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

                                   FORM 10-KSB
(Mark One)
[X]  Annual Report  Pursuant to Section 13 or 15(d) of The  Securities  Exchange
     Act of 1934
                   For the Fiscal Year Ended December 31, 2004

[ ]  Transition  Report  Pursuant  to  Section  13 or  15(d)  of The  Securities
     Exchange Act of 1934
                         Commission File Number 0-23530

                               TRANS ENERGY, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

             Nevada                                              93-0997412
---------------------------------                           --------------------
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                           Identification No.)

         210 Second Street, P.O. Box 393, St. Marys, West Virginia 26170
               (Address of principal executive offices) (Zip Code)

Issuer's telephone no.:  (304) 684-7053

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

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

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes[X] No[ ]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the best of the  Registrant's  knowledge,  in definitive proxy or
information  statements  incorporated  by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [X]

     State the issuer's revenues for its most recent fiscal year. $ 2,390,099

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and ask  prices  of such  stock  as of a  specified  date  within  60  days.
$5,656,224 (Based on price of $1.90 per share on April 6, 2005)

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date.

         Class                                  Outstanding as of March 31, 2005
-----------------------                         --------------------------------
Common Stock, Par Value                                    4,790,480
   $.001 per share
                       DOCUMENTS INCORPORATED BY REFERENCE

     A description of "Documents Incorporated by Reference" is contained in Part
III, Item 13.

Transitional Small Business Disclosure Format.   Yes [ ]  No [X]

                                       -1-

<PAGE>

<TABLE>
<CAPTION>
                               TRANS ENERGY, INC.

                                TABLE OF CONTENTS

                                                                                                       Page
                                                                                                       ----

                                                      PART I

<S>              <C>                                                                                   <C>
Item 1.           Description of Business .......................................................        3

Item 2.           Description of Property........................................................       16

Item 3.           Legal Proceedings..............................................................       18

Item 4.           Submission of Matter to a Vote of Security Holders.............................       18

                                                      PART II

Item 5.           Market for Common Equity and Related Stockholder Matters.......................       18

Item 6.           Management's Discussion and Analysis or Plan of Operation......................       20

Item 7.           Financial Statements...........................................................       23

Item 8.           Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure...........................................................       23

Item 8A.          Controls and Procedures........................................................       23

Item  8B          Other Information..............................................................       24


                                                     PART III

Item 9.           Directors, Executive Officers, Promoters and Control persons;
                  Compliance with Section 16(a) of the Exchange Act..............................       25

Item 10.          Executive Compensation.........................................................       27

Item 11.          Security Ownership of Certain Beneficial Owners and Management.................       27

Item 12.          Certain Relationships and Related Transactions.................................       28

Item 13.          Exhibits.......................................................................       29

Item 14.          Principal Accountant Fees and Services.........................................       29

                  Signatures.....................................................................       31

</TABLE>

                                       -2-
<PAGE>

                                     PART I

Item 1.       Description of Business

History

     Trans  Energy,  Inc.  is  engaged  in  the  transportation,  marketing  and
production  of natural gas and oil,  and  certain  exploration  and  development
activities.  We own and  operate 203 oil and gas wells in West  Virginia  and an
interest in seven oil wells in Wyoming that we do not  operate.  We also own and
operate an  aggregate  of over 20 miles of 4-inch  and  6-inch gas  transmission
lines located  within West  Virginia in the Counties of Ritchie and Tyler.  This
pipeline system gathers the natural gas produced from these wells and from wells
owned by third  parties.  We also have  approximately  11,000  gross acres under
lease in the Powder River Basin in Campbell, Crook and Weston Counties, Wyoming.

     In 1998,  we purchased  from GCRL  Energy,  Ltd. all of its interest in the
Powder  River Basin in  Campbell  and Crook  Counties,  Wyoming,  consisting  of
interests  in five (5)  wells,  four (4) of which are  producing,  interests  in
30,000 leasehold acres,  and interests in approximately  seventy-three  miles of
3-D seismic data. The properties  include three producing  fields from Minnelusa
Sandstone and were discovered on 3-D seismic.  During 1999, the Sagebrush 3 well
was drilled in the Sagebrush field in Campbell  County Wyoming,  to be used as a
water disposal well for the Sagebrush #1 and #2. The well was put into operation
as an injection well in 2004.

