| Nevada                                        |   | 51-0482104                           |
|-----------------------------------------------|--------|--------------------------------------|
| (State or other jurisdictionof incorporation) |   | (IRS Employer Identification Number) |

| Three Riverway, Suite 1590Houston, Texas |   |  77056 |
|------------------------------------------|--------|-------------|
| (Address of principalexecutive offices)  |   | (zip code)  |

| Large accelerated filer  []       | Accelerated filer  []       |  Non-accelerated filer  []        |   Smaller reporting company [X]  |
|---------------------------------------------------------------------------|---------------------------------------------------------------------|-------------------------------------------------------------------------------------|-------------------------------------------------|

----

| PART I. FINANCIAL INFORMATION                                                                                                                                                                     | Page                             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|
|                                                                                                                                                                                              |                             |
| Item 1. Financial Statements                                                                                                                                                                      |                             |
|                                                                                                                                                                                              |                             |
|      Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and          December 31, 2009 (Unaudited)       |  3                          |
|                                                                                                                                                                                              |                             |
|      Consolidated Statements of Operations for the three months ended          September 30, 2010 and 2009 (Unaudited) |  4                          |
|                                                                                                                                                                                              |                             |
|     Consolidated Statements of Operations for the nine months ended          September 30, 2010 and 2009 (Unaudited)        |  5                          |
|                                                                                                                                                                                              |                             |
|      Consolidated Statements of Cash Flows for the nine months ended          September 30, 2010 and 2009 (Unaudited)  |  6                          |
|                                                                                                                                                                                              |                             |
| Notes to Consolidated Financial Statements (Unaudited)                                                                                                                                            | 7                                |
|                                                                                                                                                                                              |                             |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                     | 14                               |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                | 18                               |
| Item 4. Controls and Procedures                                                                                                                                                                   | 18                               |
|                                                                                                                                                                                              |                             |
| PART II. OTHER INFORMATION                                                                                                                                                                   |                             |
| Item 1. Legal Proceedings                                                                                                                                                                         | 19                               |
| Item 1A. Risk Factors                                                                                                                                                                             |      19 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                               | 19                               |
| Item 3. Defaults Upon Senior Securities                                                                                                                                                           | 20                               |
| Item 5. Other Information                                                                                                                                                                         | 20                               |
| Item 6. Exhibits                                                                                                                                                                                  | 20                               |
| Signatures                                                                                                                                                                                        | 21                               |

