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

                                   Form 10-KSB

               |X| ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                              For Fiscal Year Ended
                                December 31, 2005

                            Commission File #0-30503
                          PANGEA PETROLEUM CORPORATION
             (Exact name of registrant as specified in its charter)

                                    COLORADO
         (State or other jurisdiction of incorporation or organization)

                                   76-0635938
                      (IRS Employer Identification Number)

                9801 Westheimer, Suite 302, Houston, Texas 77042
               (Address of principal executive offices)(Zip Code)

                                 (713) 706-6350
                (Registrant's telephone no., including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
Par Value

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. Yes |X| No |_|

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the 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. |X|

Revenues for year ended December 31, 2005: $57,360. Aggregate market value of
the voting common stock held by non-affiliates of the registrant as of March 8,
2006 was $3,078,964 Number of shares of the registrant's common stock
outstanding as of March 8, 2006 was 266,059,538.

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<PAGE>

                                TABLE OF CONTENTS

                                     PART I

Item 1.  Description of Business

Item 2.  Description of Properties

Item 3.  Legal Proceedings

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

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and
         Small Business Issuer Purchase of Equity Securities

                                     PART II

Item 6.  Management's Discussion and Analysis or Plan of Operations

Item 7.  Financial Statements

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

Item 8A. Controls and Procedures

Item 8B. Other Information

                                    PART III

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

Item 10. Executive Compensation

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

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits

Item 14. Principal Accountant Fees and Services

                                   SIGNATURES

                                       2
<PAGE>

                            FORWARD LOOKING STATEMENT

We are including the following cautionary statement in this Form 10-KSB to make
applicable and take advantage of the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by, or on behalf of, the Company. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, expectations, future events or
performance and underlying assumptions and other statements which are other than
statements of historical facts. The statements contained herein and other
information contained in this report may be based, in part, on management's
estimates, projections, plans and judgments. These forward-looking statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from historical results or those anticipated. In this
report, the words "anticipates", "believes", "expects", "intends", "future",
"plans", "targets" and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein. We undertake no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that may arise
after the date hereof. Our expectations, beliefs and projections are expressed
in good faith and are believed to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in our records and other data available from third parties, but there
can be no assurance that management's expectations, beliefs or projections will
result or be achieved or accomplished. In addition to other factors and matters
discussed elsewhere herein, the following are important factors that could cause
actual results to differ materially from those discussed in the forward-looking
statements: our dependence on limited cash resources, dependence on certain key
personnel within the Company, and the ability to raise additional capital; our
ability to secure leases for our oil and gas projects; our ability to obtain
acceptable forms and amounts of financing; the demand for, and price level of,
our products and services; competitive factors; the ability to mitigate
concentration of business in a small number of customers; the evolving industry
and technology standards; the ability to protect proprietary technology; the
dependence on key personnel; and the effect of business interruption due to
political unrest; oil and gas prices; and our ability to efficiently manage our
operations. In addition, our ability to generate long-term value for the common
stockholder is dependent upon the acquisition of profitable energy prospects.
There are many companies participating in the oil and gas industry, many with
greater resources. Greater competition for profitable operations can increase
prices and make it more difficult to acquire assets at reasonable multiples of
cash flow. We believe that we will be able to compete in this environment and
will be able to find attractive investments; however, it is not possible to
predict competition or the effect this will have on operations. Operations are
also significantly affected by factors, which are outside our control, including
the prices of oil and natural gas, environmental and governmental regulations.
Accordingly, actual results may differ, possibly materially, from the
predictions contained herein.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL INFORMATION ABOUT PANGEA

Pangea Petroleum Corporation is a Colorado corporation that was organized on
March 11, 1997. Our principle executive office is located at 9801 Westheimer,
Suite 302, Houston, Texas 77042. Our company website can be viewed at
www.pangeapetroleum.com. We are a publicly traded company listed on the OTC
Electronic Bulletin Board under the symbol "PAPO". We currently have no
subsidiaries.

BUSINESS STRATEGY

Pangea is an independent energy company focused on exploration and development
of oil and natural gas reserves, whose core business is directed to the
development of oil and gas prospects in proven onshore production areas. Pangea
is pursuing a development program designed to achieve profitability by
distributing risk across multiple oil and gas projects. We diversify our risk by
carefully identifying prospects that fit within strict parameters and by taking
a minority working interest in each project. We devotes essentially all of it
resources to development of revenue producing activities by keeping its overhead
at a minimum level through the retention of carefully selected consultants,
contractors and service companies.

Pangea projects are focused on low risk development type drilling. Each project
is screened looking at depth, seismic data available, surrounding production
from similar wells, and proximity to infrastructure. We seek to hold a minority
non-operating interest in the projects and, thus, also closely examine the
project operator to determine that they have the experience and operating
philosophy that is consistent with Pangea quality expectations. Finally the well
drilling cost and upfront cost to buy in to the prospect are estimated.

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<PAGE>

Our evaluation structure compares high, most likely, and low production and
price scenarios to rank projects for investment. Our overall Business Plan
employs the same technique for price and production, and in addition, uses high,
most likely and low scenarios to factor in a projection for the number of
potential dry holes that may be encountered in the drilling program each year.

The most likely case is designed to have a 50% chance of being achieved. The
high and low cases then define the boundaries of an 80% range, such that there
is a 10% chance of achieving the high case and a 90% chance of achieving the low
case.

Pangea attempts to design a drilling program that will be attractive, even in
the low case assumption range, by choosing generally lower risk wells from
prospects at shallower depths. This philosophy allows Pangea to avoid the
unnecessarily complex down-hole environments which are often encountered in
deeper wells, and which often invite very expensive and unreliable results.

To date Pangea has chosen to focus its acquisition, exploration, and development
activities primarily in the Gulf Coast region. This region is characterized by
long-lived gas reserves with predictable and relatively low production depletion
rates, multiple geologic targets that decrease drilling risk, strong natural gas
prices, lower service costs than in more competitive or remote basins, a
favorable regulatory environment that encourages active drilling efforts, and
virtually no federal land or land access impediments. Management believes that
by continuing to identify projects that fit the company's investment and
production criteria, we have a strategy that will enhance production and cash
flow and optimize the use of our investment capital.

We are managed by a small experienced team focused on finding and structuring
attractive oil and gas investment opportunities. Our goal is to create long-term
value for our investors by building a significant onshore oil and natural gas
reserve base.

In summary, Pangea seeks to acquire and exploit properties with the following
characteristics:

o     primarily Gulf Coast Basin locations
o     an established production history and infrastructure
o     multiple productive sands and reservoirs
o     low current production levels with significant identified proven and
      potential reserve opportunities
o     the opportunity to obtain a minority interest.

RISK FACTORS

GOING CONCERN RISK

We have had and could have in the future losses, deficits and deficiencies in
liquidity, which could impair our ability to continue as a going concern.

In Note #2 to our consolidated financial statements, our independent auditors
have indicated that certain factors raise substantial doubt about our ability to
continue as a going concern. Since its inception, we have suffered recurring
losses from operations and have been dependent on existing stockholders and new
investors to provide the cash resources to sustain its operations. During the
years ended December 31, 2005 and 2004, we reported net income and losses and
negative cash flows from operations as follows:

                                                           2005          2004
                                                        ---------     ---------
Net Income (loss)                                       $(542,737)    $ 927,924
Net Loss from continuing operations                     $(542,737)    $(547,217)
Cash flow provided by
      continuing operations                             $     562     $  29,724

                                       4
<PAGE>

Our continuing negative operating results have produced a working capital
deficit of $487,381 at December 31, 2005. This is an increase compared to a
working capital deficit of $392,054 at December 31, 2004, and reflects the
additional loss from 2005 operations. The above factors represent a substantial
improvement over year 2003 performance; however the net loss from continuing
operations continues to raise doubt about our ability to fully establish
ourselves as a going concern.

IMPLEMENTATION OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING

Pangea must obtain financing to fund the expansion of operations. Such outside
financing must be provided from the sale of equity or third party financing.
Further, the sale of equity securities will dilute our existing stockholders'
interests, and borrowings from third parties could result in our assets being
pledged as collateral. While the Company is currently able to fund all basic
operating costs, it is possible our operations could be restricted if loan terms
increase our debt service requirements. There is no assurance that we can obtain
financing on favorable terms.

INDUSTRY

The petroleum industry is a global industry that is fundamental to all economic
activity. It is composed of the down stream sector (refining, marketing,
products and derivatives) and the upstream sector that is focused on finding and
producing crude oil and natural gas. Oil and natural gas are commodities, which
are found throughout the world and they have been produced in increasing
quantities since the mid 19th century. The exploration, production and
transportation of these materials in the modern era generate an enormous
appetite for capital because quantities sufficient to fuel the world's economic
machine are rapidly becoming more difficult to find and expensive to produce.
Consequently, a few global corporations and state energy companies dominate the
industry. These companies tend to concentrate their investments on very large
prospects and to quickly abandon less productive, older reserves.

The production technology in the petroleum industry has improved tremendously in
recent years; however commercial quantities of oil and gas are frequently left
in place when fields are abandoned. This is particularly true in older
reservoirs that were abandoned before modern technologies were available.
Additionally, the economic level of interest varies with company size. A small
company such as Pangea can successfully exploit a field that is not of interest
to a major oil and gas company.

Mature energy provinces such as the United States have many fields with
production and collection infrastructure in place that can be purchased. The
infrastructure represents a significant savings in investment required for
production to continue. These fields offer investment potential for those
companies willing to commit capital and appropriate technology. Technology that
is readily available from consultants, service companies, and other groups
established to support the petroleum production sector.

These factors allow small companies like Pangea to effectively and efficiently
target the niche comprised by fields with established reserves that require
capital and/or technology in order to develop, enhance or restore production.

JOINT OPERATIONS; NON-OPERATOR STATUS

Pangea owns less than 100% of the working interest in our oil and gas holdings.
Operations are conducted jointly with other working interest owners. Joint
operating arrangements are customary in the oil and gas industry and are
governed by a joint operating agreement whereby a single working interest owner
is designated the operator. On properties where we own less than 50% of the
working interest, drilling and operating decisions will not be entirely within
our control. If we disagree with the decision of a majority of working interest
owners, we may be required, among other things, to postpone the proposed
activity or decline to participate. If we decline to participate, we might be
required to relinquish our interest or may be subject to certain non-consent
penalties, as provided in the applicable operating agreement. Such penalties
typically allow participating working interest owners to recover from the
proceeds of production, if any, an amount equal to 100%- 400% of the new
investment. Under most operating agreements, the operator is given direct and
full control over all operations on the property and is obligated to conduct
operations in a workman-like manner; however the operator is usually not liable
to the working interest owners for losses sustained or for liabilities incurred,
except those resulting from its own gross negligence or willful misconduct. Each
working interest owner is liable for its share of the costs of developing and
operating jointly owned properties. The operator is required to pay the expenses
of developing and operating the property and will invoice working interest
owners for their proportionate share of such costs. In instances where we are a
non-operating working interest owner, we may have a limited ability to exercise
control over operations and the associated costs of such operations. The success
of our investment in such non-operated activities may, therefore, be dependent
upon a number of facts that are outside of our direct control.

                                       5
<PAGE>

MARKETING

The revenue generated by our operations is highly dependent upon the price of,
and demand for, crude oil and natural gas. Historically, the markets for crude
oil and natural gas have been volatile and are likely to continue to be volatile
in the future. The prices received by the Company for its crude oil and natural
gas production and the level of such production are subject to fluctuations and
depend on numerous factors beyond our control including seasonality, the
condition of the United States economy (particularly the manufacturing sector),
foreign imports, political conditions in other oil-producing and natural
gas-producing countries, the actions of the Organization of Petroleum Exporting
Countries and domestic regulation, legislation and policies. Decreases in the
prices of crude oil and natural gas could have an adverse effect on the carrying
value of any proved reserves or revenue from operations in the future.