     On November 5, 2004, we acquired  Cobham Gas  Industries,  Inc. and certain
wells,  leases,  pipelines,  gas purchase  agreements,  oil hauling  agreements,
equipment,  right of ways and other  miscellaneous  items  related to the leases
located in West Virginia.  A total of 229 wells were  acquired,  of which 98 are
currently producing, located on approximately 15,000 leased acres.

     On January  31,2005,  we  finalized  the  acquisition  of Arvilla  Oilfield
Services,  LLC, , a West Virginia limited  liability  company,  assuming all its
operations,  assets and liabilities.  Arvilla provides well servicing,  workover
and related transportation services to independent oil and natural gas producers
in  the  northeast  region  of the  United  States.  It  also  performs  ongoing
maintenance  and major  overhauls  necessary to optimize the level of production
from existing oil and natural gas wells and provides certain ancillary  services
during the drilling and completion of new wells.  Arvilla offers its services in
Ohio, Pennsylvania, New York, Virginia, Kentucky and West Virginia.

     On November 29, 2004,  our board of directors  and  stockholders  holding a
majority of our  outstanding  common  stock  approved a one share for 150 shares
reverse split of our common stock. The reverse split was effected on January 28,
2005.

     Our principal  executive offices are located at 210 Second Street, P.O. Box
393, St. Marys, West Virginia 26170, and our telephone number is (304) 684-7053.

Business Development

     In 2001,  we  continued  our interest in the Trenton - Black River deep gas
field in the Appalachian Basin in West Virginia.  We believes that this area may
become active in the counties in which we operate.  We continue to focus much of
our efforts in this area to take  advantage of the situation if the  opportunity
becomes  available.  In 1999, we sold many of our  Appalachian  Basin assets and
purchased 51% of a producing well in the Powder River Basin in Wyoming.

     In addition to the business of newly acquired Arvilla, we will continue our
current business of the  transporting,  marketing and producing  natural gas and
oil and engaging in certain limited exploration and development activities.


                                      -3-
<PAGE>

     Our business strategy is to economically increase reserves,  production and
the sale of gas and oil from  existing  and  acquired  properties  in the Powder
River Basin, Appalachian Basin and elsewhere, in order to maximize shareholders'
return over the long term. Our strategic location in West Virginia enables us to
actively pursue the acquisition and development of producing  properties in that
area that will  enhance our  revenue  base  without  proportional  increases  in
overhead costs.

     We operate oil and natural gas  properties and transport and market natural
gas through  our  transmission  systems in West  Virginia.  Although  management
desires to acquire  additional oil and natural gas properties and to become more
involved in exploration and development, this can only be accomplished if we can
secure future  funding.  Management  intends to continue to develop and increase
the  production  from oil and  natural gas  properties  that we  currently  own.
Although  we will  continue  to  transport  and market  natural  gas through our
pipelines,  there are no current plans to acquire or to lay additional pipeline.
Accordingly,  during 2004 we sold approximately 7.6 miles of our 6-inch pipeline
and   approximately  10  miles  of  our  4-inch  pipeline  for  cash  and  other
consideration.  In 2004, we sold  approximately  3 miles of 6-inch  pipeline and
approximately 5.7 miles of 4-inch pipeline.

     On December 31, 2003,  we sold our 75% working  interest  ownership in five
oil and gas  wells  located  in  Tyler  County,  West  Virginia  to  Ultra-Light
Investments  for $380,000.  Of the total  proceeds,  $30,000 was used to pay off
existing  debt on the  wells.  The  balance  of  $350,000  was used to settle an
ongoing dispute with Baker Hughes Oilfield Operations,  Inc. d/b/a/ Baker Hughes
Inteq, Western Geophysical, a division of Western Atlas International,  Inc. The
$350,000  was  considered  as payment in full and we were given a release of all
judgments and liens against us in the matter.

     The  following is a summary of our oil and gas assets  including  wells and
pipelines that we acquired in September 1993:

     Tyler Construction Company, Inc.
     --------------------------------

     We acquired a 65%  interest  in Tyler  Construction  Company  from Loren E.
Bagley and William F.  Woodburn,  both of whom are  directors  of Trans  Energy.
Tyler  Construction  owns and operates a natural gas gathering  pipeline  system
serving the industrialized Ohio Valley, initially consisting of approximately 27
miles of 6-inch pipeline and 10 miles of 4-inch pipeline.

