changes in our internal controls over financial reporting that
      occurred during our most recent fiscal quarter that have materially affected,
      or
      are reasonably likely to materially affect our internal controls over financial
      reporting.




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




**Item
                8B.**
            **Other
                Information**




None.




31




**PART
      III**




**Item
                9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act.**




*Directors
      and Executive Officers, Promoters and Control Persons*




The
      officers of our company are appointed by our board of directors and hold office
      until their death, resignation or removal from office. Our directors, executive
      officers and significant employees, their ages, positions held, and duration
      as
      such, are as follows:







**Name**
            **Position
                Held with our Company**
            **Age**
            **Date
                First**
              **Elected
                or Appointed**Greg
                A Thompson
            Director,
                President and Secretary
            52
            November
                18, 2005Dion
                Burkard
            Director
            59
            February
                3, 2006Yazmin
                Leyva
            Treasurer
            29
            August
                16, 2006




*Business
      Experience*




The
      following is a brief account of the education and business experience during
      at
      least the past five years of each director, executive officer and key employee,
      indicating the principal occupation during that period, and the name and
      principal business of the organization in which such occupation and employment
      were carried out.




**Greg
      A. Thompson**




Mr.
      Thompson became a director on November 18, 2005, and president on February
      1,
      2006.




Mr.
      Thompson has 25 years of diversified experience in oil & gas production,
      operations, contracts, marketing, transportation, and financial instruments.
      Mr.
      Thompson is the president and chief operating officer for Orbit Energy LLC.
      From
      2001-2002, he was general manager, oil & gas sales for Coast Energy Group
      and from 1998-1999, he was manager national oil & gas accounts for Columbia
      Energy Services. From 1996-1998, he was Director-Oil & Gas Division for
      TexPar Energy, Inc. From 1993-1996, Mr. Thompson held the position of Vice
      President, Oil & Gas Marketing with Teco Energy Marketing (Now PG&E
      Energy Services)  From 1989-1993, he was Vice President, Oil & Gas
      Marketing for Graham Resources Corp., and from 1979-1989, he was Director,
      Oil
& Gas Marketing for United Gas Pipeline Co., a Division of Occidental
      Petroleum.




**Dion
      Burkard**




Mr.
      Burkard became a director on February 3, 2006.




Mr.
      Burkard has 20 years business development experience in oil field production
      equipment and pipeline design, has extensive management experience and field
      operating experience, and is a certified environmental inspector. He currently
      is a vice president of SCS Energy Services, responsible for marketing and
      business development. From 1995 - 1999 he was field service superintendent
      for
      Diamond Oil and Gas. Prior to that he was president of an environmental firm
      providing Phase I and Phase II environmental site assessments for institutions,
      insurance companies and for various governmental agencies.




32




**Yazmin
        Leyva**
  Ms.
      Leyva
      became Treasurer on August 16, 2006. Ms. Leyva serves as director of operations
      for Orbit Energy, LLC. From 2004-2005, she was responsible for payable and
      collections for World Wide Express. From 2003-2004 she was cash flow
      accountability manager for BTI Financial. From 2000-2003, she served as manager
      of information technology and cash flow reports for Classic Hardwood Floors
      of
      Texas.


*Committees
      of the Board*




Currently
      our company has the following committees:




·
            Audit
                Committee;




·
            Nominating
                and Corporate Governance Committee; and




·
            Compensation
                Committee.




Our
      Audit
      Committee, Nominating and Corporate Governance Committee, and Compensation
      Committee are made up of Greg A. Thompson and Dion Burkard.




The
      Audit
      Committee is governed by the Audit Committee Charter adopted by the board of
      directors on February 27, 2004. The Nominating and Corporate Governance
      Committee is governed by the Nominating and Corporate Governance Committee
      Charter adopted by the board of directors on February 27, 2004. The Compensation
      Committee is governed by the Compensation Committee Charter adopted by the
      board
      of directors on February 27, 2004.




*Family
      Relationships*




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




*Involvement
      in Certain Legal Proceedings*




Other
      than as discussed below, none of our directors, executive officers, promoters
      or
      control persons has been involved in any of the following events during the
      past
      five years:




1.
      any
      bankruptcy petition filed by or against any business of which such person was
      a
      general partner or executive officer either at the time of the bankruptcy or
      within two years prior to that time;




2.
      any
      conviction in a criminal proceeding or being subject to a pending criminal
      proceeding (excluding traffic violations and other minor offences);




3.
      being
      subject to any order, judgment, or decree, not subsequently reversed, suspended
      or vacated, of any court of competent jurisdiction, permanently or temporarily
      enjoining, barring, suspending or otherwise limiting his involvement in any
      type
      of business, securities or banking activities; or




4.
      being
      found by a court of competent jurisdiction (in a civil action), the Commission
      or the Commodity Futures Trading Commission to have violated a federal or state
      securities or commodities law, and the judgment has not been reversed,
      suspended, or vacated.