----

|                                                                    |   | September 30, |        |   | December 31, |   |
|-------------------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                                                    |   | 2010          |        |   | 2009         |   |
| Assets                                                                  |   |          |        |   |         |   |
| Current assets:                                                         |   |          |        |   |         |   |
| Cash and cash equivalents                                               |   | $             | 131,082     |   |         | $      | 142,703 |   |
| Restricted cash                                                         |   |          | -           |   |         |   | 1,613,637 |   |
| Accounts receivable                                                     |   |          | 3,004,983   |   |         |   | 2,948,159 |   |
| Prepaid expenses and other                                              |   |          | 192,886     |   |         |   | 132,325 |   |
| Total current assets                                                    |   |          | 3,328,951   |   |         |   | 4,836,824 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Property and equipment:                                                 |   |          |        |   |         |   |   |   |
| Oil and gas properties, evaluated (full cost method)                    |   |          | 14,543,924  |   |         |   | 14,425,950 |   |
| Other property and equipment                                            |   |          | 174,676     |   |         |   | 144,625 |   |
|                                                                    |   |          | 14,718,600  |   |         |   | 14,570,575 |   |
| Less:  Accumulated depreciation, depletion & amortization |   |          | (8,713,744  | )      |         |   | (8,017,822 | ) |
| Net property and equipment                                              |   |          | 6,004,856   |   |         |   | 6,552,753 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Other assets:                                                           |   |          |        |   |         |   |   |   |
| Goodwill (less impairment allowance of $3,400,000)                      |   |          | 1,536,313   |   |         |   | 1,536,313 |   |
| Other assets                                                            |   |          | 102,678     |   |         |   | 76,021 |   |
| Total other assets                                                      |   |          | 1,638,991   |   |         |   | 1,612,334 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Total assets                                                            |   | $             | 10,972,798  |   |         | $      | 13,001,911 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Liabilities and Stockholders’ Deficit                             |   |          |        |   |         |   |   |   |
| Current liabilities:                                                    |   |          |        |   |         |   |   |   |
| Current portion of long-term debt - stockholders                        |   | $             | 861,564     |   |         | $      | 1,682,317 |   |
| Current portion of long-term debt - others                              |   |          | 4,047,475   |   |         |   | 5,226,861 |   |
| Accounts payable                                                        |   |          | 2,804,302   |   |         |   | 2,436,846 |   |
| Accrued liabilities                                                     |   |          | 1,279,006   |   |         |   | 1,518,698 |   |
| Fair value of oil and gas derivatives                                   |   |          | 6,330       |   |         |   | 88,990 |   |
| Total current liabilities                                               |   |          | 8,998,677   |   |         |   | 10,953,712 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Long-term debt, net of current portion                                  |   |          | 172,739     |   |         |   | 408,179 |   |
| Deferred income taxes                                                   |   |          | 1,655,600   |   |         |   | 1,513,847 |   |
| Asset retirement obligations                                            |   |          | 326,327     |   |         |   | 305,370 |   |
| Total liabilities                                                       |   |          | 11,153,343  |   |         |   | 13,181,108 |   |
|                                                                    |   |          |        |   |         |   |   |   |
| Stockholders’ deficit:                                            |   |          |        |   |         |   |   |   |
| Preferred stock, $.01 par value per share, 1,000,000 shares authorized, |   |          |        |   |         |   |   |   |
| None issued                                                             |   |          | -           |   |         |   | - |   |
| Common stock, $.01 par value per share, 5,000,000 shares authorized,    |   |          |        |   |         |   |   |   |
| 2,655,738 shares issued and outstanding                                 |   |          | 26,557      |   |         |   | 26,557 |   |
| Additional paid in capital                                              |   |          | 12,894,489  |   |         |   | 12,808,867 |   |
| Accumulated deficit                                                     |   |          | (12,868,546 | )      |         |   | (12,783,790 | ) |
| Accumulated foreign currency translation adjustment                     |   |          | (233,045    | )      |         |   | (230,831 | ) |
| Total stockholders’ deficit                                       |   |          | (180,545    | )      |         |   | (179,197 | ) |
|                                                                    |   |          |        |   |         |   |   |   |
| Total liabilities and stockholders’ deficit                       |   | $             | 10,972,798  |   |         | $      | 13,001,911 |   |

----

|                                                   |   | Three Months Ended September 30, |      |
|--------------------------------------------------------|--------|----------------------------------|-----------|
|                                                   |   | 2010                             |      |   | 2009 |   |
| Revenues:                                              |   |                             |      |   |   |   |
| Energy services                                        |   | $                                | 4,694,278 |   |   | $ | 2,876,844 |   |
| Oil and gas sales                                      |   |                             | 689,502   |   |   |   | 782,297 |   |
| Other                                                  |   |                             | 8,851     |   |   |   | 13,192 |   |
|                                                   |   |                             | 5,392,631 |   |   |   | 3,672,333 |   |
| Expenses:                                              |   |                             |      |   |   |   |   |   |
| Energy services                                        |   |                             | 4,341,858 |   |   |   | 2,620,190 |   |
| Lease operating expense                                |   |                             | 320,411   |   |   |   | 368,301 |   |
| Depreciation, depletion & amortization             |   |                             | 216,333   |   |   |   | 118,402 |   |
| Workover expense                                       |   |                             | 93,461    |   |   |   | 105,579 |   |
| Selling, general and administrative                    |   |                             | 389,309   |   |   |   | 405,724 |   |
|                                                   |   |                             | 5,361,372 |   |   |   | 3,618,196 |   |
|                                                   |   |                             |      |   |   |   |   |   |
| Operating income                                       |   |                             | 31,259    |   |   |   | 54,137 |   |
|                                                   |   |                             |      |   |   |   |   |   |
| Other income (expense):                                |   |                             |      |   |   |   |   |   |
| Interest expense                                       |   |                             | (228,282  | ) |   |   | (192,969 | ) |
| Gain on oil and gas derivatives                        |   |                             | 160       |   |   |   | 4,868 |   |
|                                                   |   |                             |      |   |   |   |   |   |
| Loss from continuing operations before income taxes    |   |                             | (196,863  | ) |   |   | (133,964 | ) |
| Benefit (provision) for income taxes                   |   |                             | 66,900    |   |   |   | (68,500 | ) |
| Net loss from continuing operations                    |   |                             | (129,963  | ) |   |   | (202,464 | ) |
| Discontinued operations, net of tax                    |   |                             | -         |   |   |   | - |   |
| Net loss                                               |   | $                                | (129,963  | ) |   | $ | (202,464 | ) |
|                                                   |   |                             |      |   |   |   |   |   |
| Net loss per share, basic and diluted                  |   |                             |      |   |   |   |   |   |
| Net loss from continuing operations                    |   | $                                | (0.05     | ) |   | $ | (0.08 | ) |
| Discontinued operations                                |   |                             | -         |   |   |   | - |   |
| Net loss                                               |   | $                                | (0.05     | ) |   | $ | (0.08 | ) |
|                                                   |   |                             |      |   |   |   |   |   |
| Weighted average shares outstanding, basic and diluted |   |                             | 2,655,738 |   |   |   | 2,655,738 |   |