     Tyler  Construction's  trunk line system  consists of 6-inch  pipeline that
begins at the town of St. Marys, West Virginia, located on the Ohio River in the
County of Pleasants in western West Virginia,  and proceeds  twenty-seven  miles
due east to Bradden Station,  West Virginia.  Near Bradden Station, the pipeline
intercepts  major   transmission   lines  of  Equitable  Natural  Gas,  Dominion
Transmission,  Inc. and Eastern American Energy. An intercepting line consisting
of ten miles of 4-inch  pipeline begins at a point eight miles east of St. Marys
and proceeds  north 10 miles to an industrial  park located seven miles south of
Sistersville,  West Virginia. At this point, gas is delivered to OSI Specialties
(formerly Union Carbide) and Consolidated  Aluminum Corporation of America under
a marketing  agreement with Sancho.  Pursuant to our agreement  with Sancho,  we
have the right to sell  natural  gas  subject to the terms and  conditions  of a
20-year  contract,  as amended,  that Sancho entered into with Hope Gas, Inc. in
1988.  This agreement is a flexible volume supply  agreement  whereby we receive
the full price which Sancho  receives  less a $.05 per Mcf marketing fee paid to
Sancho. The price of the natural gas is based upon the residential gas index and
the Inside F.E.R.C. CNG Index.

     On  February  28,  2003,  we sold 7.6 miles of the  6-inch  pipeline  to PC
Pipeline,  Inc., located in Morgantown,  West Virginia. In consideration for the
sale,  we  received  35% of the  outstanding  stock of Tyler  Construction  from
Ecological  Energy,  Inc.,  an  affiliate  of PC  Pipeline.  As a result  of the
transaction, we now own 100% of the capital stock of Tyler Construction.

     Also on February 28, 2003, we sold 10 miles of the 4-inch pipeline to Triad
Energy  Corporation,  located in Marietta,  Ohio, for the cash  consideration of
$270,000.  Proceeds  from the sale  were  used to pay down  existing  short  and
long-term debt.

                                      -4-
<PAGE>

     On March 17, 2004, Tyler  Construction  sold 16,000 feet of 6-inch pipeline
located in Pleasants  and Tyler  Counties,  West  Virginia  for  $70,000.  Tyler
Construction  also sold  30,096  feet of 4-inch  pipeline  (the  Pipeline  Ltd.)
located in Pleasants and Ritchie Counties, West Virginia for $130,000. The buyer
in both  instances  was Triad Energy  Corporation  of Reno,  Ohio.  Of the total
proceeds,  $161,391 was used to pay off the bank debt of the  pipelines  and the
balance  was  used  as  operating   capital.   Following  the  sale,  we  retain
approximately 16.3 miles of 6-inch pipeline in Tyler County.

     Spencer Wells
     -------------

     We acquired  all rights,  title and interest to six  producing  oil and gas
wells  located in West  Virginia,  in exchange for shares of Trans Energy common
stock.  Five of the wells identified as "Fowler,"  "Goff," "Locke," "McGill" and
"Workman"  are  situated  in Ritchie  County in a proven  reservoir  field.  The
remaining  well  identified as  "Spencer,"  is located in Tyler County.  All six
wells were  completed  in 1991 and have been  producing  oil and gas through the
date hereof.  In 1999,  five of these wells were sold to an  unaffiliated  third
party and in 2000, the sixth well was sold to an unaffiliated third party.

     The Pipeline, Ltd.
     ------------------

     We acquired from Tyler Pipeline, Inc. all rights, title and interest in the
natural gas gathering  pipeline system known as The Pipeline,  Ltd. (the name of
the pipeline, not a legal entity), a 4-inch pipeline that begins at Twiggs, West
Virginia,  nine miles east of St. Marys, West Virginia where it intercepts Tyler
Construction's  trunk line system and  proceeds  due south for a distance of six
miles.  The Pipeline,  Ltd.  system is used for  purchasing gas from third party
producers.  Mr.  Woodburn,  our  Secretary / Treasurer  and a director,  is also
President and owns 50% of Tyler Pipeline.  Mr. Bagley,  our Vice President and a
director, also owns 50% of Tyler Pipeline.

