UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.20549








Form
10-K





x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934





For the
fiscal year ended December 31, 2009





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the transition period from _____ to
_____





Commission
      file number 000-26721





AUSTRALIAN
      OIL & GAS CORPORATION


(Name
      of small business issuer in its
charter)






Delaware
              
              84-1379164(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification
      No.)Level
      21, 500 Collins Street
                  Melbourne
      Victoria Australia
              
              3000(Address
      of principal executive offices)
              
              (Zip
      Code)




Issuer’s telephone
      number (61-3) 8610 4700
            Website:
      www.ausoil.com








Securities
registered under Section 12(b) of the Exchange
Act:   None





Securities
registered under Section 12(g) of the Exchange Act:


Common
stock - $0.001 par value


(Title of
class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  o No x
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.  Yes  o 
 No x
  Indicate
by check mark whether the issuer (1) filed all reports required to be filed
by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes  x    
No  o
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes o  No  o
  Indicate
by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  o
  
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of "large accelerated
filer,"  "accelerated filer" and "smaller reporting company" in Rule
12b-2 of the Exchange Act.
  Large accelerated
      filer   o
              Accelerated
      filer   oNon-accelerated filer   o
              Smaller
      reporting company   x
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).   Yes  o    No 
x
 
 The
aggregate market value of the voting shares of the registrant (based on the
closing price reported by the OTC Bulletin Board on or before December 31,
2009), held by non-affiliates was $616,937. For purposes of this disclosure,
shares of common stock held by persons who own 5% or more of the outstanding
common stock and shares of common stock held by each officer and director have
been excluded in that such persons may be deemed to be “affiliates” as that term
is defined under the Rules and Regulations of the Securities Exchange Act of
1934, as amended. This determination of affiliate status is not necessarily
conclusive.





Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.    Y es x  No o





As at
March 31, 2010, 45,650,531 shares of common stock were outstanding.





Documents
incorporated by reference:  None



















TABLE
OF CONTENTS







PART
I




Item
      1.
            Business:





Business
Development


Description
of Business


Oil and
Gas Interests


Reserve
Estimates


Production


Productive
Wells and Acreage


Underdeveloped
Acreage


Drilling
Activity


Current
Activities and Plans


Competitive
Factors


Environmental
Compliance and Risk


Employees




Item
      1A.
            Risk
      Factors


Item
      1B.
            Unresolved
      Staff Comments


Item
      2.
            Properties


Item
      3.
            Legal
      Proceedings


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




PART
II




Item
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchasers Of Equity
Securities


Item
      6.
            Selected
      Financial Data


Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations


Item
      7A.
            Quantitive
      and Qualitative Disclosures about Market
Risk


Item
      8.
              Financial
      Statements and Supplementary Data Financial Statements and Supplementary
      Data


Item
      9.
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure


Item
      9A.
            Controls
      and Procedures


Item
      9B.
            Other
      Information




PART
III




Item
      10.
            Directors, Executive Officers and
      Corporate Governance Item
      11.
            Executive
      Compensation Item
      12.
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters


Item
      13.
            Certain Relationships and Related
      Transactions, and Director
Independence


Item
      14
            Principal
      Accountant Fees and Services




PART
IV




Item
      15.
            EXHIBITS, FINANCIAL STATEMENT
      SCHEDULES





Signatures


Financial
Statements


Certifications


Exhibits








Forward
Looking Statements





References in this report to “the
Company”, “we”, “us”, “AOGC”, or “our” are intended to refer to Australian Oil
& Gas Corporation. This annual report contains certain statements that may
be deemed forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (Securities Act), and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended (Exchange Act). Readers of this
annual report are cautioned that such forward-looking statements are not
guarantees of future performance and that actual results, developments and
business decisions may differ from those envisaged by such forward-looking
statements.





All
statements, other than statements of historical facts, so included in this
annual report that address activities, events or developments that the Company
intends, expects, projects, believes or anticipates will or may occur in the
future, including, without limitation: statements regarding the Company’s
business strategy, plans and objectives and statements expressing beliefs and
expectations regarding the ability of the Company to successfully raise the
additional capital necessary to meet its obligations, the ability of the Company
to secure the permits, licenses and leases necessary to facilitate anticipated
drilling activities and the ability of the Company to attract additional working
interest owners to participate in the exploration and development of oil and gas
reserves, are forward-looking statements within the meaning of the Securities
Act and the Exchange Act. These forward-looking statements are and will be based
on management's then-current views and assumptions regarding future
events.




PART
I





ITEM
1.  BUSINESS





Australian Oil & Gas Corporation, a
Delaware corporation formed on 6th
August 2003, is an energy company that explores for natural gas, crude oil and
natural gas liquids. Our common stock, par value $0.001 per share, has been
traded on the OTC BB since 2003.





The
Company seeks oil and gas exploration opportunities in offshore waters within
the territorial boundaries of Australia.Once acquired,
our strategy is to carry out preliminary geological assessments, including the
acquisition of pre-existing data, the formulation and undertaking of new 2D and
3D seismic programs and, if supported by geological rationale and appropriate
funding, the drilling of wells to determining whether any viable resource may
exist.





We hold interests in many of our
properties through our 100% owned subsidiaries; Alpha Oil & Natural Gas Pty
Ltd and Nations Natural Gas Pty Ltd.  Alpha Oil & Natural Gas Pty
Ltd itself now has three wholly owned Australian subsidiaries, Vulcan Australia
Pty Ltd (which holds the joint venture interest in the Vulcan Joint Ventures),
Braveheart Oil & Gas Pty Ltd (which holds the joint venture interest in the
Braveheart Joint Venture) and Cornea Oil & Gas Pty Ltd (which will hold the
joint venture interest in the Cornea Joint Venture). Cornea Oil & Gas Pty
Ltd was incorporated in Australia on July 17, 2009.





Nations
Natural Gas Pty Ltd itself now has a wholly owned Australian subsidiary,
Napoleon Nations Gas Pty Ltd (which it is planned may hold the joint venture
interest in the National Gas Consortium Joint Venture). Napoleon Nations Gas Pty
Ltd was incorporated in Australia on July 17, 2009.












AOGC’s goal is to grow a profitable oil
and gas company for the long-term benefit of our shareholders.  Our
strategy is to build a portfolio of core exploration acreage which provide
growth opportunities through grass-roots exploration activity, including the
acquisition of seismic surveys and subsequent drilling.





When acquisition opportunities are
identified, small operational and technical teams participate in the evaluation
process, enabling our Company to move quickly to execute exploration
strategies.  Over time we plan to build a team that will have the
technical knowledge and sense of urgency to maximize value.  Our local
knowledge of Australian producing basins and our proactive culture provide a
potential platform for growth through our strategy of acreage acquisition,
prospect development and farmout.  An integral part of our plan is to
actively evaluate our assets to determine whether farmout or sales of these
assets might provide opportunities to reduce commitments, to spread risk and to
redeploy our capital resources, so as to constantly rebalance our portfolio and
generate new prospects.





We regard Australia as a relatively
immature oil and gas country, with particular prospectivity for natural gas, so
that our exploration strategy provides the potential exposure to larger
gas/liquids targets which may ultimately establish significant production and
reserves through successful drilling.  Our technological experts are
encouraged to develop strategies for rapid and cost-effective acquisition,
processing and interpretation of seismic data, enabling our technical teams to
analyse large areas of acreage, to acquire new seismic data, to generate
drilling prospects and to relinquish acreage when it is found to be
insufficiently prospective to warrant further exploration or where we are unable
to raise capital for its exploration.





Industry experts project declines in
natural gas production from traditional sources and significant increases in
U.S. and Asian natural gas demand over the next 20 years.  LNG sourced
natural gas may provide a significantly larger share of the natural gas
market.  We target potential natural gas supply sources suitable not
only for LNG processing and export,  but also for domestic Australian
consumption, subject to successful exploration and exploiting of our exploration
acreage.





We consider that we are now well
positioned to pursue these oil and natural gas exploration objectives for the
following reasons:





·
            Our
      success in acquiring gas prospective acreage is expected to provide
      opportunities to farmout and joint venture with other established oil and
      gas companies, as well as the possibility to joint venture with them in
      additional exploratory prospects;


·
            We
      possess a significant exploration acreage portfolio in the Browse Basin
      and Bonaparte Basin region offshore Australia (see “Oil and Gas Interests
      and Properties” below);


·
            We
      are intent on building a broad-based team with significant experience in
      the use of structural geology, augmented by 3D seismic technology, and in
      drilling prospects.


·
            We
      own or have rights to an extensive seismic database, including 6,500
      km2of
      new 2D seismic and some 3,500 km2of 3D
      seismic data;


·
            We
      are conducting intensive evaluations of our acreage and are in the process
      of identifying exploration prospects, some of which are high-risk,
      high-potential, gas and oil
prospects.















We
have focused on the Bonaparte Basin and Browse Basin region
because:




·
            We
      have acquired a significant permit portfolio in these
    regions;


·
            We
      have developed significant expertise and have an extensive database of
      information about the geology and geophysics of this
    region;


·
            We
      believe there are significant reserves in this region that have not yet
      been discovered; and


·
            The
      construction of infrastructure for efficiently developing, producing,
      transporting and processing natural gas is being actively promoted or has
      been initiated in the region by
others.





Background to Australian
Offshore Permits





To gain
control of offshore exploration areas in Australia, a Petroleum Exploration
Permit (“Permit”) must be granted by the Designated Authority, acting pursuant
to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 of the
Commonwealth of Australia (“the Act”). A Permit provides rights to the holder to
undertake exploration, including seismic surveys and drilling, in the defined
area of a Permit.  A Permit is granted for an initial six year
period.  Under the terms of a Permit, the exploration work program
nominated for the first three years must be met.  The Permit holder
may withdraw from the Permit after the third permit year, or at the end of any
subsequent Permit year, provided that all the exploration work obligations up to
the date of withdrawal have been met.





It should be noted that (provided
all work commitments are carried out) Australian petroleum exploration permits
may be renewed for two further 5-year terms, upon relinquishment of 50% of the
area of a permit at the end of the first 6-year term, and again at the end of
the second 5-year permit term. Any Retention Lease or Production License is
excluded from the calculation of the area to be relinquished. Permits therefore,
have a potential 16-year life, subject to these requirements.





The holder of a Permit may not
construct any installation in the Permit or abandon, suspend or complete any
well without the written approval of the Designated Authority.  A
Permit requires the holder to comply with the Act, the regulations and all
directions made there under and to carry out operations with adequate measures
for the protection of the environment and to carry insurance as directed by the
Designated Authority.  A Permit incurs a modest yearly rental
figure.





A Permit is granted by the
Designated Authority following a competitive tender program, based on the best
work program offered. The experience of the directors and the technical and
financial resources of the applicant are taken into consideration before a
decision is made. The Company considers that it satisfies the Designated
Authority’s requirements and believes that in the future it will be able to
secure acreage.  We have already acquired interests in a number of
Permits (See Item 2 – Properties).  Our President, Mr. Ernest Geoffrey
Albers, has a track record in successfully bidding for exploration permits, and
of subsequently progressing through farmout and exploration with major
international companies.





For the most part, major companies
have dominated the offshore exploration industry in Australia.  More
recently, new and independent international operators have become increasingly
active. The Company is encouraged by this increased activity and by the
diversity of geological concepts being developed.












Increasing availability of
sophisticated off-the-shelf technologies from service companies and of expert
technical advice from consultants, all aided by the latest computing power,
allow companies such as ours to operate in this environment.  There is
a worldwide pool of rig operators, seismic service companies and technical
consultants upon which we can draw for products and specialist expertise,
allowing us to participate at a high level of expertise.





A significant element of our
strategy includes the acquisition and control of strategic areas which have
potential to be farmed-out, sold or developed in conjunction with industry
players: it being recognised that the Company lacks the resources to fully
explore and develop areas on its own behalf.  The funding of our
programs by others in return for a percentage interest in our exploration
permits (farm-out) is a vital part of our strategy and not only spreads risk
but, importantly, conserves our capital. We sponsor or assist in the sponsorship
of companies for the express purpose of assisting with the funding of costs of
our exploration program.





When we require further funds for our
programs, it is our intention that the additional funds would be raised in a
manner deemed most expedient by the Board of Directors at the time, taking into
account budgets, interest of industry in co-participation in our programs and
share market conditions.  It is our intention to meet our funding
obligations by either partial sale of our interests or farm-out, either to third
parties or to entities sponsored by the Company, the latter course of action
being a vital part of management’s overall strategy.  It is also part
of our plan that funds could be raised by further issues of stock or the
promotion of new companies for this purpose. Should funds be required for
appraisal or development purposes we would, in addition, look to project loan
finance.





Oil and Gas
Interests





The Company holds interests in 11
petroleum exploration permits in the offshore areas adjacent to
Australia.




Permit
            Geological Basin/Sub
      Basin
            Percentage
      Held
            Joint Venture
      NameAC/P33
            Vulcan
            7.5%(i)
            OliverAC/P35
            Vulcan
            15%
            VulcanAC/P39
            Vulcan
            15%
            NomeWA-322-P
            Browse
            17%
            BraveheartWA-323-P
            Browse
            17%
            BraveheartWA-342-P
            Browse
            17%
            CorneaNT/P62
            Bonaparte
            21%
            National Gas
      ConsortiumNT/P65
            Bonaparte
            21%
            National Gas
      ConsortiumNT/P71
            Bonaparte
            21%
            National Gas
      ConsortiumNT/P72
            Bonaparte
            21%
            National Gas
      ConsortiumNT/P73
            Bonaparte
            100%
            Stillwater






(i)
            Permit
      Interest sold February 18, 2010.





See Item
2 “Properties” of this report for more information concerning our intentions and
our past and recent exploration activities with respect to our oil and gas
interests.













Reserve
Estimates





The Company
has no oil and gas reserves at the present time.





Production





The Company
has had no oil and gas production to date.





Productive Wells and
Acreage


The Company
has no productive wells or productive acreage at the present time.





Underdeveloped
Acreage





See Item 2
“Properties” of this report for further information concerning our oil and gas
interests.





Drilling
Activity





We and our
joint venturers drilled Cornea-3 in WA-342-P in December 2009 and Braveheart-1
in WA-333-P in January 2010.





Current Activities and
Plans





Our current
activities relate solely to our participation in oil and gas exploration in the
offshore areas of Australia, as described above. (For more information with
respect to our current activities and plans see also Item 2 -
“Properties”).





Competitive
Factors





The
acquisition of oil and gas interests is highly competitive. We anticipate that
we will continue to encounter strong competition from many established companies
with greater financial, personnel and informational
resources.  Competition from such companies may escalate the cost of
acquiring properties beyond the range of prices we can afford.  Even
if valuable oil and gas deposits are discovered on our properties, our ability
to develop and exploit and their marketability will depend on numerous factors,
including available equipment and personnel for which there is strong demand,
and other competing supplies of oil and gas.





Environmental Compliance and
Risk





Since the
Company is engaged in the natural resources industry, environmental regulation
has a significant impact upon our operations and may necessitate significant
capital outlays, which, in turn, may materially affect the earning power of the
Company. Certain operations in the exploratory and production phase of oil and
gas exploration are potentially hazardous to the
environment.  Exploratory drilling in natural areas are sources of
significant environmental regulation; and reclamation requirements, must be
satisfied.  Further, if recovery methods are utilized which involve
the construction of a plant or similar hardware to implement the recovery
system, the environmental impact of such a system must be disclosed in an
Environmental Impact Statement; and compliance could adversely affect future
operations and revenues.  Although we do not have immediate plans to
be the operator on any oil and gas drilling operations, others who may drill and
operate such properties will face possible environmental regulations, which
could affect our liabilities.  Should we operate, then we would
directly be responsible for environmental and project management, and liability
in the event of mishap.












Employees





As of
December 31, 2009, we employed four persons, namely the three directors, and one
other person, each on a part time basis.  Additionally, we retain
consultant geologists and other geo-scientists on a contract or fee basis, as
and when their services are required.