----

|                                                   |   | Nine Months Ended September 30, |       |
|--------------------------------------------------------|--------|---------------------------------|------------|
|                                                   |   | 2010                            |       |   | 2009 |   |
| Revenues:                                              |   |                            |       |   |   |   |
| Energy services                                        |   | $                               | 14,687,137 |   |   | $ | 10,691,581 |   |
| Oil and gas sales                                      |   |                            | 2,061,977  |   |   |   | 1,915,140 |   |
| Other                                                  |   |                            | 50,711     |   |   |   | 63,757 |   |
|                                                   |   |                            | 16,799,825 |   |   |   | 12,670,478 |   |
| Expenses:                                              |   |                            |       |   |   |   |   |   |
| Energy services                                        |   |                            | 13,469,582 |   |   |   | 9,758,434 |   |
| Lease operating expense                                |   |                            | 1,151,154  |   |   |   | 1,308,523 |   |
| Depreciation, depletion & amortization             |   |                            | 626,234    |   |   |   | 341,137 |   |
| Impairment of acquisition goodwill                     |   |                            | -          |   |   |   | 1,900,000 |   |
| Workover expense                                       |   |                            | 310,630    |   |   |   | 297,723 |   |
| Selling, general and administrative                    |   |                            | 1,283,315  |   |   |   | 1,385,827 |   |
|                                                   |   |                            | 16,840,915 |   |   |   | 14,991,644 |   |
|                                                   |   |                            |       |   |   |   |   |   |
| Operating loss                                         |   |                            | (41,090    | ) |   |   | (2,321,166 | ) |
|                                                   |   |                            |       |   |   |   |   |   |
| Other income (expense):                                |   |                            |       |   |   |   |   |   |
| Interest expense                                       |   |                            | (608,893   | ) |   |   | (581,230 | ) |
| Gain on debt extinguishment                            |   |                            | 438,967    |   |   |   | - |   |
| Gain (loss) on oil and gas derivatives                 |   |                            | 82,660     |   |   |   | (92,520 | ) |
|                                                   |   |                            |       |   |   |   |   |   |
| Loss from continuing operations before income taxes    |   |                            | (128,356   | ) |   |   | (2,994,916 | ) |
| Benefit for income taxes                               |   |                            | 43,600     |   |   |   | 154,700 |   |
| Net loss from continuing operations                    |   |                            | (84,756    | ) |   |   | (2,840,216 | ) |
| Discontinued operations, net of tax                    |   |                            | -          |   |   |   | (25,419 | ) |
| Net loss                                               |   | $                               | (84,756    | ) |   | $ | (2,865,635 | ) |
|                                                   |   |                            |       |   |   |   |   |   |
| Net loss per share, basic and diluted                  |   |                            |       |   |   |   |   |   |
| Net loss from continuing operations                    |   | $                               | (0.03      | ) |   | $ | (1.07 | ) |
| Discontinued operations                                |   |                            | -          |   |   |   | (0.01 | ) |
| Net loss                                               |   | $                               | (0.03      | ) |   | $ | (1.08 | ) |
|                                                   |   |                            |       |   |   |   |   |   |
| Weighted average shares outstanding, basic and diluted |   |                            | 2,655,738  |   |   |   | 2,655,738 |   |

