UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**





**x** **** QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For
      the
      quarterly period ended March 31, 2008




 ̈ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT


For
      the
      transition period from _____ to _____





**OSAGE
      EXPLORTION AND DEVELOPMENT, INC.**


(Exact
      name of small business issuer as specified in its charger)





Delaware
            
            0-52718
            
            26-0421736(State
                or other jurisdiction
              of
                incorporation or
              organization)
            
            (Commission
                File No.)
            
            (I.R.S.
                Employer
              Identification
                No.)





2445
                5thAvenue
              Suite
                310
              San
                Diego, CA 92101
            
            (619)
                677-3956(Address
                of principal executive offices)
            
            (Issuer’s
                telephone number)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 month (or for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days.


Yes **x** No  ̈


Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company
      in
      Rule 12b-2 of the Exchange Act.


Large
                  Accelerated Filer ̈
              Accelerated
                  Filer ̈Non-Accelerated
                  Filer ̈
              Smaller
                  Reporting Company**x**





Indicate
      by check mark whether the registrant is a shell company (as defined in section
      12b-2 of the Exchange Act)


Yes  ̈ No **x**





The
      number of outstanding shares of the registrant’s Common Stock, $0.0001 par
      value, as of May 12, 2008 was 37,309,775.





**OSAGE
      EXPLORATION AND DEVELOPMENT, INC. AND SUBSIDIARY**





**TABLE
      OF CONTENTS**





PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements (unaudited)Consolidated
                Balance Sheets; March 31, 2008 and December 31, 2007
            1Consolidated
                Statement of Operations; Three Months ended March 31, 2008
                andMarch
                31, 2007
            2Consolidated
                Statement of Cash Flows; Three Months ended March 31, 2008
                andMarch
                31, 2007
            3Notes
                to Consolidated Financial Statements
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            11Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            16Item
                4.
            Controls
                and Procedures
            16PART
                II – OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            17Item
                1.A.
            Risk
                Factors
            17Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            18Item
                3
            Default
                upon Senior Securities
            18Item
                4
            Submission
                of Matters to a Vote of Security Holders
            18Item
                5
            Other
                Information
            18Item
                6
            Exhibits
            18Signatures
            18




ii


**PART
      I. FINANCIAL INFORMATION**





Item
      1.
      Financial Statements




OSAGE
      EXPLORATION AND DEVELOPMENT, INC.


CONSOLIDATED
      BALANCE SHEETS


As
      of
      December 31, 2007 and March 31, 2008





December 31,
              2007
            
            March 31,
              2008**ASSETS**
            
            
            
            (unaudited)Current
                Assets:Cash
                and cash equivalents
            
            $
            689,545
            
            $
            446,141Prepaid
                Expenses
            
            
            64,632
            
            
            47,841Colombian
                Deposits (Note 4)
            
            
            1,029,601
            
            
            1,123,557Bank
                CD pledged for Letter of Credit (Note 6)
            
            
            147,043
            
            
            148,880Deposits
                (Note 5)
            
            
            140,000
            
            
            100,000Accounts
                Receivable
            
            
            11,541
            
            
            12,916Deferred
                Financing Costs
            
            
            33,638
            
            
            22,466Total
                Current Assets
            
            
            2,116,000
            
            
            1,901,801Property
                and Equipment, at cost (Note 2):Oil
                and gas properties and equipment
            
            
            253,641
            
            
            269,172Capitalized
                asset retirement costs
            
            
            13,675
            
            
            13,675Other
                property & equipment
            
            
            23,520
            
            
            39,205290,836
            
            
            322,052Less:
                accumulated depletion, depreciation and amortization
            
            
            (10,761
            )
            
            (13,494
            )280,075
            
            
            308,558Bank
                CD pledged for Bond
            
            
            30,000
            
            
            30,000Deposits
                (Note 5)
            
            
            82,000
            
            
            82,000Total
                Assets
            
            $
            2,508,075
            
            $
            2,322,359**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Accounts
                payable
            
            $
            53,491
            
            $
            120,666Current
                Maturity of Promissory Note (Note 10)
            
            
            3,518
            
            
            3,600Unsecured
                Convertible Promissory Note, net of $652,753 and $435,903 of unamortized
                discount as of December 31, 2007 and March 31, 2008, respectively
                (Note 9)
                unamortized discount (Note 8 and 10)
            
            
            447,247
            
            
            664,037Total
                Current Liabilities
            
            
            504,256
            
            
            788,303Promissory
                Note, net of Current Maturity (Note 10)
            
            
            7,289
            
            
            6,343Liability
                for Asset Retirement Obligations (Note 14)
            
            
            16,547
            
            
            16,961Commitments
                and Contingencies (Note 11)Stockholders'
                Equity:Common
                stock, $0.0001 par value, 190,000,000 shares authorized; 35,959,775
                and
                35,959,775 shares issued and outstanding as of December 31, 2007
                and March
                31, 2008, respectively.
            
            
            3,595
            
            
            3,595Additional-Paid-in-Capital
            
            
            7,478,768
            
            
            7,478,768Deferred
                Compensation
            
            
            (2,750,201
            )
            
            (2,068,271
            )Stock
                Purchase Notes Receivable
            
            
            (309,875
            )
            
            (295,775
            )Accumulated
                Deficit
            
            
            (2,413,373
            )
            
            (3,703,605
            )Accumulated
                Other Comprehensive Loss - Currency Translation
                (Loss)/Gain
            
            
            (28,931
            )
            
            96,0401,979,983
            
            
            1,510,752Total
                Liabilities and Stockholders' Equity
            
            $
            2,508,075
            
            $
            2,322,359




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


1


OSAGE
      EXPLORATION AND DEVELOPMENT, INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS


For
      the
      Three Months Ended March 31, 2008 and March 31, 2007 (unaudited)





2008
            
            2007(unaudited)
            
            (unaudited)Operating
                RevenuesOil
                & Gas Sales
            
            $
            34,565
            
            $
            70,257Total
                Operating Revenues
            
            
            34,565
            
            
            70,257Operating
                Costs and ExpensesOperating
                Expenses
            
            
            18,423
            
            
            22,229Depreciation,
                Depletion and Accretion
            
            
            2,733
            
            
            1,029Stock
                Based Compensation Expense
            
            
            681,930General
                and Administrative
            
            
            398,832
            
            
            87,383Total
                Operating Costs and Expenses
            
            
            1,101,918
            
            
            110,641Operating
                (Loss)
            
            
            (1,067,353
            )
            
            (40,384
            )Other
                Income (Expenses):Interest
                Income
            
            
            27,689
            
            
            413Interest
                Expense
            
            
            (250,568
            )
            
            (366,559
            )Other(Loss)
                before Income Taxes
            
            
            (1,290,232
            )
            
            (406,530
            )Provision
                for Income Taxes
            
            
            -
            
            
            -Net
                (Loss)
            
            
            (1,290,232
            )
            
            (406,530
            )Other
                Comprehensive Income, net of tax:Foreign
                Currency Translation Adjustment
            
            
            124,971Other
                Comprehensive Income
            
            
            124,971
            
            
            -Comprehensive
                (Loss)
            
            $
            (1,165,261
            )
            $
            (406,530
            )Basic
                and Diluted Loss per Share
            
            $
            (0.04
            )
            $
            (0.01
            )Weighted
                average number of common share and common share equivalents used
                to
                compute basic and dilluted Loss per Share
            
            
            35,959,775
            
            
            29,896,171





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


2





OSAGE
      EXPLORATION AND DEVELOPMENT, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      the
      Three Months Ended March 31, 2008 and March 31, 2007 (unaudited)





2008
            
            2007(unaudited)
            
            (unaudited)Cash
                flows from Operating Activities:Net
                (Loss)
            
            $
            (1,290,232
            )
            $
            (406,530
            )Adjustments
                to reconcile net (loss) to net cash used by operating
                activites:Beneficial
                Conversion of Convertible Debenture
            