ITEM
1A.  RISK FACTORS





The
business operations of the Company are subject to risks, which may impact
adversely on its future performance. These risks may adversely affect the value
of our assets and this may affect the value of our common stock.





The
following are some of the important factors that could affect our financial
performance or could cause actual results to differ materially from estimates
contained in our forward-looking statements. The important factors are not
exclusive.





Our
future performance is difficult to evaluate because we have a limited operating
history and do not own or have development plans for any oil or natural gas
properties.





We began
operations in August 2003 and have a limited operating and financial
history.  As a result, there is little historical financial and
operating information available to help you evaluate our performance or an
investment in our common stock.





Potential conflicts of
interest may cause us to
enter into less favorable agreements than we might have obtained from third
parties.





Some of
our directors are also directors or executive officers of other oil and natural
gas companies, which may from time to time compete with us for farm-ins, working
interest partners, or property acquisitions. We also may seek to negotiate
farm-in agreements or working interest agreements with companies whose boards of
directors include individuals who are directors or executive officers of our
company.  Under Delaware law, a director that has an interest in a
contract or proposed contract or agreement shall disclose his interest in such
contract or agreement and shall refrain from voting on any matter in respect of
such contract or agreement.  Nevertheless, we may enter into
agreements with such other companies that are not as favorable as that which we
might have obtained from unrelated third parties.





We
will require additional equity capital or debt financings in the future, which
may not be available, or may only be available on unfavorable
terms.





Our
future capital requirements depend on many factors, including the prospectivity
of our exploration property and our profitability.  To the extent that
available funds are insufficient to fund operating and capital requirements, we
will need to fund our exploration commitments by farmout or sale of interests or
by raising additional funds through debt financing or curtail our growth and
reduce our exploration activities.  Any farmout or sale activity or
any equity or debt financing, if available at all, may be on terms that are not
favorable to us.  In the case of farmout, sale or equity financings,
dilution to our stockholders could result, and in any case such securities may
have rights, preferences and privileges that are senior to existing
shares.  If we cannot obtain adequate capital on favorable terms or at
all, our business, operating results and financial condition could be adversely
affected.














Estimates
of future cash flows may prove to be inaccurate, resulting in a reduction of our
working capital.





Estimates
of future net cash flows from oil and gas interests we may wish to develop,
prepared by independent consultants, will be based upon estimates by independent
engineers of oil and natural gas reserves and the percentage of those reserves
which can be recovered and produced with current technology.  These
estimates will include assumptions as to the prices received for the sale of oil
and natural gas. Any one or all of those estimates may be inaccurate, which
could materially affect resulting future net cash flows and working
capital.





We
depend on our executive officers for critical management decisions and industry
contacts but have no key person insurance with these individuals.





We are
dependent upon the continued services of our executive officers, in particular,
our President, Mr.E. Geoffrey Albers.  While we do have an employment
contract with Mr.E. Geoffrey Albers, we do not carry key person insurance on his
life.  The loss of the services of any of our executive officers,
through incapacity or otherwise, could have a material adverse effect on our
business and would require us to seek and retain other qualified
personnel.





Exploring
for and producing oil and natural gas are high risk activities with many
uncertainties that could adversely affect our business, financial condition or
results of operations.





Oil and
natural gas exploration activities are subject to numerous risks beyond our
control, including the risk that drilling will not result in commercially viable
oil or natural gas reserves. Our decisions to explore, assess, appraise or
develop or otherwise exploit prospects or properties will depend in part on the
evaluation of data obtained through geophysical and geological analyses, seismic
and other data and engineering studies, the results of which are often
inconclusive or subject to varying interpretations.  Assessment of
prospectivity and reserve estimates depend on many assumptions that may turn out
to be inaccurate.  Our cost of drilling, completing and operating
wells will be uncertain until drilling concludes.  Overruns in
budgeted expenditures are common risks that can make a particular project
uneconomical.  Further, many factors may curtail, delay or cancel
drilling, including the following:





·
            delays
      imposed by or resulting from compliance with regulatory
      requirements;


·
            pressure
      or irregularities in geological
formations;


·
            equipment
      failures or accidents;


·
            adverse
      weather conditions;


·
            reductions
      in oil and natural gas prices;


·
            title
      problems; and


·
            limitations
      in the market for oil and natural
gas.



















We may incur substantial losses and
be subject to substantial liability claims as a result of oil and natural gas
exploration activities.





We are
not insured against risks.  Losses and liabilities arising from
uninsured and underinsured events could materially and adversely affect our
business, financial condition or results of operations. Our oil and natural gas
exploration activities are subject to all of the operating risks associated with
exploring for oil and natural gas, including the possibility of:





·
            environmental
      hazards, such as uncontrollable spills or flows of oil, natural gas,
      brine, well fluids, toxic gas or other pollution into the environment,
      including groundwater and shoreline
  contamination;


·
            abnormally
      pressured formations;


·
            mechanical
      difficulties, such as stuck oilfield drilling and service tools and casing
      collapse;


·
            fires
      and explosions;


·
            personal
      injuries and death; and


·
            natural
      disasters.





Any of
these risks could adversely affect our ability to operate or result in
substantial losses to our company.  We may elect not to obtain
insurance if we believe that the cost of available insurance is excessive
relative to the risks presented.  In addition, pollution and
environmental risks generally are not fully insurable.  If a
significant accident or other event occurs and is not fully covered by
insurance, then it could adversely affect us.





Market
conditions or operational impediments may hinder our access to oil and natural
gas markets or delay any production.





Market
conditions or the unavailability of satisfactory oil and natural gas
transportation arrangements may hinder our access to oil and natural gas markets
or delay any production.  The availability of a ready market for any
future oil and natural gas production will depend on a number of factors,
including the demand for and supply of oil and natural gas and the proximity of
reserves to pipelines and terminal facilities.  Our ability to market
production (when and if we have production) will depend in substantial part on
the availability and capacity of gathering systems, pipelines and processing
facilities owned and operated by third parties.  Our failure to obtain
such services on acceptable terms could materially harm our
business.  We may be required to shut-in wells for a lack of a market
or because of inadequacy or unavailability of natural gas pipeline or gathering
system capacity. If that were to occur, then we would be unable to realize
revenue from those wells until production arrangements were made to deliver our
production to market.





We
are subject to complex laws that can affect the cost, manner or feasibility of
doing business.





Exploration,
production and sale of oil and natural gas are subject to extensive Australian
laws and regulations, including the Offshore Petroleum and Greenhouse Gas
Storage Act 2006 (Commonwealth of Australia) and all regulations, directions and
guidelines made thereunder. We may be required to make large expenditures to
comply with our permit obligations and governmental
regulations.  Matters subject to such obligations and regulation
include:





·
            permit
      work program requirements;


·
            environmental
      approvals;


·
            seismic
      work program approvals













·
            permits
      for drilling operations;


·
            drilling
      bonds;


·
            development
      and production approvals;


·
            unitization
      and pooling of properties; and


·
            taxation.





Under
these laws, we could be liable for personal injuries, property damage and other
damages. Failure to comply with these laws may also result in the suspension or
termination of our operations and subject us to administrative, civil and
criminal penalties. Moreover, these laws could change in ways that substantially
increase our costs of doing business. Any such liabilities, penalties,
suspensions, terminations or regulatory changes could materially and adversely
affect our financial condition and results of operations.





Our
operations may incur substantial liabilities to comply with applicable
environmental laws and regulations.





Our oil
and natural gas operations are subject to stringent Australian laws and
regulations relating to the release or disposal of materials into the
environment or otherwise relating to environmental protection, both of the
environment and of the living things within that environment.  These
laws and regulations, which include the Environment Protection and Biodiversity
Conservation Act 1999, require the acquisition of approvals before seismic
acquisition or drilling commences, restrict the types, quantities, and
concentration of substances that can be released into the environment in
connection with drilling and production activities, limit or prohibit seismic or
drilling activities in protected areas, and impose substantial liabilities for
pollution resulting from our operations.  Failure to comply with these
laws and regulations may result in the assessment of administrative, civil, and
criminal penalties, incurrence of investigatory or remedial obligations, or the
imposition of injunctive relief.  Changes in environmental laws and
regulations occur frequently, and any changes that result in more stringent or
costly waste handling, storage, transport, disposal or cleanup requirements
could require us to make significant expenditures to maintain compliance, and
may otherwise have a material adverse effect on our results of operations,
competitive position, or financial condition as well.  Under these
environmental laws and regulations, we could be held strictly liable for the
removal or remediation of previously released materials or property
contamination regardless of whether we were responsible for the release of such
materials or if our operations were standard in the industry at the time they
were performed.




Competition
in the oil and natural gas industry is intense, which may adversely affect our
ability to compete.





We
operate in a highly competitive environment for the acquisition and exploration
of properties, marketing of oil and natural gas and securing qualified and
experienced personnel.  Many of our competitors possess and employ
financial, technical and personnel resources substantially greater than ours,
which can be particularly important in the areas in which we
operate.  Those companies often are able to pay more for oil and
natural gas properties and prospects and to evaluate, bid for and purchase a
greater number of properties and prospects than our financial or personnel
resources permit.  Our ability to acquire additional prospects and to
find and develop reserves in the future will depend on our ability to evaluate
and select suitable properties, to fund exploration and to consummate
transactions in a highly competitive environment.  There is
substantial competition for capital available for investment in the oil and
natural gas industry.  We may not be able to compete successfully in
the future in acquiring prospective resources, carrying out seismic and drilling
activities, developing reserves, marketing hydrocarbons, attracting and
retaining personnel and raising capital.












We
may depend on industry partners and could be seriously harmed if they do not
perform satisfactorily, a matter which is usually not within our
control.





Because
we have few employees, limited resources and revenues, we will continue to be
largely dependent on industry partners, including farmin participants and joint
venturers, for the success of our oil and gas exploration
projects.  We could be seriously harmed if our industry partners do
not perform satisfactorily on projects that affect us. It is likely that we will
have no control over factors that would influence the performance of our
partners.





We
are controlled by a small number of principal stockholders who may exercise a
proportionately larger influence on the company than its stockholders with
smaller holdings.





We are
controlled by a small number of principal stockholders who may cause events to
occur that are not in the interests of the Company’s stockholders with smaller
holdings.  Our President, Mr.E.Geoffrey Albers, and entities
controlled by him, own approximately 70% of the outstanding common stock (see
Item 12).  Accordingly, Mr. Albers has effective control over the
election of the Company's directors and significant influence over our
management, operations and affairs, including the ability to prevent or cause a
change in control of the Company.





Anti-takeover
provisions of the certificate of incorporation, bylaws and Delaware law could
adversely impact a potential acquisition by third parties that may ultimately be
in the financial interests of the company's stockholders.





Our
certificate of incorporation, bylaws and the Delaware General Corporation Law
contain provisions that may discourage unsolicited takeover
proposals.  These provisions could have the effect of inhibiting
fluctuations in the market price of the Company's shares that could result from
actual or potential takeover attempts, preventing changes in its management or
limiting the price that investors may be willing to pay for shares of common
stock.  These provisions, among other things, authorize the board of
directors to designate the terms of and to issue new series of preferred stock,
to limit the personal liability of directors, and to require the Company to
indemnify directors and officers to the fullest extent permitted by applicable
law and to impose restrictions on business combinations with some interested
parties.





The
market price of our common stock is highly volatile.





The
market price of our common stock has been and is expected to continue to be
highly volatile.  Prices for our common stock will be influenced by
many factors and may fluctuate widely as a result of factors beyond our
control.  General factors which will bear on the price of our common
stock include the depth and liquidity of the market for the common stock,
investor perception of us and our financial and technical ability and general
economic and market conditions.














Our
common stock is traded over the counter, which may deprive shareholders of the
full value of their shares.





Our common stock is quoted via the Over
The Counter Bulletin Board (OTC-BB).  As such, our common stock may
have fewer market makers, lower trading volumes and larger spreads between bid
and asked prices than securities listed on an exchange such as the New York
Stock Exchange or the NASDAQ Stock Market, Inc.  These factors may
result in higher price volatility and less market liquidity for the Common
Stock.





A
low market price may severely limit the potential market for our common
stock.





Our common stock is currently trading
at a price substantially below $5.00 per share, subjecting trading in the stock
to certain SEC rules requiring additional disclosures by
broker-dealers.  These rules generally apply to any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions (a “penny stock”).  Such rules require the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and institutional or wealthy
investors.  For these types of transactions, the broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to the sale.  The
broker-dealer also must disclose the commissions payable to the broker-dealer,
current bid and offer quotations for the penny stock and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market.  Such information
must be provided to the customer orally or in writing before or with the written
confirmation of trade sent to the customer.  Monthly statements must
be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.  The
additional burdens imposed upon broker-dealers by such requirements could
discourage broker-dealers from effecting transactions in our common
stock.





ITEM
1B.  UNRESOLVED STAFF COMMENTS





None.





ITEM
2.  PROPERTIES





We share
the use of premises in Australia at Level 21, 500 Collins Street, Melbourne,
Victoria, Australia from which our Australian subsidiaries carry on
business.  The Australian office space is taken on a non-exclusive
basis, with no rent payable, but the usage of the premises is included in the
charges that Setright Oil & Gas Pty Ltd., (an affiliate of the Company by
virtue of common management, ownership and control) makes in respect to the
administration of the Company.





Following
implementation of our acquisition strategy we now hold interests in 11 Petroleum
Exploration Permits granted by the Commonwealth of Australia. With one
exception, they are held in joint venture with other parties.





Vulcan
Sub-basin Interests, Territory of Ashmore and Cartier Islands, Australia
(AC/P33, AC/P35 and AC/P39)




Geologically, AC/P33, AC/P35 and AC/P39
are located on the eastern margin of the Vulcan Sub-basin, a broad, deep and
proven hydrocarbon-generative basin, one of a number of proven petroliferous
sub-basins which together comprise the North West Shelf hydrocarbon province of
Australia.












The
permits are within the Territory of Ashmore and Cartier Islands (“the
Territory”), an Australian offshore territory which was ceded from Britain and
accepted by the Commonwealth of Australia (“Commonwealth”) in 1933. The
responsibility for the administration of the Territory was transferred from the
Northern Territory of Australia (“Northern Territory”) to the Commonwealth when
a level of self-government was instituted in the Northern Territory in
1978.





The
Territory comprises West, Middle and East Islands of Ashmore Reef, Cartier
Island and a large area of territorial sea generated by those
islands.  The Territory is an area of active offshore oil and gas
exploration.  The islands are uninhabited, small, low and composed of
coral and sand, with some grass cover.





The
Territory is located on the outer edge of the continental shelf in the Indian
Ocean approximately 320 km off Australia’s north-west coast and 144 kilometres
south of the Indonesian Island of Roti.  The Jabiru and Challis oil
fields are located within the Territory, as are numerous other oil and gas
accumulations and occurrences.




Petroleum
extraction activities within the Territory are administered on behalf of the
Commonwealth by the Northern Territory Department of Mines and Energy through
the Designated Authority protocol operating pursuant to the Offshore Petroleum
and Greenhouse Gas Storage Act 2006 (Commonwealth).





Commonwealth
laws, laws of the Northern Territory and Ordinances made by the Governor-General
make up the body of law generally applicable in the Territory.





We
acquired our initial 20% interest in the Vulcan Sub-basin permits as a result of
the acquisition of Alpha Oil & Natural Gas Pty Ltd (“Alpha”) in
2006.




On May
15, 2006 Alpha agreed to farmout 5% of its 20% interest in each of the Vulcan
Sub-basin permits to National Gas Australia Pty Ltd (“NGA”) (leaving Alpha with
a 15% interest), in return for the acquisition and funding of Alpha’s 20% share
of the new Oliver 3D seismic survey of approximately 124 km2 and the funding of
the cost of reprocessing of approximately 2,800 km2 of the existing Onnia 3D
Seismic Survey data, relevant to all of AC/P33, AC/P35 and
AC/P39.  The cost of the Company’s share of the Oliver 3D seismic
survey and the Onnia reprocessing has thus been met entirely by
NGA.  NGA subsequently transferred its interests to its wholly owned
subsidiary, Petrocorp Australia Pty Ltd.