----

|                                                                               |   | Nine Months Ended September 30, |       |
|------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                               |   | 2010                            |       |   | 2009 |   |
| Cash flows provided by (used in) operating activities:                             |   |                            |       |   |   |   |
| Net loss from continuing operations                                                |   | $                               | (84,756    | ) |   | $ | (2,840,216 | ) |
| Adjustments to reconcile net loss from continuing                                  |   |                            |       |   |   |   |   |   |
|      operations to cash provided by (used in) operations: |   |                            |       |   |   |   |   |   |
| Depreciation, depletion & amortization                                         |   |                            | 626,234    |   |   |   | 341,137 |   |
| Impairment expense                                                                 |   |                            | -          |   |   |   | 1,900,000 |   |
| Benefit for income taxes                                                           |   |                            | (43,600    | ) |   |   | (154,700 | ) |
| Stock based compensation                                                           |   |                            | 11,525     |   |   |   | 41,149 |   |
| Gain on debt extinguishment                                                        |   |                            | (438,967   | ) |   |   | - |   |
| Unrealized gain on oil and gas derivatives                                         |   |                            | (82,660    | ) |   |   | 92,520 |   |
| Changes in current assets and liabilities                                          |   |                            | 425,119    |   |   |   | (274,036 | ) |
| Other changes, net                                                                 |   |                            | 63,988     |   |   |   | (103,154 | ) |
| Net cash flows from continuing operations                                          |   |                            | 476,883    |   |   |   | (997,300 | ) |
| Net cash flows from discontinued operations                                        |   |                            | -          |   |   |   | (25,419 | ) |
| Total cash flows from operating activities                                         |   |                            | 476,883    |   |   |   | (1,022,719 | ) |
|                                                                               |   |                            |       |   |   |   |   |   |
| Cash flows provided by (used in) investing activities:                             |   |                            |       |   |   |   |   |   |
| Decrease in restricted cash from sale of subsidiary                                |   |                            | 1,613,637  |   |   |   | 1,490,466 |   |
| Purchase of property and equipment                                                 |   |                            | (148,025   | ) |   |   | (173,793 | ) |
| Net cash flows from investing activities                                           |   |                            | 1,465,612  |   |   |   | 1,316,673 |   |
|                                                                               |   |                            |       |   |   |   |   |   |
| Cash flows provided by (used in) financing activities:                             |   |                            |       |   |   |   |   |   |
| Proceeds from long term debt                                                       |   |                            | 32,725     |   |   |   | 640,280 |   |
| Payments of long term debt                                                         |   |                            | (1,525,987 | ) |   |   | (714,337 | ) |
| Net payments of stockholder advances                                               |   |                            | (460,854   | ) |   |   | (260,000 | ) |
| Net cash flows from financing activities                                           |   |                            | (1,954,116 | ) |   |   | (334,057 | ) |
|                                                                               |   |                            |       |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                          |   |                            | (11,621    | ) |   |   | (40,103 | ) |
| Cash and equivalents at beginning of period                                        |   |                            | 142,703    |   |   |   | 203,200 |   |
|                                                                               |   |                            |       |   |   |   |   |   |
| Cash and equivalents at end of period                                              |   | $                               | 131,082    |   |   | $ | 163,097 |   |
|                                                                               |   |                            |       |   |   |   |   |   |
| Supplemental cash flow data:                                                       |   |                            |       |   |   |   |   |   |
| Cash paid for interest                                                             |   | $                               | 411,815    |   |   | $ | 399,932 |   |
| Cash paid for income taxes                                                         |   |                            | -          |   |   |   | 273,682 |   |
|                                                                               |   |                            |       |   |   |   |   |   |
| Supplemental financing activity:                                                   |   |                            |       |   |   |   |   |   |
| Gain on debt extinguishment - related party                                        |   | $                               | 74,097     |   |   | $ | - |   |