     Ritchie County Gathering Systems, Inc.
     --------------------------------------

     We acquired all the issued and outstanding  capital stock of Ritchie County
Gathering Systems,  Inc., a West Virginia corporation.  Ritchie County Gathering
owns and operates a 4-inch  natural gas  gathering  line which begins five miles
south of Cairo,  West  Virginia at  Rutherford,  and  proceeds due south for 4.6
miles,  crossing  Mellon Ridge and ending at Macfarlan Creek  approximately  1/2
mile north of the South Fork of the Hughes River.  The Ritchie County  Gathering
pipeline is used for  purchasing  gas from third party  producers and delivering
such gas to Hope Gas.

     Cobham Gas Industries, Inc.
     ---------------------------

     On November 5, 2004,  we  finalized  an  agreement  with Texas Energy Trust
Company,  a Delaware  Business Trust with offices in Irving,  Texas,  whereby we
acquired  certain oil and gas leases and leasehold  interests  located in Wetzel
and Marion Counties,  West Virginia, and other assets. Our acquisition of Cobham
includes its two subsidiaries,  Penine Resources,  Inc. and Belmont Energy, Inc.
The  acquisition  was  accomplished  by our wholly owned  subsidiary,  Prima Oil
Company,  Inc.,  acquiring  from  Texas  Energy  Trust  100% of the  issued  and
outstanding  shares (2,100  shares) of Cobham Gas  Industries,  Inc., a Delaware
corporation.  Under the  terms of the  agreement,  we  acquired  certain  wells,
leases, pipelines, gas purchase agreements,  oil hauling agreements,  equipment,
right of ways and other  miscellaneous  items  related to the leases  located in
West  Virginia.  A total of 229 wells were  acquired,  of which 98 are currently
producing,  located  on  approximately  15,000  leased  acres.  Among the assets
acquired are certain  vehicles and heavy  equipment and various  other  drilling
equipment.

     In  consideration  for the acquired  property,  we paid a purchase price of
$892,344, of which approximately  $489,000 is payable in cash and the balance in
244,633 shares of restricted Trans Energy common stock, post-split, to be issued
following the  effectiveness of our one share for 150 shares reverse stock split
in January 2005. An initial payment of $250,000 was paid at the closing with the
remaining balance to be paid quarterly in equal  installments  beginning January
1, 2005, with the final payment due October 1, 2005.

                                      -5-
<PAGE>

     The wells are situated in well defined  fields  producing  from the shallow
Devonian formation.  Big Injun, Gordon and Thirty Foot are sands in the Devonian
foundation  that have produced  substantial  natural gas in West  Virginia.  The
field/acreage   positions   consist  of  three   specific   areas;   Mannington,
Smithfiled/Wallace  and Dents Run. The  Mannington  field  consists of 107 wells
encompassing  4,573  acres.  These wells are Big Injun wells,  at  approximately
2,900 - 3,000 feet in depth,  dependent  on  elevation.  The  Smithfield/Wallace
field consists of 92 wells  encompassing 9,223 acres. The preponderance of these
wells are Big Injun wells, although there are several Gordon wells in the field.
Management  believes  that future  development  can expand the Gordon and Bayard
play. The Dents Run field consists of 30 wells  encompassing  1,097 acres. These
wells are completed through the Thirty Foot sand.

     Powder River Basin Wyoming
     --------------------------

     On March 6, 1998,  we  entered  into an  agreement  to  purchase  from GCRL
Energy, Ltd. all of its interest in the Powder River Basin in Campbell and Crook
Counties,  Wyoming, consisting of interests in five (5) wells, four (4) of which
are  producing,   interests  in  30,000   leasehold   acres,  and  interests  in
approximately  seventy-three  miles of 3-D seismic data. The properties  include
three  producing  fields from  Minnelusa  Sandstone  and were  discovered on 3-D
seismic.  We made an initial  payment  for the  properties  of  $50,000  and the
balance of $2,987,962 was paid for with proceeds from the sale of debentures.

     The  following  table sets forth  information  concerning  the existing oil
production per day of the producing wells located on the GCRL property.

                                Gross Bbls.                        Net Bbls.
Name of Well                    Oil Per Day    Net % to TSRG       to TSRG
------------                   ------------    -------------      -----------
Sagebrush Flat (one unit)            85               42.15%            36
Pinon Fee #1                         21                51.2%            11
Swartz Draw                          28                15.4%             4
                                  -----                               ----
        Total                        97                                 51

Current Business Activities

     We operate our oil and  natural gas  properties  and  transport  and market
natural  gas  through  our  transmission  systems  in  West  Virginia.  Although
management  desires to acquire  additional oil and natural gas properties and to
become  more  involved  in  exploration  and  development,   this  can  only  be
accomplished if we can secure future funding.  Management intends to continue to
develop and increase the production from the oil and natural gas properties that
it currently owns.