Our
wholly owned subsidiary, Alpha, established a wholly owned subsidiary named
Vulcan Australia Pty Ltd (“Vulcan”) and transferred its interests in each of its
Timor Sea permits, AC/P33, AC/P35 and AC/P39 to Vulcan.





We
subsequently farmed out half of our interest in AC/P33 to Stuart Petroleum
Limited (“Stuart”) (see Oliver Joint Venture below), leaving us with a 7.5%
interest.














In
addition, the singular joint venture operating agreement, which previously
governed joint venture operations in all three of the permits, has been replaced
by new separate joint venture agreements for each permit.  The new
joint ventures are known as Oliver Joint Venture (AC/P33), Vulcan Joint Venture
(AC/P35) and Nome Joint Venture (AC/P39).




Oliver
Joint Venture (AC/P33)





Our
wholly owned subsidiary, Vulcan, following farmout of drilling and development
commitments made by Stuart (see below), until the recent sale (see below) held a
7.5% interest in the Oliver Joint Venture permit, AC/P33, in joint venture with
Stuart (50%), the designated operator, and our joint venture affiliates;
Petrocorp Australia Pty Ltd (“Petrocorp”) (12.5%), Natural Gas Corporation Pty
Ltd (NGC) (15%) and Auralandia N.L. (Auralandia) (15%).





AC/P33
(granted July 6, 2004) includes the undeveloped Oliver oil and gas accumulation,
drilled by the now plugged and abandoned Oliver-1 well. AC/P33 comprises five
graticular blocks, totalling approximately 400 km2 (98,800 acres). During the
first three years of the initial 6-year term of permit AC/P33, the joint venture
participants obtained a range of existing reports and open file seismic data and
mapped, interpreted and revised analyses and concepts for the area. The joint
venture carried out enhancement of existing seismic data around the Oliver
feature and examined various techniques with potential to provide direct
hydrocarbon indicators.  As a result of the farmout to NGA, the joint
venture acquired 124 km2 of new high quality enhanced parameter 3D seismic
survey, known as the Oliver 3D Seismic Survey. The survey was conducted over the
Oliver feature and part of its extension to the east.  Processing of
the new Oliver Seismic Survey and reprocessing of part of the immediately
adjacent Onnia 3D Seismic Survey in the vicinity of the Oliver-1 well was
carried out.





The joint
venture elected to enter the second three years of the initial permit and,
following farmout, Stuart made plans to drill one exploration well in late
2009/early 2010, and to perform further interpretational work at its
cost.





Stuart’s
earn-in obligations were to be satisfied by sole funding the drilling of an
appraisal well on the Oliver feature, completion of engineering studies up to
final investment decision for development of an oilfield and sole funding the
first $25 million of development expenditure.





On
February 18, 2010 Vulcan completed the sale of its 7.5% interest in AC/P33 to a
wholly-owned subsidiary of PTT Exploration and Production Public Company
Limited, a major Thailand petroleum exploration and production company. Vulcan
recovered $ 4,244,679 for its 7.5% interest. These proceeds will be utilized in
meeting a large proportion of our obligations to the Braveheart Joint Venture
and Cornea Joint Venture with respect to the costs associated with the recent
drilling of the Braveheart-1 well and Cornea-3 well.





Vulcan
Joint Venture (AC/P35)





AC/P35
(granted October 18, 2005) is located immediately to the north of AC/P33. It
comprises 46 graticular blocks, totalling approximately 3,410 km2 (842,645
acres). There have been five wells drilled in the area, with two having oil and
gas indications, all of which were plugged and abandoned. During the first three
years of the initial 6-year term of the AC/P35 permit, we obtained a range of
pertinent existing reports and open file seismic data.  We also
acquired the right to the reprocessed Onnia 3D seismic data-set of some 1,750
km2 within AC/P35.  On June 15, 2009 the company was granted a 12
month extension on year three of the permit. Year three now ends April 17, 2010
and includes an existing work obligation to shoot up to 250 km2 of a new 3D
seismic survey and a new obligation for 200km of 2D seismic, which we have met
with a 275 km acquisition (see below).














Our
geological evaluation of this permit during the quarter saw the development of
the Fairfax feature as a focus of our exploration efforts in
AC/P35.  The Fairfax feature was not within the area of coverage of
the Onnia 3D survey, being in the west of AC/P35 and being covered only by some
older seismic lines acquired by previous explorers.  We saw the
potential for the Fairfax feature to be a possible mirror-image of the Oliver
oil/gas accumulation.  In order to better understand the feature and
to advance it to lead status, we decided to acquire a 2D seismic survey to
infill the existing data bank and to constrain the south-western end of the
feature.  The Fairfax 2D seismic was completed during the year, with
approximately 275 kms of new high quality 2D acquired, utilizing Bergen
Offshore’s BOS Atlantic vessel.  The joint venture plans to co-process
the new acquisition and some of the pre-existing seismic lines which are already
held over the Fairfax feature.





Before
their decision to sell out of AC/P33, Stuart Petroleum had shown significant
interest in Fairfax, such that Stuart took an option to acquire a 250 km2 3D
survey over Fairfax in return for meeting the cost of the Fairfax 2D
survey.





On July
27, 2009, Stuart Petroleum Limited signed an agreement with the Vulcan Joint
Venture participants in relation to AC/P35.  Stuart agreed to fund the
cost of acquisition and processing of a 2D seismic survey over the Fairfax
feature in AC/P35.  The cost of


this work
was estimated at $240,000 and the data was acquired in August 2009.


Following
acquisition and processing of the Fairfax 2D seismic, Stuart would have become
entitled, at its option, to earn up to a 70% participating interest in
AC/P35.





However,
subsequently, as a condition to agreeing to Stuart’s arrangement with PTT in
relation to AC/P33, the joint venture participants insisted that Stuart
relinquish all rights to AC/P35, which has occurred.





The
participants in the Vulcan Joint Venture currently are:


%Auralandia
      NL (Operator)
              30.0Natural
      Gas Corporation Pty Ltd
              30.0Petrocorp
      Australia Pty Ltd (subsidiary of National Gas Australia Pty
      Ltd)
              25.0Vulcan
      Australia Pty Ltd (subsidiary of Australian Oil & Gas
      Corporation)
              15.0


Nome
Joint Venture (AC/P39)





AC/P39
(granted April 7, 2006) is located 600 km west of Darwin, immediately to the
east of AC/P33 and AC/P35.  It comprises 11 graticular blocks,
totalling approximately 920 km2 (2,273 acres).  AC/P39 lies within 100
km of existing petroleum production facilities and along the eastern elevated
flank of the Vulcan Sub-basin. There have been five wells drilled in the area,
with two having oil and gas indications.  In the first three years of
the initial 6-year term of the AC/P39 permit, we obtained a range of existing
reports and open file seismic data.  We requested a 12 month
suspension and extension of Year 2 in order to complete the reprocessing of 920
km2 Onnia 3D seismic survey within the permit. The re-processing has now been
completed, but was delayed because of the manpower constraints of the
contractor.  Geological evaluation of the permit is continuing,
including the assessment of risk as to whether any leads are of sufficient
quality to warrant the risk and cost of drilling and the likelihood of a
farminee being prepared to meet the cost of such a well.














Interpretation
of approximately 920 km2 of reprocessed Onnia 3D seismic within AC/P39 is
on-going.  We are planning for a further 3D seismic program over our
best lead in AC/P39, before making any commitment to drill a well.





We have
developed nine high risk/high impact leads within AC/P39 ranging in size from a
mean scope for recovery of prospective resources of 21 million barrels (Tancred
NE lead) to 340 million barrels (Ceto lead).





The
participants in the Nome Joint Venture are:




%Auralandia
      NL (Operator)
                  30.0Natural
      Gas Corporation Pty Ltd
                  30.0Petrocorp
      Australia Pty Ltd (subsidiary of National Gas Australia Pty
      Ltd)
                  25.0Vulcan
      Australia Pty Ltd (subsidiary of Australian Oil & Gas
      Corporation)
                  15.0





BROWSE
BASIN INTERESTS, OFFSHORE FROM WESTERN AUSTRALIA


–
WA-332-P, WA-333-P and WA-342-P





The
Browse Basin region is a major proven hydrocarbon area and it forms a part of
the extensive series of continental margin sedimentary basins that, together,
comprise the North West Shelf hydrocarbon province of Australia. The Browse
Basin has been host to a series of major gas, gas condensate and oil discoveries
which began with the 1971 discovery at Scott Reef-1 (now called Torosa). The
Browse Basin is currently the focus for two proposals to establish new LNG
export facilities; one by Woodside Energy Ltd in relation to the
Torosa/Brecknock/Calliance complex and the other by Inpex Corporation in
relation to the Ichthys complex. Two of the Browse Joint Venture permits are
presently lightly explored. There is one well on the boundary of WA-332-P
(Prudhoe-1), one well in WA-333-P (Rob Roy-1), and a total of fourteen wells in
WA-342-P, mostly associated with the undeveloped Cornea oil and gas
accumulation.





On April
12, 2006, we completed the acquisition of Alpha Oil & Natural Gas Pty Ltd
(“Alpha”), a transaction entered into on July 1, 2004.  The
acquisition of Alpha was made in order to acquire a 20% interest in the Browse
Joint Venture, being permits, WA-332-P, WA-333-P, WA-341-P and
WA-342-P.  Following signing of this transaction, but prior to the
agreement between being finalized, Alpha (with the approval of AOGC) sold its
20% interest in WA-341-P to a third party for an amount in excess of book value.
The settlement funds received by Alpha were incorporated in funds available to
AOGC, through this wholly owned subsidiary, following completion of the Alpha
purchase.





The now
remaining three permits within the Browse Basin, WA-332-P, WA-333-P and
WA-342-P, are contiguous and are located offshore in the eastern Browse Basin.
They cover a total area of 9,460 km2 (2,336,620 acres).














Our
wholly owned subsidiary, Alpha, together with its joint venturers, in 2008
entered into a farmout agreement with respect to WA-332-P, WA-333-P and WA-342-P
(“Permits”) with Gascorp Australia Pty Ltd (“Gascorp”) whereby Gascorp agreed to
earn a 15% interest in each of the three Permits in return for Gascorp expending
$1,120,000 in acquiring approximately 490 line kilometres of new 2D seismic data
(the Braveheart 2D survey) in the Permits and in acquiring a drill site survey
in order to determine a specific well location from which to test the Braveheart
prospect.  The seismic surveys provided further coverage of the
Braveheart Prospect as well as coverage of leads within WA-332-P.  As
a result of this farmout, Alpha’s interest in each of the three permits reduced
from 20% to 17%.





Separate
new operating agreements were entered into for WA-332-P and WA-333-P
(Braveheart) and WA-342-P (Cornea).





Braveheart
Joint Venture – WA-332-P and WA-333-P





In the
first three year term of these permits, the Joint Venture obtained available
open file reports and basic 2D and 3D seismic data acquired by the earlier
efforts of previous explorers.  We also acquired reprocessed 2D
seismic data.  The pre-existing 2D seismic data sets have been
integrated with the acquisition and processing by the Joint Venture of the
Braveheart 2D seismic survey of approximately 1,949 line km of new 2D seismic
survey over these permits.  This survey has recently been infilled
with a further 490 kms of 2D seismic.  The Braveheart Joint Venture
elected to enter a second three year permit term in which it has planned for the
drilling of Braveheart 1 in WA-333-P.





On April
3, 2009 the Browse Joint Venture was granted an 18-months suspension and
extension of Year 5 of permit WA-332-P and WA-333-P in order to acquire further
new infill 2D seismic survey over potential leads in WA-332-P and to secure a
drilling vessel. Year 5 of WA-332-P ends March 31, 2010.  Further
extensions may be necessary.





On April
3, 2009 the Browse Joint Venture was also granted a 12-month suspension and
extension of Year 5 of the WA-333-P permit in order to allow additional time for
the drilling of the Braveheart-1 well in WA-333-P. The Joint Venture entered
into a contract with a drilling vessel management company, as a result of which
the Braveheart-1 well commenced drilling on the Braveheart feature in late 2009.
Year-5 of WA-333-P ends on March 31, 2010.





The
participants in each of the WA-332-P and WA-333-P permits formed new 100% owned
subsidiary companies and transferred their respective interests in the
Braveheart Joint Venture to such wholly owned subsidiaries.  Alpha
incorporated Braveheart Oil & Gas Pty Ltd as a wholly owned subsidiary to
which it has assigned its residual 17% interest in each of these
Permits.  The Joint Venture adopted the new name of the “Braveheart
Joint Venture” and entered into a new joint venture operating agreement on 21
October 2009 and confirmed the appointment of Hawkestone Oil Pty Ltd (a
subsidiary of Exoil Limited) as operator.





The
participants had previously farmed out a further 12.5% interest in the
Braveheart Permits to Gascorp Australia Pty Ltd in return for that company
meeting all of the costs for the planning services of Australian Drilling
Associates Pty Ltd in the lead up to drilling Braveheart-1.














These two
permits are held by the Braveheart Joint Venture, consisting of the following
parties:




Moby Oil & Gas
      Limited
            26.4375%Braveheart
      Resources Pty Ltd
              (subsidiary
      of Exoil Limited)
            25.3750%Browse
      Petroleum Pty Ltd
              (subsidiary
      of Gascorp Australia Pty Ltd)
            20.1875%Braveheart
      Oil & Gas Pty Ltd
              (subsidiary
      of Australian Oil & Gas Corporation)
            14.5000%Braveheart
      Energy Pty Ltd
              (subsidiary
      of Goldsborough Limited)
            7.2500%Braveheart
      Petroleum Pty
      Ltd
              (subsidiary
      of Batavia Oil & Gas Pty Ltd)
            6.2500%




The
Operator of the Braveheart Joint Venture is Hawkestone.





Between
the December 29, 2009 and (post the end of the year) the January 18, 2010, the
Braveheart-1 exploration well was drilled into the Braveheart Prospect by the
Songa Venus semi-submersible rig from a location within WA-333-P.  The
Braveheart Prospect straddled the two permits.





During
the course of drilling operations on January 13, 2010, the well penetrated the
targeted Lower M.australis sandstone.  After the conduct and analysis
of wireline logging operations, it was established that the targeted sandstone
interval extended over a gross interval of 30 metres.  Within that
gross sandstone interval there were net porous sands of 22.7 metres, estimated
as having an average total porosity of 28.7% - see figure below entitled
“M.australis sandstone interval in Braveheart-1”.





While
there was some evidence of residual hydrocarbons at the top of the reservoir
interval, most of the cleaner sands were water filled.  While this
result was disappointing, the well results have validated the depositional model
relied upon to support the presence of a high quality reservoir interval at the
Braveheart Prospect.


Steps
were taken to complete the conduct of further data gathering actions after which
the well was plugged and abandoned as a dry hole.





Cornea
Joint Venture – WA-342-P





The
Cornea Joint Venture comprises the interests held in WA-342-P, which is adjacent
to WA-332-P and WA-333-P.





On
October 22, 2007, the Joint Venture lodged a request for a variation of the
permit WA-342-P so that, instead of drilling a well in Year-5, the permit would
require geotechnical studies, while Year-6 of the permit would require
reprocessing 1000 kms2 of the existing 3D seismic data set.  Such
variation of the permit has been granted, with Year-6 of the permit commencing
on November 28, 2009.





The joint
venture has carried out extensive studies as to prospectivity of the known
Cornea gas/oil accumulation, where it is postulated that there is scope for
recovery of prospective resources of between 40 million and 90 million barrels
of oil, if our geological concepts and assumptions are
correct.  However, the challenges at Cornea include a low permeability
reservoir with difficult to model production characteristics and the long,
narrow shape of the field.