            
            216,790
            
            
            169,683Amortization
                of stock based Deferred Compensation
            
            
            681,930Increase/(Decrease)
                in Accrued Interest
            
            
            
            
            
            (12,705
            )Amortization
                of shares issued with Secured Convertible Debenture
            
            
            
            
            
            64,024Amortization
                of Warrants issued with Convertible Debenture
            
            
            
            
            
            111,481Accretion
                of Asset Retirment Obligation
            
            
            414
            
            
            376Amortization
                of Deferred Financing Costs
            
            
            11,172Issuance
                of shares for Accrued Interest
            
            
            
            
            
            33,700Provision
                for depletion, depreciation amortization and valuation
                allowance
            
            
            2,733
            
            
            1,029Changes
                in operating assets and liabitlies:(Increase)
                in accounts receivable
            
            
            (1,375
            )
            
            (15,169
            )(Increase)
                in prepaid expenses
            
            
            16,791Increase/(Decrease)
                in bank overdraft
            
            
            
            
            
            (4,138
            )Increase/(decrease)
                in accounts payable and accrued expenses
            
            
            67,175
            
            
            15,612Net
                cash used by operating activities
            
            
            (294,602
            )
            
            (42,637
            )Cash
                flows from Investing Activities:Deposit
                made on Cimarrona acquisition
            
            
            (100,000
            )Return
                of Deposits on potential acquisition
            
            
            140,000Investments
                made on Colombian Oil & Gas Properties
            
            
            (15,531
            )Interest
                earned on Bank CD pledged for Letter of Credit
            
            
            (1,837
            )Investments
                made on Colombian Oil & Gas Properties
            
            
            (93,956
            )Capital
                expenditures
            
            
            (15,685
            )
            
            (4,671
            )Net
                cash used in investing activities
            
            
            (87,009
            )
            
            (4,671
            )Cash
                flows from Financing Activities:Proceeds
                from issuance of Secured Convertible Debenture
            
            
            
            
            
            250,000Proceeds
                from payment on Stock Purchase Notes Receivable
            
            
            14,100
            
            
            250Payments
                on Promissory Notes
            
            
            (864
            )Net
                cash provided by financing activities
            
            
            13,236
            
            
            250,250Effect
                of exchange rate on cash and cash equivalents
            
            
            124,971Net
                increase (decrease) in cash and cash equivalents
            
            
            (243,404
            )
            
            202,942Cash
                and Cash equivalents beginning of period
            
            
            689,545
            
            
            -Cash
                and Cash equivalents at end of period
            
            $
            446,141
            
            $
            202,942SUPPLEMENTAL
                CASH FLOW INFORMATION:Cash
                Payments for Interest
            
            $
            22,192
            
            
            0Cash
                Payment for Taxes
            
            
            0
            
            
            0Non-Cash
                Transactions:Shares
                issued with Secured Convertible Debenture
            
            
            
            
            
            250,000





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


3





OSAGE
      EXPLORATION AND DEVELOPMENT, INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


March
      31,
      2008 (unaudited)





1.
      BASIS
      OF PRESENTATION





Osage
      Exploration and Development, Inc. (“Osage” or the “Company”) has prepared the
      accompanying unaudited consolidated financial statements in accordance with
      accounting principles generally accepted in the United States of America (“USA”)
      for interim financial information and pursuant to the rules and regulations
      of
      the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and
      Item 310(b) of regulation S-K. These financial statements should be read
      together with the financial statements and notes in the Company’s 2007 Form
      10-KSB filed with the SEC. Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the USA have been condensed or omitted. The
      accompanying financial statements reflect all adjustments and disclosures,
      which, in the Company’s opinion, are necessary for fair presentation. All such
      adjustments are of a normal recurring nature. The results of operations for
      the
      interim periods are not necessarily indicative of the results of the entire
      year.





The
      Company has incurred significant losses and had negative cash flow from
      operations in the last three years and the three months ended March 31, 2008
      and
      has an accumulated deficit of $3,703,605 (unaudited) at March 31, 2008 and
      $2,413,373 at December 31, 2007. Substantial portions of the losses are
      attributable to legal and professional fees as well as interest expense. The
      Company's operating plans require additional funds that may take the form of
      debt or equity financings. There can be no assurance that any additional funds
      will be available. The Company's ability to continue as a going concern is
      in
      substantial doubt and is dependent upon achieving a profitable level of
      operations and obtaining additional financing.





Management
      of our Company has undertaken steps as part of a plan to improve operations
      with
      the goal of sustaining our operations for the next twelve months and beyond.
      These steps include (a) increasing our current production, (b) controlling
      overhead and expenses and (c) raising additional capital and/or obtaining
      financing.





There
      can
      be no assurance the Company can successfully accomplish these steps and it
      is
      uncertain the Company will achieve a profitable level of operations and obtain
      additional financing. There can be no assurance that any additional financings
      will be available to the Company on satisfactory terms and conditions, if at
      all. In the event we are unable to continue as a going concern, we may elect
      or
      be required to seek protection from our creditors by filing a voluntary petition
      in bankruptcy or may be subject to an involuntary petition in bankruptcy. To
      date, management has not considered this alternative, nor does management view
      it as a likely occurrence.





These
      consolidated financial statements do not give effect to any adjustments which
      would be necessary should the Company be unable to continue as a going concern
      and therefore be required to realize its assets and discharge its liabilities
      in
      other than the normal course of business and at amounts different from those
      reflected in the accompanying consolidated financial statements.





IMPACT
      OF
      RECENT ACCOUNTING PRONOUNCEMENTS





**Recent
      Pronouncements**





Fair
      Value Measurements





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (‘SFAS”) SFAS No. 157, *“* Fair
      Value Measurements, *”* which
      establishes a framework for measuring fair value, and expands disclosures about
      fair value measurements required under the accounting pronouncements, but does
      not change existing guidance as to whether or not an instrument is carried
      at
      fair value. Additionally, it establishes a fair value hierarchy that prioritizes
      the information used to develop those assumptions. SFAS No. 157 is effective
      for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. Earlier application is
      encouraged, provided that the reporting entity has not yet issued financial
      statements for fiscal year, including financial statements for an interim period
      within the fiscal year. The Company has implemented SFAS No. 157 and believes
      it
      does not have a material impact on its consolidated financial
      statements.


4





Defined
      Benefit Pension and Other Postretirement Plans





In
      September 2006, the FASB, issued SFAS No. 158, “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans, an Amendment of FASB
      Statements No. 87, 88, 106, and 132R,” which requires employers to recognize the
      underfunded or overfunded status of a defined benefit postretirement plan as
      an
      asset or liability in its statement of financial position and to recognize
      changes in the funded status in the year in which the changes occur through
      accumulated other comprehensive income. Additionally, SFAS No. 158 requires
      employers to measure the funded status of a plan as of the date of its year-end
      statement of financial position. The new reporting requirements and related
      new
      footnote disclosure rules of SFAS No. 158 are effective for fiscal years ending
      after December 15, 2006. We adopted the provisions of SFAS No. 158 for the
      year
      end 2006, and the effect of recognizing the funded status in accumulated other
      comprehensive income was not significant. The new measurement date requirement
      applies for fiscal years ending after December 15, 2008.





Fair
      Value Option for Financial Assets and Financial Liabilities





In
      February of 2007 the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an amendment of FASB
      Statement No. 115.” The statement permits entities to choose to measure many
      financial instruments and certain other items at fair value. The objective
      is to
      improve financial reporting by providing entities with the opportunity to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions. The statement is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007. Company has implemented SFAS
      No. 159 and believes it does not have a material impact on its consolidated
      financial statements.





Income
      Tax





The
      Company adopted the provisions of FASB Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes, on January 1, 2008. As a result of the
      implementation of FIN 48, the Company made a comprehensive review of its
      portfolio of tax positions in accordance with recognition standards established
      by FIN 48. As a result of the implementation of Interpretation 48, the Company
      recognized no material adjustments to liabilities or stockholders
      equity.