     We will  continue to transport  and market  natural gas through our various
pipelines  in 2005.  Apart from one well  drilled in the Powder  River  basin in
Wyoming  (Sagebrush  #3) and the seven  re-entry  Benson  wells  drilled in West
Virginia, we have not participated in any new wells in the last four years.

     Powder River Basin Wyoming - Prima
     ----------------------------------

     In  December  1996 we  purchased  420 acres in the  Powder  River  basin in
Wyoming for $50,000 from an unaffiliated  third party.  Included in the purchase
price was a condition that the previous owners would provide all of the geologic
and  geophysical  work as part of the purchase price. In February 1997 we leased
an  additional  480 acres that  joined  with our  acreage  position.  The target
formation is the Minnelusa "B1" sand.  There presently are no producing wells on
such acreage and no proved reserves located on the acreage owned by us.

                                      -6-
<PAGE>

     Five   two-dimensional   ("2-D")   seismic   lines  and  a  6-square   mile
three-dimensional  ("3-D") seismic program have been shot across the acreage now
held by us. Unlike 2-D seismic testing which provides a cross-sectional  view of
the subsurface of the Earth, 3-D testing provided a full, three-dimensional view
of the  subsurface.  Such views allow for greater  precision  in the location of
potential  drilling  sites.  3-D  testing  allows  potential  drillers to obtain
accurate estimates of the size of oil and gas bearing structures and the profile
of the  structure.  2-D testing  only  informs  the driller  that an oil and gas
bearing structure is in a particular area, without giving information as to size
and shape.  Without an accurate  estimate of the size of the oil and gas bearing
structures,  it  is  difficult  to  accurately  estimate  the  reserves  in  the
structure,  and,  thus,  the economic  viability  of drilling  into a particular
structure.  Without an accurate profile of the structure,  a driller may not hit
the most economic portion of the structure.

     Water pressure  primarily is responsible for the movement of oil within the
area of our acreage. Where water pressure is the cause of oil movement,  finding
the apex of the oil bearing  structure  is critical.  Drilling  into the apex of
such a structure  usually  assures  that a maximum  amount of oil, and a minimal
amount of water,  will be recovered  from a well.  Hitting such a zone elsewhere
than at the apex will result in a lower  proportion  of oil to water and reduced
rates of recovery.

     We completed  drilling the Fowler 22-8 in January 1998 and  determined  the
well to be a dry hole and was plugged.  We have not done further drilling on the
acreage.

     Powder River Basin Wyoming - Wolffe Prospect
     --------------------------------------------

     In 1997, we purchased a 30% working  interest in the Wolffe Prospect in the
Powder River Basin in Campbell County,  Wyoming for $65,000 from an unaffiliated
third party.  Included in the purchase  price was a 30% working  interest in the
Wolffe  #1-35  well  and  30%  interest  in  240  acres.  In  October  1997,  we
participated  in our share of the drilling of the Horizon 32-35 well. The target
formation was the Minnelusa  "B1" sand. The well was determined to be a dry hole
and plugged. In November 1999 we purchased for $16,000 an additional 51% working
interest in the Wolff 1-35 well from Renor  Exploration  Limited.  In  September
2002, we transferred this well to an unaffiliated third party in settlement of a
lawsuit.

     Arvilla Oilfield Services
     -------------------------

     On January 31,  2005,  we finalized  the  acquisition  of Arvilla  Oilfield
Services,  LLC through a merger of our  subsidiary,  Trans Energy  Acquisitions,
with and into  Arvilla,  Inc.,  with  Arvilla,  Inc.  being the  survivor of the
merger.  Previously  in June 2004,  Clarence  E. Smith and  Rebecca L. Smith had
acquired  Arrow  Oilfield  Services  Company  from  Belden  & Blake  Corporation
("B&B"),  a privately held company engaged in the  exploration,  development and
production  of oil and natural gas  reserves.  Mr. and Mrs.  Smith  subsequently
created Arvilla Oilfield Services,  LLC as the operating entity and then created
Arvilla,  Inc., that acquired all the membership  interests of Arvilla  Oilfield
Services,  LLC.  Thus,  by  acquiring  Arvilla,  Inc.,  we  assumed  all  of the
operations, assets and liabilities of Arvilla Oilfield Services.