This permit is held by the Cornea Joint
Venture consisting of the following parties.




Moby Oil & Gas
      Limited
            22.375%Cornea
      Oil & Gas Pty Ltd
              (subsidiary
      of Australian Oil & Gas Corporation)
            17.000%Cornea
      Resource Pty Ltd
              (subsidiary
      of Exoil Limited)
            16.750%Cornea
      Petroleum Pty Ltd
              (subsidiary
      of Batavia Oil & Gas Pty Ltd)
            14.875%Cornea
      Energy Pty Ltd
              (subsidiary
      of Goldsborough Limited)
            8.500%Octanex
      N.L.
            8.000%Coldron
      Pty Ltd
              (subsidiary
      of Gascorp Australia Pty Ltd)
            7.500%Auralandia
      N.L.
            5.000%





The
Operator of the Cornea Joint Venture is Exoil’s wholly-owned subsidiary,
Hawkestone Oil Pty Ltd (“Hawkestone”).





The
Cornea Joint Venture engaged the services of Australian Drilling Associates Pty
Ltd to provide project management services to support the conduct of Cornea-3
appraisal drilling operations and took by assignment a drilling slot in a group
sponsored multi-well program utilising the semi-submersible drilling rig, the
Songa Venus.





Between
the 11th and 28th of December 2009, the Cornea-3 appraisal/exploration well was
drilled into the known Cornea oil and gas accumulation by the Songa Venus
semi-submersible rig





Late on
24 December 2009 the Cornea-3 well penetrated the targeted Middle Albian and
Lower Jamieson Formation B and C sand reservoir interval, 2.2 metres deeper than
predicted, but, as planned, just below the predicted gas oil
contact.  The well was then deepened to penetrate exploration targets
in the Early Albian and Aptian of the Lower Heywood Formation before terminating
at a total depth of 910.6 metres (measured depth below rotary table or
MDRT).  The data obtained while drilling indicated the intersection of
a hydrocarbon bearing column in the Middle Albian, Lower Jamieson
Formation.  The exploration targets in the Lower Heywood Formation did
not contain hydrocarbons.





The
objectives of the Cornea-3 well were to define the location of hydrocarbon
contacts and to obtain data relating to the potential reservoir qualities of the
Middle Albian and Lower Jamieson Formation.





Following
the conclusion of drilling, a series of logs were run, including a Magnetic
Resonance log, as conventional logging tools are unable to resolve the reservoir
properties due to the glauconitic nature of the rocks.  In addition, a
wireline formation tester was run to assess the pressure within the reservoir
and to take fluid samples.





The
results of drilling and logging can be summarised as follows.





1.           An
oil column of 20.4m was intersected between the gas oil contact at 785.6m MDRT
and the free water level (as defined by pressure data) at 806m
MDRT.  The logging has established a clear oil and water gradient – a
significant improvement on the position known before the well was
drilled.  This will better enable the assessment of the aggregate
quantity of hydrocarbons across the greater Cornea feature.












2.           Extensive
efforts were made to sample the oil, but the unconsolidated nature of the
reservoir meant that, on every attempt, the test MDT tools became blocked with
sand preventing fluid sampling.  The failure to recover fluid samples
was somewhat disappointing, but oil samples had been obtained by the previous
operator.




3.           A
considerable number of pressure testing results were obtained which enabled the
establishment of oil and water gradients and hydrocarbon contacts.




4.           The
condition of the hole through the hydrocarbon bearing section was excellent and
enabled the recovery of high quality log data from the Magnetic Resonance
tool.  These data are now being analysed to deduce reservoir porosity,
permeability, water saturation and oil viscosity.





Overall,
the results of Cornea-3 have, for the first time, clearly defined the location
of an oil column.  As already noted, the condition of the hole through
the reservoir section was excellent.  A great deal has been learned
about how future wells can be drilled in the greater Cornea
feature.  This has given the Cornea Joint Venture confidence about the
ability to drill subsequent horizontal wells through the reservoir
section.





Looking
forward, the data obtained from Cornea-3 will enable the Cornea Joint Venture to
formulate a future exploration, appraisal and development strategy now that an
oil column has been proved and that good data relating to the potential
reservoir performance has been obtained.





Following
the logging, Cornea-3 was plugged and abandoned as planned.  The Songa
Venus rig was then towed to the Braveheart-1 location in WA-333-P where that
well was spudded on 29 December 2009 – refer to immediately preceding
section.





BONAPARTE
BASIN INTERESTS, OFFSHORE FROM THE NORTHERN TERRITORY OF AUSTRALIA – NT/P62,
NT/P63, NT/P64, NT/P65, NT/P70, NT/P71, NT/P72 and NT/P73





The Timor
Sea covers a huge area underlain by the Bonaparte sedimentary basin made up of
various geological segments, with potential for new hydrocarbon discoveries. The
region has a long history of exploration activity and discovery and has become a
focus for domestic and international petroleum exploration and development
activities. There have been numerous oil, gas/condensate and gas discoveries to
the north west in the region of the permits, including the Laminaria, Corallina
and Bayu-Undan fields.  The giant gas fields of Greater Sunrise, Evans
Shoal, Caldita and Barossa are to the north and east of the permits. Recent
Plover Formation discoveries have been made in the Heron-2 well and the
Blackwood-1 well, in permit NT/P68 immediately north of NT/P63 and immediately
south of NT/P65.





The Timor
Sea is a major emerging petroleum province, with a developing emphasis in gas
processing for the export market.  Discoveries made over the past few
years are expected to lead to the area providing substantial gas production and
revenue, through value-added gas projects covering a range of gas to liquids
processes and technologies.














National
Gas Consortium - NT/P62, NT/P63, NT/P64, NT/P65, NT/P71 and NT/P72





On April
12, 2006, we completed the acquisition of 100% of Nations Natural Gas Pty Ltd
(Nations). The acquisition of Nations was entered into on September 10, 2004 and
made in order to acquire a 30% interest in the initial four permits of the
National Gas Consortium, being permits, NT/P62, NT/P63, NT/P64 and NT/P65
(“Timor Sea Permits”), located in the Australian sector of the Timor Sea,
offshore from the Northern Territory.





Nations,
on June 15, 2006, agreed to farmout 6% of its 30% interest in each of the Timor
Sea Permits to NGA (leaving Nations with a net 24% interest) in return for the
acquisition and funding by NGA of Nations 30% share of the new Sunshine 2D
seismic survey (887 kms) and Kurrajong 2D seismic survey (3,291 km), which were
acquired in November 2006.





Nations,
on June 16, 2008, agreed to a further farmout of 3% of its 24% interest in each
of the Timor Sea Permits to NGA (leaving Nations with a net 21% interest) in
return for expenditure of AUD$1.6 million by NGA on Joint Venture exploration
costs. The cost of the Company’s share of the Sunshine and Kurrajong surveys was
met entirely by NGA.





On August
8, 2006, Nations, together with the other joint venturers in the National Gas
Consortium, were granted petroleum exploration permits NT/P71 and NT/P72 for an
initial 6-year term.  Permits NT/P71 and NT/P72, which cover a total
area of approximately 17,380 km2 (4,294,772 acres), are located in the
Australian sector of the Timor Sea, and are held by the National Gas Consortium,
which holds the contiguous NT/P62, NT/P63 and NT/P64 permits to the immediate
west.





The
National Gas Consortium then held six permits aggregating approximately 32,255
km2 (7,970,533 acres) namely, NT/P62, NT/P63, NT/P64, NT/P65, NT/ P71 and
NT/P72, all within jurisdiction of Australia.





The
participants in the National Gas Consortium then were:




%National
      Oil & Gas Pty Ltd (Operator)
            24.5Australian
      Natural Gas Pty Ltd
            24.5National
      Gas Australia Pty Ltd
            30.0Nations
      Natural Gas Pty Ltd (AOGCsubsidiary)
            21.0


During
the year the National Gas Consortium relinquished NT/P63 and
NT/P64.





Interests
in the permits NT/P71 and NT/P72 as at the end of the year as per the holdings
shown above for the National Gas Consortium.





Sunshine
Joint Venture and Mimosa Joint Venture – NT/P65 and NT/P62




On May
29, 2009, the members of the National Gas Consortium applied for a variation in
the permits NT/P62 and NT/P65 where the year 5 well obligation in each permit
will be swapped for a seismic interpretation and mapping obligation from year
6.














The
obligation to acquire at least 150 km of new 2D seismic data in NT/P62 was met
through the completion of the Mimosa 2D survey carried out in March,
2009.  Cost of the 2D survey was met by Gascorp Australia Pty Ltd as
its farmin obligation.





The
obligation to acquire at least 200 km of new 2D seismic data in NT/P65 was met
through the completion of the Sunshine Infill 2D survey carried out in March
2009. The cost of the Sunshine survey was met entirely by Gascorp Australia Pty
Ltd as its farmin obligation.





Following
these farmins the interests in each of NT/P62 and NT/P65 are:


%Gascorp
      Australia Pty Ltd
                  12.500National
      Oil & Gas Pty Ltd (Operator)
                  21.4375Australian
      Natural Gas Pty Ltd
                  21.4375National
      Gas Australia Pty Ltd
                  26.2500Nations
      Natural Gas Pty Ltd (AOGC subsidiary)
                  18.3750
 
 Crocodile
Joint Venture - Eastern Bonaparte Basin - NT/P70




On
October 10, 2005, the Australian Government granted petroleum exploration permit
NT/P70, for a 6-year term. The Company initially held a 100% interest in the
permit and now holds an 80% interest as the result of farmout (see
below).





NT/P70
covers an area of 7,370 km2 (1,821,200 acres) and is located in the eastern
Timor Sea, about 300 km north of Darwin, and 250 km northeast of the proposed
Darwin to Bayu-Undan gas pipeline. The Greater Sunrise, Evans Shoal, Barossa and
Caldita gas accumulations are located to the west and southwest of the NT/P70
permit area.





There
have been no wells drilled in the permit.





AOGC
agreed on June 15, 2006, to farmout 20% of its 100% interest in NT/P70 to NGA in
return for the acquisition and funding by NGA of the cost of acquisition of a
new 800 line km Crocodile 2D seismic survey in the NT/P70 permit. Subsequently
AOGC has agreed to transfer it’s 80% interest to it’s wholly owned subsidiary,
Alpha Oil & Natural Gas Pty Ltd.



















In NT/P70
we have obtained a range of pertinent existing reports and open file seismic
data and, together with the Crocodile 2D seismic data, have mapped, interpreted
and revised analyses and concepts for the area.  We have decided not
to acquire 300 km2 of new 3D seismic survey as, from the seismic data we
acquired, we have been unable to confirm our initial perceptions of the
viability of either the Crocodile feature or the Warawi feature which have been
the major focus of our work in NT/P70.  They are the only features
that we have identified as having any merit.





The
NT/P70 permit had previously been offered for farmout, with a number of
international companies having considered the acreage without any proposal
having been received.




The
NT/P70 permit was relinquished during the year.







Stillwater
Joint Venture - NT/P73





On March
27, 2007, the Australian Government granted our subsidiary, Alpha, a petroleum
exploration permit, NT/P73, for an initial 6-year term.  NT/P73 covers
an area of 6,815 km2 (1,683,300 acres). The Barossa and Caldita gas
accumulations are located to the west of the NT/P73 permit area.





In the
first three years of the initial 6-year term of the NT/P73 permit we plan to
obtain existing reports and open file seismic data and, with this data, to map,
interpret and revise analyses and concepts for the area.  We are
required to acquire up to 2,000 line km of 2D in the third year of the
permit.  Should we so decide, we can elect to enter the second three
years of the initial permit term and drill one exploration well and perform
further interpretational work. There have been no wells drilled in the permit
area.





Our work
to date has focused on the Stillwater feature of the NW corner of
NT/P73.  We reached agreement with ConocoPhillips with respect to our
right to approximately 200 kms2 of 3D data acquired by ConocoPhillips in the NW
corner of our NT/P73, most of which covers the highly interesting Stillwater
feature, which sits en enchelon with the Caldita feature, located in the
adjacent permit held by ConocoPhillips and Santos.  This data has been
expressed in 2D format, exceeding 2000 line kms, thus meeting our third
permit-year obligation.





On April
3, 2009 the company’s Australian subsidiary, Alpha Oil and Natural Gas Pty Ltd,
sold “information” in the NT/P73 exploration permit to Gascorp Australia Pty Ltd
(Gascorp) for $249,935 (AUD$350,000).  That information has been used
by Gascorp to investigate a proposal to take up to a 35% interest in the
permit.  Gascorp Australia Pty Ltd is an affiliate company of Mr. EG
Albers.

















Gascorp
had previously advised that it would take up this 35% interest and is in the
process of entering into a formal arrangement to do so.





The
NT/P73 permit has been offered for farmout.








ITEM
3.  LEGAL PROCEEDINGS





None





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





No matter was
submitted to a vote of security holders during the period covered by this
report.


















PART
II





ITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASERS OF EQUITY SECURITIES





Market
Information





Our common
stock is not traded on an exchange but is quoted on the OTC Bulletin Board under
the trading symbol “AOGC.OB”. The prices set forth below reflect the quarterly
high and low bid prices for shares of common stock for the past two
years.  These quotations reflect inter-dealer prices, without retail
markup, markdown or commission, and may not represent actual
transactions.




Period
            High Sale or
      Bid
            Low Sale or
      Bid1st
      Quarter 2008
            $0.08
            $0.042nd
      Quarter 2008
            $0.06
            $0.043rd
      Quarter 2008
            $0.11
            $0.054th
      Quarter 2008
            $0.13
            $0.021st
      Quarter 2009
            $0.10
            $0.052nd
      Quarter 2009
            $0.06
            $0.043rd
      Quarter 2009
            $0.20
            $0.054th
      Quarter 2009
            $0.10
            $0.04




As at
December 31, 2009, there were 4 market makers in our common
stock.





As at
December 31, 2009, there were approximately 212 holders of record of our common
stock.





The Company
has not paid any cash dividends on its common stock and does not anticipate
paying cash dividends in the foreseeable future. We intend to retain any
earnings to finance the growth of the business. There can be no assurance that
we will ever pay cash dividends.





Recent Sales of Unregistered
Securities





During the
past two years, without registering the securities under the Securities Act of
1933, the Company has issued following securities:





On January
18, 2008, 1,500,000 shares of common stock were issued to Mr EG Albers under the
terms of his employment contract pursuant to Section 4(2) of the Securities Act,
filed as an exhibit to the 2006 Form 10-KSB.





On June 24,
2008, 3,650,000 shares of common stock were issued to Great Missenden Holdings
Pty Ltd resulting from conversion of Unsecured Notes held by that
company.











On March 26,
2009, 2,400,000 shares of common stock were issued to Mr EG Albers under the
terms of his employment contract pursuant to Section 4(2) of the Securities Act,
filed as an exhibit to the 2008 Form 10-K.





On December
23, 2009, 2,200,000 shares of common stock were issued to Mr EG Albers under the
terms of his employment contract pursuant to Section 4(2) of the Securities Act,
filed as an exhibit to this 2009 Form 10-K.





Share Repurchase
Program





The Company does not maintain any stock
repurchase program involving purchases of the Company’s common stock by or on
behalf of the Company that would require disclosure under Item 703 of the
Regulation S-B.





ITEM
6.  SELECTED FINANCIAL DATA





The
information set forth below is only a summary, is not necessarily indicative of
results of future operations and should be read in conjunction with Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes to Consolidated
Financial Statements.





We derived
our historical information from our audited financial statements as of December
31, 2005, 2006, 2007, 2008 and 2009. The historical results included below and
elsewhere in this document are not indicative of our future performance.