COMPETITION

We operate in a highly competitive environment. Competition is particularly
intense with respect to the acquisition of desirable undeveloped crude oil and
natural gas properties. The principal competitive factors in the acquisition of
such undeveloped crude oil and natural gas properties include the staff and data
necessary to identify, investigate and purchase such properties, and the
financial resources necessary to acquire and develop such properties. We compete
with major and independent crude oil and natural gas companies for properties
and the equipment and labor required to develop and operate such properties.
Many of these competitors have financial and other resources substantially
greater than ours, which may adversely affect the company's ability to compete
on certain projects.

TITLE TO PROPERTIES

As is customary in the crude oil and natural gas industry, we make only a
cursory review of title to undeveloped crude oil and natural gas leases at the
time they are acquired by us. However, before drilling commences, we require a
thorough title search to be conducted, and any material defects in title are
remedied prior to the time actual drilling of a well begins. To the extent title
opinions or other investigations reflect title defects, we, rather than the
seller of the undeveloped property, are typically obligated to cure any title
defect at our expense. If we were unable to remedy or cure any title defect of a
nature such that it would not be prudent to commence drilling operations on the
property, we could suffer a loss of the lease cost for the property. We believe
that we have good title to our oil and gas leases.

EMPLOYEES

As of March 8, 2006, Pangea had two full-time employees, including executive
officers, non-executive officers, secretarial and clerical personnel and field
personnel. Pangea also retains independent geological and engineering
consultants and administrative assistance on a limited basis and expects to
continue to do so in the future.

ITEM 2. DESCRIPTION OF PROPERTY

Pangea's principal executive offices are located at 9801 Westheimer, Suite 302,
Houston, Texas 77042 in approximately 140 square feet of office space that is
leased on a one-year contract basis expiring March 31, 2005 for $687.52 per
month. The Company has renewed the lease for another year at a rate of $712.52
per month. The new lease expires on March 31, 2006. On March 15, 2006, we signed
an agreement to renew for one year at $762.52. We believe that this office space
is adequate for our present and future needs.

ITEM 3. LEGAL PROCEEDINGS

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<PAGE>

On May 7, 2004, the Company was awarded $158,000.00 in its arbitration claim
against Clay Exploration, Inc. and Joseph W. Shunta pertaining to a well
interest in Duval County, Texas. On September 8, 2004, Pangea entered into a
settlement agreement with Clay Exploration whereby Clay agreed to pay Pangea
$80,000 and release Pangea from any claims, in exchange for a full release from
Pangea. The amount was paid in the third quarter 2004. Pangea has entered into
two Forbearance Agreements with Joseph W. Shunta. The first agreement was
executed in December 2004 and provided a payment period from January 2005 to
June 2005. The second signed Forbearance Agreement is dated March 23, 2005 and
extends the payment period to December 2005. Mr. Shunta agreed to withdraw an
appeal of the judgment confirming the award, allowing the judgment to become
final. He also agreed to pay $2,000 per month for the 12 month period while he
arranges to pay the balance of the judgment. In exchange, Pangea agreed to
refrain from executing property liens filed by Pangea on Mr. Shunta's real
estate holdings during the Forbearance period. In addition, Pangea has agreed to
release liens so that Mr. Shunta could sell two of the properties that had
negative cash flow and no net asset value in exchange for an additional $2,000
payment. Pangea is continuing to work with Mr. Shunta to fully satisfy the
entire claim amount. As of December 31, 2005, at total of $8000 has been paid by
Mr. Shunta; however, at this time it is uncertain as to whether the full amount
of the settlement due will be collected. We are currently evaluating our legal
option to pursue collections in this matter.

As of the date hereof, Pangea is not a party to any further legal proceedings,
and none are known to be contemplated against Pangea.

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

We held our Annual Stockholders Meeting on July 20, 2005 at our corporate
offices located at 9801 Westheimer, Suite 302, Houston, Texas 77042 at 2:00 PM.

Our Stockholders voted to elect Charles B. Pollock, Mark F. Weller and Edward R.
Skaggs to continue serving as the directors of Pangea Petroleum Corporation to
serve for a one year term or until their successors have been duly elected and
qualified. Each duly elected Director will hold office until his death,
resignation, retirement, removal, disqualification, or until his successor shall
have been elected and qualified.

Votes representing 158,988,071 shares of Common Stock were cast and the
following persons received the number of votes set opposite their respective
names, to wit:

                                                    FOR                 WITHHELD
Charles B. Pollock                              156,208,621            2,779,450
Mark F. Weller                                  156,302,256            2,685,815
Edward R. Skaggs                                156,356,256            2,631,815

Our Stockholders voted to ratify the appointment of the Board of Director's
selection of Ham, Langston & Brezina to serve as the Corporation's independent
public accountants for the fiscal year ending December 31, 2005 and for
subsequent financial statements until their successors have been duly qualified.
Votes representing 158,362,266 shares were cast For and 557,105 shares were cast
Against and 68,700 shares Abstained from voting on the approval of Ham, Langston
and Brezina as independent public accountants for the Corporation for the year
2005.

Votes representing 151,402,611 shares were cast For and 7,544,160 shares were
cast Against and 41,300 shares Abstained from voting on the approval the
Amendment to the Articles of Incorporation to increase the number of authorized
shares from 210,000,000 shares to 510,000,000 shares.

Votes representing 94,833,606 shares were cast For and 5,990,140 shares were
cast Against and 15,516,438 shares Abstained from voting on the resolution to
approve the 2005 Equity Compensation Plan. Further information is disclosed on
Item 5 below.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of March 8, 2006, Pangea had 266,059,538 shares of common stock outstanding
and had approximately 4,914 certificate stockholders of record.

The following table sets forth certain information as to the high and low bid
quotations quoted on the OTC Bulletin Board for 2004 and 2005. Information with
respect to over-the-counter bid quotations represents prices between dealers,
does not include retail mark-ups, mark-downs or commissions, and may not
necessarily represent actual transactions.

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                          Period           High          Low
                          ------         --------     --------

                           2004

First Quarter                             .0195        .011
Second Quarter                            .018         .007
Third Quarter                             .013         .0042
Fourth Quarter                            .0091        .005

                           2005

First Quarter                             .034         .006
Second Quarter                            .021         .008
Third Quarter                             .015         .008
Fourth Quarter                            .054         .0081

The closing price of our common stock was $0.02 per share on March 8, 2006.
There were approximately 4,914 certificate shareholders of record as of March 8,
2006.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS FOR FISCAL
YEAR ENDED DECEMBER 31, 2005

<TABLE>
<CAPTION>
                                                                                          Number of Securities
                                                                                          remaining available for
                                Number of Securities to be                                future issuance under
                                issued upon exercise of      Weighted-average price of    equity compensation
                                outstanding options,         outstanding options          plans(excluding securities
                                warrants and rights          warrants and rights          reflected in column (a))
                                            (a)                          (b)                          (c)
--------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                             <C>                       <C>
Equity compensation plans
approved by security holders            25,000,000                      $0.11                     15,777,624
--------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders                 0                            0                            0
--------------------------------------------------------------------------------------------------------------------
TOTAL                                   25,000,000                      $0.11                     15,777,624
</TABLE>

On July 20, 2005, our shareholders approved the 2005 Equity Compensation Plan.
The purpose of the Plan is to further the interests of the Corporation and the
stockholders by providing incentives in the form of stock to key employees,
consultants and Directors who contribute materially to our success and
profitability. The grants recognize and reward outstanding individual
performances and contributions and will give such a person a proprietary
interest in us, thus enhancing their personal interest in our continued success
and progress. The Plan also compensates consultants for their work for the
Corporation. The Plan will be administered by the Board of Directors. The Board
of Directors has exclusive power to select the participants in the Plan, to
establish the terms of the stock granted to each participant, and to make all
determinations necessary or advisable under the Plan. The maximum number of
shares of common stock that may be granted or optioned and sold under the Plan
is 25,000,000.

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OUR TRANSFER AGENT IS:
Olde Monmouth Stock Transfer Co., Inc.
200 Memorial Parkway
Atlantic Highlands, New Jersey 07716

DIVIDENDS

There have been no dividends declared in the past two years. We presently intend
to retain future earnings to support our growth. Any payment of cash dividends
in the future will be dependent upon: the amount of funds legally available, our
earnings; financial condition; capital requirements; and other factors which our
Board of Directors deems relevant.

                                     PART II

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS

GENERAL

We are an independent energy company focused on exploration and development of
oil and natural gas reserves in the onshore United States, primarily on the Gulf
Coast. We have crafted a business model specifically designed to exploit the
unique opportunities currently available to small companies in the domestic oil
and gas industry. Pangea's basic philosophy is that it will maximize potential
success by focusing on shallow, less expensive prospects with quality data.
Through the development of strong relationships with industry partners, Pangea
has been able to assemble a large pool of prospect opportunities, which have
been rigorously evaluated to identify the best possible drilling candidates.
Finally, management believes that, while not all wells will be successful, there
is a relationship between the number of potential prospects drilled and the rate
of success enjoyed, such that the more wells the Company drills, the more
chances we have for success. For this reason Pangea takes a minority position in
each well, so that within the available funds, the number of wells drilled can
be increased.

RESULTS OF OPERATIONS

We participated in drilling three wells in 2005. Two of those wells are
producing and one well encountered sub-commercial reserves and was abandoned as
a dry hole. This resulted in a 66% success rate, which is above the Company's
target success rate of 50% and well above the 33% rate we achieved in 2004.
Production in 2005 was down 32% to 8.6 million cubic feet of gas equivalent,
versus 12.6 million cubic feet in 2004. The successful drilling in 2005 was
partially offset by larger than anticipated production declines in two of the
producing areas. Pangea was also successful in replacing 102% of reserves
produced in 2005. However, overall reserves in 2005 declined to 36.2 million
cubic feet of gas equivalent as of December 31, 2005, from 76.7 million cubic
feet as of December 31, 2004 due to adjustments primarily resulting from greater
than expected declines in the Company's Liberty County, Texas well. Results from
the three wells drilled in 2005, are discussed below;

We participated in drilling two wells in San Patricio County, Texas, one of
which was in 2005. The projects were based on 3D seismic data in the Miocene
sands. These wells are in a prolific Miocene production zone and were designed
to drill into potentially unproduced channel sands in the area. The first well
was drilled in December 2004 and encountered a productive sand. The well was
completed in January 2005 and placed on production at the rate of 130 MCFD. The
second well was drilled to the Miocene in February 2005. This well encountered
the expected intervals with the analysis that they contained sub-commercial
reserves. The second well was abandoned without attempting a completion. Pangea
has a 4.25% working interest and a 3.275% net interest in the project area.

During the third quarter 2005, we participated in the successful drilling of a
10,000' Wilcox well in Colorado County, Texas. This project was developed based
on 3D seismic data and analysis of existing Wilcox formation in the area. We
have a 2.0% working interest and a 1.5% net interest in the prospect. The well
encountered several attractive Wilcox, Yegua and Frio sands, based on wireline
log readings. The primary Wilcox sands were tested in October 2005 with a gas
rate of 700 thousand cubic feet per day; however, excessive water production
required the operator to perform a squeeze procedure to attempt to reduce the
water production. Following the squeeze, the water rate was not completely
eliminated and the gas rate had only been re-established at 180 to 200 thousand
cubic feet per day. The operator is proceeding with further work designed to
stimulate the higher initial production rate by recompleting in the Yegua sand.
This work is currently underway and has yielded 600-700 MCFD with a high water
rate. Further work is being designed to reduce the water production. In
addition, the drilling partners are evaluating two to three additional well
locations that can offset the current well to produce from the Wilcox, Yegua and
Frio sands encountered in the first well, but not able to be completed. Review
for those locations should be completed in the first quarter 2006.