*Audit
      Committee Financial Expert*




Our
      Board
      of Directors has determined that it does not have a member of its audit
      committee that qualifies as an "audit committee financial expert" as defined
      in
      Item 401(e) of Regulation S-B, and is "independent" as the term is used in
      Tem
      7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as
      amended.


33




We
      believe that the members of our Board of Directors are collectively capable
      of
      analyzing and evaluating our financial statements and understanding internal
      controls and procedures for financial reporting. In addition, we believe that
      retaining an independent director who would qualify as an "audit committee
      financial expert" would be overly costly and burdensome and is not warranted
      in
      our circumstances given the early stages of our development and the fact that
      we
      have not generated significant revenues to date.




*Section
      16(a) Beneficial Ownership Compliance*




Section
      16(a) of the Securities Exchange Act requires our executive officers and
      directors, and persons who own more than 10% of our common stock, to file
      reports regarding ownership of, and transactions in, our securities with the
      Securities and Exchange Commission and to provide us with copies of those
      filings. Based solely on our review of the copies of such forms received by
      us,
      or written representations from certain reporting persons, we believe that
      during fiscal year ended December 31, 2006, all filing requirements applicable
      to its officers, directors and greater than ten percent beneficial owners were
      complied with.




*Code
      of Ethics*




Effective
      February 27, 2004, our company's board of directors adopted a Code of Business
      Conduct and Ethics that applies to, among other persons, members of our Board
      of
      Directors, our company's officers including our president (being our principal
      executive officer) and our company's chief financial officer (being our
      principal financial and accounting officer), contractors, consultants and
      advisors. As adopted, our Code of Business Conduct and Ethics sets forth written
      standards that are designed to deter wrongdoing and to promote:




(1)
      honest and ethical conduct, including the ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships;




(2)
      full,
      fair, accurate, timely, and understandable disclosure in reports and documents
      that we file with, or submit to, the Securities and Exchange Commission and
      in
      other public communications made by us;




(3)
      compliance with applicable governmental laws, rules and
      regulations;




(4)
      the
      prompt internal reporting of violations of the Code of Business Conduct and
      Ethics to an appropriate person or persons identified in the Code of Business
      Conduct and Ethics; and




(5)
      accountability for adherence to the Code of Business Conduct and
      Ethics.




Our
      Code
      of Business Conduct and Ethics requires, among other things, that all of our
      company's personnel shall be accorded full access to our president and secretary
      with respect to any matter which may arise relating to the Code of Business
      Conduct and Ethics. Further, all of our company's personnel are to be accorded
      full access to our company's board of directors if any such matter involves
      an
      alleged breach of the Code of Business Conduct and Ethics by our Company
      officers.




In
      addition, our Code of Business Conduct and Ethics emphasizes that all employees,
      and particularly managers and/or supervisors, have a responsibility for
      maintaining financial integrity within our company, consistent with generally
      accepted accounting principles, and federal, provincial and state securities
      laws. Any employee who becomes aware of any incidents involving financial or
      accounting manipulation or other irregularities, whether by witnessing the
      incident or being told of it, must report it to his or her immediate supervisor
      or to our company's president or secretary. If the incident involves an alleged
      breach of the Code of Business Conduct and Ethics by the president or secretary,
      the incident must be reported to any member of our board of directors. Any
      failure to report such inappropriate or irregular conduct of others is to be
      treated as a severe disciplinary matter. It is against our company policy to
      retaliate against any individual who reports in good faith the violation or
      potential violation of our company's Code of Business Conduct and Ethics by
      another.




Our
      Code
      of Business Conduct and Ethics is filed herewith with the Securities and
      Exchange Commission as Exhibit 14.1 to this annual report. We will provide
      a
      copy of the Code of Business Conduct and Ethics to any person without charge,
      upon request. Requests can be sent to: Altus Explorations, Inc., 5868 Westheimer
      Road, Suite 308, Houston, Texas, 77057.