Years
      Ended December 31,2005
            
            
            2006
            
            
            2007
            
            
            2008
            
            
            2009Operating
      revenues
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Interest
      expense
            
            
            21
            
            
            
            341
            
            
            
            29
            
            
            
            17
            
            
            
            8Net income
      (loss)
            
            
            (606
            )
            
            
            592
            
            
            
            (815
            )
            
            
            (389
            )
            
            
            (491
            )Net income (loss)
      per share (1)
            
            
            (0.01
            )
            
            
            0.02
            
            
            
            (0.02
            )
            
            
            (0.01
            )
            
            
            (0.01
            )Total
    assets
            
            
            92
            
            
            
            737
            
            
            
            484
            
            
            
            9
            
            
            
            2,974Long-term
      debt
            
            
            250
            
            
            
            276
            
            
            
            305
            
            
            
            -
            
            
            
            206





(1)  Basic
and fully diluted loss per share is based on the weighted average number of
shares of our common stock outstanding during each year: 27,369,021 in 2005 and
33,212,561 in 2006 and 36,467,152 in 2007 and 40,052,317 in 2008 and 44,281,575in 2009). NOTE: Basic
and diluted


earnings
per share are the same in loss years.





ITEM
7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.





General





Australian
Oil & Gas Corporation is an independent energy company focused on
exploration and development of oil and natural gas reserves.  Our core
business is directed at the acquisition of interests in oil and gas prospects in
the off-shore areas in Australia’s territorial waters.  Since August
2003, when current management began operating the company, we have not conducted
any substantive revenue generating business operations. Management has
identified opportunities in oil and gas exploration in Australia, has acquired
permits authorizing the exploration for petroleum, has carried out geological
and geophysical programs, including the acquisition of seismic
data.  It has not yet made any decision as to the company’s future
operations other than as disclosed elsewhere herein.














We rely
on the considerable experience in the oil and gas industry of our President,
Mr.E.G.Albers, and our consultants to identify and conduct initial geological
analyses of properties in which we acquire an interest.  We have
devoted essentially all of our resources to the identification and acquisition
of large - tract oil and gas properties and seek to keep our overhead at a
minimum level through the retention of carefully selected consultants,
contractors and service companies.  We use proven modern technologies
to evaluate properties and prospects.  Generally, we expect to invest
in projects at different percentage levels of participation, with our intention
being to spread risk and to reduce the Company’s financial commitments through
either farmout or sale.





To date,
together with certain other affiliated joint venturers, the Australian
authorities have awarded us interests in 11 Petroleum Exploration
Permits.





Liquidity
and Capital Resources





The
following table reflects our working capital position at December 31, 2008 and
2009:


2008
              
              
              2009Current
      assets
              
              $
              9
              
              
              $
              6Current
      liabilities
              
              $
              392
              
              
              $
              3,478Working
      capital
              
              $
              (383
              )
              
              $
              (3,472
              )Current
      ratio
              
              
              0.02
              
              
              
              0.002




In order to fund on-going
administration and the cost of acquisition of interests, the Company has
previously largely relied on infusions of cash through the advances of Great
Missenden Holdings Pty Ltd, an affiliated company associated with our President,
Mr.E.Geoffrey Albers.  To date, we have also relied upon farmins from
National Gas Australia Pty Ltd and Gascorp Australia Pty Ltd (both affiliated
companies associated with Mr Albers) by way of farmout to fund a significant
proportion of our preliminary seismic and associated
obligations.  When we require further funds, it is our intention that
the additional funds would be raised in a manner deemed most expedient by the
Board of Directors at the time, taking into account budgets, the interest of
industry in co-participation in our programs, stock market and oil and gas
market conditions.  When additional funds for exploration are
required, our strategy to meet our obligations by either partial sale of our
interests or farm out, the latter course of action being a vital part of
managements overall strategy.  We would also look to further issues of
stock or the promotion of new companies formed for the purpose of funding
exploration within our permit interests.  Should funds be required for
appraisal or development purposes we would, in addition, look to project loan
finance.





Our cash
requirements for the next 12 months to support the operations are currently
assessed to be approximately $275,000. This figure includes office
administration of $75,000, and payments of approximately $200,000 for future
exploration.  The Company has sufficient liquid capital to support its
operations during the next twelve months.











In addition,
if the Company is to maintain its remaining portfolio of tenement interests then
it will have to make future binding commitments to carry out specified work
programs in order to meet permit terms.  We may also elect to carry
out exploration over and above our minimum permit commitments or enter into new
projects with expenditure obligations.





Expenditure
commitments include obligations arising from the minimum work obligations for
the initial 3 year period of exploration permits and thereafter commitments made
annually.  Minimum work obligations, may, subject to negotiation and
approval, be varied or suspended or extended.  They may also be
satisfied by farmout, sale, relinquishment or surrender of a
permit.





However, if
the Company requires further funds, the Company can seek the farmout or sale of
permit interests, or the sponsorship of new companies for this purpose, or
through the sale of additional shares of our common stock.





On February
17, 2009 the Company signed a Line of Credit agreement with Great Missenden
Holdings Pty Ltd, for $250,000 of which $200,000 has been drawn
down.





On February
18, 2010 AOGC’s wholly owned subsidiary, Vulcan Australia Pty Ltd (“Vulcan”)
completed the sale of its 7.5% interest in AC/P33 to a wholly-owned subsidiary
of PTT Exploration and Production Public Company Limited, a major Thailand
petroleum exploration and production company. Vulcan recovered $ 4,244,679 for
its 7.5% interest. These proceeds will be utilized in meeting a large proportion
of our obligations to the Braveheart Joint Venture and Cornea Joint Venture with
respect to the costs associated with the recent drilling of the Braveheart-1
well and Cornea-3 well.





Contractual
Obligations and Off-Balance Sheet Arrangements





We have
no off-balance sheet arrangements, as defined by Item 303 of Regulation S-K
under the Securities Act.





Critical
Accounting Policies





Management
has identified the accounting policies described below as critical to our
business operations and the understanding of the results of operations. The
impact and any associated risks related to these policies on our business
operations are discussed throughout this section where such policies affect our
reported and expected financial results. The preparation of this Annual Report
requires us to make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses of the Company during the
reporting period and contingent assets and liabilities as of the date of our
financial statements. There can be no assurance that the actual results will not
differ from those estimates.





Undeveloped
oil and gas properties:





We
utilize the “successful efforts” method of accounting for undeveloped mineral
interests and oil and gas properties.  Costs of carrying and retaining
undeveloped properties are to be charged to expense when
incurred.  Capitalized costs are to be charged to operations at the
time the Company determines that no economic reserves exist. Proceeds from the
sale of undeveloped properties are to be treated as a recovery of
cost.  Proceeds in excess of the capitalized cost realized from the
sale of any such properties, if any, are to be recognized as gain to the extent
of the excess.











Recent
Accounting Pronouncements




In May
2009, the FASB issued guidance now codified as FASB ASC Topic 855, “Subsequent
Events” which establishes general standards of accounting for, and the
disclosures of, events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. This
pronouncement is effective for interim or fiscal periods ending after June 15,
2009. Accordingly, the Company adopted the provisions of FASB ASC Topic 855 on
March 29, 2009. The adoption of this pronouncement did not have a material
impact on our consolidated financial position, results of operations or cash
flows. However, the provisions of FASB ASC Topic 855 resulted in additional
disclosures with respect to subsequent events. See Note 12, Subsequent Events,
for this additional disclosure.




In June
2009, the FASB issued guidance now codified as FASB ASC Topic 105, “Generally
Accepted Accounting Principles” as the single source of authoritative
nongovernment U.S. GAAP. FASB ASC Topic 105 does not change current U.S. GAAP,
but is intended to simplify access to all authoritative U.S. GAAP by providing
all authoritative literature related to a particular topic in one place. All
existing accounting standard documents will be superseded and all other
accounting literature not included in the FASB Codification will be considered
non-authoritative. These provisions of FASB ASC Topic 105 are effective for
interim and annual reporting periods ended September 15, 2009 and, accordingly,
are effective for the Company for the current fiscal reporting period. The
adoption of this pronouncement did not have an impact of the Company’s financial
condition or results of operations, but will impact our financial reporting
process by elimination all references to pre-codification standards. On the
effective date of this Statement, the Codification superseded all then-existing
non-SEC accounting and reporting standards, and all other non-grandfathered
non-SEC accounting literature not included in the Codification became
non-authoritative.




On
December 21, 2008 the SEC published the final rules and interpretations updating
its oil and gas reporting requirements. Many of the revisions are updates in the
existing oil and gas rules to make them consistent with the petroleum resource
management system, which is a widely accepted standard for the management of
petroleum resources that was developed by several industry organizations. Key
revisions include the ability to include nontraditional resources in reserves,
the use of new technology for determining reserves, permitting disclosure of
probable and possible reserves, and changes to the pricing to determine reserves
in that companies must use a 12-month average price. The average is calculated
using the first-day-of-the-month price for each of the 12 months that make up
the reporting period. The SEC will require companies to comply with the amended
disclosure requirements for registration statements filed after January 1, 2010,
and for annual reports for fiscal years ending on or after December 15, 2009.
The adoption of this rules had no impact on the Company’s financial
statements.





















ITEM
7A.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Not
applicable.





ITEM
8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





See Item
15 (a) for an index to the Consolidated Financial Statements and supplementary
financial information, which are attached hereto and incorporated by
reference herein.




ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE


Not
applicable.




ITEM
9A   CONTROLS AND PROCEDURES





As required
by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”),
we carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2009. This evaluation
was carried out under the supervision and with the participation of our
President and Chief Financial Officer. Based upon that evaluation, our President
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective as of such
date.





As used herein,
"disclosure controls and procedures" meanscontrols and other procedures
of ours that are designed to ensure that information required to be disclosed by
us in the reports we file or submit under the Securities Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports we file
under the Securities Exchange Act is accumulated and communicated to our
management, including our President and Chief Financial Officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.





Internal
Controls





Since the
date of the evaluation described above, there were no significant changes in our
internal control or in other factors that could significantly affect these
controls, and there were no corrective actions with regard to significant
deficiencies and material weaknesses.





Management’s
Report on Internal Control over Financial Reporting





The
management of Australian Oil and Gas Corporation (“the Company”) is responsible
for (1) the preparation of the accompanying financial statements; (2)
establishing and maintaining internal controls over financial reporting; and (3)
the assessment of the effectiveness of internal control over financial
reporting. The Securities and Exchange Commission defines effective internal
control over financial reporting as a process designed under the supervision of
the company’s principal executive officer and principal financial officer, and
implemented in conjunction with management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with generally accepted
accounting principles.









All internal
control systems, no matter how well designed, have inherent limitations
and  provide only reasonable assurance that the objectives of the
control system are met, Therefore, no evaluation of controls can provide
absolute assurance that all control issues and misstatements due to error or
fraud, if any, within the company have been detected. Additionally, any system
of controls is subject to risk that controls may become inadequate due to
changes in conditions or that compliance with policies or procedures mat
deteriorate. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because
changes in conditions or that compliance with the policies or procedures may
deteriorate.


As of
December 31, 2009, management of the Company conducted as assessment of the
effectiveness of the company’s internal control over financial reporting based
on criteria established in the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. From this assessment, management has concluded that the company’s
internal control over financial reporting was effective as of December 31,
2009.





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











/s/ E. Geoffrey
Albers


E.
Geoffrey Albers,


Chief
Executive Officer and


Chief
Financial Officer


(Principal
Executive and Financial Officer)








ITEM
9B   OTHER INFORMATION.





Not
applicable













PART
III







ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.




Set forth
below are the names of each of the executive officers of the Registrant and the
position held:






Name
            
            Age
            
            PositionErnest Geoffrey
      Albers
            
            65
            
            President, Treasurer
      and DirectorWilliam Ray
      Hill
            
            59
            
            Director, Vice
      PresidentMark Anthony
      Muzzin
            
            47
            
            Director, Vice
      President





Ernest
Geoffrey Albers has been our President and Treasurer and a director since August
2003.  Mr. Albers is a company director with over 30 years experience
as a lawyer and administrator in Australian corporate law, petroleum exploration
and resource sector investment.  During this period Mr Albers has
sponsored the formation of companies that have made the original Maari (Moki)
oilfield discovery and development in New Zealand, the Yolla Gas/Condensate
discovery in Bass Strait, the Evans Shoal gasfield discovery/ appraisal in the
Timor Sea, the Oyong and Wortel gas/oil discoveries in Indonesia and the SE Gobe
oilfield development in Papua New Guinea. He is a director of Australian
publicly listed companies; Octanex N.L., Moby Oil & Gas Limited and Exoil
Limited.  He is a member of the Petroleum Exploration Society of
Australia and a Fellow of the Institute of Directors in Australia.





W. Ray Hill
has been a director of the Company since August 2003.  Mr. Hill
founded Rocky Mountain Minerals, Inc. in 1978 and is currently a director. Mr.
Hill is President and Director of The Zonia Company, an Arizona real estate
development company.  Mr. Hill is the founder and President of Geowest
Corporation, which is involved in the development and operation of a solid waste
construction and demolition landfill.  In 1988 Mr. Hill founded
Citizens Recycle & Collection, a solid waste hauling and Transfer Company,
which was acquired by Waste Management, Inc. in 1996.





Mark A Muzzin
was appointed a director of the Company on November 16, 2005. Mr Muzzin has had
over 20 years of commercial experience and holds a B.A. degree from Latrobe
University, Melbourne, Australia.  His career commenced in the mid
eighties for a London stock broking firm and has consulted for two of the major
banks in Australia in the share custodian area. He has been involved in capital
raising activities for resource companies in Australia and is a consultant for
various oil and gas companies.  He is President of Rocky Mountain
Minerals, Inc, Strategic Energy Resources Ltd and is a director in a number of
Australian private companies. Mr Muzzin is a member of the Petroleum Exploration
Society of Australia.














Board/Committee
Matters


The Company
does not currently maintain separate standing committees, including an Audit,
Nominating or Compensation Committee, of the Board of Directors, because of the
small size of the Board and of the Company.  As a result, the entire
Board of Directors acts as these Committees for the purpose of overseeing these
functions, including the Company’s accounting and financial reporting processes,
and the audits of the financial statements by our independent registered public
accounting firm.





Board
Attendance


The Board of
Directors met five times during the year ended December 31,
2009.  During 2009, each of the directors attended at least 100% of
the total number of meetings of the Board of Directors.  It is the
Company’s policy that, absent unusual or unforeseen circumstances, all of the
directors are expected to attend annual meetings of stockholders.





Audit Committee Financial
Expert


We do not
have an audit committee financial expert serving on our Board of Directors
because no current member of the Board has the requisite experience and
education to qualify as an audit committee financial expert as defined in Item
401 of Regulation S-B and because we are a start up oil and gas exploration
company with limited revenues to date.  However, in the future, the
current members of the Board intend to consider such qualifications in making
future nominations of persons to join our Board of Directors.





Report of the Board, Acting
as the Audit Committee


The Board of
Directors, acting as the Audit Committee, has prepared the following report for
inclusion in this Annual Report.  The Board has the responsibility for
reviewing the Company’s accounting practices, internal accounting controls and
financial results and is responsible for the engagement of the Company’s
independent auditors.  The Board met five times in 2009 and has
reviewed and discussed the audited financial statements with the Company’s
management.





The Board has
discussed with the independent auditors the matters required to be discussed by
SAS 114 (Codification of Statements on Auditing Standards, AU Section 380), as
may be modified or supplemented.





The Board has
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as may be modified or supplemented, and has
discussed with the independent auditors the independent auditors’
independence.





Based on the
review and discussions referred to in the foregoing three paragraphs, the Board
of Directors determined that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2009 for
filing with the Securities and Exchange Commission.





E. Geoffrey Albers


Mark A. Muzzin


W. Ray Hill











Dated:  March
31, 2010





THIS
REPORT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED TO BE FILED UNDER SUCH ACTS.












Code of
Ethics





The Board of
Directors on March 28, 2007, adopted a code of ethics for the Company’s
principal executive, financial and accounting officers. (See Exhibit 21 to the
2006 10KSB).