                                       9
<PAGE>

In the fourth quarter 2005, we participated in drilling a 5,000' test of the
Frio well Colorado County, Texas. This project was developed based on 3D seismic
data. The well encountered three Frio sands and a Miocene sand. The first Frio
sand was placed on production in February 2006 at 200 MCFD. We have a 3.0%
drilling interest and a 2.25% working interest in the prospect. The prospect
area has several potential additional locations in the Frio and Miocene that are
being evaluated for drilling.

In January 2005, we entered into an agreement with Titan Oil and Gas Corporation
to purchase an interest in a Lavaca County, Texas well. This well is a 3500'
Frio prospect that was successfully drilled and logged in January 2005. We have
a 2.0% working interest and a 1.5% net interest in the prospect. The well was
completed in February 2005 and had an extended production test at pipeline
conditions and produced at the rate of 260 mcf per day. The well was placed on
production in April 2005.

In the third quarter 2005, we sold our 3.75% interest in a Panola County, Texas
well to the well operator. Production declines resulted in the operator
proposing a workover that Pangea did not judge to be economically viable. The
sale included the transfer of future abandonment liability along with one
potential new well location, in which we were not planning on participating in
once we received the drilling proposal.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of its financial condition and results of operations
are based upon its consolidated financial statements, which have been prepared
in accordance with generally accepted accounting principles in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates. We base the
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. These estimates and
assumptions provide a basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions, and these differences may be material.

We believe the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.

OIL AND GAS PRODUCING ACTIVITIES

Pangea follows the "successful efforts" method of accounting for its oil and gas
properties. Under this method of accounting, all property acquisition costs
(cost to acquire mineral interests in oil and gas properties) and costs (to
drill and equip) of exploratory and development wells are capitalized when
incurred, pending determination of whether the well has found proved reserves.
If an exploratory well has not found proved reserves in commercial quantities,
the costs associated with the well are charged to expense. The costs of
development wells are capitalized whether productive or nonproductive.
Geological and geophysical costs and the costs of carrying and retaining
undeveloped properties are expensed as incurred. Management estimates the future
liability for plugging and abandonment of the related wells. Accordingly, a net
cost of $7,943 has been recorded for plugging and abandonment.

Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at the
time of impairment by providing an impairment allowance. Other unproved
properties are amortized based on the average holding period. Capitalized costs
of producing oil and gas properties after considering estimated dismantlement
and abandonment costs and estimated salvage values are depreciated and depleted
by the unit-of-production method. On the sale or retirement of a complete unit
of a proved property, the cost and related accumulated depreciation, depletion,
and amortization are eliminated from the property accounts, and the resultant
gain or loss is recognized. On the retirement or sale of a partial unit of
proved property, the cost is charged to accumulated depreciation, depletion, and
amortization with a resulting gain or loss recognized in the statement of
operations.

                                       10
<PAGE>

On the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

OIL AND GAS REVENUES

Oil and gas revenues are recorded under the sales method. We recognized oil and
gas revenues as production occurs. As a result, we accrued revenue relating to
production for which we have not received payment.

Since our inception, we have suffered recurring losses from operations and have
been dependent on existing stockholders and new investors to provide the cash
resources to sustain its operations.

COMPARISON OF YEAR ENDED DECEMBER 31, 2005 TO YEAR ENDED DECEMBER 31, 2004.

Revenues were $57,360 in 2005 compared to revenue of $81,646 in 2004 reflecting
a decrease of 64% or $24,286 in revenue in 2005. This decrease in revenue
reflects a drop in production during the year that was partially offset by
slightly higher contract oil and gas prices in 2005 versus 2004. During the
fiscal year 2005 $101,046 was used for capital and exploratory expenditures
compared to $178,157 in 2004 (using the successful effort method of accounting).

The $4,480 increase in the net loss from continuing operations to $542,737 for
the year ended December 31, 2005 from $547,217 for the year ended December 31,
2004 is due to a few factors. Impairment of oil and gas properties decreased
$172,763 in 2005. This was due to the dry hole costs recorded in 2004 for the
drilled and abandoned wells of $195,742, while only $22,979 in dry hole costs
and abandonment were recorded in 2005. This was partially offset by a decrease
in other income reflected in 2004 and not received in 2005 and by a slight
increase in Selling, General and Administrative including stock based
compensation, which increased by $21,677 to $487,167 in 2005 compared to
$465,490 in 2004. Also offsetting the improved dry hole cost were lease
operating expenses increasing by $8,557 and DD&A increasing by $14,378 in 2005.

During the year ended December 31, 2005, we reported a net loss of $542,737
compared to a net profit of $927,924 for the year ended December 31, 2004. The
net profit for the year ended December 31, 2004 was directly due to recognition
in 2004 of a deferred gain on the 2002 sale of a discontinued exploration and
production subsidiary, a non-recurring event.

LIQUIDITY AND CAPITAL RESOURCES

Our capital and exploratory expenditures of $101,046 for the fiscal year 2005
were used to invest in three wells. Two of the wells were generating revenue at
year end. We have not been able to generate positive cash flow from operations.
We utilized cash from financing activities and from monies received from
settlement income to fund these investments. The net cash from financing
activities decreased in 2005 to $100,404 from $201,000 in 2004. We intend to
continue investing in additional oil and gas projects but will need additional
financing activities, including private placements, debt financing or equity
investment in order to participate fully and at the levels we intend. There can
be no assurance that any of the plans developed by Pangea will produce cash
flows sufficient to ensure its long-term viability.

Our long-term viability as a going concern is dependent on certain key factors,
as follows:

      o     Our ability to continue to obtain sources of outside financing that
            will supplement current income and allow us to continue to make
            strategic investments in new oil and gas well prospects.

      o     Our ability to coordinate attractive development prospects, with
            timely funding that will allow us to continue to increase oil and
            gas reserves and production.

                                       11
<PAGE>

      o     Our ability to increase profitability and sustain a cash flow level
            that will ensure support for continuing operations as well as make
            timely new well investments.

RECENT FINANCING

In 2005, we received $100,404 from sales of our common stock from four
investors.

2006 OUTLOOK

Pangea has identified additional prospects scheduled for drilling in 2006 in
Colorado County, Texas; Brazoria County, Texas; White County, Illinois and
Steuben County, New York. In addition we are monitoring activity in Henderson
County, Texas and De Witt County, Texas for possible investment. We are also in
the process of evaluating several additional prospects for inclusion in the 2006
program.

We participated in our first project during 2006 which was the drilling to the
Wilcox in Colorado County, Texas. The well was drilled to 10,050' during January
2006 based on data developed from a 3D seismic survey and analysis of existing
Wilcox formation in the area. The well found the target objective lower than
anticipated in the geologic structure and was tested in three intervals and
deemed sub-commercial. Further review is being conducted to see if any locations
can be identified for drilling on the leases further up on the structure. Pangea
has a 2.0% working interest and a 1.5% net interest in the prospect

On January 6, 2006 we acquired a 1.5% working interest in oil and gas leases
located in Fort Bend County, Texas and a 2.5% working interest in oil and gas
leases in Steuben County, New York, in a restricted stock transaction with
Scully Oil and Gas. As consideration for the interests we issued 20,000,000 of
our restricted common stock and will issue 10,000,000 warrants upon meeting
certain revenue targets in the two projects.

      The Fort Bend County interest of 1.5% is a 421 acre project currently
      producing approximately 6500 barrels of oil per month from fifteen wells
      in the Miocene and Frio sands. Current plans call for the drilling of four
      additional wells in the next six months. Pangea will not receive revenue
      from the project until payout by the operator of drilling and acquisition
      expenses. Payout is currently expected before the end of 2006.

      The New York interest of 2.5% covers approximately 50,000 acres in Steuben
      County, New York. The project is currently shooting twenty-two square
      miles of 3-D seismic. Thus far there are two well defined drilling
      prospects in the Trenton Black River, and two leads identified in the
      Oriskany and Onandaga Reef sands. Additional seismic work is planned for
      2006 and it is anticipated that drilling on the first well will commence
      in the second quarter.

On January 6, 2006 we purchased a 3% working interest and a 2.25% net interest
in a prospect in White County, Illinois that encompasses approximately 880
acres. The primary target is the Warsaw Sand at 4200' with several secondary
objectives present up to 3200'. The first well is anticipated to be drilled the
first quarter of 2006 and will be drilled beyond the Warsaw to approximately
8500' to test a geologic feature in the Trenton Black River, which appears to be
similar to the seismic features found in the successful producing areas in New
York and Michigan.

In February 2005, Pangea purchased a 7% working interest in a re-entry workover
in Brazoria County, Texas. The well was drilled in 2002 and experienced
mechanical difficulty in the first of four zones in the Miocene sands. The logs
indicate three additional sands behind pipe which will be sequentially completed
for the project. Work is expected to begin prior to the end of the first quarter
2006.

Pangea is continuing to monitor additional projects for potential participation:

Henderson County, Texas is an 11,500' test in the Rodessa and Pettit with a
secondary objective in the Upper Travis Peak. The first well has the potential
for an additional well in the fault trap and, if successful, will lead to
drilling in four additional analogous fault blocks on the leased acreage. If we
participate in this project we expect to have a 2% working interest and 1.54%
net interest in the first well. We are still evaluating the well and if
participation is taken as currently expected, the drilling will not proceed
until mid 2006.

                                       12
<PAGE>

De Witt County, Texas is a 4800' test of several stacked Yegua objectives
identified by 3D seismic data. The prospect is on trend with existing Yegua
production and there is considerable shallow Frio and Miocene production that
appears in the area. Two recent 3D wells to the south back up the seismic
analysis on the prospect and if successful, the lease could provide a follow-up
location. Pangea plans to commit to a 6.67% working interest and a 5% net
interest in the prospect. It is expected that rig availability will allow this
well to be drilled in the fourth quarter 2006.

Pangea is actively reviewing additional prospects in Texas and Louisiana to add
new wells to the prospect list. We are continuing our strategy of evaluating
primarily shallow, onshore oil and gas projects that avoid investing in
"wildcat" or exploratory wells. Focus remains on investing in development well
prospects that are supported by seismic data, proven production from the
surrounding area and positive information from adjacent wells. Additionally,
Pangea will continue to diversify our risk by taking a minority working interest
in the prospects such that we are not dependent on any one project or highly
impacted by an unsuccessful well. The ability to invest further will be heavily
dependent on securing additional capital from investors or debt financing. There
is no assurance that additional equity or debt financing will be available on
terms acceptable to Management.

OFF BALANCE SHEET ARRANGEMENT

During the year ended December 31, 2005, we had no off balance sheet
arrangements.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the company are set forth beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

ITEM 8A. CONTROLS AND PROCEDURES

Charles B. Pollock, our Chief Executive Officer, and Scott Duncan, our Chief
Financial Officer, have concluded that our disclosure controls and procedures
are appropriate and effective. They have evaluated these controls and procedures
as of the end of the period covered by this report on Form 10-KSB. There were no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

ITEM 8B. OTHER INFORMATION

None

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The directors and officers of the Company are set forth below. The directors
hold office for their respective term and until their successors are duly
elected and qualified. The officers serve at the will of the Board of Directors.