When
      tax
      returns are filed, it is highly certain that some positions taken would be
      sustained upon examination by the taxing authorities, while others are subject
      to uncertainty about the merits of the position taken or the amount of the
      position that would be ultimately sustained. The benefit of a tax position
      is
      recognized in the financial statements in the period during which, based on
      all
      available evidence, management believes it is more likely than not that the
      position will be sustained upon examination, including the resolution of appeals
      or litigation processes, if any. Tax positions taken are not offset or
      aggregated with other positions. Tax positions that meet the
      more-likely-than-not recognition threshold are measured as the largest amount
      of
      tax benefit that is more than 50 percent likely of being realized upon
      settlement with the applicable taxing authority. The portion of the benefits
      associated with tax positions taken that exceeds the amount measured as
      described above is reflected as a liability for unrecognized tax benefits in
      the
      accompanying balance sheets along with any associated interest and penalties
      that would be payable to the taxing authorities upon examination.





Interest
      associated with unrecognized tax benefits are classified as interest expense
      and
      penalties are classified in selling, general and administrative expenses in
      the
      statements of income.


5


2  .
      OIL AND
      GAS PROPERTIES





Oil
      and
      gas properties consisted of the following as of December 31, 2007 and March
      31,
      2008:





December 31, 2007
            
            March 31, 2008(unaudited)Properties
                subject to amortization
            
            $
            103,177
            
            $
            103,177Properties
                not subject to amortization
            
            
            150,464
            
            
            165,995Capitalized
                asset retirement costs
            
            
            13,675
            
            
            13,675Accumulated
                depreciation and depletion
            
            
            (4,751
            )
            
            (4,979
            )Oil
                and gas properties, net
            
            $
            262,565
            
            $
            277,858





3.
      GEOGRAPHICAL INFORMATION





The
      following table sets forth revenues for the periods reported and assets by
      geographic location:





United States
            
            Colombia
            
            ConsolidatedMarch 31, 2008:Revenues
            
            $
            34,565
            
            $
            0
            
            $
            34,565Long
                Lived Assets
            
            
            142,563
            
            
            165,995
            
            $
            308,558March
                31, 2007:Revenues
            
            $
            70,257
            
            $
            0
            
            $
            70,257Long
                Lived Assets
            
            
            100,307
            
            
            0
            
            
            100,307





4.
      COLOMBIAN DEPOSITS





In
      June
      2007, we entered into an agreement (the “Agreement”) with Gold Oil, Plc (“Gold”)
      and Empesa Petrolera de Servicios y Asesorias, S.A. (“Empesa), whereby we
      farmed-in to the approximately 165 square mile Rosablanca concession in Colombia
      awarded by the Agencia Nacional de Hidrocarburos (“ANH”) to Gold in June 2007.
      In August 2007, we (i) paid $1,200,000 to Gold representing the funds that
      Gold
      had previously issued to a trust established by the ANH to use for drilling
      the
      first well for the Rosablanaca concession and (ii) issued a letter of credit
      in
      the amount of $144,000 for the benefit of Gold’s bank in Colombia representing
      the guarantee required by the ANH. We anticipate that the total cost of drilling
      the first well to be approximately $2,500,000 to $3,000,000, of which $1,200,000
      has already been deposited in trust with the ANH to be used for the first well.
      The balance in the trust deposit account as of March 31, 2008 is
      $1,123,557.





5.
      DEPOSITS





In
      January 2007, we placed a deposit totaling $82,000 on approximately 85% of
      the
      working interest of a natural gas property consisting of 640 acres with proved
      undeveloped reserves located in Hansford County, Texas. The agreement was
      amended in March 2007 stipulating that unless we acquired a contiguous lease
      by
      June 1, 2008 at a cost of $48,000, a second contiguous lease by August 1, 2008
      for $80,000 and place $445,180 in escrow for drilling and completing the first
      well with actual commencement of drilling prior to September 15, 2008, the
      seller shall have the right to refund 90% of the initial purchase price and
      void
      the agreement. In September 2007, the seller provided us with an extension
      until
      June 30, 2008 to fulfill all of our obligations under the agreement. Until
      we
      raise additional capital, we do not anticipate further investments in this
      project and as such, the agreement may be voided by the seller at any time
      after
      June 30, 2008.





In
      November 2007, we entered into an agreement to purchase out of bankruptcy a
      working interest in an oil & gas leasehold and producing wellbore in
      Louisiana for a purchase price of $1,400,000. Upon the signing of the agreement,
      we placed a deposit totaling 10% of the total purchase price, or $140,000.
      The
      bankruptcy court has decided that it is not pursuing the sale at this moment
      and
      we received our entire deposit of $140,000 back on March 1, 2008. We have no
      further obligations for this property.


6





In
      February 2008, we entered into an letter of intent and issued a $100,000 deposit
      to acquire a minority position in certain producing oil and gas assets in
      Colombia. On April 8, 2008, we entered into a membership interest purchase
      agreement (the “Purchase Agreement”) with Sunstone Corporation (“Sunstone”)
      pursuant to which the Company acquired from Sunstone 100% of the membership
      interests in Cimarrona Limited Liability company, an Oklahoma limited liability
      company (“Cimarrona LLC”). Cimarrona LLC is the owner of a 9.4% interest in
      certain oil and gas assets in the Guaduas field, located in the Dindal and
      Rio
      Seco Blocks that covers 30,665 acres in the Middle Magdalena Valley in Colombia.
      The Purchase Agreement is effective as of April 1, 2008. The purchase price
      consisted of 2,750,000 shares of the Company’s common stock and a warrant to
      purchase 1,125,000 shares of the Company’s common stock exercisable at $1.25 per
      share and expiring April 8, 2013. The $100,000 deposit was returned to the
      Company in conjunction with closing of the transaction.





6.
      BANK
      CD PLEDGED FOR LETTER OF CREDIT





In
      August
      2007, we placed $144,000 as a certificate of deposit with a bank as collateral
      for the $144,000 letter of credit required by the ANH as more fully described
      in
      footnote 4 above. If we do not complete drilling and testing of the first well
      in the Rosablanca concession by July 3, 2008, and we do not receive extensions
      from the ANH, we may lose our entire interest in the concession and the $144,000
      letter of credit we previously issued. The balance, including accrued interest,
      in the Bank CD as of March 31, 2008 is $148,880.





7.
      CONVERTIBLE DEBENTURES





From
      February 2006 through October 2006, we issued convertible debentures (the
“Convertible Debentures”) with three-year detachable warrants to accredited
      investors for gross proceeds of $349,000. The Convertible Debentures mature
      one
      year from issuance, carried a 10% interest rate and were convertible at $1.20
      per share for $263,000 of the Convertible Debentures, $0.75 as to $50,000 of
      the
      Convertible Debentures and $0.80 as to $36,000 of the Convertible Debentures.
      As
      of December 31, 2006, we had $349,000 of Convertible Debentures outstanding
      and
      accrued interest of $20,302. All of the Convertible Debentures, including
      accrued interest on $337,000 of the Convertible Debentures, converted in January
      and February 2007 into 362,417 shares of our Common Stock. In May 2007, we
      paid
      $1,200 of interest on $12,000 of the Convertible Debentures.





Pursuant
      to EITF 98-5, "Accounting for Convertible Securities with Beneficial Conversion
      Features or Contingently Adjustable Conversion Ratios" and EITF 00-27,
“Application of Issue No. 98-5 in Certain Convertible Instruments,” based on
      relative fair values of the warrant and the debt, the proceeds from the debt
      were allocated to the warrant and the debt on a relative fair value basis.
      We
      recorded $209,014 upon the issuance of the Convertible Debentures attributable
      to the beneficial conversion feature as additional paid in capital. The discount
      was being amortized using the effective interest rate method over the term
      of
      the indebtedness. The warrants are exercisable for a period of three years
      with
      an exercise price of $2.40, for $299,000 of the Convertible Debentures, and
      $1.50 as to $50,000 of the Convertible Debenture. Using the Black Scholes
      pricing model, with volatility of 80.0%, risk-free rate of 4.61% to 5.15% and
      a
      0% dividend yield, the warrants were determined to have a fair value of $138,604
      and were recorded as additional paid in capital. The balance of the unamortized
      discount at the date of conversion was expensed.