34




**Item
                10.**
            **Executive
                Compensation.**




The
      following table summarizes the compensation of key executives during the last
      three complete fiscal years. No other officers or directors received annual
      compensation in excess of $100,000 during the last three complete fiscal
      years.




SUMMARY
                  COMPENSATION TABLEAnnual
                  Compensation
              Long
                  Term Compensation(1)Awards
              PayoutsName
                  and Principal
                Position
              Year
              Salary
              Bonus
              Other
                Annual
                Compen-
                sation(1)
              Securities
                Underlying
                Options/
                SARs
                Granted
              Restricted
                Shares
                  or
                Restricted
                Share
                Units
              LTIP
                Payouts
              All
                  Other
                Compen-
                sationGreg
                  Thompson(2)
                President,
                  Secretary
                Director
              2006
                2005
                2004
              $Nil
                $Nil
                $Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                100,000(3)
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                NilYazmin
                  Leyva(4)
                Treasurer
              2006
                2005
                2004
              $Nil
                $Nil
                $Nil
              $Nil
                $Nil
                $Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil
              Nil
                Nil
                Nil




(1) The
      value
      of perquisites and other personal benefits, securities and property for the
      Named Executive Officers that do not exceed the lesser of $50,000 or 10% of
      the
      total of the annual salary and bonus is not reported herein.




(2) Greg
      Thompson became a director on November 18, 2005 and our president on February
      1,
      2006.




(3) Greg
      Thompson was granted stock options to purchase up to 100,000 common shares
      of
      our company on November 19, 2004. The options are exercisable at a price of
      $0.425 per share until November 19, 2014. The options are fully vested as of
      December 31, 2005.




(4) Yazmin
      Leyva became our treasurer on August 16, 2006.




*Employment/Consulting
      Agreements*




We
      have
      consulting agreements with certain former officers and directors to provide
      services to company as required at rates to be agreed.




*Long-Term
      Incentive Plans*




There
      are
      no arrangements or plans in which we provide pension, retirement or similar
      benefits for directors or executive officers, except that our directors and
      executive officers may receive stock options at the discretion of our board
      of
      directors. We do not have any material bonus or profit sharing plans pursuant
      to
      which cash or non-cash compensation is or may be paid to our directors or
      executive officers, except that stock options may be granted at the discretion
      of our board of directors.




We
      have
      no plans or arrangements in respect of remuneration received or that may be
      received by our executive officers to compensate such officers in the event
      of
      termination of employment (as a result of resignation, retirement, change of
      control) or a change of responsibilities following a change of control, where
      the value of such compensation exceeds $60,000 per executive
      officer.


35




*Stock
      Option Plan*




On
      January 28, 2004 we established a stock option plan pursuant to which 5,483,040
      common shares were reserved for issuance.




Stock
      options become exercisable at dates determined by the Board of Directors at
      the
      time of granting the option and have initial terms of ten years.




*Stock
      Options/SAR Grants*




During
      the year ended December 31, 2006 and December 31, 2005, no options were granted
      to directors or executive officers. During the year ended December 31, 2004
      we
      granted the following stock options to our current and former directors and
      executive officers:


Options/SAR
      Grants in Year-Ended December 31, 2004


Name
            Number
                of
              Securities
              Underlying
              Options/
              SARs
              Granted
              (#)
            %
                of Total
              Options/
              SARs
              Granted
                to
              Employees
              in
                Fiscal
              Year(1)
            Exercise
              Price
              ($/Share)
            Expiration
                DateGreg
                Thompson
            100,000
            2.31%
            $0.425
            November
                19, 2014Darrell
                Parlee
            100,000
            2.31%
            $0.425
            November
                19, 2014Milton
                Cox
            1,175,000
            27.17%
            $0.425
            November
                19, 2014Donald
                Sytsma
            1,175,000
            27.17%
            $0.425
            November
                19, 2014Bassam
                Nastat
            1,175,000
            27.17%
            $0.425
            November
                19, 2014





(1) The
      denominator (of 4,325,000) was arrived at by calculating the net total number
      of
      new options awarded to directors, officers, employee and consultants during
      the
      year ended December 31, 2004. There were 800,000 stock options granted to
      non-employees during the year ended December 31, 2004.




There
      were no stock options exercised during the year ended December 31,
      2006.




In
      anticipation of the adoption of FAS 123(R) for Altus's calendar year ending
      December 31, 2006, the Board of Directors approved the vesting of all issued
      and
      outstanding stock options issued under the 2004 Stock Option Plan as of December
      30, 2005.