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages, and positions of the executive officers and
directors of the Company:

                                       13
<PAGE>

Name                       Age                       Office
-------------------       -----        ------------------------------------
Charles B.  Pollock        66          Chief Executive Officer and Chairman
                                       of the Board of Directors

Mark F.  Weller            55          President and Director

Scott Duncan               39          Chief Financial Officer

Edward R.  Skaggs          40          Director

Charles B. Pollock was appointed the Chief Executive Officer and Chairman of the
Board in June 1999. From January 1994 to September 1995, Mr. Pollock was
President of Praxair Indonesia, an industrial gas company. From October 1995 to
August 1996, he was General Manager of Praxair, Inc. His responsibilities
included strategic marketing and competition analysis. From September 1996 to
May 1999, Mr. Pollock was self-employed as a consultant and managed projects
including the acquisition and sale of businesses, competitive analysis and
strategic marketing. Mr. Pollock received his Bachelor of Science degree in 1962
from North Carolina State University, his Master of Science degree in Ceramic
Engineering from North Carolina State University in 1968 and his PhD in Material
Engineering from North Carolina State University in 1972.

Mark F. Weller was appointed President and Director in March 2002. Mr. Weller
was with Texaco, Inc. for over 30 years until his departure in early 2002. His
last position with Texaco was as general manager for new project development for
West Africa. His background includes all phases of oil and gas operations and
development, both onshore and offshore on the U.S. gulf and west coasts, as well
as international project development assignments. He holds a Bachelor of Science
in mechanical engineering from the University of California, Davis.

Scott Duncan was appointed Chief Financial Officer in February 2003. Mr. Duncan
has currently been employed as the cost accounting manager for Farouk Systems, a
manufacturing company. From September 2001 to February 2004, Mr. Duncan handled
financial and cost accounting for Goodman Manufacturing. From December 1998 to
April 2001, Mr. Duncan was a Programmer Analyst with RHI Refractories America.
From 1991 to December 1998, Mr. Duncan was the MIS Manager, Controller and Cost
Accountant for Garlock. Mr. Duncan has a total of 8 years of experience in
financial and cost accounting for manufacturing companies along with a total of
6 years of experience with computer programming. He is actively involved with
various organizations offering accounting, programming and consulting services.
He received a BBA in accounting from Southwest Texas State University in 1989
and his CPA license in 1992.

Edward R. Skaggs was appointed to our Board of Directors in December, 2000. Mr.
Skaggs has worked for an investigative consulting firm, Skaggs & Associates
since 1991. Mr. Skaggs has over 10 years of experience in investigations and
security. In addition, he has extensive experience in retail management
specifically dealing in personnel issues and security matters. He received a
Bachelor of Arts degree in Political Science from Texas Tech University in 1992.

All officers and directors listed above will remain in office until the next
annual meeting of our stockholders, and until their successors have been duly
elected and qualified. There are no agreements with respect to the election of
Directors. We have not compensated our Directors for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of Directors.
We do not have any standing committees. Our Board of Directors may in the future
determine to pay Directors' fees and reimburse Directors for expenses related to
their activities.

BOARD OF DIRECTORS

We do not currently have any standing committees, which we feel is adequate
based on the size of our company.

PROCEDURES FOR SECURITY HOLDERS NOMINATION FOR BOARD OF DIRECTORS

There have been no material changes to the procedures by which security holders
may recommend nominees to the board of directors.

                                       14
<PAGE>

CODE OF ETHICS

During the third quarter 2004, we adopted a Code of Ethics, a copy which is
attached as Exhibit 14.1.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's officers, directors and persons who own more than
10% of the Company's Common Stock to file reports of ownership and changes in
ownership with the SEC and the National Association of Securities Dealers, Inc.
Officers, directors and greater than 10% stockholders are required by regulation
to furnish the Company with copies of all forms they file pursuant to Section
16(a) of the Exchange Act. Based solely on the reports we have received and on
written representations from certain reporting persons, we believe that the
directors, executive officers, and our greater than ten percent beneficial
owners have complied with all applicable filing requirements for the fiscal year
ended December 31, 2005.

ITEM 10. EXECUTIVE COMPENSATION

                  SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                       Long Term Compensation
                                                       ----------------------------------------------------
                            Annual Compensation                        Awards                    Payouts
                    ---------------------------------- -------------------------------------- -------------
                                                                     Securities
                                                        Restricted   Underlying
                                          Other Annual     Stock      Options/        LTIP
Name and                  Salary   Bonus  Compensation   award(s)       SARs        Payouts      All Other
Principal Position  Year   ($)      ($)       ($)        (shares)       (#)           ($)      Compensation
------------------- ---- -------  ------ ------------- -----------  ----------- ------------- -------------
<S>                 <C>  <C>      <C>    <C>           <C>          <C>         <C>           <C>
Charles B. Pollock
CEO and             2003   -0-(1)  -0-(2)      0       1,200,000(3)       0           -0-          -0-
Chairman of the     2004   -0-(5)  -0-         0       1,200,000(3)       0           -0-          -0-
Board of Directors  2005   -0-(7)  -0-         0       1,200,000(3)       0           -0-          -0-
------------------- ---- -------  ------ ------------- -----------  ----------- ------------- -------------
Mark F.  Weller
President and       2003   -0-(4)  -0-(2)      0       1,100,000(3)       0           -0-          -0-
Director            2004   -0-(6)  -0-         0       1,200,000(3)       0           -0-          -0-
                    2005   -0-(7)  -0-         0       1,200,000(3)       0           -0-          -0-
------------------- ---- -------  ------ ------------- -----------  ----------- -------------- -------------
Scott Duncan
CFO                 2003   -0-     -0-         0         465,000(4)       0           -0-          -0-
                    2004   -0-     -0-         0         480,000(4)       0           -0-          -0-
                    2005   -0-     -0-         0         280,000(4)       0           -0-          -0-
</TABLE>

(1)   14,041,356 shares of common stock were issued in lieu of cash salary
(2)   Bonus of 200,000 restricted shares of common stock
(3)   Restricted shares pursuant to employment contract
(4)   11,666,724 shares of common stock were issued in lieu of cash salary
(5)   11,300,064 shares of common stock were issued in lieu of cash salary
(6)   10,170,056 shares of common stock were issued in lieu of cash salary
(7)   7,477,332 shares of common stock were issued in lieu of cash salary

                                       15
<PAGE>

                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

                  Individual Grants
------------------------------------------------------------ ------------------
                         Percent of
            Number of      Total
           Securities    Options /
           Underlying      SARs
            Options/    Granted to   Exercise
              SARs       Employees   of Base               Grant Date
             Granted     in Fiscal    Price   Expiration     Present
Name           (#)         Year      ($/sh)      Date       Value ($)
---------- ----------- ----------- ---------- ---------- ---------------
Charles B.
Pollock         0           0          0         N/A           N/A
---------- ----------- ----------- ---------- ---------- ---------------
Mark F.
Weller          0           0          0         N/A           N/A
---------- ----------- ----------- ---------- ---------- ---------------
Scott
Duncan          0           0          0         N/A           N/A
---------- ----------- ----------- ---------- ---------- ---------------

                       AGGREGATED OPTION/SAR EXERCISES IN
              LAST FISCAL YEAR AND FOR YEAR END OPTIONS/SAR VALUES

-------------- ------------ ---------------- ---------------- -------------
                                             Number of
                                             Securities       Value of
                                             Underlying       Unexercised In-
                                             Unexercised      The-Money
                                             Options/SARs     Options/SARs
                                             At Fiscal Year-  At Fiscal Year-
               Shares                        End (#)          End ($)
               Acquired on   Value Realized  Exercisable /    Exercisable /
Name           Exercise (#)  ($)             Unexercisable    Unexercisable
-------------- ------------ ---------------- ---------------- -------------
Charles B.
Pollock            -0-              -0-           -0-             -0-
-------------- ------------ ---------------- ---------------- -------------
Mark F.
Weller             -0-              -0-           -0-             -0-
-------------- ------------ ---------------- ---------------- -------------
Scott Duncan       -0-              -0-           -0-             -0-
-------------- ------------ ---------------- ---------------- -------------

EMPLOYMENT AGREEMENTS

We have entered into employment agreements with Mr. Charles Pollock and Mr. Mark
Weller. The following sets forth the terms of the employment agreements:

Charles B. Pollock-On July 1, 2005, we entered into an employment agreement that
expires on December 31, 2007, to act as our Chief Executive Officer. The
employment agreement provides for a salary of $10,000 per month. Mr. Pollock may
convert any or all salaries with accrued interest to common stock of the Company
based on 30% off the average closing bid price during the month prior to the
month being compensated. Additionally, the employment agreement provides for the
issuance of 100,000 shares of restricted stock per month as part of the base
salary compensation.

Mark F. Weller-On July 1, 2005, we entered into an employment agreement that
expires on December 31, 2007, to act as our President. The employment agreement
provides for a salary of $10,000 per month. Mr. Weller may convert any or all
salaries with accrued interest to common stock of the Company based on 30% off
the average closing bid price during the month prior to the month being
compensated. Additionally, the employment agreement provides for the issuance of
100,000 shares of restricted stock per month as part of the base salary
compensation.

On June 1, 2005, we entered into a consulting agreement with Mr. Scott Duncan as
Chief Financial Officer to provide advice and services on financial matters
pertaining to the Company's business including but not limited to SEC reports.
The terms of his employment are based on payment in the form of the Company's
common stock at the rate of 40,000 shares of our restricted common stock per
month.

                                       16
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of March 8, 2006 with
respect to the beneficial ownership of shares of the Company's common stock by
(i) each person known to us who owns beneficially more than 5% of the
outstanding shares of the Company's common stock, (ii) each of our Directors,
(iii) each of our Executive Officers and (iv) all of our Executive Officers and
Directors as a group. Unless otherwise indicated, each stockholder has sole
voting and investment power with respect to the shares shown. As of March 8,
2006, there were 266,059,538 shares of the Company's common stock issued and
outstanding.

<TABLE>
<CAPTION>
----------------------------- ---------------------------------- -------------------------- -------------------------
                              Name and address of beneficial     Number of Shares of        Percentage of Common
Title of class                owner                              Common Stock               Stock (1)
----------------------------- ---------------------------------- -------------------------- -------------------------
<S>                           <C>                                <C>                        <C>
Common Stock                  Charles B. Pollock                       68,643,688(2)                 25.8%
                              Chairman and CEO
                              9801 Westheimer, Suite 302
                              Houston, Texas  77042
----------------------------- ---------------------------------- -------------------------- -------------------------
Common Stock                  Mark F. Weller                            41,767,668                   15.7%
                              President and Director
                              9801 Westheimer, Suite 302
                              Houston, Texas  77042
----------------------------- ---------------------------------- -------------------------- -------------------------
Common Stock                  Scott Duncan                               1,100,000
                              CFO                                                                 less than 1%
                              9801 Westheimer, Suite 302
                              Houston, Texas  77042
----------------------------- ---------------------------------- -------------------------- -------------------------
Common Stock                  Edward Skaggs                               600,000
                              Director                                                            less than 1%
                              9801 Westheimer, Suite 302
                              Houston, Texas  77042
----------------------------- ---------------------------------- -------------------------- -------------------------
Common Stock                  All Officers and Directors as a           112,111,356                  41.5%
                              group (total of 4)
----------------------------- ---------------------------------- -------------------------- -------------------------
</TABLE>

(1)   Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of
      a security includes any person who, directly or indirectly, through any
      contract, arrangement, understanding, relationship, or otherwise has or
      shares: (i) voting power, which includes the power to vote, or to direct
      the voting of shares; and (ii) investment power, which includes the power
      to dispose or direct the disposition of shares. Certain shares may be
      deemed to be beneficially owned by more than one person (if, for example,
      persons share the power to vote or the power to dispose of the shares). In
      addition, shares are deemed to be beneficially owned by a person if the
      person has the right to acquire the shares (for example, upon exercise of
      an option) within 60 days of the date as of which the information is
      provided. In computing the percentage ownership of any person, the amount
      of shares is deemed to include the amount of shares beneficially owned by
      such person (and only such person) by reason of these acquisition rights.
      As a result, the percentage of outstanding shares of any person as shown
      in this table does not necessarily reflect the person's actual ownership
      or voting power with respect to the number of shares of common stock
      actually outstanding on March 8, 2006. As of March 8, 2006 there were
      266,059,538 shares of our common stock issued and outstanding.