The Code has
created written standards that require accountability for adherence to the code
and have been designed to deter wrongdoing and to promote honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships.  The code
requires full, fair, accurate, timely, and understandable disclosure in reports
and documents that the Company files with, or submits to, the Commission and in
other public communications.  The code includes requirements for
compliance with applicable governmental laws, rules and regulations and the
prompt internal reporting of violations of the code to an appropriate person or
persons identified in the code.





The Company
will provide to any person without charge, upon request, a copy of such code of
ethics.  The Code is available by written request to the Company at
its address Level 21, 500 Collins Street, Melbourne, Victoria, Australia or by
email to admin@ausoil.com.





Section 16(A) Beneficial
Ownership Reporting Compliance





Section 16(a)
of the Securities Act of 1934 requires our officers and directors, and greater
than 10% stockholders, to file reports of ownership and changes in ownership of
our securities with the Securities and Exchange Commission.  Copies of
the reports are required by SEC regulation to be furnished to us.





Based solely
upon a review of Forms 3 and 4 furnished to the Company, the Company is not
aware of any director, officer, or beneficial owner of more than ten percent of
the Common Stock of the Company, who failed to file, on a timely basis, reports
required by Section 16(a) of the Securities Exchange Act of 1934.





ITEM
11.   EXECUTIVE COMPENSATION





Compensation
awarded to, earned by, or paid to our sole executive officer whose compensation
exceeded $100,000.


























Summary
Compensation Table for 2009




Nae and Principal
      Position
            Year
            Salary
              ($)
            
            Stock
      Awards
              ($) *
            
            
            Total
              ($)E.G.
      Albers
            2009
            NIL
            
            $
            88,000
            
            
            $
            88,000(CEO)
      President
      and Treasurer
            2008
            NIL
            
            $
            127,000
            
            
            $
            127,000




*   This
amount is the grant date fair value of the shares issued.





All other
tables regarding executive officer compensation have been omitted as
inapplicable.





Our
directors are not compensated for their service on the Board.





Compensation
Committee Interlocks and Insider Participation





We
have no compensation committee or another board committee performing equivalent
functions. Each of the current members of the Board, being Messrs. Albers,
Muzzin and Hill has participated in deliberations of the Board concerning
executive officer compensation.





Compensation
Committee Report





Given
that no compensation has been paid to our directors and executive officers in
our 2009 fiscal year, our Board of Directors has not reviewed or discussed the
Compensation Discussion and Analysis set forth in Item 402(b) of Regulation S-K
under the Securities Act with management; and has not recommended that such
Compensation Discussion and Analysis be included in our Annual Report or proxy
statement. This disclosure is being made by all members of our Board, being
Messrs. Geoffrey Albers, Mark Muzzin, and William Ray Hill.





ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





The following table sets forth, as of
December 31, 2009, certain information with respect to the beneficial ownership
of shares of common stock by (i) any officer of our company, (ii) each director
of our company, (iii) each person known to us to be the beneficial owner of more
than 5 percent of our outstanding shares of common stock, and (iv) our directors
and executive officers as a group.





Beneficial Owner
            
            Number
              of Shares(1)
            
            
            Percent of
              Class(2)Ernest
      Geoffrey Albers (3)
            
            
            33,311,782
            
            
            
            72.97William
      Ray Hill
            
            
            100,000
            
            
            
            0.22Mark
      Anthony Muzzin
            
            
            0
            
            
            
            0All
      executive officers and directors as a group (3 persons)
            
            
            28,811,782
            
            
            
            73.19
            %


















(1)
            The
      number of shares and the percentage of the class beneficially owned by the
      entities above are determined under rules promulgated by the SEC and the
      information is not necessarily indicative of beneficial ownership for any
      other purpose. Under such rules, beneficial ownership includes any shares
      as to which the individual has sole or shared voting power or investment
      power and also any shares which the individual has the right to acquire
      within 60 days through the exercise of any stock option or other right.
      The inclusion herein of such shares, however, does not constitute an
      admission that the named stockholder is a direct or indirect beneficial
      owner of such shares. Unless otherwise indicated, each person or entity
      named in the table has sole voting power and investment power (or shares
      such power with his or her spouse) with respect to all shares of capital
      stock listed as beneficially owned by such person or
    entity.





(2)
            Percentages
      are based upon the total 45,650,531outstanding
      shares of Common Stock at December 31, 2009, combined with the number of
      shares of Common Stock beneficially owned by each person or
      entity.


(3)
              Includes
      shares of common stock registered in the names of Mr. Albers’ family
      members and affiliates.




ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.




Set forth
below is information regarding transactions involving the Company and executive
officers, directors and significant shareholders of the Company during the most
recent fiscal year and for the prior fiscal year.





Some of
our directors and officers are engaged in various aspects of oil and gas
exploration and development for their own account and through other entities in
which they are directors and or shareholders. Furthermore, as described in this
Item 13, certain of our directors and officers are involved in transactions with
the Company. We have no policy prohibiting, nor does our Certificate of
Incorporation prohibit, transactions between the Company and our officers and
directors. We may enter into cost-sharing arrangements with respect to
geological investigations, seismic acquisition and drilling of our
properties.  Directors and officers may participate, from time to
time, in these arrangements and such transactions may be on a non-promoted basis
(actual costs), or on a promoted basis, but must be approved by a majority of
the disinterested directors of the Board of Directors.





With respect to Mr E.G.
Albers, President, Treasurer and a director of AOGC and each of its
subsidiaries including Alpha, Nations, Vulcan ,Braveheart and Cornea,
transactions were entered into, in relation to:





*           Great Missenden Holdings Pty
Ltd:Mr.
Albers is a director and shareholder of Great Missenden Holdings Pty
Ltd.




For the
year ended December 31, 2009, and the year ended December 31, 2008, respectively
Great Missenden Holdings Pty Ltd charged $8,101 and $17,067 for interest on all
advances during the year.
















*           Setright Oil & Gas Pty
Ltd:  Mr Albers is a director and shareholder of Setright Oil
& Gas Pty Ltd.   For the year ended December 31, 2009, and
the year ended December 31, 2008, respectively, Setright Oil & Gas Pty Ltd
charged the Company $15,372 and $54,951 for the provision of accounting and
administrative services rendered by third parties for the benefit of the
Company, but not including services rendered by Mr. E Geoffrey Albers, who is
remunerated separately by way of the issue of shares of common
stock.  AOGC’s subsidiaries have the use of premises in Australia at
Level 21, 500 Collins Street, Melbourne, Victoria.  The office space
is taken on a nonexclusive basis, with no rent payable, but the usage of the
premises is included in the charges Setright Oil & Gas Pty Ltd makes in
respect to the administration of the Company.





*           Oliver, Vulcan and Nome
Joint Ventures: Mr. Albers is a director and shareholder in the
joint venture participants with Vulcan Australia Pty Ltd (Vulcan) with regard to
exploration permit ACP/33, ACP/35 and AC/P39; namely Petrocorp Australia Pty
Ltd, Natural Gas Corporation Pty Ltd and Auralandia N.L.  Mr Muzzin is
a shareholder in Auralandia N.L. As a result of incurring expenditures, the
predecessor in title to Petrocorp Australia Pty Ltd earned an aggregate 25%
interest in each of AC/P33, AC/P35 and AC/P39 (Vulcan Joint Venture), 5% of
which was earned from AOGC subsidiary, Alpha (predecessor in title to
Vulcan).





*           Braveheart Joint
Venture:  With regard to the Braveheart Joint Venture, Mr.
Albers is a director and shareholder in each of Browse Petroleum Pty Ltd,
Braveheart Petroleum Pty Ltd, Moby Oil & Gas Limited, Braveheart Energy Pty
Ltd and Exoil Limited, the parent of Braveheart Resources Pty Ltd. He is a major
shareholder in the parent of Braveheart Energy Pty Ltd.  All of these
companies are the holders of the Braveheart Joint Venture.





*           Cornea Joint
Venture:  With regard to the Cornea Joint Venture, Mr. Albers
is a director and shareholder in each of Coldron Pty Ltd, Cornea Petroleum Pty
Ltd, Moby Oil & Gas Limited, Auralandia NL, Cornea Energy Pty Ltd, Octanex
NL and Exoil Limited, the parent of Cornea Resources Pty Ltd. All of these
companies are the holders of the Cornea Joint Venture.





*           National Gas
Consortium.With regard to the
National Gas Consortium, Mr. Albers is a director and shareholder in each of
National Oil & Gas Pty Ltd, Australian Natural Gas Pty Ltd and Natural Gas
Australia Pty Ltd. Expenditure incurred by National Gas Australia Pty Ltd has
resulted in National Gas Australia Pty Ltd earning an aggregate 30% interest in
each of NT/P62, NT/P63, NT/P64, NT/P65, NT/P71 and NT/P72, (National Gas
Consortium), of which 9% was earned from Nations.





*           NT/P70 Joint
Venture.  With regard to the NT/P70 Joint Venture, Mr Albers is
a director and shareholder in National Gas Australia Pty
Ltd.  Expenditure incurred during a prior period by National Gas
Australia Pty Ltd (in which Mr E.G. Albers is the sole shareholder and sole
director) in relation to the acquisition of the 795 line km Crocodile 2D Seismic
Survey is in the order of $950,000.  As a result of this expenditure,
National Gas Australia Pty Ltd earned a 20% interest in NT/P70 from
AOGC.





*           NT/P73 Stillwater Joint
Venture.  With regard to the Stillwater Joint Venture, Mr
Albers is a director and shareholder in Gascorp Australia Pty Ltd which has
earned a 35% interest in NT/P73 in return for expending $249,935.













Mr. Mark A Muzzin, a
director and Vice-President of AOGC is a shareholder in Exoil Limited, the
parent of Braveheart Resources Pty Ltd and Cornea Resources Pty
Ltd.







ITEM
14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES




(a)           Audit
Fees




Our
principal accountant, Demetrius & Company L.L.C., billed us aggregate fees
in the amounts of approximately $34,100 and $34,600 respectively for the fiscal
years ended 2009 and 2008.  These amounts were billed for professional
services that Demetrius & Company, L.L.C. provided for the audit of our
annual financial statements, review of the financial statements included in our
report on 10-Q and other services typically provided by an accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.




(b)
            Audit
      – Related Fees




There
were no fees billed to us for the fiscal year ended December 31, 2009 for
assurance and other services related to the performance of the audit or review
of our financial statements.




(c)
            Tax
      Fees




We paid
$3,400 in tax fees for the fiscal year ended December 31, 2009 for tax
compliance, tax advice, and tax planning.  For the year ended December
31, 2008, $3,800 was paid for tax compliance, tax advice and tax
planning.




(d)
            All
      Other Fees




Fees of
$650 were billed to us for the dissolution of the two dormant US subsidiary
companies during the fiscal year ended December 31, 2009. No other fees were
paid for the year ended December 31, 2008.




(e)
            Audit
      Committee’s Pre-Approval Practice




Inasmuch
as the Company does not have an audit committee, its Board of Directors performs
the functions of its audit committee. Section 10A(i) of the Securities Exchange
act of 1934 prohibits our auditors from performing audit services for us as well
as any services not considered to be “audit services” unless such services are
pre-approved by the board of directors (in lieu of the audit committee) or
unless the services meet certain de minimis standards.





The board
of directors has adopted resolutions that provide that the board
must:





Preapprove
all audit services that the auditor may provide to us or any subsidiary
(including, without limitation, providing comfort letters in connection with
securities underwritings or statutory audits) as required by Section 10A(i) (1)
(A) of the Securities Exchange Act of 1934 (as amended by the Sarbanes-Oxley Act
of 2002).





Preapprove
all non-audit services (other than certain de-minimis services described in
Section 10A(i) (1) (B) of the Securities Exchange act of 1934 (as amended by the
Sarbanes-Oxley Act of 2002) that the auditors propose to provide to us or any of
its subsidiaries.












The board of directors considers at
each of its meetings whether to approve any audit services or non-audit
services. In some cases, management may present the request; in other cases, the
auditors may present the request. The board of directors has approved Demetrius
& Company LLC performing our audit for the 2008 and 2009 fiscal
years.





The
percentage of the fees for audit, audit-related, tax and other services were as
set forth in the following table:





Percentage
of total fees paid to Demetrius & Company LLC


Fiscal
Year 2009




Audit fees
            89%Audit-related
      fees
            NilTax fees
            9%All other
    fees
            2%1



























PART
IV





ITEM
15                      EXHIBITS,
FINANCIAL STATEMENT SCHEDULES





a)





1.   Index
to Consolidated Financial Statements





The
following Consolidated Financial Statements are filed as part of this annual
report on Form 10-K:




Report of
      Independent Registered Public Accounting Firm
            F-2Consolidated Balance
      Sheets-December 31, 2009 and 2008
            F-3Consolidated
      Statements of Operations--Years Ended December
      31, 2009 and 2008
            F-4Consolidated
      Statements of Stockholders' Equity—From inception(August
      6, 2003) through to December 31, 2009
            F-5Consolidated
      Statements of Cash Flows--Years endedDecember
      31, 2009, 2009 and 2008
            F-7Notes to
      Consolidated Financial Statements
            F-8 -
      F-13








2.   Financial
Statement Schedules





Financial
statement schedules have been omitted because they are either not required,
not applicable or the information required to be set forth therein is included
in the Consolidated Financial  Statements hereto.





3.   Exhibits


Exhibit
                Number
              Description3.1
              Certificate
      of Incorporation of Australian Oil & Gas Corporation (incorporated by
      reference from Exhibit 3.1 to the Company’s annual report on Form 10-K for
      the year ended December 31, 2005).3.2
              By-Laws,
      as amended, of Australian Oil & Gas Corporation (incorporated by
      reference from Exhibit 3.2 to the Company’s annual report on Form 10-K for
      the year ended December 31, 2005).10.1
              Sale
      and Purchase of Shares in Alpha Oil & Natural Gas Pty Ltd, dated as of
      April 12, 2006 (incorporated by reference from Exhibit 10.1 to the
      Company’s current report on Form 8-K dated July 17,
  2006).10.2
              Amending
      Agreement to the Sale and Purchase of Shares in Alpha Oil & Natural
      Gas Pty Ltd, dated as of June 29, 2006 (incorporated by reference from
      Exhibit 10.2 to the Company’s current report on Form 8-K dated July 17,
      2006).  40
  
  10.3
              Sale
      and Purchase of Shares in Nations Natural Gas Pty Ltd, dated as of April
      12, 2006 (incorporated by reference from Exhibit 10.3 to the Company’s
      current report on Form 8-K dated July 17, 2006).10.4
              Amending
      Agreement to the Sale and Purchase of Shares in Nations Natural Gas Pty
      Ltd, dated as of June 29, 2006 (incorporated by reference from Exhibit
      10.4 to the Company’s current report on Form 8-K dated July 17,
      2006).10.5
              Deed
      of Appointment between the Company and E.G. Albers, dated May 4, 2005
      (incorporated by reference from Exhibit 10.3 to the Company’s Annual
      Report on Form 10-KSB for the year ended December 31,
    2005).10.6
              Services
      Agreement between the Company and Setright Oil & Gas Pty. Ltd., dated
      as of May 4, 2005 (incorporated by reference from Exhibit 10.4 to the
      Company’s Annual Report on Form 10-KSB for the year ended December 31,
      2005).10.7
              Agreement
      between the Company and E.G. Albers regarding the Issue of 2,000,000
      Shares, dated January 31, 2007 (incorporated by reference from Exhibit
      10.7 to the Company’s annual report on Form 10-K for the year ended
      December 31, 2006).10.8
              Deed
      of Re-appointment between the Company and E.G. Albers, dated February 17,
      2009 (incorporated by reference from Exhibit 10.8 to the Company’s Annual
      Report on Form 10-K for the year ended December 31,
  2008).10.9
              Agreement
      between the Company and Great Missenden Holdings Pty Ltd, regarding
      $250,000 Line of Credit, dated February 17, 2009 (incorporated by
      reference from Exhibit 10.9 to the Company’s Annual Report on Form 10-K
      for the year ended December 31, 2008).10.10
              Series
      III Convertible Unsecured Note held by Great Missenden Holdings Pty
      Ltd.10.11
              Agreement
      between the Company and E.G. Albers regarding the Acquisition of Shares
      and Compliance with U.S. Securities Law, dated February 17, 2009
      (incorporated by reference from Exhibit 10.11 to the Company’s annual
      report on Form 10-K for the year ended December 31,
  2008).14
              Standards
      of Conduct of Australian Oil & Gas Corporation (incorporated by
      reference from Exhibit 14 to the Company’s annual report on Form 10-K for
      the year ended December 31, 2006).21
              List
      of Subsidiaries of Australian Oil & Gas Corporation.
  *24.1
              Certification
      of Secretary with respect to power of attorney. *31
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Rule
      13a-14 under the Securities Exchange Act of 1934. *32
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.
*








*  Filed
      herewith





(b) 
Not applicable.