     In order to consummate the acquisition of Arvilla, on November 29, 2004 our
board of directors and stockholders holding a majority of our outstanding common
stock,  approved a one share for 150 shares  reverse  split of our common stock.
The reverse split was effected on January 28, 2005.

                                      -7-
<PAGE>
     In  consideration  for  Arvilla,   Inc.,  we  issued  1,185,024  shares  of
post-split  Trans Energy  common stock to the  following  Arvilla  stockholders:
Clarence E. Smith, 531,437 shares; Rebecca L. Smith 531,437 shares and Howell B.
Williams,  122,150 shares. These shares represent approximately 25% of our total
outstanding shares (post-split)  following the transaction,  including shares to
be  issued  in  connection  with the  separate  acquisition  of the  Cobham  Gas
Industries assets. Arvilla, Inc. will operate as a separate business entity 100%
owned by Trans Energy.

         Business of Arvilla
         -------------------

     Arvilla  is engaged in  providing  well  servicing,  workover  and  related
transportation  services to  independent  oil and natural gas  producers  in the
northeast region of the United States.  Arvilla performs ongoing maintenance and
major overhauls  necessary to optimize the level of production from existing oil
and  natural  gas wells and  provides  certain  ancillary  services  during  the
drilling  and  completion  of new wells.  Arvilla  offers its  services in Ohio,
Pennsylvania, New York, Virginia, Kentucky and West Virginia.

     Typically,  Arvilla will provide a well  servicing or swab rig, the crew to
operate the rig, and such other specialized equipment as may be needed to meet a
customer's requirements. Arvilla also owns a fleet of equipment that provides:

     o   brine hauling and disposal;
     o   pipeline and facility  construction;
     o   well location preparation and lease road construction;
     o   oil hauling;
     o   and trucking of oilfield equipment,  such as rigs, casings,  tubing and
         rods.

         Strategy
         --------

     Management believes that the Appalachian Basin in the northeastern  portion
of the United States  provides  significant  opportunities  for  exploration and
production  companies to develop  reserves at shallow  depths.  Because  Arvilla
operates in Ohio, Pennsylvania,  New York, Virginia, Kentucky and West Virginia,
we feel  that  Arvilla's  well  servicing  operations  are  well  positioned  to
capitalize  on existing  market  opportunities  and  established  demand for its
services.

     Arvilla's service area is located within 500 miles of major gas markets for
the United States. This strategic location is important as oil and gas companies
develop natural gas reserves for future  markets.  Management  anticipates  that
demand for natural gas will grow  significantly  in the next few years and, as a
result of the  demand,  it is  expected  that there to be a marked  increase  in
drilling  activity  in the  Appalachian  Basin  served by  Arvilla.  As drilling
activity increases, the need for the services provided by Arvilla will increase.
Every well drilled requires service of the type that Arvilla is able to provide.
As the drilling activities increase, we anticipate demand for Arvilla's services
in its operation area to also increase.

         Services
         --------

     Through  its  experienced  work force,  Arvilla is able to provide  various
services to the oil and gas industry that include:

         Trucking  services.  Arvilla  owns a fleet of trucks  that can  provide
     customers with the ability to move equipment,  tanks, drill pipe, and other
     types of trucking needs necessary in the oil and gas business.  Each time a
     well is drilled,  all drilling  equipment  must be moved by trucks from one
     site to the next. This equipment  includes  generators,  water pumps, drill
     pipe, air compressors,  drilling rigs, and many other associated items used
     in drilling.
                                      -8-
<PAGE>

         Excavating equipment.  Arvilla provides dozer, excavators,  and loaders
     that are used to build access roads,  cut drill sites for wells,  dig pits,
     reclaim drill sites after drilling is completed,  reclaim access roads, and
     seed, fertilize, lime, and mulch disturbed areas.

         Service and swab rigs. Arvilla maintains a fleet of 14 service rigs and
     swab rigs  capable  of  servicing  wells up to 6,000  feet in  depth.  This
     service includes running pipe, tubing, rods, and swabbing capabilities. All
     wells drilled require services of this type.