(2)   A total of 24,056,943 shares indirectly through spouse and 44,586,745
      shares held directly by Mr. Pollock

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as described below, none of the following persons has any direct or
indirect material interest in any transaction to which we were or are a party
during the past two years, or in any proposed transaction to which we propose to
be a party:

(A)   any of our directors or executive officers;

(B)   any nominee for election as one of our directors;

                                       17
<PAGE>

(C)   any person who is known by us to beneficially own, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or

(D)   any member of the immediate family (including spouse, parents, children,
      siblings and in-laws) of any of the foregoing persons named in paragraph
      (A), (B) or (C) above.

At December 31, 2005, we had notes payable to related parties totaling $430,053.
These include a note payable in the amount of $273,040 to Charles B. Pollock due
December 31, 2005, a demand note payable in the amount of $89,184.45 to Mary
Pollock, daughter of Charles B. Pollock and to Mark Weller in the amount of
$52,829 due on December 31, 2005 and $15,000 due on June 28, 2006. These amounts
have subsequently been updated after year end to properly include all accrued
interest and now total $527,915. Charles B. Pollock now has a note payable in
the amount of $323,315 due December 31, 2007. Mary Pollock has a note payable in
the amount of $118,299 due December 31, 2007. Mark Weller now has a note payable
in the amount of $86,301 due December 31, 2007.

We entered into a consulting agreement to provide record-keeping and other
administrative services. During the years ended December 31, 2005 and 2004 the
Company paid consideration under this record-keeping and administrative services
agreement totaling $54,000 and $47,019, respectively. We paid for these services
by issuing 7,000,000 and 4,836,448 shares of our common stock respectively.

ITEM 13. EXHIBITS

     Exhibit 10.1  --   Employment Agreement with Mark Weller

     Exhibit 10.2  --   Employment Agreement with Charles Pollock

     Exhibit 10.3  --   Consulting Agreement with Scott Duncan

     Exhibit 14.1  --   Pangea Petroleum Code of Ethics

     Exhibit 31.1 --    Certification of Chief Executive Officer of
                        Pangea Petroleum Corporation required by Rule 13a -
                        14(1) or Rule 15d - 14(a) of the Securities Exchange Act
                        of 1934, as adopted pursuant to Section 302 of the
                        Sarbanes-Oxley Act of 2002.

     Exhibit 31.2 --    Certification of Chief Financial Officer of
                        Pangea Petroleum Corporation required by Rule 13a -
                        14(1) or Rule 15d - 14(a) of the Securities Exchange Act
                        of 1934, as adopted pursuant to Section 302 of the
                        Sarbanes-Oxley Act of 2002.

     Exhibit 32.1 --    Certification of Chief Executive Officer of
                        Pangea Petroleum Corporation pursuant to Section 906 of
                        the Sarbanes-Oxley Act of 2002 and Section 1350 of 18
                        U.S.C. 63.

     Exhibit 32.2 --    Certification of Chief Financial Officer of
                        Pangea Petroleum Corporation pursuant to Section 906 of
                        the Sarbanes-Oxley Act of 2002 and Section 1350 of 18
                        U.S.C. 63.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

Ham, Langston & Brezina, L.L.P. billed us in the aggregate amount of $15,000 and
$20,082 for professional services rendered for their audit of our annual
financial statements and their reviews of the financial statements included in
our Forms 10-KSB for the year ended December 31, 2005 and December 31, 2004,
respectively.

AUDIT-RELATED FEES

Ham, Langston & Brezina, L.L.P. did not bill us for, nor perform professional
services rendered for assurance and related services that were reasonably
related to the performance of audit or review of the Company's financial
statements for the fiscal years ended December 31, 2005 and December 31, 2004.

                                       18
<PAGE>

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

For the fiscal years ended December 31, 2005 and December 31, 2004, Ham,
Langston & Brezina, L.L.P. did not bill us for, nor perform, any financial
information systems design or implementation. For the fiscal years ended
December 31, 2005 and December 31, 2004, we were not billed for professional
services from any other accounting firm for information systems design or
implementation.

TAX FEES

Ham, Langston & Brezina, L.L.P. billed us in the aggregate amount of $2,100 and
$1,750 for professional services rendered for tax related services for the
fiscal years ended December 31, 2005 and December 31, 2004, respectively.

ALL OTHER FEES

We were not billed for any other professional services for the fiscal year ended
December 31, 2005.

AUDITOR INDEPENDENCE

Our Board of Directors considers that the work done for us in the year ended
December 31, 2005 by Ham, Langston & Brezina, L.L.P. is compatible with
maintaining Ham, Langston & Brezina, L.L.P.'s independence.

AUDITOR'S TIME ON TASK

All of the work expended by Ham, Langston & Brezina, L.L.P. on our December 31,
2005 audit was attributed to work performed by Ham, Langston & Brezina, L.L.P.'s
full-time, permanent employees.

                                       19
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the undersigned has duly caused this Form 10-KSB to be signed on
its behalf by the undersigned, there unto duly authorized, in the City of
Houston, Texas, on March 31, 2006.

PANGEA PETROLEUM CORPORATION

         By: /s/ Charles B. Pollock                         Date: March 31, 2006
             -------------------------------------
             Charles B.  Pollock,
             Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1933, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

Date: March 31, 2006

By: /s/ Charles B. Pollock
---------------------------------
Charles B. Pollock, Chairman of the Board, and Chief Executive Officer

Date:  March 31, 2006
By: /s/ Scott Duncan
----------------------------------
Scott Duncan, Chief Financial Officer

Date: March 31, 2006
By: /s/ Mark Weller
----------------------------------
Mark Weller, President and Director

Date:  March 31, 2006
By: /s/ Edward R. Skaggs
----------------------------------
Edward R. Skaggs, Director

                                       20

<PAGE>

                          PANGEA PETROLEUM CORPORATION
                                   ----------
                              FINANCIAL STATEMENTS
                     WITH REPORT OF INDEPENDENT ACCOUNTANTS
                 for the years ended December 31, 2005 and 2004

                                      F-1
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                                TABLE OF CONTENTS
                                   ----------

                                                                            Page
                                                                            ----

Report of Independent Registered Public Accounting Firm                      F-3

Financial Statements:

  Balance Sheet as of December 31, 2005                                      F-4

  Statements of Operations for the years
    ended December 31, 2005 and 2004                                         F-5

  Statements of Stockholders' Deficit for
    the years ended December 31, 2005 and 2004                               F-6

  Statements of Cash Flows for the years
    ended December 31, 2005 and 2004                                         F-8

Notes to Financial Statements                                                F-9

                                      F-2
<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Pangea Petroleum CorporationWe have audited the accompanying balance sheet of
Pangea Petroleum Corporation as of December 31, 2005 and the related statements
of operations, stockholders' deficit and cash flows for each of the two years in
the period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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 Pangea Petroleum Corporation
and subsidiaries as of December 31, 2005, and the results of their operations
and their cash flows for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses, negative cash
flows from operations and has a net capital deficiency at December 31, 2005 that
raise substantial doubt about its ability to continue as a going concern.
Management's plans with regard to this matter are also discussed in Note 2.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Houston, Texas
March 15, 2006

                                      F-3
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                                  BALANCE SHEET
                                December 31, 2005

ASSETS

Current assets:
  Cash                                                             $     56,377
  Accounts receivable                                                     2,136
  Payroll taxes refundable                                                9,879
  Prepaid expenses
                                                                          6,500
                                                                   ------------
    Total current assets
                                                                         74,892
                                                                   ------------

Property and equipment:
  Oil and gas properties (successful efforts method)                    242,086
  Other property and equipment                                           18,174
  Less accumulated depletion, depreciation and
   amortization                                                         (63,368)
                                                                   ------------

    Net property and equipment                                          196,892
                                                                   ------------

      Total assets                                                 $    271,784
                                                                   ============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
  Accounts payable and accrued liabilities                         $     40,309
  Accrued interest payable to related parties                            91,911
  Notes payable to related parties                                      430,053
                                                                   ------------

    Total current liabilities                                           562,273

Obligation for dismantlement and disposal activities                      7,943
                                                                   ------------

    Total liabilities                                                   570,216
                                                                   ------------

Commitments and contingencies

Stockholders' deficit:
  Preferred stock: $.001 par value; 10,000,000 shares
   authorized Common stock: $.001 par value; 500,000,000
   shares authorized; 222,676,886 and 175,694,413 shares
   issued and outstanding at December 31, 2005 and
   December 31, 2004, respectively                                      222,677
  Additional paid-in capital                                         17,257,178
  Deferred compensation                                                      --

  Accumulated deficit                                               (17,778,287)
                                                                   ------------

    Total stockholders' deficit                                        (298,432)
                                                                   ------------

      Total liabilities and stockholders' deficit                  $    271,784
                                                                   ============

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

                                      F-4
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                            STATEMENTS OF OPERATIONS
                 for the years ended December 31, 2005 and 2004
                                   ----------

                                                      2005             2004
                                                 -------------    -------------
Revenue from operations                          $      57,360    $      81,646
                                                 -------------    -------------

Costs and expenses:
  Lease operating expenses                              13,559            5,002
  Production tax                                         7,312            5,844
  Selling, general and administrative,
    including stock based compensation                 487,167          465,490
  Impairment of oil and gas properties                  22,979          195,742
  Depletion, depreciation, and amortization             34,709           20,331
                                                 -------------    -------------

      Total costs and expenses                         565,726          692,409
                                                 -------------    -------------

         Loss from operations                         (508,366)        (610,763)
                                                 -------------    -------------

Other income and (expenses)
  Interest expense                                     (42,371)         (41,225)
  Settlement income                                      8,000           80,000
  Other income                                              --           24,771
                                                 -------------    -------------

      Other income and expenses, net                   (34,371)          63,546
                                                 -------------    -------------

         Loss from continuing operations              (542,737)        (547,217)

Recognition of deferred gain on sale of
  discontinuedexploration and production
  subsidiary                                                --        1,475,141
                                                 -------------    -------------

            Net income (loss)                    $    (542,737)   $     927,924
                                                 =============    =============
Basic and diluted net loss per common share:
  Continuing operations                          $       (0.00)   $       (0.00)
  Discontinued operations                                   --             0.01
                                                 -------------    -------------

        Net income (loss)                        $       (0.00)   $        0.01
                                                 =============    =============

Weighted average common shares                     193,782,389      151,886,501
                                                 =============    =============

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

                                      F-5
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                       STATEMENT OF STOCKHOLDERS' DEFICIT
                 for the years ended December 31, 2004 and 2003
                                   ----------

<TABLE>
<CAPTION>
                                                                 Additional     Unissued
                                            Common Stock           Paid-In       Common
                                       Shares         Amount       Capital        Stock
                                    ------------  ------------  ------------  ------------
<S>                                 <C>           <C>           <C>           <C>
Balance at December 31, 2003         117,665,959  $    117,666  $ 16,116,224  $    192,833

Common stock issued for cash          24,571,667        24,572       161,428            --

Common stock issued to compensate
 employees and consultants            30,893,235        30,893       265,483            --