(c)  Not
applicable.























SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




AUSTRALIAN OIL & GAS
CORPORATION




By:
              /s/ E.
      Geoffrey AlbersE.
      Geoffrey AlbersE.
      Geoffrey Alberts, President





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




Name
              
              Title
              
              Date/s/
      E. Geoffrey Albers
              
              President,
      Treasurer, Chief Financial Officer and Director
              
              31stday
      of March 2010E.
      Geoffrey Albers/s/
      Mark A Muzzin
              
              Director,
      Vice President
              
              31stday
      of March 2010Mark
      A Muzzin/s/
      W. Ray Hill
              
              Director,
      Vice President
              
              31stday
      of March 2010W.
      Ray Hill





















FINANCIAL
      STATEMENTS





Table
      of Contents


Report of
      Independent Registered Public Accounting Firm
              F-2Consolidated Balance
      Sheets-December 31, 2009 and 2008
              F-3Consolidated
      Statements of Operations--Years Ended December
      31, 2009 and 2008
              F-4Consolidated
      Statements of Stockholders' Equity—From inception(August
      6, 2003) through to December 31, 2009
              F-5Consolidated
      Statements of Cash Flows--Years endedDecember
      31, 2009, 2009 and 2008
              F-7Notes to
      Consolidated Financial Statements
              F-8 -
      F-13































REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the
Board of Directors and Stockholders


of
Australian Oil & Gas Corporation (An Exploration Stage
Enterprise)





We have
audited the accompanying consolidated balance sheets of Australian Oil & Gas
Corporation and subsidiaries (An Exploration Stage Enterprise) as of December
31, 2009 and 2008 and the related consolidated statements of operations,
stockholders’ equity and cash flows for each of the two years then ended and the
period from inception (August 6, 2003) to December 31, 2009. 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 audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Australian Oil & Gas
Corporation and subsidiaries (An Exploration Stage Enterprise) as of December
31, 2009 and 2008, and the results of their operations and their cash flows for
each of the two years then ended and for the period from inception (August 6,
2003) to December 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.














/s/
Demetrius & Company, L.L.C.


Wayne,
New Jersey


March 31,
2010












F-2





Australian
Oil & Gas Corporation


(an
exploration stage enterprise)


CONSOLIDATED
BALANCE SHEETS




(Dollar
amounts in
thousands)


12/31/09
              
              
              12/31/09ASSETS
              
              $
              
              
              $Current
      assets:Cash
      and cash equivalents
              
              
              5
              
              
              
              8Receivables
              
              
              1
              
              
              
              1Total Current Assets
              
              
              6
              
              
              
              9Non-Current
      assets:Exploration
      and Evaluation Asset (Note 12)
              
              
              2,968
              
              
              
              -Total Non-Current Assets
              
              
              2,968
              
              
              
              -Total
      Assets
              
              
              2,974
              
              
              
              9LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      liabilities:Accounts payable and accrued expenses
              
              
              3,466
              
              
              
              214Accounts payable to director related entities (Note 6)
              
              
              12
              
              
              
              178Total Current Liabilities
              
              
              3,478
              
              
              
              392Non-Current
      liabilities:Line of Credit – Director Related (Note 6)
              
              
              206
              
              
              
              -Total
      Liabilities
              
              
              3,684
              
              
              
              -STOCKHOLDERS’
      EQUITY (DEFICIT)Common
      stock, $0.001 par value; 75,000,000 shares authorized,Issued shares, 45,650,531 at December 31, 2009 and 43, 450,531at December 31, 2008; Outstanding shares, 45,650,531 atDecember 31, 2009 and 41,050,531 at December 31, 2008.
              
              
              46
              
              
              
              43Capital in excess of par value
              
              
              2,722
              
              
              
              2,509Accumulated other Comprehensive Income
              
              
              264
              
              
              
              316Deficit accumulated during the exploration stage
              
              
              (3,742
              )
              
              
              (3,251
              )Total Stockholders’ Equity (Deficit)
              
              
              (710
              )
              
              
              (383
              )Total Liabilities and Stockholders’ Equity (Deficit)
              
              
              2,974
              
              
              
              9


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





F-3





Australian
Oil & Gas Corporation


(an
exploration stage enterprise)


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
twelve months ended December 31, 2009 and 2008


and for
the period from inception (August 6, 2003) to December 31, 2009





(Dollar
amounts in thousands)


For
      the twelve months ended Dec 31, 2009
                $
              
              
              
              For
      the twelve months ended Dec 31, 2008
                $
              
              
              
              From
                inception
      to
                Aug
      6, 2003
                $ExpensesExploration
              
              
              671
              
              
              
              499
              
              
              
              2,481General and administrative
              
              
              117
              
              
              
              191
              
              
              
              1,146Merger and reorganization
              
              
              -
              
              
              
              -
              
              
              
              249Total operating expenses
              
              
              788
              
              
              
              690
              
              
              
              3,876Loss
      before other income and expense
              
              
              (788
              )
              
              
              (690
              )
              
              
              (3,876
              )Other
      Income and (Expense)Income from sale of tenement and tenement information (Note
      11)
              
              
              249
              
              
              
              389
              
              
              
              1,
      899Write down of investments
              
              
              -
              
              
              
              -
              
              
              
              (1,759
              )Currency exchange gain/(loss)
              
              
              56
              
              
              
              (78
              )
              
              
              64Interest income
              
              
              -
              
              
              
              7
              
              
              
              63Interest expense
              
              
              (8
              )
              
              
              (17
              )
              
              
              (109
              )Loss
      before income tax
              
              
              (48
              )
              
              
              (389
              )
              
              
              (3,718
              )Income
      tax provision
              
              
              -
              
              
              
              -
              
              
              
              24Net
      Loss
              
              
              (491
              )
              
              
              (389
              )
              
              
              (3,742
              )Loss
      per Common Share:Net
      Loss
              
              $
              (
      0.01
              )
              
              $
              (
      0.01
              )
              
              $
              (0.11
              )Weighted
      average common share used in calculation
              
              
              44,281,575
              
              
              
              40,052,317
              
              
              
              34,203,186







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




F-4











Australian
Oil & Gas Corporation


(an
exploration stage enterprise)


CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE
INCOME


For the
period from inception (August 6, 2003) to December 31, 2009





(Dollar
amounts in thousands)


Common
      StockShares
              
              
              
              Amount
                $
              
              
              Capital
      in
                excess
      of
                par
      value
                $
              
              
              Accumulated
      Other Comprehensive Income
                $
              
              
              Deficit
      Accumulated during exploration stage
                $
              
              
              
              Total
                Equity
                $Issuance
      of common stock:Combination
      of Controlled Entities
              
              
              
              
              
              1,560
              
              
              
              
              
              
              
              
              
              
              
              
              1,560To
      holders of unsecured claims againstSynergy
      Technology Corporation
              
              
              3,000,000To
      equity holders of Synergy TechnologyCorporation
              
              
              4,800,528To
      the Plan Funder to fund thePlan
      of Reorganization
              
              
              19,500,000
              
              
              
              20
              
              
              
              55
              
              
              
              
              
              
              
              
              
              75Loss
      from operations
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (184
              )
              
              
              (184
              )Balance, December 31, 2003
              
              
              27,300,528
              
              
              
              1,580
              
              
              
              55
              
              
              
              
              
              
              
              (184
              )
              
              
              1,451Loss
      from operations
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,849
              )
              
              
              (1,849
              )Foreign
      currency translation adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              195
              
              
              
              
              
              
              
              195Balance, December 31, 2004
              
              
              27,300,528
              
              
              
              1,580
              
              
              
              55
              
              
              
              195
              
              
              
              (2,033
              )
              
              
              (203
              )To
      the Chairman as compensation
              
              
              2,500,000
              
              
              
              2
              
              
              
              248
              
              
              
              
              
              
              
              
              
              
              
              250Shares
      issued external to combined grouppreviously
      held within the combined group
              
              
              
              
              
              
              65
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              65Loss
      from operations
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (606
              )
              
              
              (606
              )Foreign
      currency translation adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              48
              
              
              
              
              
              
              
              48Balance, December 31, 2005
              
              
              29,800,528
              
              
              
              1,647
              
              
              
              303
              
              
              
              243
              
              
              
              (2,639
              )
              
              
              (446
              )To
      the Chairman as compensation
              
              
              2,000,000
              
              
              
              2
              
              
              
              198
              
              
              
              
              
              
              
              
              
              
              
              200
 Profit
      from operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            592
            
            
            
            592Acquisition
      of entities subject to common control
            
            
            
            
            
            
            (1,621
            )
            
            
            1,621
            
            
            
            
            
            
            
            
            
            
            
            -Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            17
            
            
            
            
            
            
            
            17Balance , December 31, 2006
            
            
            35,900,531
            
            
            
            28
            
            
            
            2,122
            
            
            
            260
            
            
            
            (2,047
            )
            
            
            363To
      the Chairman as compensation
            
            
            1,500,000
            
            
            
            2
            
            
            
            88
            
            
            
            
            
            
            
            
            
            
            
            90Loss
      from operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (815
            )
            
            
            (815
            )Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (36
            )
            
            
            
            
            
            
            (36
            )Balance, December 31, 2007
            
            
            37,400,531
            
            
            
            30
            
            
            
            2,210
            
            
            
            224
            
            
            
            (2,862
            )
            
            
            (398
            )



















Australian
Oil & Gas Corporation
 (an
exploration stage enterprise)
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(Continued)
 For the
period from inception (August 6, 2003) to December 31, 2009


Conversion
      of Notes
            
            
            3,650,000
            
            
            
            13
            
            
            
            299
            
            
            
            
            
            
            
            
            
            
            
            312Loss
      from operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (389
            )
            
            
            (389
            )Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            92
            
            
            
            
            
            
            
            92Balance , December 31, 2008
            
            
            41,050,531
            
            
            
            43
            
            
            
            2,509
            
            
            
            316
            
            
            
            (3,251
            )
            
            
            (383
            )To
      the Chairman as compensation (Note 8)
            
            
            4,600,000
            
            
            
            3
            
            
            
            213
            
            
            
            
            
            
            
            
            
            
            
            216Loss
      from operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (491
            )
            
            
            (491
            )Foreign
      currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (52
            )
            
            
            
            
            
            
            (52
            )Balance, December 31, 2009
            
            
            45,650,531
            
            
            
            46
            
            
            
            2,722
            
            
            
            264
            
            
            
            (3,742
            )
            
            
            (710
            )















F-6




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





Australian
Oil & Gas Corporation


(an
exploration stage enterprise)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


For the
twelve months ended December 31, 2009 and 2008


and
Cumulative from inception (August 6, 2003) to December 31, 2009





(Dollar
amounts in thousands)


Dec
      31, 2009
                $
              
              
              Dec
      31, 2008
                $
              
              
              From
                inception
                $Cash
      flows from operating activities:Net
      profit/(loss)
              
              
              (491
              )
              
              
              (389
              
              
              
              (3,742
              )Adjustments
      to reconcile net profit/(loss) to net cashused in operating activities:Adjustments
      for non-cash items:Compensation expense (Note 8)
              
              
              88
              
              
              
              127
              
              
              
              755Currency exchange (gain)/loss
              
              
              (106
              )
              
              
              171
              
              
              
              (31
              )Write down of investment
              
              
              -
              
              
              
              -
              
              
              
              1,759Issuance of Convertible Note in lieu of repayment ofadvances from director related entity
              
              
              -
              
              
              
              7
              
              
              
              100Gain on transfer of interest in tenement (Note 11)
              
              
              (249
              )
              
              
              (389
              )
              
              
              (1,899
              )Change
      in assets and liabilitiesIncrease (decrease) in accounts payable
              
              
              3,324
              
              
              
              (60
              )
              
              
              3,830Increase (decrease) in tax payable
              
              
              -
              
              
              
              (1
              )
              
              
              (9
              )(Increase) decrease in accounts receivable
              
              
              -
              
              
              
              (1
              )
              
              
              82Increase in exploration assets
              
              
              (2,968
              )
              
              
              -
              
              
              
              (2,968
              )Net cash used in operating activities
              
              
              (402
              )
              
              
              (535
              )
              
              
              (2,123
              )Cash
      flows from financing activities:Proceeds from the sale of Common stock – net
              
              
              -
              
              
              
              -
              
              
              
              75Proceeds from advance from director-related entities
              
              
              150
              
              
              
              59
              
              
              
              534Repayment of advance from director-related entities
              
              
              -
              
              
              
              -
              
              
              
              (73
              )Net cash (used in) provided by financing activities
              
              
              150
              
              
              
              59
              
              
              
              536Cash
      flows from investing activities:Proceeds from sale of tenement
              
              
              249
              
              
              
              -
              
              
              
              1,510Net cash provided investing activities
              
              
              249
              
              
              
              -
              
              
              
              1,510Increase
      (decrease) in cash
              
              
              (3
              )
              
              
              (476
              )
              
              
              (77
              )Cash
      and cash equivalents at beginning of period
              
              
              8
              
              
              
              484
              
              
              
              -Effect
      of currency exchange rate fluctuations on cash held
              
              
              -
              
              
              
              -
              
              
              
              82Cash
      and cash equivalents at end of period
              
              
              5
              
              
              
              8
              
              
              
              5Supplementary
      disclosure of non-cash financing activities.-
      Issuance of Stock for compensation and settlement of
    advances
              
              
              -
              
              
              
              312
              
              
              
              852-Administration
      Fees charged by Setright Oil & Gas Pty Ltd (Note 5)
              
              
              15
              
              
              
              55
              
              
              
              233-
      Interest charged by Great Missenden Holdings Pty Ltd (Note
    5)
              
              
              8
              
              
              
              17
              
              
              
              113-
      Profit on sale of tenement and tenement information (Note
    11)
              
              
              249
              
              
              
              389
              
              
              
              1,899






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





F-7










Australian
Oil & Gas Corporation


(an
exploration stage enterprise)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2009




NOTE
1:  ORGANIZATION





Australian
Oil & Gas Corporation (the Company or AOGC) was incorporated in Delaware on
August 6, 2003, and began operations on August 11, 2003 pursuant to the terms of
a Plan of Reorganization (Plan) of Synergy Technologies Corporation (“Synergy”)
and is considered to be a crude petroleum and natural gas company in the
exploratory stage company as defined by SFAS No. 7, and since inception, has
been engaged in the assessment of oil and gas exploration
properties.





The
authorized capital stock of the AOGC consists of 75,000,000 shares of common
stock (AOG Common Stock), $0.001 par value.





The two
inactive, Delaware-incorporated US subsidiaries; Gascorp, Inc. and Nations LNG,
Inc were dissolved March 18, 2009. The company still has two wholly owned
Australian subsidiaries; Alpha Oil & Natural Gas Pty Ltd and Nations Natural
Gas Pty Ltd.