         Brine and water hauling.  Arvilla  provides a fleet of 20 vacuum trucks
     designed to deliver  water to drilling  rigs and fracs.  Arvilla also hauls
     and disposes of brine water from producing  wells and disposes of pit water
     used in well completions.

         Disposal wells.  Arvilla has 14 brine disposal wells located at various
     locations  in Ohio.  These wells are used for the disposal of brine and pit
     water.

         Oil  hauling.  Arvilla  maintains a fleet of 6 oil tankers that pick up
     oil from producers at the well site and delivers the oil to terminals, from
     which it is shipped to refineries.

         Pipelines. Arvilla has the capability of constructing pipelines for the
     delivery of natural gas or oil. Most wells drilled require  construction of
     a natural  gas line to  deliver  gas from the well to a  gathering  system,
     which will ultimately take the gas to market.

Research and Development

     We have  not  allocated  funds  for  conducting  research  and  development
activities  and,  due  to  the  nature  of our  business.  We do not  anticipate
allocating funds for research and development in the immediate future.

Marketing

     We operate exclusively in the oil and gas industry.  Natural gas production
from wells owned by us is generally  sold to various  intrastate  and interstate
pipeline companies and natural gas marketing companies. Sales are generally made
on the spot market or under  short-term  contracts (one year or less)  providing
for variable or market sensitive prices.  These prices often are tied to natural
gas futures contracts as posted in national publications.

     Natural  gas  delivered  through  our  pipeline  network is sold  through a
contract  with  Sancho Oil and Gas  Corporation  to  Dominion  Hope Gas, a local
utility.  Some of the gas is sold at a fixed price on a year long basis and some
at a variable price per month per Mcf.  Under our contract with Sancho,  we have
the right to sell natural gas subject to the terms and  conditions  of a 20-year
contract,  as amended,  that  Sancho  entered  into with Hope Gas in 1988.  This
agreement  is a flexible  volume  supply  agreement  whereby we receive the full
price which Sancho  charges the end user less a $.05 per Mcf  marketing fee paid
to Sancho.  In  addition  to the  natural  gas  produced  by our wells,  we also
purchased approximately 960 Mcf of natural gas per day in 2004.

     We sell our oil production to third party  purchasers  under  agreements at
posted  field  prices.  These  third  parties  purchase  the oil at the  various
locations where the oil is produced.

     Although  management  believes  that  we are  not  dependent  upon  any one
customer,  our marketing arrangement with Sancho accounted for approximately 78%
of our revenue for the year ended December 31, 2004, and  approximately  82% for
2003. This marketing agreement is in effect until September 1, 2008.

                                      -9-
<PAGE>
     Arvilla  markets its services  through its various office  locations.  Each
office has a designated  person who will market the services for that  offices's
given area. Currently,  the marketing is done from Canton, Ohio,  Pleasantville,
Pennsylvania and St. Marys,  West Virginia.  Arvilla  advertises its services in
oil and gas trade journals as well as direct verbal and written communication to
oil ad gas  companies  operating  in the areas  served by Arvilla.  Arvilla also
maintains a web site at  http://www.arvillaoilfield.com  that is  available  for
current and prospective customers to review. Brochures will also be prepared for
distribution that will explain those services available.

Competition

     We are in direct  competition  with numerous oil and natural gas companies,
drilling and income  programs and  partnerships  exploring  various areas of the
Appalachian and Powder River Basins and elsewhere competing for customers.  Many
competitors are large, well-known oil and gas and/or energy companies,  although
no single entity dominates the industry. Many of our competitors possess greater
financial  and  personnel  resources  enabling them to identify and acquire more
economically  desirable energy producing  properties and drilling prospects than
us.  Additionally,  there is  competition  from other fuel choices to supply the
energy needs of consumers and industry.  Management believes that there exists a
viable  market  place  for  smaller  producers  of  natural  gas and oil and for
operators of smaller natural gas transmission systems.

     Under our  contract  with  Sancho,  we have the right to sell  natural  gas
subject to the terms and  conditions  of a 20-year  contract,  as amended,  that
Sancho entered into with Dominion Hope Gas in 1988. This agreement is a flexible
volume supply agreement  whereby we receive the full price which Sancho receives
less a $.05 per Mcf marketing  fee paid to Sancho.  The price of the natural gas
is based upon indices  that  include the  residential  gas  commodity  charge of
Dominion  Hope  Gas and  the  Inside  F.E.R.C.  CNG  Index.  Were it not for the
relationship  between  Dominion  Hope Gas and  Sancho,  Dominion  Hope Gas would
compete directly with us for the sale of gas to certain customers,  specifically
OSI Specialities, Inc. and Ormet Aluminum Company.