Common stock issued for legal
 services                                563,552           563         3,967            --

Common stock issued for profes-
 sional fees                           2,000,000         2,000        34,000            --

Stock warrants issued for profes-
 sional services                              --            --        27,900            --

Stock warrants issued to originate
 debt                                         --            --         5,737            --

Write off of stock subscription
 receivable                                   --            --            --            --

Net income                                    --            --            --            --
                                    ------------  ------------  ------------  ------------

Balance at December 31, 2004         175,694,413  $    175,694  $ 16,614,739  $    192,833
                                    ============  ============  ============  ============
</TABLE>

<TABLE>
<CAPTION>
                                                      Stock                         Total
                                    Accumulated    Subscriptions    Deferred     Stockholders'
                                       Deficit      Receivable    Compensation     (Deficit)
                                    ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>
Balance at December 31, 2003        $(18,163,474)  $    (15,645)  $         --   $ (1,752,396)

Common stock issued for cash                  --             --             --        186,000

Common stock issued to compensate
 employees and consultants                    --             --         (2,000)       294,376

Common stock issued for legal
 services                                     --             --             --          4,530

Common stock issued for profes-
 sional fees                                  --             --             --         36,000

Stock warrants issued for profes-
 sional services                              --             --             --         27,900

Stock warrants issued to originate
 debt                                         --             --             --          5,737

Write off of stock subscription
 receivable                                   --         15,645             --         15,645

Net income                               927,924             --             --        927,924
                                    ------------   ------------   ------------   ------------

Balance at December 31, 2004        $(17,235,550)  $         --   $     (2,000)  $   (254,284)
                                    ============   ============   ============   ============
</TABLE>

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

                                      F-6
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                       STATEMENT OF STOCKHOLDERS' DEFICIT
                 for the years ended December 31, 2005 and 2004
                                   ----------

<TABLE>
<CAPTION>
                                                               Additional     Unissued
                                          Common Stock           Paid-In       Common
                                      Shares        Amount       Capital        Stock
                                   ------------  ------------  ------------  ------------
<S>                                 <C>            <C>            <C>            <C>
Balance at December 31, 2004        175,694,413  $    175,694  $ 16,614,739  $    192,833

Common stock issued for cash         15,785,000        15,785        81,215            --

Common stock issued to compensate
  employees and consultants          28,134,664        28,135       348,550            --

Common stock issued upon exercise
  of warrants                         1,562,809         1,563         1,841            --

Common stock issued for profes-
  sional fees                         1,500,000         1,500        18,000            --

Reversal of unissued common
  stock upon expiration of
  agreement                                  --            --       192,833      (192,833)

Net loss                                     --            --            --            --
                                   ------------  ------------  ------------  ------------

Balance at December 31, 2005        222,676,886  $    222,677  $ 17,257,178  $         --
                                   ============  ============  ============  ============
</TABLE>

<TABLE>
<CAPTION>
                                                     Stock                         Total
                                   Accumulated    Subscriptions    Deferred     Stockholders'
                                      Deficit      Receivable    Compensation     (Deficit)
                                   ------------   ------------  ------------   ------------
<S>                                <C>            <C>           <C>            <C>
Balance at December 31, 2004       $(17,235,550)  $         --  $     (2,000)  $   (254,284)

Common stock issued for cash                 --             --            --         97,000

Common stock issued to compensate
  employees and consultants                  --             --         2,000        378,685

Common stock issued upon exercise
  of warrants                                --             --            --          3,404

Common stock issued for profes-
  sional fees                                --             --            --         19,500

Reversal of unissued common
  stock upon expiration of
  agreement                                  --             --            --             --

Net loss                               (542,737)            --            --       (542,737)
                                   ------------   ------------  ------------   ------------

Balance at December 31, 2005       $(17,778,287)  $         --  $         --   $   (298,432)
                                   ============   ============  ============   ============
</TABLE>

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

                                      F-7
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                             STATEMENT OF CASH FLOWS
                 for the years ended December 31, 2005 and 2004
                                   ----------

<TABLE>
<CAPTION>
                                                                2005           2004
                                                            ------------   ------------
<S>                                                         <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                         $   (542,737)  $    927,924
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Recognition of deferred gain from sale of discontinued
      business segment                                                --     (1,475,141)
    Depletion, depreciation and amortization expense              34,709         20,331
    Impairment of oil and gas properties                          22,978        195,742
    Direct write-off of subscription receivable                       --         15,645
    Common stock issued as compensation for services             378,685        334,906
    Warrants issued for compensation for services                 19,500         27,900
    Changes in operating assets and liabilities, net of
      effects of dispositions:
      Accounts receivable                                          8,741          1,583
      Prepaid expenses                                            (6,500)            --
      Payroll taxes refundable                                        --         (9,879)
      Accounts payable and accrued liabilities                    85,656         (7,690)
    Dismantlement obligation                                        (470)        (1,597)
                                                            ------------   ------------

          Net cash provided by operating activities                  562         29,724
                                                            ------------   ------------

Cash flows from investing activities:
  Capital and exploratory expenditures                          (101,046)      (178,157)
  Proceeds from sale of interest in well                           2,000             --
                                                            ------------   ------------

          Net cash used in investing activities                  (99,046)      (178,157)
                                                            ------------   ------------

Cash flows from financing activities:
  Proceeds from the sale of common stock                         100,404        186,000
  Proceeds from notes payable to related parties                      --         15,000
                                                            ------------   ------------

          Net cash provided by financing activities              100,404        201,000
                                                            ------------   ------------

Net increase in cash and cash equivalents                          1,920         52,567

Cash and cash equivalents at beginning of year                    54,457          1,890
                                                            ------------   ------------

Cash and cash equivalents at end of year                    $     56,377   $     54,457
                                                            ============   ============
</TABLE>

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

                                      F-8
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

1.    Organization and Significant Accounting Policies

      Organization

      Pangea Petroleum Corporation (the "Company") is a Colorado corporation
      engaged in oil and gas exploration and development. The Company was
      originally incorporated in 1997 as Zip Top, Inc. and subsequently adopted
      a name change to Pangea Petroleum Corporation. On April 26, 2000, the
      Company was recapitalized when the Company acquired the non-operating
      public shell, Segway II Corporation. Segway II Corporation had no
      significant assets or liabilities at the date of acquisition and,
      accordingly, the transaction was accounted for as a recapitalization.

      Accounting 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 at the date of the financial statements
      and the reported amounts of revenue and expenses during the reporting
      period. Actual results could differ from those estimates. These estimates
      mainly involve the useful lives of property and equipment, the impairment
      of unproved oil and gas properties, the valuation of deferred tax assets
      and the realizability of accounts receivable.

      Oil and Gas Producing Activities

      The Company follows the "successful efforts" method of accounting for its
      oil and gas properties. Under this method of accounting, all property
      acquisition costs (cost to acquire mineral interests in oil and gas
      properties) and costs (to drill and equip) of exploratory and development
      wells are capitalized when incurred, pending determination of whether the
      well has found proved reserves. If an exploratory well has not found
      proved reserves in commercial quantities, the costs associated with the
      well are charged to expense. The costs of development wells are
      capitalized whether productive or nonproductive. Geological and
      geophysical costs and the costs of carrying and retaining undeveloped
      properties are expensed as incurred. Management has performed an analysis
      and developed an estimate for plugging and abandoning wells of $7,943 and
      8,413 at December 31, 2005 and 2004, respectively.

      Unproved oil and gas properties that are individually significant are
      periodically assessed for impairment of value, and, if necessary, a loss
      is recognized by providing an impairment allowance. Other unproved
      properties are amortized based on the Company's average holding period.
      Capitalized costs of producing oil and gas properties after considering
      estimated dismantlement and abandonment costs and estimated salvage
      values, are depreciated and depleted by the unit-of-production method. On
      the sale or retirement of a complete unit of a proved property, the cost
      and related accumulated depreciation, depletion, and amortization are
      eliminated from the property accounts, and the resultant gain or loss is
      recognized. On the retirement or sale of a partial unit of proved
      property, the cost is charged to accumulated depreciation, depletion, and
      amortization with a resulting gain or loss recognized in the statement of
      operations.

      On the sale of an entire interest in an unproved property for cash or cash
      equivalent, gain or loss on the sale is recognized, taking into
      consideration the amount of any recorded impairment if the property had
      been assessed individually. If a partial interest in an unproved property
      is sold, the amount received is treated as a reduction of the cost of the
      interest retained.

      Other Property and Equipment

      Property and equipment is stated at cost. Depreciation is computed using
      the straight-line method over the estimated useful lives of 3 to 5 years
      for office furniture and equipment and transportation and other equipment.
      Additions or improvements that increase the value or extend the life of an
      asset are capitalized. Expenditures for normal maintenance and repairs are
      expensed as incurred. Disposals are removed from the accounts at cost less
      accumulated depreciation and any gain or loss from disposition is
      reflected in operations.

                                      F-9
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

1.    Organization and Significant Accounting Policies, continued

      Impairment of Long-Lived Assets

      In the event facts and circumstances indicate the carrying value of a
      long-lived asset, including associated intangibles, may be impaired, an
      evaluation of recoverability is performed by comparing the estimated
      future undiscounted cash flows associated with the asset to the asset's
      carrying amount to determine if a write-down to market value or discounted
      cash flow is required. Based upon a recent evaluation by management, an
      impairment write-down of the Company's long-lived assets was recorded to
      write such assets down to their estimated net realizable value.

      Cash and Cash Equivalents

      For purposes of reporting cash flows, the Company considers all short-term
      investments with an original maturity of three months or less when
      purchased to be cash equivalents.

      Fair Value of Financial Instruments

      The Company includes fair value information in the notes to financial
      statements when the fair value of its financial instruments is different
      from the book value. When the book value approximates fair value, no
      additional disclosure is made.

      Concentration of Credit Risk and Major Customers

      Financial instruments which subject the Company to concentrations of
      credit risk include cash and cash equivalents and accounts receivable. The
      Company maintains its cash and cash equivalents with major financial
      institutions selected based upon management's assessment of the banks'
      financial stability. Balances periodically exceed the $100,000 federal
      depository insurance limit. The Company has not experienced any losses on
      deposits. During the years ended December 31, 2005 and 2004, 100% of the
      Company's revenues was received from two customers.

      Oil and Gas Revenues

      Oil and gas revenues are recorded under the sales method. The Company
      recognizes oil and gas revenues as production occurs. As a result, the
      Company accrues revenue relating to production for which the Company has
      not received payment.

      Earnings Per Share

      The Company has adopted SFAS No. 128, which provides for calculation of
      "Basic" and "Diluted" earnings per share. Basic earnings per share
      includes no dilution and is computed by dividing net income available to
      common shareholders by the weighted average common shares outstanding for
      the period. Diluted earnings per share reflect the potential dilution of
      securities that could share in the earnings of an entity similar to fully
      diluted earnings per share.

      Stock Based Compensation

      SFAS No. 123, "Accounting for Stock-Based Compensation" established
      financial accounting and reporting standards for stock-based employee
      compensation plans. It defined a fair value based method of accounting for
      an employee stock option or similar equity instrument and encouraged all
      entities to adopt that method of accounting for all of their employee
      stock compensation plans and include the cost in the income statement as
      compensation expense. However, it also allows an entity to continue to
      measure compensation cost for those plans using the intrinsic value based
      method of accounting prescribed by Accounting Principles Board ("APB")
      Opinion No. 25, "Accounting for Stock Issued to Employees". The Company
      accounts for compensation cost for stock option plans in accordance with
      APB Opinion No. 25.