*Directors
      Compensation*




We
      reimburse our directors for expenses incurred in connection with attending
      board
      meetings but did not pay director's fees or other cash compensation for services
      rendered as a director in the year ended December 31, 2006. We have no present
      formal plan for compensating our directors for their service in their capacity
      as directors, although in the future, such directors are expected to receive
      compensation and options to purchase shares of common stock as awarded by our
      board of directors or (as to future options) a compensation committee which
      may
      be established in the future. Directors are entitled to reimbursement for
      reasonable travel and other out-of-pocket expenses incurred in connection with
      attendance at meetings of our board of directors. The board of directors may
      award special remuneration to any director undertaking any special services
      on
      behalf of our company other than services ordinarily required of a director.
      Other than indicated in this annual report, no director received and/or accrued
      any compensation for his or her services as a director, including committee
      participation and/or special assignments.




36




*Report
      on Executive Compensation*


Our
      compensation program for our executive officers is administered and reviewed
      by
      our board of directors. Historically, executive compensation consists of a
      combination of base salary and bonuses. Individual compensation levels are
      designed to reflect individual responsibilities, performance and experience,
      as
      well as the performance of our company. The determination of discretionary
      bonuses is based on various factors, including implementation of our business
      plan, acquisition of assets, development of corporate opportunities and
      completion of financing.




**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters.**




*Beneficial
      Ownership*




The
      following table sets forth, as of March 22, 2007, certain information with
      respect to the beneficial ownership of our common shares by each shareholder
      known to us to be the beneficial owner of 5% of our common shares, and by each
      of our officers and directors. Each person has sole voting and investment power
      with respect to the common shares, except as otherwise indicated. Beneficial
      ownership consists of a direct interest in the common shares, except as
      otherwise indicated.







Name
                and Address of
              Beneficial
                Owner
            Amount
                and Nature of
              Beneficial
                Ownership
            Percentage
              of
                Class(1)Milton
                Cox
              7227
                Winchester Road, #258
              Memphis,
                TN 38118
              USA
            6,528,699(2)
            14.02%Bassam
                Nastat
              5831
                Winch Street
              Burnaby,
                BC V5B 2J4
              Canada
            4,508,591
            9.68%Greg
                A. Thompson
              11123
                Tupper Lake Drive
              Houston,
                TX 77042
              USA
            600,000
            1.29%Dion
                Burkard
              2003
                Charlotte Estates Drive
              Austin,
                TX 78744
            Nil
            NilSterling
                Management of Belize
              5
                Park Avenue
              Orange
                Walk Town
              Belize
                City, Belize
            4,000,000
            8.59Directors
                and Officers
              (as
                a group)
            600,000
            1.29%





(1) Based
      on
      46,572,792 shares outstanding as of March 22, 2007 and, as to a specific person,
      shares issuable pursuant to the conversion or exercise, as the case may be,
      of
      currently exercisable or convertible debentures, share purchase warrants and
      stock options.


(2) Of
      these
      shares, 928,699 are owned by CodeAmerica Investments, LLC, a company wholly
      owned by Mr. Cox.





*Changes
      in Control*




We
      are
      unaware of any contract or other arrangement the operation of which may at
      a
      subsequent date result in a change in control of our company.


37




**Item
                12.**
            **Certain
                Relationships and Related
                Transactions.**




Other
      than as described under the heading "Executive Compensation", or as set forth
      below, there are no material transactions with any of our directors, officers
      or
      control person that have occurred during the last fiscal year.





On
      March
      8, 2007 Altus entered into Convertible Loan Agreements with CodeAmerica
      Investments, LLC and Paragon Capital, LLC, a Nevada LLC for which Bassam Nastat
      serves as manager, to document amounts paid on the behalf of Altus and advances
      to Altus by control persons during 2006 in order for Altus to meet its operating
      requirements, provide funding for payments to third-party vendors, and to allow
      it to remain compliant with its public company reporting obligations. At
      December 31, 2006 Altus had advances from the control persons totalling $65,500
      and accounts payables to one shareholder for expenses funded during 2006 for
      it
      to continue operations, which total $34,017 at December 31, 2006.




We
      have
      consulting agreements with certain former officers and directors to provide
      services to company as required at rates to be agreed.




None
      of
      our directors, executive officers, future directors, 5% shareholders, or any
      members of the immediate families of the foregoing persons have been indebted
      to
      us during the last fiscal year or the current fiscal year in an amount exceeding
      $60,000.