8.
      SECURED CONVERTIBLE DEBENTURE





On
      February 16, 2007, we issued a $250,000 secured convertible debenture (the
      “Secured Convertible Debenture”) and 300,000 shares of common stock to an
      institutional investor for gross proceeds of $250,000. The Secured Convertible
      Debenture matured July 31, 2007, had a 10% interest rate with a minimum interest
      amount of $25,000 due at Maturity, and was convertible, in whole or in part,
      into shares of common stock at a conversion price $0.25 per share. The shares
      issued in conjunction with the Secured Convertible Debenture were valued at
      $250,000 based on the price of the stock issued at the most recent private
      placement offering and were recorded as additional pain in capital. The discount
      of $250,000 was being amortized using the effective interest rate method over
      the term of the indebtedness. Pursuant to EITF 98-5, "Accounting for Convertible
      Securities with Beneficial Conversion Features or Contingently Adjustable
      Conversion Ratios", we recorded an interest expense of $0 upon the issuance
      of
      the Secured Convertible Debentures attributable to the beneficial conversion
      feature as the value of the shares exceeded the face value of the Secured
      Convertible Debenture. In July 31, 2007, the Secured Convertible Debenture
      along
      with accrued interest converted into 1,100,000 shares of common stock. The
      effective interest rate, which includes the value of the shares as well as
      the
      minimum interest amount of $25,000, was 241.5%.


7


9.
      UNSECURED CONVERTIBLE PROMISSORY NOTE





In
      July
      2007, we issued a $1,100,000 unsecured convertible promissory note (“Unsecured
      Convertible Promissory Note”) to one institutional investor for gross proceeds
      of $1,100,000. The Unsecured Convertible Promissory Note matures September
      30,
      2008, has an 8% interest rate, payable in cash quarterly, and is convertible,
      in
      whole or in part, into units, with each unit (“Unit”) priced at $1.00 and
      consisting of one share of common stock and one warrant, exercisable at $1.25
      per share maturing three years from issuance. We may prepay the Unsecured
      Convertible Promissory Note at any time prior to maturity with no penalty.
      We
      may, but only at maturity, elect to repay the Unsecured Convertible Promissory
      Note in Units valued at $1.00 per Unit. Pursuant to EITF 98-5, "Accounting
      for
      Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios" and EITF 00-27, “Application of Issue No. 98-5 in
      Certain Convertible Instruments,” we recorded $1,067,274 upon the issuance of
      the Unsecured Convertible Promissory Note attributable to the beneficial
      conversion feature as additional paid in capital. The discount is being
      amortized using the effective interest rate method over the term of the
      indebtedness.





10.
      PROMISSORY NOTE





On
      April
      27, 2007, we purchased a truck to be used by our pumper in our Oklahoma
      properties by issuing a promissory note (the “Promissory Note”) to a bank
      secured by the truck. The Promissory Note matures October 27, 2010, has a
      variable interest rate of Prime plus 1.0%, and has monthly principal and
      interest payments totaling $366. As of March 31, 2008, the interest rate on
      the
      Promissory Note was 6.25%.





The
      following table summarizes the balance of the note at March 31,
      2008:




Promissory
                Note Outstanding at March 31, 2008
            
            $
            9,943Less
                Current Portion
            
            
            3,600$
            6,343





11.
      COMMITMENTS AND CONTINGENCIES





Pursuant
      to our Agreement with Gold and Empesa, we are considered the operators of the
      concession and will pay all costs associated with drilling and testing of the
      first well on the Rosablanca project. If we do not complete drilling and testing
      of the first well by July 3, 2008, and we do not receive extensions from the
      ANH, we may lose our entire interest in the concession and the $144,000 letter
      of credit we previously issued. However, we would be entitled to receive the
      balance of the $1,200,000 deposit ($1,123,557 as of March 31, 2008) that we
      have
      in trust with the ANH. After drilling the first well, we are required to provide
      the ANH with a budget and program for drilling successive wells. The concession
      with the ANH shall remain in effect as long as we meet our time obligations
      to
      drill each well that we present to the ANH. We anticipate that we will need
      to
      raise at least $2,000,000 of additional capital to complete the first well.





In
      January 2008, we entered into a Letter of Intent to farmin (an arrangement
      whereby one oil operator buys in or acquires an interest in a lease or
      concession owned by another operator) to 50% of a field in Colombia. Under
      the
      Letter of Intent, we are to pay for 100% of the drilling and completion costs
      of
      an appraisal well to be drilled in 2008 at an anticipated cost of approximately
      $3,000,000.





In
      March
      2008, we entered into a Letter of Intent to farmin to 30% of a field in
      Colombia. Under the Letter of Intent, we are to pay for 100% of the drilling
      and
      completion costs of an appraisal well to be drilled in 2008 at an anticipated
      cost of approximately $3,000,000.





ENVIRONMENT





Osage,
      as
      owner and operator of oil and gas properties, is subject to various federal,
      state, and local laws and regulations relating to discharge of materials into,
      and protection of, the environment. These laws and regulations may, among other
      things, impose liability on the owner of real property and the lessee under
      oil
      and gas leases for the cost of pollution clean-up resulting from operations,
      subject the owner/lessee to liability for pollution damages and impose
      restrictions on the injection of liquids into subsurface strata.


8





Although
      Company environmental policies and practices are designed to ensure compliance
      with these laws and regulations, future developments and increasing stringent
      regulations could require the Company to make additional unforeseen
      environmental expenditures





The
      Company maintains insurance coverage that it believes is customary in the
      industry, although it is not fully insured against all environmental
      risks.





The
      Company is not aware of any environmental claims existing as of December 31,
      2007, that would have a material impact on its consolidated financial position
      or results of operations. There can be no assurance, however, that current
      regulatory requirements will not change, or past non-compliance with
      environmental laws will not be discovered on the Company's
      property.





LAND
      RENTALS AND OPERATING LEASES





In
      February 2008, the Company entered into a 36 month lease for its corporate
      offices in San Diego. The lease is initially for $3,682 per month for the first
      year, increasing to $3,800 and $3,923 in the second and third year respectively.
      The lease is guaranteed by Mr. Bradford, our President and CEO. No compensation
      was given to Mr. Bradford for his guarantee. In addition, the Company is
      responsible for all operating expenses and utilities.





We
      lease
      approximately 1,000 square feet of modern office space in Oklahoma City, OK
      consisting of a large conference room, three offices, a drafting room and a
      storage room. The lease is based on a verbal agreement with a third party on
      a
      month-to-month basis for $575.





Future
      minimum rental payments required as of March 31, 2008 under operating leases
      are
      as follows by year:





Year
            
            Amount2009
            
            $
            44,4192010
            
            $
            45,4872011
            
            $
            39,227Totals
            
            $
            129,133





Rental
      expense charged to operations totaled $10,082 and $3,025 for the three months
      ended March 31, 2008 and March 31, 2007, respectively.





LEGAL
      PROCEEDINGS





The
      Company is not a party to any litigation that has arisen in the normal course
      of
      its business and that of its subsidiaries.





12.
      EQUITY TRANSACTIONS





Unit
      Offering


In
      June
      and July 2007, for gross proceeds of $925,000, we issued 925,000 shares of
      common stock and 1,387,500 warrants, exercisable at $1.50 per share expiring
      on
      March 31, 2010 to two accredited investors and one institutional investor.