                                      F-10
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

1.    Organization and Significant Accounting Policies, continued

      Income Taxes

      The Company uses the liability method in accounting for income taxes.
      Under this method, deferred tax assets and liabilities are determined
      based on differences between financial reporting and income tax carrying
      amounts of assets and liabilities and are measured using the enacted tax
      rates and laws that will be in effect when the differences are expected to
      reverse. A valuation allowance, if necessary, is provided against deferred
      tax assets, based upon management's assessment as to their realization.

      New Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
      SFAS 123R, which requires companies to recognize in the statement of
      operations all share-based payments to employees, including grants of
      employee stock options, based on their fair values. Accounting for
      share-based compensation transactions using the intrinsic method
      supplemented by pro forma disclosures will no longer be permissible. The
      new statement is effective for public entities no later than the beginning
      of the first fiscal year beginning after June 15, 2005. The Company
      adopted the new statement on July 1, 2005. The adoption of this new
      statement did not affect the Company's results of operations or net income
      per share, but may have a significant future effect as the Company will be
      required to expense the fair value of all share-based payments.

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
      Corrections", a replacement of Accounting Principles Board Opinion No. 20,
      "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes in
      Interim Financial Statements" ("SFAS 154"). SFAS 154 changes the
      requirements for the accounting for, and reporting of, a change in
      accounting principle. Previously, voluntary changes in accounting
      principles were generally required to be recognized by way of a cumulative
      effect adjustment within net income during the period of the change. SFAS
      154 requires retrospective application to prior periods' financial
      statements, unless it is impracticable to determine either the
      period-specific effects or the cumulative effect of the change. SFAS 154
      is effective for accounting changes made in fiscal years beginning after
      December 15, 2005; however, the statement does not change the transition
      provisions of any existing accounting pronouncements. The Company does not
      believe adoption of SFAS 154 will have a material effect on its financial
      position, cash flows or results of operations.

2.    Going Concern Considerations

      Since its inception, the Company has suffered recurring losses from
      operations and has been dependent on existing stockholders and new
      investors to provide the cash resources to sustain its operations. During
      the years ended December 31, 2005 and 2004, the Company reported losses
      from continuing operations of $542,737 and $547,217, respectively.

      Continuing negative operating results produced a working capital deficit
      of $487,381 as of December 31, 2005. Additionally, at December 31, 2005,
      the Company has past due principal and interest payments due on notes
      payable to related parties totaling $523,500

      The Company developed a multi-step plan and during 2005 took actions to
      improve its financial position and deal with its liquidity problems. The
      final steps of the plan are still being developed, but may include
      additional private placements of the Company's common stock, additional
      oil and gas property acquisitions and/or exploration efforts, and efforts
      to raise additional debt financing or equity investments. There can be no
      assurance that any of the plans developed by the Company will produce cash
      flows sufficient to ensure its long-term viability as a going concern.

                                      F-11
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

2.    Going Concern Considerations, continued

      The Company's long-term viability as a going concern is dependent on
      certain key factors, as follows:

      o     The Company's ability to obtain adequate sources of outside
            financing to support near term operations and to allow the Company
            to continue forward with current strategic plans.

      o     The Company's ability to locate, prove and produce from economically
            viable oil and gas reserves.

      o     The Company's ability to ultimately achieve adequate profitability
            and cash flows to sustain continuing operations.

3.    Property and Equipment

      Property and equipment consists of the following at December 31, 2005:

      Oil and gas properties                                   $  242,086
      Office equipment                                             15,594
      Furniture and fixtures                                        2,580
                                                               ----------

                                                                  260,260

      Less accumulated depreciation, depletion
        and amortization                                          (63,368)
                                                               ----------

      Net property and equipment                               $  196,892
                                                               ==========

      Included in oil and gas properties is $7,943 recorded to reflect the cost
      of disposal activities associated with oil and gas properties 2005. A
      long-term liability for the same amount has been recognized to reflect the
      Company's obligation for future disposal and dismantlement.

      During the years ended December 31, 2005 and 2004, the Company recorded
      dry hole, abandonment and impairment charges of $22,978 and $195,742,
      respectively. At December 31, 2005, the Company has working interests in
      eight wells. Four of the wells, with capitalized costs totaling $89,445,
      have not been completed and, accordingly, a determination has not yet been
      made if those wells are economically viable.

                                      F-12
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

4.    Notes Payable to Related Parties

      Notes payable to related parties consist of the following at December 31,
      2005:

      Notes payable to Mary Pollock, a significant stockholder
      and and daughter of the chief executive officer. Theses
      notes bear interest at rates of 4% to 12% per year with
      interest due quarterly and principal due in October 2005.
      These notes are not collateralized and are past due at
      December 31, 2005.                                                $ 89,184

      Notes payable to Charles Pollock, the Chief Executive
      Officer and a significant stockholder of the Company. These
      notes bear interest of 12% per year, and due in one time
      payments of principal and interest at various dates through
      December 2005. These notes are not collateralized and are
      past due at December 31, 2005                                      273,040

      Notes payable to Mark Weller, the Chief Operating Officer
      and a significant stockholder of the Company. These notes
      bear interest of 12% per year, and due in one time payments
      of principal and interest at various dates through June
      2006. These notes are not collateralized and $52,829 are
      past due at December 31, 2005.                                      67,829
                                                                        --------
                                                                        $430,053
                                                                        ========

      Accrued interest payable to related parties of $91,911 at December 31,
      2005 represents interest accrued on the above notes payable to related
      parties. Substantially all of the above notes are past due at December 31,
      2005.

5.    Income Taxes

      The Company has incurred losses since its inception and, therefore, has
      not been subject to federal income taxes. As of December 31, 2005, the
      Company had net operating loss ("NOL") carryforwards for income tax
      purposes of approximately $6,561,124 which expire in various tax years
      through 2025. Under the provisions of Section 382 of the Internal Revenue
      Code, the net operating loss carryforwards resulting from the acquisition
      of Mass Energy, Inc. and the ownership change in the Company when it
      recapitalized in 2000 will severely limit the Company's ability to utilize
      its NOL carryforward to reduce future taxable income and related tax
      liabilities. Additionally, because United States tax law limits the time
      during which NOL carryforwards may be applied against future taxable
      income, the Company will, in all likelihood, be unable to take full
      advantage of its NOL for federal income tax purposes should the Company
      generate taxable income.

      The composition of deferred tax assets and the related tax effects at
      December 31, 2005 are as follows:

      Net operating losses                                    $ 2,241,851
      Interest expense not deductible until paid                   31,771
                                                              -----------

      Total deferred tax assets                                 2,273,623

      Less valuation allowance                                 (2,273,623)
                                                              -----------

      Net deferred tax asset                                  $        --
                                                              ===========

      The difference between the income tax benefit in the accompanying
      statement of operations and the amount that would result if the U.S.
      Federal statutory rate of 34% were applied to pre-tax loss for the years
      ended December 31, 2005 and 2004 is as follows:

                                      F-13
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

5.    Income Taxes, continued

<TABLE>
<CAPTION>
                                                   2005                        2004
                                          -----------------------    -----------------------
                                            Amount          %          Amount          %
                                          ----------   ----------    ----------   ----------
<S>                                       <C>          <C>           <C>          <C>
      Benefit (provision) for income tax
        at federal statutory rate         $  184,530         34.0%   $  315,494         34.0%
      Non-deductible expenses               (128,753)       (23.7%)     130,820         14.1%
      Non-taxable income                          --           --      (501,548)       (54.1%)
      Increase in valuation allowance        (55,777)        (0.3%)      55,234          6.0%
                                          ----------   ----------    ----------   ----------

                                          $       --           --%    $      --           --%
                                          ==========   ==========    ==========   ==========
</TABLE>

6.    Commitments and Contingencies

      Operating Lease

      The Company leases office space under a one year operating lease that
      expires in March 2006 and includes monthly rent of $704. Rent expense
      incurred under operating leases during the years ended December 31, 2005
      and 2004 was $10,397 and $8,447, respectively.

      Employment Agreement

      The Company entered into an employment agreement with its Chairman/Chief
      Executive Officer and its President. The employment agreements provide for
      salaries of $10,000 each per month. The employees may convert any or all
      salaries with accrued interest to common stock of the Company based on 30%
      off the average closing bid price during the month prior to the month
      being compensated. Additionally, the employment agreements provide for the
      issuance of 100,000 shares of restricted stock per month as part of the
      base salary compensation.

7.    Legal Proceedings

      On May 7, 2004, the Company was awarded $158,000.00 in its arbitration
      claim against Clay Exploration, Inc. and Joseph W. Shunta pertaining to a
      well interest in Duval County, Texas. On September 8, 2004, Pangea entered
      into a settlement agreement with Clay Exploration whereby Clay agreed to
      pay Pangea $80,000 and release Pangea from any claims, in exchange for a
      full release from Pangea. The amount was paid in the 3rd quarter 2004.
      Pangea has entered into two Forbearance Agreements with Joseph W. Shunta.
      The first agreement was executed in December 2004 and provided a payment
      period from January 2005 to June 2005. The second signed Forbearance
      Agreement is dated March 23, 2005 and extends the payment period to
      December 2005. Mr. Shunta agreed to withdraw an appeal of the judgment
      confirming the award, allowing the judgment to become final. He also
      agreed to pay $2,000 per month for the 12 month period while he arranges
      to pay the balance of the judgment. In exchange, Pangea agreed to refrain
      from executing property liens filed by Pangea on Mr. Shunta's real estate
      holdings during the Forbearance period. In addition, Pangea has agreed to
      release liens so that Mr. Shunta could sell two of the properties that had
      negative cash flow and no net asset value in exchange for an additional
      $2,000 payment. Pangea is continuing to work with Mr. Shunta to fully
      satisfy the entire claim amount. As of December 31, 2005 $8000 has been
      paid by Mr. Shunta; however, at this time it is uncertain as to whether
      the full amount of the settlement due will be collected.

      As of the date hereof, Pangea is not a party to any further legal
      proceedings, and none are known to be contemplated against Pangea.

8.    Stockholders' Equity

      In July 2005 the stockholders of the company voted to approve an increase
      in the authorized shares from 210,000,000 to 510,000,000, which includes
      500,000,000 common shares and 10,000,000 preferred shares.

                                      F-14
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

8.    Stockholders' Equity, continued

      Preferred Stock

      The Company's articles of incorporation authorize the issuance of up to
      10,000,000 shares of serial preferred stock, with a par value of $.001 and
      other characteristics determined by the Company's board of directors. As
      of December 31, 2005 and 2004, there was no preferred stock issued or
      outstanding.

      Common Stock

      During the years ended December 31, 2005 and 2004, the Company issued
      shares for cash under private placements of securities and as compensation
      to employees and consultants. These issuances are shown on the
      accompanying statement of stockholders' deficit.

      Included in stock issuances for the year ended December 31, 2001 were
      certain shares issued under a Securities Purchase Agreement (the
      "Securities Purchase Agreement") whereby the Company issued 16,149,998
      shares of restricted common stock to an escrow agent (the "Escrowed
      Shares") for the benefit of four investor groups in exchange for
      $1,300,000 in cash. The terms of the Securities Purchase Agreement
      required the Company to file a Registration Statement with the Securities
      and Exchange Commission to register the Escrowed Shares and included
      provisions for the issuance of four series of warrants with exercise
      prices to be set based on a combination of certain future events and the
      performance of the Company's common stock. As of December 31, 2002, the
      Company had not registered shares in accordance with the terms of the
      Securities Purchase Agreement and, accordingly, at December 31, 2002,
      1,399,998 additional shares were issuable to the investors under the
      agreement. During the year ended December 31, 2002, the Company recognized
      a $192,833 expense for failure to timely register shares under the
      Securities Purchase Agreement. A total of 11,158,498 shares are held by
      the escrow agent to cover requests for the exercise of warrants. As of
      December 31, 2005 all but 3,428,000 warrants have expired. The Company no
      longer has a liability for the additional share expense of $192,833, and
      7,730,498 shares will be retired upon return by the escrow agent.
      Following is an analysis of shares and warrants issuable under the
      Securities Purchase Agreement as of December 31,2005. Subsequent to
      December 31, 2005, all of the under the Securities Purchase Agreement
      expired.