**Item
                13.**
            **Exhibits.**




*Exhibits
      required by Item 601 of Regulation S-B*




**(3)**
            **Articles
                of Incorporation and
                Bylaws**




3.1 Articles
      of Incorporation (incorporated by reference to our SB2 Registration Statement
      filed January 29, 2002).




3.2 Bylaws
      (incorporated by reference to our SB2 Registration Statement filed January
      29,
      2002).




3.3 Certificate
      of Forward Stock Split filed with Nevada Secretary of State on November 6,
      2003.
      (incorporated by reference from our Annual Report on Form 10-KSB, filed on
      April
      13, 2004)




3.4 Certificate
      of Change Pursuant to NRS 78.209 filed with the Nevada Secretary of State on
      February 2, 2004. (incorporated by reference from our Annual Report on Form
      10-KSB, filed on April 13, 2004)




**(10)**
            **Material
                Contracts**




10.1 Convertible
      Loan Agreement between Altus Explorations Inc. and CodeAmerica Investments,
      LLC
      dated March 8, 2007 (incorporated by reference from our Current Report on Form
      8-K, filed on March 13, 2007).




10.2 Convertible
      Loan Agreement between Altus Explorations Inc. and Paragon Capital, LLC dated
      March 8, 2007 (incorporated by reference from our Current Report on Form 8-K,
      filed on March 13, 2007).




10.3 Convertible
      Loan Agreement between Altus Explorations Inc. and DLS Energy Associates, LLC
      dated March 8, 2007 (incorporated by reference from our Current Report on Form
      8-K, filed on March 13, 2007).




10.4 2004
      Stock Option Plan (incorporated by reference from our Registration Statement
      of
      Form S-8, filed on February 27, 2004)




**(14)**
            **Code
                of Ethics**




14.1 Code
      of
      Business Conduct and Ethics (incorporated by reference from our Annual Report
      on
      Form 10-KSB, filed on April 13, 2004)


38




**(31)**
            **Section
                302 Certifications**




31.1 Certification
      of Greg Thompson




31.2 Certification
      of Yazmin Leyva




**(32)**
            **Section
                906 Certification**




32.1 Certification
      of Greg Thompson




32.2 Certification
      of Yazmin Leyva.




**Item
                14.**
            **Principal
                Accountant Fees and
                Services**




*Audit
      Fees*




The
      aggregate fees billed by Malone & Bailey, PC for professional services
      rendered for the audit of our annual financial statements included in our Annual
      Report on Form 10-KSB for 2006 and 2005 were $16,600 and
      $17,600, respectively.




*Audit
      Related Fees - zero.*




*Tax
      Fees - zero.*




We
      do not
      use Malone & Bailey, PC for financial information system design and
      implementation. These services, which include designing or implementing a system
      that aggregates source data underlying the financial statements or generates
      information that is significant to our financial statements, are provided
      internally or by other service providers. We do not engage Malone & Bailey,
      PC to provide compliance outsourcing services.




Effective
      May 6, 2003, the Securities and Exchange Commission adopted rules that require
      that before Malone & Bailey, PC is engaged by us to render any auditing or
      permitted non-audit related service, the engagement be:




·
            approved
                by our audit committee (which consists of entire Board of Directors);
                or




·
            entered
                into pursuant to pre-approval policies and procedures established
                by the
                audit committee, provided the policies and procedures are detailed
                as to
                the particular service, the audit committee is informed of each service,
                and such policies and procedures do not include delegation of the
                audit
                committee's responsibilities to
                management.




The
      audit
      committee pre-approves all services provided by our independent auditors. The
      pre-approval process has just been implemented in response to the new rules,
      and
      therefore, the audit committee does not have records of what percentage of
      the
      above fees were pre-approved. However, all of the above services and fees were
      reviewed and approved by the audit committee either before or after the
      respective services were rendered.




The
      audit
      committee has considered the nature and amount of fees billed by Malone &
Bailey, PC and believes that the provision of services for activities unrelated
      to the audit is compatible with maintaining Malone & Bailey, PC's
      independence.




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) 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.


39




**ALTUS
      EXPLORATIONS INC.**




By:
      /s/
      Greg Thompson






Greg
      Thompson, President, Secretary and Director




Date:
      April 16, 2007








Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.








By:/s/
      Greg Thompson






Greg
      Thompson, President Secretary and Director


(Principal
      Executive Officer)








By:
      /s/
      Yazmin Leyva






Yazmin
      Leyva, Treasurer


(Principal
      Financial Officer and Principal Accounting Officer)




Date:
      April 16, 2007