Common
      Stock Offering


In
      April
      and May 2007, for gross proceeds of $475,000, we issued 1,187,500 shares of
      our
      common stock at a price per share of $0.40 to nine accredited investors and
      entities.


9


Cimarrona
      Acquisition


On
      April 8, 2008, pursuant to the Purchase Agreement with Sunstone Corporation
      whereby the Company acquired from Sunstone 100% of the membership interests
      in
      Cimarrona, the Company issued to Sunstone 2,750,000 shares of the Company’s
      common stock and a warrant to purchase 1,125,000 shares of the Company’s common
      stock exercisable at $1.25 per share and expiring April 8, 2013. In addition,
      the Company issued 50,000 shares of common stock to Energy Capital Solutions,
      LP
      for their role as financial advisor and $22,500 and 100,000 shares of common
      stock to Larry Ray, an individual, as a finder’s fee.





13.
      MAJOR
      CUSTOMERS





During
      the three months ended March 31, 2008 and 2007, one customer, Sunoco, Inc.,
      accounted for 100.0% of our total oil and gas sales.





14.
      ASSET
      RETIREMENT OBLIGATIONS





The
      Company recognizes a liability at discounted fair value for the future
      retirement of tangible long-lived assets and associated assets retirement cost
      associated with the petroleum and natural gas properties. The fair value of
      the
      liability is capitalized as part of the cost of the related asset and amortized
      to expense over its useful life. The liability accretes until the date of
      expected settlement of the retirement obligations. The related accretion expense
      is recognized in the statement of operations. The provision will be revised
      for
      the effect of any changes to timing related to cash flow or undiscounted
      abandonment costs. Actual expenditures incurred for the purpose of site
      reclamation are charged to the asset retirement obligations to the extent that
      the liability exists on the balance sheet. Differences between the actual costs
      incurred and the fair value of the liability recorded are recognized in income
      in the period the actual costs are incurred.





There
      are
      no legally restricted assets for the settlement of asset retirement obligations.
      A reconciliation of the Company's asset retirement obligations for the periods
      presented is as follows:





Year Ended
            
            Three Months Ended
              March 31,December 31
              2007
            
            2008
              (unaudited)
            
            2007
              (unaudited)Beginning Balance
            
            $
            15,043
            
            $
            16,547
            
            $
            15,043Incurred
                during the periodAdditions
                for new wellsAccretion
                expense
            
            
            1,504
            
            
            414
            
            
            376Ending
                Balance
            
            $
            16,547
            
            $
            16,961
            
            $
            15,419





15.
      SUBSEQUENT EVENTS





On
      April 8, 2008, the Company entered into a membership interest purchase
      agreement (the “Purchase Agreement”) with Sunstone Corporation (“Sunstone”)
      pursuant to which the Company acquired from Sunstone its membership interests
      in
      Cimarrona Limited Liability company, an Oklahoma limited liability company
      (“Cimarrona LLC”). Cimarrona LLC is the owner of a 9.4% interest in certain oil
      and gas assets in the Guaduas field, located in the Dindal and Rio Seco Blocks
      that covers 30,665 acres in the Middle Magdalena Valley in Colombia. The
      Purchase Agreement is effective as of April 1, 2008. The purchase price
      consisted of 2,750,000 shares of the Company’s common stock and a warrant to
      purchase 1,125,000 shares of the Company’s common stock exercisable at $1.25 per
      share and expiring April 8, 2013. In February 2008, The Company previously
      provided a $100,000 deposit to Sunstone, which was returned to the Company
      in
      conjunction with closing of the transaction. In connection with the Purchase
      Agreement, the Company also issued 50,000 shares of the Company’s common stock
      to Energy Capital Solutions, LP for their role as financial advisor and $22,500
      and 100,000 shares to Larry Ray, an individual, as a finder’s fee. The foregoing
      securities were issued pursuant to Section 4(2) of the Securities Act of 1933
      and Regulation D promulgated thereunder and a restrictive legend was placed
      thereon.


10




**Item
      2.**   **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.**





This
      report contains forward-looking statements within the meaning of Section 27A
      of
      the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
      1934 that include, among others, statements of: expectations, anticipations,
      beliefs, estimations, projections, and other similar matters that are not
      historical facts, including such matters as: future capital requirements,
      development and exploration expenditures (including the amount and nature
      thereof), drilling of wells, reserve estimates (including estimates of future
      net revenues associated with such reserves and the present value of such future
      net revenues), future production of oil and gas, repayment of debt, business
      strategies, and expansion and growth of business operations. These statements
      are based on certain assumptions and analyses made by our management in light
      of
      past experience and perception of: historical trends, current conditions,
      expected future developments, and other factors that our management believes
      are
      appropriate under the circumstances. We caution the reader that these
      forward-looking statements are subject to risks and uncertainties, including
      those associated with the financial environment, the regulatory environment,
      and
      trend projections, that could cause actual events or results to differ
      materially from those expressed or implied by the statements. Such risks and
      uncertainties include those risks and uncertainties identified
      below.





Significant
      factors that could prevent us from achieving our stated goals include: declines
      in the market prices for oil and gas, adverse changes in the regulatory
      environment affecting us, the inherent risks involved in the evaluation of
      properties targeted for acquisition, our dependence on key personnel, the
      availability of capital resources at terms acceptable to us, the uncertainty
      of
      estimates of proved reserves and future net cash flows, the risk and related
      cost of replacing produced reserves, the high risk in exploratory drilling
      and
      competition. You should consider the cautionary statements contained or referred
      to in this report in connection with any subsequent written or oral
      forward-looking statements that may be issued. We undertake no obligation to
      release publicly any revisions to any forward-looking statement to reflect
      events or circumstances after the date hereof or to reflect the occurrence
      of
      unanticipated events.




In
      June
      2007, we entered into an agreement with Gold and Empesa, whereby we farmed-in
      to
      the approximately 165 square mile Rosablanca concession in Colombia awarded
      by
      the ANH to Gold in June, 2007. Under the Agreement, we are the operators of
      the
      concession and will pay all costs associated with drilling and testing of the
      first well on the Rosablanca project. Revenues generated from the first well
      will be allocated 50% to us, 40% to Gold and 10% to Empesa. If we do not
      complete drilling and testing of the first well by July 3, 2008, we will lose
      our entire interest in the concession. On each additional well, we will
      contribute 50% of the costs, Gold will contribute 40% of the costs and Empesa
      will contribute 10% of the costs. Revenues will be allocated according to the
      above percentages. If any party doesn’t contribute its share of the costs, its
      revenue interest will automatically be transferred to the party that provides
      the capital. In August 2007, we (i) paid $1,200,000 to Gold representing the
      funds that Gold had previously issued to a trust established by the ANH to
      use
      for drilling the first well for the Rosablanaca concession and (ii) issued
      a
      letter of credit in the amount of $144,000 for the benefit of Gold’s bank in
      Colombia representing the guarantee required by the ANH. We anticipate that
      the
      total cost of drilling the first well to be approximately $2,500,000 to
      $3,000,000, of which $1,200,000 has already been deposited in trust with the
      ANH
      to be used for the first well. In accordance with the ANH, we must spend at
      least $1,200,000 on expenses relating to the first well, the amount already
      deposited in trust, by July 3, 2008. If we do not spend that amount and are
      unable to get any extensions from the ANH, we may lose the $144,000 letter
      of
      credit we previously issued.




In
      November 2007, we entered into an agreement to purchase out of bankruptcy a
      working interest in an oil & gas leasehold and producing wellbore in
      Louisiana for a purchase price of $1,400,000. Upon the signing of the agreement,
      we placed a deposit totaling 10% of the total purchase price, or $140,000.
      The
      bankruptcy court has decided that it is not pursuing the sale at this moment
      and
      we received our entire deposit of $140,000 back in March 2008. We have no
      further obligations for this property.