----

----

----

|                                                                                                                                                                                                                                                                                 |   |   | September 30,                                                                                                                                                                         |   | December 31,                                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                 |   |   | 2010                                                                                                                                                                                  |   | 2009                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| $25,000,000 line of credit with a bank, maturing on April 1, 2011, interest at 1.0% above prime (but not less than 6.0%) payable monthly, secured by first lien on CYMRI, LLC’s oil and gas properties, with a declining borrowing base of $3,076,000 as of September 30, 2010 |   |   |  $               3,001,000                                                                            |   |  $             3,001,000                            |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| Notes payable to individuals and entities, incurred in acquisition of CYMRI, bearing interest at 10%, with principal and accrued interest due at extended maturity in March 2010, unsecured                                                                                          |   |   |                               - |   |                 1,125,000                 |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| $2,500,000 (Cdn) revolving line of credit with a bank, interest at 6.5% above Canadian prime payable monthly through extended maturity in September 2010, secured by accounts receivable of Canadian energy services business (see Note 12)                                          |   |   |                      877,556                                                 |   |                 1,389,667                 |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| Notes payable to 2 individuals, incurred in acquisition of Decca Consulting, Ltd., bearing interest at 9%, payable in monthly installments of $30,099 (Cdn) from April 1, 2007 through March 31, 2012, unsecured                                                                     |   |   |                      504,303                                                 |   |                    618,179 |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| Advances from stockholders, bearing interest at 10%, with principal and accrued interest due in March 2010, unsecured ($530,000 extended as of September 30, 2010 - see discussion below)                                                                                            |   |   |                      530,000                                                 |   |                 1,047,317                 |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
| Other short term notes for liability insurance and accrued payables, interest rates at 7% to 9%                                                                                                                                                                                      |   |   |                      168,919                                                 |   |                    136,194 |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                 |   |   |                   5,081,778                                                                 |   |                 7,317,357                 |   |
| Current portion of long term debt - stockholders                                                                                                                                                                                                                                     |   |   |                    (861,564)                                                           |   |               (1,682,317)                           |   |
| Current portion of long term debt - others                                                                                                                                                                                                                                           |   |   |                 (4,047,475)                                                                           |   |               (5,226,861)                           |   |
|                                                                                                                                                                                                                                                                                 |   |   |                                                                                                                                                                                  |   |                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                 |   |   |  $                  172,739                                                            |   |  $                408,179            |   |

----

----

|                              |   | Number |    |   | Wtd. Avg. |   |   | Wtd. Avg. |   |   | Aggregate |   |   |
|-----------------------------------|--------|--------|---------|--------|----------------|--------|--------|----------------|--------|--------|-----------|--------|--------|
|                              |   | of     |    |   | Exercise       |   |   | Remaining      |   |   | Intrinsic |   |   |
|                              |   | Shares |    |   | Price          |   |   | Term (Yrs.)    |   |   | Value     |   |   |
|                              |   |   |    |   |           |   |   |           |   |   |      |   |   |   |   |
| Outstanding at January 1, 2009    |   |   | 47,500  |   |           | $      | 7.60   |           |   |   |      |   |   |   |   |
| Option activity                   |   |   |  - |   |           |   | -      |           |   |   |      |   |   |   |   |
| Outstanding at December 31, 2009  |   |   | 47,500  |   |           |   | 7.60   |           |   |   |      |   |   |   |   |
| Options forfeited                 |   |   | (10,000 | )      |           |   | (1.50  | )              |   |   |      |   |   |   |   |
| Outstanding at September 30, 2010 |   |   | 37,500  |   |           | $      | 9.18   |           |   |   | 0.5       |   |   | $ | - |   |   |
|                              |   |   |    |   |           |   |   |           |   |   |      |   |   |   |   |   |   |
| Exercisable at September 30, 2010 |   |   | 37,500  |   |           | $      | 9.18   |           |   |   | 0.5       |   |   | $ | - |   |   |

----

|                                                    |   | Energy   |    |   | Exploration & |   |   |   |   |
|---------------------------------------------------------|--------|----------|---------|--------|-------------------|--------|--------|--------|--------|
|                                                    |   | Services |    |   | Production        |   |   |   |   |
|                                                    |   | (Canada) |    |   | (U. S.)           |   | Total  |   |   |
|                                                    |   |     |    |   |              |   |   |   |   |
| Income Statement Data:                                  |   |     |    |   |              |   |   |   |   |
| Operating revenues                                      |   | $        | 14,687  |   |              | $      | 2,062  |   | $      | 16,749 |   |   |
| Other revenues                                          |   |     | 50      |   |              |   | 1      |   |   | 51 |   |   |
| Total revenues                                          |   |     | 14,737  |   |              |   | 2,063  |   |   | 16,800 |   |   |
| Depreciation, depletion & amortization              |   |     | -       |   |              |   | (626   | )      |   | (626 | ) |   |
| Other allocable operating expenses                      |   |     | (13,470 | )      |              |   | (1,462 | )      |   | (14,932 | ) |   |
| Gross profit (loss)                                     |   | $        | 1,267   |   |              | $      | (25    | )      |   | 1,242 |   |   |
| General and administrative expenses                     |   |     |    |   |              |   |   |   |   | (1,283 | ) |   |
| Operating loss                                          |   |     |    |   |              |   |   |   |   | (41 | ) |   |
| Interest expense                                        |   |     |    |   |              |   |   |   |   | (609 | ) |   |
| Gain on debt extinguishment                             |   |     |    |   |              |   |   |   |   | 439 |   |   |
| Unrealized gain on oil and gas derivatives              |   |     |    |   |              |   |   |   |   | 83 |   |   |
| Net loss from continuing operations before income taxes |   |     |    |   |              | $      | (128   | )      |   |
|                                                    |   |     |    |   |              |   |   |   |   |   |   |   |
| Balance Sheet Data:                                     |   |     |    |   |              |   |   |   |   |   |   |   |
| Subsidiary assets                                       |   | $        | 2,396   |   |              | $      | 6,868  |   | $      | 9,264 |   |   |
| Goodwill                                                |   |     | 1,537   |   |              |   | -      |   |   | 1,537 |   |   |
| Segment assets                                          |   | $        | 3,933   |   |              | $      | 6,868  |   |   | 10,801 |   |   |
| Corporate assets                                        |   |     |    |   |              |   |   |   |   | 172 |   |   |
| Consolidated assets                                     |   |     |    |   |              |   |   |   | $      | 10,973 |   |   |