Alpha Oil
& Natural Gas Pty Ltd itself now has three wholly owned Australian
subsidiaries, Vulcan Australia Pty Ltd (which holds the joint venture interest
in the Vulcan Joint Ventures), Braveheart Oil & Gas Pty Ltd (which holds the
joint venture interest in the Braveheart Joint Venture) and Cornea Oil & Gas
Pty Ltd (which will hold the joint venture interest in the Cornea Joint
Venture). Cornea Oil & Gas Pty Ltd was incorporated in Australia on July 17,
2009.





Nations
Natural Gas Pty Ltd itself now has a wholly owned Australian subsidiary,
Napoleon Nations Gas Pty Ltd (which will hold the joint venture interest in the
National Gas Consortium Joint Venture). Napoleon Nations Gas Pty Ltd was
incorporated in Australia on July 17, 2009.






NOTE
2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis
of consolidation





The
consolidated financial statements include all majority-owned subsidiaries over
which we exercise control. Investments where we exercise significant influence
but do not control (generally a 20% to 50% ownership interest), are accounted
for under the equity method of accounting. All material intercompany
transactions and balances have been eliminated.




Use
of estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and footnotes thereto. Actual results could differ from those
estimates.




Undeveloped
mineral interests and oil and gas properties




The Company
follows the successful efforts method of accounting for its oil and natural gas
exploration activities, as follows:





·
            Geological
      and geophysical costs and costs of retaining unproved properties and
      undeveloped properties are charged to expense as incurred and are included
      as a reduction of operating cash flow in the consolidated statements of
      cash flow.


















·
            Costs
      of exploratory wells are capitalized pending determination of whether they
      have discovered proved reserves.





*
            The
      costs of exploratory wells that have found oil and natural gas reserves
      that cannot be classified as proved when drilling is completed continue to
      be capitalized as long as the well has found a sufficient quantity of
      reserves to justify its completion as a producing well and sufficient
      progress is being made in assessing the proved reserves and the economic
      and operating viability of the project.  Management evaluates
      progress on such wells on an on-going
basis.





*
            If
      proved reserves are not discovered the related drilling costs are charged
      to exploration expense.





·
            Acquisition
      costs of permits, leases and development activities are
      capitalized.




·
            Other
      exploration costs are charged to expense as
  incurred.




·
            Gains
      or losses from disposition of the Company’s interests in oil and gas
      properties are included in earnings under the following
      conditions:




*
            All
      or part of an interest owned is sold to an unrelated third party; if only
      part of an interest is sold, there is no substantial uncertainty about the
      recoverability of cost applicable to the interest retained;
      and


*
            The
      Company has no substantial obligation for future performance (e.g.
      drilling a well(s) or operating the property without proportional
      reimbursement of costs relating to the interest
  sold).


·
            Interest
      expense allocable to significant unproved leasehold costs and in progress
      exploration and development projects is capitalized until the assets are
      ready for their intended use.  There was no interest expense
      capitalized by the Company in 2007 or in the prior three
      years.





Asset
      Impairment.  Costs of unproved oil and gas properties are
      assessed periodically and a loss is recognized if the properties are
      deemed impaired.  When events or circumstances indicate that
      unproved oil and gas property carrying amounts might not be recoverable
      from estimated future undiscounted cash flows from the property, a
      reduction of the carrying amount to fair value is
      required.  Measurement of the impairment loss is based on the
      estimated fair value of the asset, which the Company would determine using
      estimated undiscounted future cash flows from the property, adjusted to
      present value using an interest rate considered appropriate for the
      asset.




Income
taxes





The Company
will provide for income taxes utilizing the liability approach under which
deferred income taxes are provided based upon enacted tax laws and rates
applicable to the periods in which the taxes became payable.




Cash
equivalents




For
purposes of the statements of cash flows, the Company will consider all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.




Concentrations
of credit risk




Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and cash equivalents.  The Company
will place its cash with high quality financial institutions. The Company
maintains the primary amount of cash in Australian Banks. These accounts are not
insured.











F-9












Fair
Value of Financial Instruments





The Company’s
financial instruments include cash, cash equivalents, account receivable,
accounts payable, accrued expenses and long term debt. The book values of cash,
cash equivalents, account receivable, accounts payable and accrued expenses are
representative of their fair value due to the short-term maturity of these
instruments The Company’s advance from Great Missenden Holdings Pty Ltd is at a
fixed interest rate and the book value, after interest is accrued, is considered
representative of the advances fair value.




Recently
issued Accounting Standards adopted as of December 31, 2009





In May 2009,
the FASB issued guidance now codified as FASB ASC Topic 855, “Subsequent Events”
which establishes general standards of accounting for, and the disclosures of,
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This pronouncement is effective for
interim or fiscal periods ending after June 15, 2009. Accordingly, the Company
adopted the provisions of FASB ASC Topic 855 on March 29, 2009. The adoption of
this pronouncement did not have a material impact on our consolidated financial
position, results of operations or cash flows. However, the provisions of FASB
ASC Topic 855 resulted in additional disclosures with respect to subsequent
events. See Note 13, Subsequent Events, for this additional
disclosure.





In June 2009,
the FASB issued guidance now codified as FASB ASC Topic 105, “Generally Accepted
Accounting Principles” as the single source of authoritative nongovernment U.S.
GAAP. FASB ASC Topic 105 does not change current U.S. GAAP, but is intended to
simplify access to all authoritative U.S. GAAP by providing all authoritative
literature related to a particular topic in one place. All existing accounting
standard documents will be superseded and all other accounting literature not
included in the FASB Codification will be considered non-authoritative. These
provisions of FASB ASC Topic 105 are effective for interim and annual reporting
periods ended September 15, 2009 and, accordingly, are effective for the Company
for the current fiscal reporting period. The adoption of this pronouncement did
not have an impact of the Company’s financial condition or results of
operations, but will impact our financial reporting process by elimination all
references to pre-codification standards. On the effective date of this
Statement, the Codification superseded all then-existing non-SEC accounting and
reporting standards, and all other non-grandfathered non-SEC accounting
literature not included in the Codification became
non-authoritative.




NOTE 3:    INCOME TAXES





Net losses
attributable to the acquisition of Synergy Technologies Corporation are limited
by Internal Revenue Recognition.  When there is a more than 50%
change in ownership, the amount of net operating loss available is approximately
$342,000, which expire between 2017-2022.


Management of
the Company has decided to fully reserve for its deferred tax asset, as it is
more likely than not that the Company will not be able to utilize these deferred
tax assets against future income, coupled with the possible limitations of the
net operating losses due to various changes in ownership over the past
years.





$Operating
      loss carried forwards
            
            
            116,280Less:
      Valuation Allowance
            
            
            (116,280
            )Net
      Deferred Tax Assets
            
            
            -





Carried
forward the losses in the Australian subsidiaries are not included in the above
numbers Realization of the losses is not probable.


NOTE
4:  BASIC LOSS PER COMMON SHARE





Basic loss
per common share is based on the weighted average number of shares of common
stock issued from inception to December 31, 2009.










F-10









NOTE
5: RELATED PARTY TRANSACTIONS





Mr. E
Geoffrey Albers, the Chairman and President of AOGC, is a director and
shareholder of each of Great Missenden Holdings Pty Ltd and of Setright Oil
& Gas Pty Ltd.





On September
22, 2009, Great Missenden Holdings Pty Ltd advanced $200,000 on its
$250,000 Line of Credit to AOGC under the terms of the Line of Credit
Agreement signed between AOGC and Great Missenden Holdings Pty Ltd on February
17, 2009. This line of credit expires December 31, 2012.  For the year
ended December 31, 2009, and the year ended December 31, 2008, respectively
Great Missenden Holdings Pty Ltd charged $8,101 and $17,067 for interest on all
advances during the year





We also have
the use of premises in Australia at Level 21, 500 Collins Street, Melbourne,
Victoria.  The office space is taken on a nonexclusive basis, with no
rent payable, but the usage of the premises is included in the charges Setright
Oil & Gas Pty Ltd makes in respect to the administration of the Company. For
the year ended December 31, 2009, and the year ended December 31, 2008,
respectively, Setright Oil & Gas Pty Ltd charged the Company $15,372 and
$54,951 for the provision of accounting and administrative services rendered by
third parties for the benefit of the Company, but not including services
rendered by Mr. E Geoffrey Albers, who is remunerated separately by way of the
issue of shares of common stock.





Mr. Albers is
a director and shareholder in the joint venture participants with Vulcan
Australia Pty Ltd (Vulcan) with regard to exploration permit ACP/33, ACP/35 and
AC/P39; namely Petrocorp Australia Pty Ltd, Natural Gas Corporation Pty Ltd and
Auralandia N.L.  Mr Muzzin is a shareholder in Auralandia N.L. As a
result of incurring expenditures, the predecessor in title to Petrocorp
Australia Pty Ltd earned an aggregate 25% interest in each of AC/P33, AC/P35 and
AC/P39 (Vulcan Joint Venture), 5% of which was earned from the AOGC subsidiary,
Alpha.





With regard
to the Braveheart Joint Venture, Mr. Albers is a director and shareholder in
each of Browse Petroleum Pty Ltd, Braveheart Petroleum Pty Ltd, Moby Oil &
Gas Limited, Braveheart Energy Pty Ltd and Exoil Limited, the parent of
Braveheart Resources Pty Ltd. He is a major shareholder in the parent of
Braveheart Energy Pty Ltd.  All of these companies are the holders of
the Braveheart Joint Venture.





With regard
to the Cornea Joint Venture, Mr. Albers is a director and shareholder in each of
Coldron Pty Ltd, Cornea Petroleum Pty Ltd, Moby Oil & Gas Limited,
Auralandia NL, Cornea Energy Pty Ltd, Octanex NL and Exoil Limited, the parent
of Cornea Resources Pty Ltd. All of these companies are the holders of the
Cornea Joint Venture.





With regard
to the National Gas Consortium, Mr. Albers is a director and shareholder in each
of National Oil & Gas Pty Ltd, Australian Natural Gas Pty Ltd and Natural
Gas Australia Pty Ltd. Expenditure incurred by National Gas Australia Pty Ltd
has resulted in National Gas Australia Pty Ltd earning an aggregate 30% interest
in each of NT/P62, NT/P63, NT/P64, NT/P65, NT/P71 and NT/P72, (National Gas
Consortium), of which 9% was earned from Nations.





With regard
to the NT/P70 Joint Venture, Mr Albers is a director and shareholder in National
Gas Australia Pty Ltd.  Expenditure incurred during a prior period by
National Gas Australia Pty Ltd (in which Mr E.G. Albers is the sole shareholder
and sole director) in relation to the acquisition of the 795 line km Crocodile
2D Seismic Survey is in the order of $950,000.  As a result of this
expenditure, National Gas Australia Pty Ltd earned a 20% interest in NT/P70 from
AOGC.





Mr. Mark A
Muzzin, a director and Vice-President of AOGC is a shareholder in Exoil Limited,
the parent of Braveheart Resources Pty Ltd and Cornea Resources Pty
Ltd.







NOTE
6:    LIABILITIES TO DIRECTOR RELATED ENTITIES





At December
31, 2009, the Company owed to Setright Oil & Gas Pty Ltd of $8,949 for
corporate services





At December
31, 2009, the Company owed to National Oil & Gas Ltd of $2,885 for
exploration costs.





From the
advance made on September 2009 and interest payable on the advance the liability
to Great Missenden Holdings at December 31, 2009 is $206,413.




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NOTE
7:   COMMON STOCK







·
            On
      January 18, 2008, 1,500,000 shares of Common stock were issued to EG
      Albers under the terms of his employment contract, filed as an exhibit to
      the 2005 Form 10-KSB.





·
            On
      June 24, 2008, 3,650,000 shares of Common Stock were issued to Great
      Missenden Holdings Pty Ltd to settle the Series I and Series II
      Convertible.





·
            On
      March 26, 2009, 2,400,000 shares of Common stock were issued to EG Albers
      under the terms of his employment contract, filed as an exhibit to the
      2008 Form 10-K.





·
            On
      December 23, 2009, 2,200,000 shares of Common stock were issued to EG
      Albers under the terms of his employment contract, filed as an exhibit to
      the 2008 Form 10-K. (See Note 13)




NOTE
8:    COMMON STOCK ISSUED TO EG ALBERS





On March 26,
2009, 2,400,000 shares of Common stock were issued to EG Albers under the terms
of his employment contract, filed as an exhibit to the 2008 Form
10-K





On December
22, 2009, 2,200,000 shares of Common stock were issued to EG Albers under the
terms of his employment contract, filed as an exhibit to this 2009 Form
10-K




NOTE
9:    COMPREHENSIVE INCOME





Comprehensive
income is the change in equity during a period from transactions and other
events from non-owner sources. The Company is required to classify items of
other comprehensive income in financial statements and to display the
accumulated balance of other comprehensive income separately in the equity
section of the Consolidated Balance Sheet.





The
functional currency of Australian Oil & Gas Corporation’s Australian
subsidiaries is Australian dollars.
The comprehensive income of $264,598 disclosed in the consolidated balance sheet
is the foreign currency exchange gain on converting the subsidiaries’ balance
sheets and income statements to US dollars for consolidation
purposes.




NOTE
10:   COMMITMENTS AND CONTINGENCIES





The Company
is without insurance pertaining to various potential risks with respect to its
properties, including general liability, because it is presently not able to
obtain insurance for such risks at rates and on terms, which it considers
reasonable.  The financial position of the Company in future periods
will be adversely affected if uninsured losses were to be incurred.




NOTE
11:    SALE OF TENEMENT INFORMATION




On April 3,
2009 the company’s Australian subsidiary, Alpha Oil and Natural Gas Pty Ltd sold
information in the NT/P73 exploration permit to Gascorp Australia Pty Ltd
(Gascorp) for $249,935 (AUD$350,000). Gascorp is an affiliate company of Mr. EG
Albers.





The
information will be used by Gascorp to investigate a proposal to acquire to a
35% interest in the permit.




NOTE
12:    EXPLORATION AND EVALUATION ASSETS




On December
31, 2009 the company’s Australian subsidiary, Alpha Oil and Natural Gas Pty Ltd
share of drilling costs of the Cornea-3 exploration well in WA-342-P was
$2,968,403.The well
was drilled from December 11, 2009 to December 28 December. 2009. Overall, the
results of Cornea-3 have, for the first time, clearly defined the location of an
oil column.Looking
forward, the data obtained from Cornea-3 will enable the Cornea Joint Venture to
formulate a future exploration, appraisal and development strategy now that an
oil column has been proved and that good data relating to the potential
reservoir performance has been obtained. On this basis the costs of the well
have been capitalized.




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NOTE
13:   SUBSEQUENT EVENTS





In May 2009,
the FASB issued guidance now codified as FASB ASC Topic 855, “Subsequent Events”
which establishes general standards of accounting for, and the disclosures of,
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This pronouncement is effective for
interim or fiscal periods ending after June 15, 2009. Accordingly, the Company
adopted the provisions of FASB ASC Topic 855 on March 29, 2009. The Company has
evaluated subsequent events for the period from December 31, 2009, the date of
these financial statements through to March 31, 2010, which represents the date
these financial statements are being filed with the Commission. Pursuant to the
requirements of FASB ASC Topic 855, there were no events or transactions
occurring during this subsequent event reporting period that require recognition
or disclosure in the financial statement, apart from the one transaction shown
below, With respect to this disclosure, the Company has not evaluated subsequent
events occurring after March 31, 2010.





Sale of Permit Interest – February
18, 2010.





On February
18, 2010 AOGC’s wholly owned subsidiary, Vulcan Australia Pty Ltd (“Vulcan”)
completed the sales of its 7.5% interest in AC/P33 to a wholly-owned subsidiary
of PTT Exploration and Production Public Company Limited, a major Thailand
petroleum exploration and production company. Vulcan recovered $ 4,244,679 for
its 7.5% interest.These proceeds will be
utilized in meeting a large proportion of our obligations to the Braveheart
Joint Venture and Cornea Joint Venture with respect to the costs associated with
the recent drilling of the Braveheart-1 well and Cornea-3 well.



















F-13