In
      January 2008, we entered into a Letter of Intent to farmin (an arrangement
      whereby one oil operator buys in or acquires an interest in a lease or
      concession owned by another operator) to 50% of a field in Colombia. Under
      the
      Letter of Intent, we are to pay for 100% of the drilling and completion costs
      of
      an appraisal well to be drilled in 2008 at an anticipated cost of approximately
      $3,000,000.


11





In
      March
      2008, we entered into a Letter of Intent to farmin to 30% of a field in
      Colombia. Under the Letter of Intent, we are to pay for 100% of the drilling
      and
      completion costs of an appraisal well to be drilled in 2008 at an anticipated
      cost of approximately $3,000,000.





In
      April
      2008, we entered into a membership interest purchase agreement (the “Purchase
      Agreement”) with Sunstone Corporation (“Sunstone”) pursuant to which the Company
      acquired from Sunstone 100% of the membership interests in Cimarrona Limited
      Liability Company, an Oklahoma limited liability company (“Cimarrona LLC”).
      Cimarrona LLC is the owner of a 9.4% interest in certain oil and gas assets
      in
      the Guaduas field, located in the Dindal and Rio Seco Blocks that covers 30,665
      acres in the Middle Magdalena Valley in Colombia. The Purchase Agreement was
      effective as of April 1, 2008. The purchase price consisted of 2,750,000 shares
      of the Company’s common stock and a warrant to purchase 1,125,000 shares of the
      Company’s common stock exercisable at $1.25 per share and expiring April 8,
      2013. In February 2008, The Company previously provided a $100,000 deposit
      to
      Sunstone, which was returned to the Company in conjunction with closing of
      the
      transaction. In connection with the Purchase Agreement, the Company also issued
      50,000 shares of the Company’s common stock to Energy Capital Solutions, LP for
      their role as financial advisor and $22,500 and 100,000 shares to Larry Ray,
      an
      individual, as a finder’s fee. The foregoing securities were issued pursuant to
      Section 4(2) of the Securities Act of 1933 and Regulation D promulgated
      thereunder and a restrictive legend was placed thereon.





We
      anticipate that we will need to raise a minimum of $6,000,000 to provide the
      cash requirements for the next twelve months to commence drilling in Colombia
      and expand our operations in Colombia. Should we not be able to raise the entire
      sum, we may lose our Rosablanca concession and our ability to participate in
      our
      other Colombian projects. At present, our Osage County, Oklahoma production
      is
      only sufficient to cover well operating expenses in Osage and a small portion
      of
      our overhead.





We
      have
      incurred $18,423 and $22,229 in the three months ended March 31, 2008 and March
      31, 2007, respectively, in operating expenses at the Osage property. The major
      source of funds for these costs was the sale of oil from the Osage property.





We
      have
      made a deposit of $82,000 on a property in Hansford County, Texas. We are
      obligated to incur an additional $573,810 for the property by June 30, 2008
      consisting of purchasing of additional contiguous leases and depositing funds
      in
      escrow for drilling and completion of the first well. If we do not fulfill
      our
      obligations, the seller may void the agreement at any time after June 30, 2008
      and return 90% of all payments received. We do not anticipate incurring
      additional expenses on this property until we have raised sufficient capital
      for
      our Rosablanca project and as such, we may lose 10% of our initial
      funding.





As
      of
      March 31, 2008, we have a note receivable due December 2009 totaling $295,775
      that was issued in conjunction with a change of control in December 2006, of
      which $78,500 of the outstanding amount is receivable is from related parties.
      If we do not collect this note, it could have a material impact on our cash
      and
      impair our ability to execute our business plan.





We
      have
      undertaken steps as part of a plan to improve operations with the goal of
      sustaining our operations for the next twelve months and beyond. These steps
      include (a) raising additional capital and/or obtaining financing, (b)
      increasing our current production in the Osage property and (c) controlling
      overhead and expenses.





There
      can
      be no assurance that we will successfully accomplish these steps and it is
      uncertain we will achieve a profitable level of operations and/or obtain
      additional financing. There can be no assurance that any additional financings
      will be available to us on satisfactory terms and conditions, if at all. In
      the
      event we are unable to continue as a going concern, we may elect or be required
      to seek protection from our creditors by filing a voluntary petition in
      bankruptcy or may be subject to an involuntary petition in bankruptcy. To date,
      management has not considered this alternative, nor does management view it
      as a
      likely occurrence.


12


**Results
      of Operations**





**Three
      Months ended March 31, 2008 compared to Three Months ended March 31,
      2007**





Three
                Months Ended March 31,2008
            
            2007Amount
            
            Percentage
            
            Amount
            
            PercentageOil
                & Gas Sales
            
            $
            34,565
            
            
            100.0
            %
            $
            70,257
            
            
            100.0
            %Operating
                Expenses
            
            
            18,423
            
            
            53.3
            %
            
            22,229
            
            
            31.6
            %Non
                Cash Compensation Expense
            
            
            681,930
            
            
            1,972.9
            %
            
            
            
            
            0.0
            %Depreciation
                , Depletion and Accretion
            
            
            2,733
            
            
            7.9
            %
            
            1,029
            
            
            1.5
            %General
                & Administrative Expenses
            
            
            398,832
            
            
            1,153.9
            %
            
            87,383
            
            
            124.4
            %Total
                Operating Costs and Expenses
            
            
            1,101,918
            
            
            3,188.0
            %
            
            110,641
            
            
            157.5
            %Operating
                Loss
            
            
            (1,067,353
            )
            
            -3,088.0
            %
            
            (40,384
            )
            
            -57.5
            %Other
                Expenses
            
            
            (222,879
            )
            
            -644.8
            %
            
            (366,146
            )
            
            -521.2
            %Loss
                before income Taxes
            
            
            (1,290,232
            )
            
            3,732.8
            %
            
            (406,530
            )
            
            -578.6
            %Net
                Loss
            
            
            (1,290,232
            )
            
            -3,732.8
            %
            
            (406,530
            )
            
            -578.6
            %Comprehensive
                Loss
            
            
            (1,165,261
            )
            
            -3,371.2
            %
            
            (406,530
            )
            
            -578.6
            %





Revenues
      from oil sales were $34,565, a decrease of $35,692, or 50.8%, in the quarter
      ended March 31, 2008 compared to $70,257 of revenues in the quarter ended March
      31, 2007. On a BOE basis, our total production decreased to 489 BOE in the
      quarter ended March 31, 2008 compared to 1,624 BOE in the quarter ended March
      31, 2007 due primarily to a loss of water production used to supply flood water
      in our secondary recovery effort. Our average price per BOE increased to $93.83
      in the quarter ended March 31, 2008 from $57.36 in the quarter ended March
      31,
      2007.





Our
      operating expenses, consisting primarily of payments to an independent pumper,
      electricity at the wells, repairs and maintenance as well as supplies and
      materials, were $18,423, representing average operating expense per BOE of
      $37.67 for the quarter ended March 31, 2008. For the quarter ended March 31,
      2007, our operating expenses were $22,229, or an average operating expense
      per
      BOE of $13.69. The increase in the average operating expenses per BOE is due
      principally to the decrease in production in the quarter ended March 31, 2008
      compared to the quarter ended March 31, 2007.





Non
      cash
      compensation expense was 681,930 and zero in the quarter ended March 31, 2008
      and March 31, 2007 respectively as the non-cash compensation expense related
      to
      the amortization of the value of shares issued to two employees in November
      2007.





General
      and administrative expenses were $398,832 and $87,383 in the quarter ended
      March
      31, 2008 and March 31, 2007, respectively. The $311,449 increase is primarily
      due to an increase of $118,627 in payroll and payroll expenses, a $63,626
      increase in legal and professional fees, $32,011 increase in travel expenses
      and
      $30,143 increase in insurance expense.


13





Depreciation,
      depletion and accretion were $2,733 in the quarter ended March 31, 2008 compared
      to$1,029 in the quarter ended March 31, 2007, primarily due to increased
      depreciation on non oil property and equipment. .