----

|                                                    |   | Energy   |   |   | Exploration & |   |   |   |   |   |
|---------------------------------------------------------|--------|----------|--------|--------|-------------------|--------|--------|--------|--------|--------|
|                                                    |   | Services |   |   | Production        |   |   |   |   |   |
|                                                    |   | (Canada) |   |   | (U. S.)           |   |   | Total  |   |   |
|                                                    |   |     |   |   |              |   |   |   |   |   |
| Income Statement Data:                                  |   |     |   |   |              |   |   |   |   |   |
| Operating revenues                                      |   | $        | 10,691 |   |              | $      | 1,915  |   |   | $      | 12,606 |   |   |
| Other revenues                                          |   |     | 51     |   |              |   | 13     |   |   |   | 64 |   |   |
| Total revenues                                          |   |     | 10,742 |   |              |   | 1,928  |   |   |   | 12,670 |   |   |
| Depreciation, depletion & amortization              |   |     | -      |   |              |   | (341   | )      |   |   | (341 | ) |   |
| Impairment expense                                      |   |     | (1,900 | )      |              |   | -      |   |   |   | (1,900 | ) |   |
| Other allocable operating expenses                      |   |     | (9,758 | )      |              |   | (1,606 | )      |   |   | (11,364 | ) |   |
| Gross profit (loss)                                     |   | $        | (916   | )      |              | $      | (19    | )      |   |   | (935 | ) |   |
| General and administrative expenses                     |   |     |   |   |              |   |   |   |   |   | (1,386 | ) |   |
| Operating loss                                          |   |     |   |   |              |   |   |   |   |   | (2,321 | ) |   |
| Interest expense                                        |   |     |   |   |              |   |   |   |   |   | (581 | ) |   |
| Unrealized loss on oil and gas derivatives              |   |     |   |   |              |   |   |   |   |   | (93 | ) |   |
| Net loss from continuing operations before income taxes |   |     |   |   |              |   | $      | (2,995 | )      |   |

----

| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------------|---------------------------------------------------------------------------------------|

----

----

----

----

| ITEM 3. |  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------------|

| ITEM 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

----

| PART II. | OTHER INFORMATION |
|----------|-------------------|

| ITEM 1. | LEGAL PROCEEDINGS See Note 10 to Consolidated Financial Statements. |
|---------|--------------------------------------------------------------------------|

| ITEM 1A. | RISK FACTORS Information for this Item is not required as the Registrant is a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. |
|---------|------------------------------------------------------------------------|

----

| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES None. |
|---------|--------------------------------------------|

| ITEM 5. | OTHER INFORMATION None. |
|---------|------------------------------|

| ITEM 6. | EXHIBITS |
|---------|----------|

|    10.1 | Factoring Agreement, dated September 27, 2010, among Century Services L.P., Decca Consulting, Ltd. and Decca Consulting, Inc.                     |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                              |
|    31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a)                                                                   |
|                   |                                                                                                                                              |
|    31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a)                                                                   |
|                   |                                                                                                                                              |
|    32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|                   |                                                                                                                                              |
|    32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

----

|   | STRATUM HOLDINGS, INC.                |
|--------|---------------------------------------|
|   |                                  |   |
|   |                                  |   |
|   | /s/   Larry M. Wright       |
|   |                                  | Larry M. Wright |
|   |                                  | Chief Executive Officer |
|   |                                  |   |
|   | /s/   D. Hughes Watler, Jr. |
|   |                                  | D. Hughes Watler, Jr. |
|   |                                  | Chief Financial Officer |

----

----