                                      Warrant
                                    Expiration          Maximum Number
             Purchaser                 Date               of Warrants
      ----------------------        ----------       --------------------

      The Apmont Group, Inc.         2/15/2006       1,639,000 C Warrants
      and Bathgate                                   1,639,000 D Warrants

      Escrow Agent Fee               2/15/2006          75,000 A Warrants
                                                        75,000 B Warrants

        Total                                          3,428,000 Warrants
                                                     ====================

      Stock Options

      The Company periodically issues incentive stock options to key employees,
      officers, and directors to provide additional incentives to promote the
      success of the Company's business and to enhance the ability to attract
      and retain the services of qualified persons. The Board of Directors
      approves the issuance of such options. The exercise price of an option
      granted is determined by the fair market value of the stock on the date of
      grant.

                                      F-15
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

8.    Stockholders' Equity, continued

      Stock Options, continued

      The Company has elected to follow Accounting Principles Board Opinion No.
      25, "Accounting for Stock Issued to Employees" (APB 25) and related
      Interpretations in accounting for its employee stock options because, as
      discussed below, the alternative fair value accounting provided for under
      FASB Statement No. 123, "Accounting for Stock-Based Compensation",
      requires use of option valuation models that were not developed for use in
      valuing employee stock options. Under APB 25, if the exercise price of the
      Company's employee stock options is greater than or equal to the market
      price of the underlying stock on the date of grant, no compensation
      expense is recognized. No compensation expense related to options was
      recognized in 2005 or 2004 because no options were granted, re-priced or
      vested.

      A summary of the Company's stock option activity and related information
      for the years ended December 31, 2005 and 2004 follows:

                                      Number of                      Weighted
                                        Shares                       Average
                                        Under         Exercise       Exercise
                                        Option         Price          Price
                                     ----------    -------------    ---------
      Balance outstanding at
        December 31, 2003             1,780,000    $0.200-$1.000     $0.910

         Expired                     (1,430,000)   $1.000             1.000
                                     ----------

      Balance outstanding at
        December 31, 2004 and 2005      350,000    $0.200-$1.000      0.560
                                     ==========

      All outstanding stock options are exercisable at December 31, 2005 and
      2004. A summary of outstanding stock options at December 31, 2005 follows:

                                              Remaining
      Number of Common                        Contracted
      Stock Equivalents   Expiration Date    Life (Years)    Exercise Price
      -----------------   ---------------    ------------    --------------
            50,000        May 2010                5.4            $0.500
           100,000        May 2010                5.4             1.000
           100,000        August 2010             5.7             0.200
           100,000        January 2011            6.1             0.500
         ---------

           350,000

      Effective June 1, 2005, the Company adopted the 2005 Equity Compensation
      Plan (the "Plan") under which stock in lieu of cash compensation awards
      may be granted from time to time to employees and consultants of the
      Company. The Plan allows for grants to other individuals contributing to
      the success of the Company at the discretion of the Company's board of
      directors. The purpose of the Plan is to provide additional incentives to
      promote the success of the Company and to enhance the Company's ability to
      attract and retain the services of qualified individuals. The Company has
      reserved 25,000,000 shares of stock for issuance under the Plan and until
      2013.

                                      F-16
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

8.    Stockholders' Equity, continued

      Stock Warrants

      A summary of the Company's stock warrant activity and related information
      for the years ended December 31, 2005 and 2004 follows:

                                  Number of                         Weighted
                                    Shares                          Average
                                    Under          Exercise         Exercise
                                   Warrant           Price           Price
                                 -----------     -------------      --------

      Warrants outstanding at
        December 31, 2003         30,922,918     $0.010-$3.750      $0.014

          Issued                  11,825,000     $0.008-$0.020       0.017
                                 -----------

      Warrants outstanding at
        December 31, 2004         42,747,918     $0.008-$3.750       0.015
                                -----------

         Issued                    1,371,100     $0.010              0.015
         Exercised               (10,707,533)    $0.006-$0.012       0.015
         Expired                 (10,821,998)    $0.010-$0.500       0.016
                                ------------

      Warrants outstanding at
        December 31, 2005         22,589,487     $0.008-$3.750       0.016
                                ============

      All stock warrants are exercisable at December 31, 2005 and 2004. A
      summary of outstanding stock warrants at December 31, 2005 follows:

                                               Remaining
      Number of Common                         Contracted
      Stock Equivalents    Expiration Date    Life (Years)       Exercise Price
      -----------------    ---------------    ------------       --------------

         3,428,000         February 2006           0.1              $3.750
           600,000         December 2008           3.0               0.020
         1,740,387         February 2009           3.2               0.010
         2,250,000         March 2009              3.3               0.008
         1,200,000         April 2009              3.3               0.010
           855,000         May 2009                3.4               0.016
           120,000         June 2009               3.5               0.010
         2,400,000         July 2009               3.5               0.010
           800,000         September 2009          3.7               0.015
           800,000         October 2009            3.8               0.010
           300,000         October 2009            3.8               0.019
         3,600,000         December 2009           4.0               0.010
           600,000         December 2009           4.0               0.015
           600,000         January 2010            4.1               0.010
           500,000         January 2010            4.1               0.120
           300,000         February 2010           4.2               0.120
         1,125,000         June 2010               4.5               0.008
         1,371,100         January 2011            5.1               0.010
        ----------

        22,589,487
        ==========

                                      F-17
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

9.    Related Party Transactions

      During the years ended December 31, 2005 and 2004, the Company engaged in
      transactions with related parties as follows:

      The Company has entered into a consulting agreement to provide
      record-keeping and other administrative services. During the years ended
      December 31, 2005 and 2004 the Company paid consideration under this
      record-keeping and administrative services agreement totaling $78,000 and
      $47,019, respectively. The Company paid for these services by issuing
      10,000,000 and 4,836,448 shares of the Company's common stock.

      In addition to record-keeping services described above, the Company has
      various related party notes payable at December 31, 2005 (See Note 4).

10.   Supplemental Oil and Gas Information - Unaudited

      The following supplemental information regarding the oil and gas
      activities of the Company is presented pursuant to the disclosure
      requirements promulgated by the Securities and Exchange Commission ("SEC")
      and SFAS No. 69, Disclosures About Oil and Gas Producing Activities
      ("Statement 69").

      Production from one field accounted for 78% and 92% of the Company's oil
      and gas sales revenues for the years ended December 31, 2005 and 2004,
      respectively.

      Estimated Quantities of Proved Oil and Gas Reserves

      Set forth below is a summary of the changes in the estimated quantities of
      the Company's crude oil and condensate, and gas reserves for the periods
      indicated, as estimated by the Company as of December 31, 2005. All of the
      Company's reserves are located within the United States. Proved reserves
      cannot be measured exactly because the estimation of reserves involves
      numerous judgmental determinations. Accordingly, reserve estimates must be
      continually revised as a result of new information obtained from drilling
      and production history, new geological and geophysical data and changes in
      economic conditions.

      Proved reserves are estimated quantities of gas, crude oil, and
      condensate, which geological and engineering data demonstrate, with
      reasonable certainty, to be recoverable in future years from known
      reservoirs under existing economic and operating conditions. Proved
      developed reserves are proved reserves that can be expected to be
      recovered through existing wells with existing equipment and operating
      methods.

                                                         Oil        Gas
      Quantity of Oil and Gas Reserves                  (Bbls)     (Mcf)
                                                       -------    -------
      Total proved reserves at December 31, 2003           469     80,693

      Discoveries                                          146     17,645
      Production                                          (153)   (13,654)
      Revision of estimates                                290    (16,274)
                                                       -------    -------

      Total proved reserves at December 31, 2004           752     72,136

      Discoveries and Purchase Property                     --      8,770
      Production                                           (57)    (8,279)
      Revision of Estimates                               (620)   (29,092)
      Sales of Property                                     --     (7,792)
                                                       -------    -------

      Total proved reserves at December 31, 2005            75     35,743
                                                       =======    =======

      Proved developed reserves:

        December 31, 2005                                   75     35,743
                                                       =======    =======

        December 31, 2004                                  469     80,693
                                                       =======    =======

                                      F-18
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

10.   Supplemental Oil and Gas Information - Unaudited, continued

      Capitalized Costs of Oil and Gas Producing Activities

      The following table sets forth the aggregate amounts of capitalized costs
      relating to the Company's oil and gas producing activities and the
      aggregate amount of related accumulated depletion, depreciation and
      amortization as of December 31, 2005:

                                                            2005        2004
                                                         ---------   ---------
      Unproved properties and prospect generation costs
        not being amortized                              $  87,265   $  17,938
      Dismantlement costs                                    7,943       8,413
      Proved properties being amortized                    146,878     160,917
      Less accumulated depletion, depreciation and
        amortization                                       (46,116)    (33,934)
                                                         ---------   ---------

        Net capitalized costs                            $ 195,970   $ 153,334
                                                         =========   =========

      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, 2005 and 2004:

                                                    2005            2004
                                                  --------        --------

      Exploration costs                           $     --        $     --
      Development costs                            101,046         187,258
                                                  --------        --------

                                                  $101,046        $187,258
                                                  ========        ========

      Standardized Measure of Discounted Future Net Cash Flows

      The following table reflects the Standardized Measure of Discounted Future
      Net Cash Flows relating to the Company's interest in proved oil and gas
      reserves as of December 31, 2005 and 2004:

                                                       2005       2004
                                                    ---------   ---------

      Future cash inflows                           $ 288,000   $ 391,000
      Future production and development costs         (56,000)    (72,000)
      Future dismantlement costs                       (7,943)     (8,400)
                                                    ---------   ---------

      Future net cash inflows before
        income taxes                                  224,057     310,600
      Future income taxes                                  --          --
                                                    ---------   ---------

      Future net cash flows                           224,057     310,600
      10% discount factor                             (58,000)    (85,000)
                                                    ---------   ---------

        Standardized measure of discounted
          future net cash inflow                    $ 166,057   $ 225,600
                                                    =========   =========

      Future net cash flows at each year end, as reported in the above schedule,
      were determined by summing the estimated annual net cash flows computed
      by: (1) multiplying estimated quantities of proved reserves to be produced
      during each year by current prices, and (2) deducting estimated
      expenditures to be incurred during each year to develop and produce the
      proved reserves (based on current costs).

                                      F-19
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   ----------

10.   Supplemental Oil and Gas Information - Unaudited, continued

      Standardized Measure of Discounted Future Net Cash Flows, continued

      Income taxes were computed by applying year-end statutory rates to pretax
      net cash flows, reduced by the tax basis of the properties and available
      net operating loss carryforwards. The annual future net cash flows were
      discounted, using a prescribed 10% rate, and summed to determine the
      standardized measure of discounted future net cash flow.

      The Company cautions readers that the standardized measure information
      which places a value on proved reserves is not indicative of either fair
      market value or present value of future cash flows. Other logical
      assumptions could have been used for this computation which would likely
      have resulted in significantly different amounts. Such information is
      disclosed solely in accordance with Statement 69 and the requirements
      promulgated by the SEC to provide readers with a common base for use in
      preparing their own estimates of future cash flows and for comparing
      reserves among companies. Management of the Company does not rely on these
      computations when making investment and operating decisions.

                                      F-20