Loss
      from
      operations was $1,067,353 and $40,384 for the quarter ended March 31, 2008
      and
      March 31, 2007, respectively.





Interest
      expense was $250,568 and $366,559 in the three months ended March 31, 2008
      and
      March 31, 2007, respectively. Interest expense in the three months ended March
      31, 2008 consisted primarily of $216,790 for the beneficial conversion of the
      convertible debt, while interest expenses for the three months ended March
      31,
      2007 consisted primarily of $169,683 and $111,481 of the beneficial conversion
      feature and the value of the warrants, respectively, of the Convertible
      Debentures and $64,024 amortization of the value of the shares issued with
      the
      $250,000 Secured Convertible Debentures.





Net
      loss
      was $1,290,232 and $406,530 for the three months ended March 31, 2008 and March
      31, 2007, respectively.





Foreign
      currency translation gain was $124,971 and $0 for the three months ended March
      31, 2008 and March 31, 2007, respectively. Comprehensive loss was $1,165,261
      and
      $406,530 for the three months ended March 31, 2008 and March 31, 2007,
      respectively.





**Liquidity
      and Capital Resources**





At
      March
      31, 2008, we had working capital of $$1,113,498 consisting primarily of
      $1,123,557 in Colombian deposits and $446,141 in cash and cash equivalents,
      offset by $664,037 of the Unsecured Convertible Promissory Note, representing
      $1,100,000 face value less $435,963 of unamortized discount and $$120,666 of
      accounts payable.





We
      have
      raised in excess of $2,500,000 in gross proceeds through various debt and equity
      financings since January 1, 2007 and have used the majority of the net proceeds
      for costs related to our Rosablanca project in Colombia, as well as for working
      capital purposes and professional fees.





Net
      cash
      used by operating activities totaled $296,402 for the three months ended March
      31, 2008 compared to net cash used by operating activities of $42,637 for the
      three months ended March 31, 2007. The major components of the net cash used
      in
      operating activities in the three months ended March 31, 2008 were the net
      loss
      of $1,290,232, offset by $681,930 amortization of deferred compensation and
      $216,790 of the beneficial conversion feature of the $1,100,000 Unsecured
      Promissory Note. The major component of the net cash used in operating
      activities in the three months ended March 31, 2007 was the net loss of
      $406,530, offset by $169,683 and $111,481 of the beneficial conversion feature
      and the value of the warrants, respectively, of the Convertible Debentures.





Net
      cash
      used in investing activities totaled $87,009 and $4,671 for the three months
      ended March 31, 2008 and March 31, 2007, respectively. Net cash used in
      investing activities in the three months ended March 31, 2008 consisted
      primarily of the $100,000 deposit made for the acquisition of Cimarrona, which
      was returned to the Company in April 2008 upon closing of the transaction and
      $93,956 investments made on the Rosablanca project, offset by the return of
      $140,000 deposit on a potential property acquisition that did not close. Net
      cash used in investing activities for the three months ended March 31, 2007
      consisted of $4,671 of office equipment.





Net
      cash
      provided by financing activities totaled $13,236 for the three months ended
      March 31, 2008 and consisted primarily of $14,100 proceeds from payment on
      the
      stock purchase notes receivable. Net cash provided by financing activities
      totaled $250,250 for the three months ended March 31, 2007 consisted primarily
      of $250,000 from the issuance of the Secured Convertible Debenture due July
      31,
      2008.





Net
      operating revenues from our oil production are very sensitive to changes in
      the
      price of oil making it very difficult for management to predict whether or
      not
      we will be profitable in the future.


14





We
      conduct no product research and development.





We
      operate our Osage County, Oklahoma properties through independent contractors
      that operate producing wells for several small oil companies.





We
      are
      responsible for any contamination of land we own or lease. However, there may
      be
      limitations on any potential contamination liabilities as well as claims for
      reimbursement from third parties.





We
      sell
      all of our oil production in our Osage property to Sunoco, Inc. In conjunction
      with our Cimarrona transaction and beginning April 1, 2008, we are selling
      all
      of our oil production in Colombia to Hocol, S.A. However, in the event these
      customers discontinued oil purchases, we believe we can replace these customers
      with other customers who would purchase the oil at terms standard in the
      industry.





**Effect
      of Changes in Prices**


Changes
      in prices during the past few years have been a significant factor in the oil
      and gas industry. The price received for the oil produced by us fluctuated
      significantly during the last year. Changes in the price that we receive for
      our
      oil and gas is set by market forces beyond our control as well as governmental
      intervention. Average price received by us for a BOE were $93.83 and $57.36
      for
      the three months ended March 31, 2008 and March 31, 2007, respectively. The
      volatility and uncertainty in oil and gas prices have made it more difficult
      for
      a company like us to increase our oil and gas asset base and become a
      significant participant in the oil and gas industry. We sell all of our oil
      production in our Osage property to Sunoco, Inc. Beginning April 1, 2008, we
      began to sell all of our oil production in Colombia to Hocol, S.A. However,
      in
      the event these customers discontinued oil purchases, we believe we can replace
      these customers with other customers who would purchase the oil at terms
      standard in the industry.





**Critical
      Accounting Policies and Estimates**


Management's
      Discussion and Analysis of Financial Condition and Results of Operations
      discusses our consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America. The preparation of these financial statements requires management
      to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. On an on-going basis,
      management evaluates our estimates and judgments, including those related to
      revenue recognition, recovery of oil and gas reserves, financing operations,
      and
      contingencies and litigation.





**Oil
      and Gas Properties**


We
      follow
      the "successful efforts" method of accounting for our oil and gas exploration
      and development activities, as set forth in the Statement of Financial
      Accounting Standards (SFAS) No. 19, as amended, issued by the Financial
      Accounting Standards Board. Under this method, we initially capitalize
      expenditures for oil and gas property acquisitions until they are either
      determined to be successful (capable of commercial production) or unsuccessful.
      The carrying value of all undeveloped oil and gas properties is evaluated
      periodically and reduced if such carrying value appears to have been impaired.
      Leasehold costs relating to successful oil and gas properties remain capitalized
      while leasehold costs which have been proven unsuccessful are charged to
      operations in the period the leasehold costs are proven unsuccessful. Costs
      of
      carrying and retaining unproved properties are expensed as
      incurred.





The
      costs
      of drilling and equipping development wells are capitalized, whether the wells
      are successful or unsuccessful. The costs of drilling and equipping exploratory
      wells are capitalized until they are determined to be either successful or
      unsuccessful. If the wells are successful, the costs of the wells remain
      capitalized. If, however, the wells are unsuccessful, the capitalized costs
      of
      drilling the wells, net of any salvage value, are charged to operations in
      the
      period the wells are determined to be unsuccessful.





The
      provision for depreciation and depletion of oil and gas properties is computed
      on the unit-of-production method. Under this method, we compute the provision
      by
      multiplying the total unamortized costs of oil and gas properties including
      future development, site restoration, and dismantlement abandonment costs,
      but
      excluding costs of unproved properties by an overall rate determined by dividing
      the physical units of oil and gas produced during the period by the total
      estimated units of proved oil and gas reserves. This calculation is done on
      a
      country-by-country basis. As of March 31, 2008 and December 31, 2007, all of
      our
      oil production operations were conducted in the United States of America. The
      cost of unevaluated properties not being amortized, to the extent there is
      such
      a cost, is assessed quarterly to determine whether the value has been impaired
      below the capitalized cost. The cost of any impaired property is transferred
      to
      the balance of oil and gas properties being depleted. The costs associated
      with
      unevaluated properties relate to projects which were undergoing exploration
      or
      development activities or in which we intend to commence such activities in
      the
      future. We will begin to amortize these costs when proved reserves are
      established or impairment is determined.


15





In
      accordance with SFAS No. 143, "Accounting for Asset Retirement Obligations,"
      we
      report a liability for any legal retirement obligations on our oil and gas
      properties. The asset retirement obligations represent the estimated present
      value of the amounts expected to be incurred to plug, abandon, and remediate
      the
      producing properties at the end of their productive lives, in accordance with
      state laws, as well as the estimated costs associated with the reclamation
      of
      the property surrounding. The Company determines the asset retirement
      obligations by calculating the present value of estimated cash flows related
      to
      the liability. The asset retirement obligations are recorded as a liability
      at
      the estimated present value as of the asset's inception, with an offsetting
      increase to producing properties. Periodic accretion of the discount related
      to
      the estimated liability is recorded as an expense in the statement of
      operations.





The
      estimated liability is determined using significant assumptions, including
      current estimates of plugging and abandonment costs, annual inflation of these
      costs, the productive lives of wells, and a risk-adjusted interest rate. Changes
      in any of these assumptions can result in significant revisions to the estimated
      asset retirement obligations. Revisions to the asset retirement obligations
      are
      recorded with an offsetting change to producing properties, resulting in
      prospective changes to depletion and depreciation expense and accretion of
      the
      discount. Because of the subjectivity of assumptions and the relatively long
      lives of most of the wells, the costs to ultimately retire the Company's wells
      may vary significantly from prior estimates.




**Revenue
      Recognition**


We
      recognize revenue upon transfer of ownership of the product to the customer
      which occurs when (i) the product is physically received by the customer, (ii)
      an invoice is generated which evidences an arrangement between the customer
      and
      us, (iii) a fixed sales price has been included in such invoice and (iv)
      collection from such customer is probable.





**Off-Balance
      Sheet Arrangements**


Our
      Company has not entered into any transaction, agreement or other contractual
      arrangement with an entity unconsolidated with us under which we have





·
            an
                obligation under a guarantee
                contract,


·
            a
                retained or contingent interest in assets transferred to the
                unconsolidated entity or similar arrangement that serves as credit,
                liquidity or market risk support to such entity for such
                assets,


·
            any
                obligation, including a contingent obligation, under a contract that
                would
                be accounted for as a derivative instrument,
                or


·
            any
                obligation, including a contingent obligation, arising out of a variable
                interest in an unconsolidated entity that is held by us and material
                to us
                where such entity provides financing, liquidity, market risk or credit
                risk support to, or engages in leasing, hedging or research and
                development services with us.





**Item
      3.**   **Quantitative
      and Qualitative Disclosures about Market Risk**





Our
      company is a Smaller Reporting Company. A Smaller Reporting Company is not
      required to provide the disclosure information required by this
      item.





**Item
      4.**   **Controls
      and Procedures**





The
      Company’s management, including the Company’s principal executive officer and
      principal financial officer, have evaluated the effectiveness of the Company’s
“disclosure controls and procedures,” as such term is defined in Rule 13a-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended, (the
“Exchange Act”). Based upon their evaluation, the principal executive officer
      and principal financial offer concluded that, as of the end of the period
      covered by this report, the Company’s disclosure controls and procedures were
      effective for the purpose of ensuring that the information required to be
      disclosed in the reports that the Company files or submits under the Exchange
      Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s
      management, including its principal executive and principal financial offers,
      as
      appropriate to allow timely decisions regarding required
      disclosure.


16





The
      management of the Company is responsible for establishing and maintaining
      adequate internal control over financial reporting. The internal control process
      has been designed under our supervision to provide reasonable assurance
      regarding the reliability of financial reporting and the preparation of the
      Company’s financial statements for external reporting purposes in accordance
      with accounting principles generally accepted in the United States of
      America.





Management
      conducted an assessment of the effectiveness of the Company’s internal control
      over financial reporting as of March 31, 2008, utilizing a top-down, risk based
      approach described in SEC Release No. 34-55929 as suitable for smaller public
      companies.  Based on this assessment, management has determined that the
      Company’s internal control over financial reporting as of March 31, 2008 is
      effective.





Our
      internal control over financial reporting includes policies and procedures
      that
      pertain to the maintenance of records that accurately and fairly reflect, in
      reasonable detail, transactions and dispositions of assets; and provide
      reasonable assurances that: (1) transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting principles
      generally accepted in the United States; (2) receipts and expenditures are
      being
      made only in accordance with authorizations of management and the directors
      of
      the Company; and (3) unauthorized acquisitions, use, or disposition of the
      Company’s assets that could have a material affect on the Company’s financial
      statements are prevented or timely detected.





All
      internal control systems, no matter how well designed, have inherent
      limitations. Therefore, even those systems determined to be effective can
      provide only reasonable assurance with respect to financial statement
      preparations and presentations. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





This
      quarterly report does not include an attestation report of the Company’s
      independent registered public accounting firm regarding internal control over
      financial reporting. Management’s report was not subject to attestation by the
      Company’s independent registered public accounting firm pursuant to temporary
      rules of the Securities and Exchange Commission that permit the Company to
      provide only management’s report in this quarterly report.





Except
      as
      indicated herein, there were no changes in the Company’s internal control over
      financial reporting during the three months ended March 31, 2008 that have
      materially affected, or are reasonable likely to materially affect, the
      Company’s internal control over financial reporting.





**PART
      II – OTHER INFORMATION**





**Item
      1.**   **Legal
      Proceedings**





We
      are
      not a party to, or the subject of, any material pending legal proceedings other
      than ordinary, routine litigation incidental to our business.





**Item
      1A.**  **Risk
      Factors**





Our
      company is a Smaller Reporting Company. A Smaller Reporting Company is not
      required to provide the risk factor disclosure required by this
      item.


17





**Item
      2.**   **Unregistered
      Sales of Equity Securities and Use of Proceeds**


(a)
      The
      following securities were issued during the fiscal quarter and not previously
      reported in a Quarterly Report on Form 10-Q of Current Report on Form
      8-K





None





(b)
      None





(c)
      None





**Item
      3**   **Default
      upon Senior Securities**





None





**Item
      4**   **Submission
      of Matters to a Vote of Security Holders**





None





**Item
      5**   **Other
      Information**





(a)
      None





(b)
      None





**Item
      6**   **Exhibits**





See
      Exhibit Index attached hereto.





**SIGNATURES**





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





**OSAGE
                EXPLORATION AND DEVELOPMENT, INC.**
              (Registrant)Date: 
                May 13, 2008
            By:
            /s/ Kim
                BradfordKim
                BradfordPresident
                and Chief Executive Officer




Date: 
                May 13, 2008
            By:
            /s/ Ran
                FurmanRan
                Furman
              Principal
                Financial Officer


18


**EXHIBIT
      INDEX**





The
      following is a list of Exhibits required by Item 601 of Regulation S-K. Except
      for these exhibits indicated by an asterisk which are filed herewith, the
      remaining exhibits below are incorporated by reference to the exhibit previously
      filed by us as indicated.





**Exhibit
                No.**
            
            **Description**3.1
            
            Articles
                of Incorporation of Osage Exploration and Development, Inc.
                (1)3.2
            
            Bylaws
                of Osage Exploration and Development, Inc. (1)31.1
                (*)
            
            Certification
                pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002, signed by Kim Bradford, President
                and
                Chief Executive Officer (Principal Executive Officer)31.2
                (*)
            
            Certification
                pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002, signed by Kim Bradford, Chief Financial
                Officer (Principal Financial Officer).32.1
                (*)
            
            Certification
                pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002, signed by Kim Bradford, President
                and
                Chief Executive Officer (Principal Executive Officer and Principal
                Financial Officer).





(1)  Incorporated
      herein by reference to Exhibit 3.1 to the Osage Exploration and Development,
      Inc. Form 10-SB Amendment No. 1 filed August 27, 2007


(2)  Incorporated
      herein by reference to Exhibit 3.2 to the Osage Exploration and Development,
      Inc. Form 10-SB Amendment No. 1 filed August 27, 2007


19