     Arvilla is in direct  competition  with  numerous  other  oilfield  service
companies  that  operate in the same areas in which  Arvilla  operates.  Some of
Arvilla's  competitors include Bishop Well Services,  Key Energy,  Triad, Carper
Well Services,  Danny Long and S & H Water Service.  Some existing and potential
competitors  have  greater  financial  resources,  larger  market share and more
customers  than  Arvilla,   which  may  enable  them  to  establish  a  stronger
competitive  position than we have. There is also much competition for qualified
personnel  that operate the  equipment  used in the oilfield  service  business.
Management  believes  that  Arvilla can  successfully  compete  with these other
businesses in securing trained personnel and additional customers.

Government Regulation

     The oil and gas industry is  extensively  regulated  by federal,  state and
local  authorities.  The scope and  applicability  of  legislation is constantly
monitored for change and expansion.  Numerous agencies,  both federal and state,
have issued  rules and  regulations  binding on the oil and gas industry and its
individual members, some of which carry substantial penalties for noncompliance.
To date, these mandates have had no material effect on our capital expenditures,
earnings or competitive position.

     Legislation and implementing  regulations adopted or proposed to be adopted
by the Environmental Protection Agency ("EPA") and by comparable state agencies,
directly and indirectly,  affect our  operations.  We are required to operate in
compliance  with certain air quality  standards,  water  pollution  limitations,
solid  waste  regulations  and other  controls  related  to the  discharging  of
materials into, and otherwise protecting the environment. These regulations also
relate to the  rights of  adjoining  property  owners  and to the  drilling  and
production  operations  and  activities  in  connection  with  the  storage  and
transportation of natural gas and oil.
                                      -10-
<PAGE>
     We may be  required  to  prepare  and  present to  federal,  state or local
authorities data pertaining to the effect or impact that any proposed operations
may have upon the environment. Requirements imposed by such authorities could be
costly, time-consuming and could delay continuation of production or exploration
activities.  Further,  the  cooperation  of other  persons  or  entities  may be
required for us to comply with all environmental regulations.  It is conceivable
that future legislation or regulations may significantly  increase environmental
protection  requirements  and,  as a  consequence,  our  activities  may be more
closely regulated which could significantly  increase operating costs.  However,
management is unable to predict the cost of future compliance with environmental
legislation.  As of  the  date  hereof,  management  believes  that  we  are  in
compliance with all present environmental regulations.  Further, we believe that
our oil and gas  explorations  do not pose a  threat  of  introducing  hazardous
substances into the environment.  If such event should occur, we could be liable
under certain  environmental  protection  statutes and laws. We presently  carry
insurance for environmental liability.

     Our exploration and development  operations are subject to various types of
regulation at the federal,  state and local levels. Such regulation includes the
requirement of permits for the drilling of wells, the regulation of the location
and density of wells,  limitations on the methods of casing wells,  requirements
for surface use and restoration of properties upon which wells are drilled,  and
governing the abandonment and plugging of wells.  Exploration and production are
also subject to property rights and other laws governing the correlative  rights
of surface and subsurface owners.

     We are subject to the  requirements of the  Occupational  Safety and Health
Act, as well as other state and local labor  laws,  rules and  regulations.  The
cost of compliance  with the health and safety  requirements  is not expected to
have a material impact on our aggregate  production expenses.  Nevertheless,  we
are unable to predict the ultimate cost of compliance.

     Although  past sales of natural gas and oil were  subject to maximum  price
controls,  such controls are no longer in effect. Other federal, state and local
legislation, while not directly applicable to us, may have an indirect effect on
the cost of, or the demand for, natural gas and oil.

Employees

     As of  the  date  hereof  Trans  Energy  employs  eight  people  full-time,
consisting of three executives,  two marketing and clerical  persons,  and three
production persons.  Our newly acquired  subsidiary,  Arvilla Oilfield Services,
has approximately 103 full time employees consisting of the following:

     o   43 rig hands that  operate or work  directly  on a service  rig or swab
         rig;
     o   25 truck drivers who drive various types of trucks that haul oil, brine
         or oilfield equipment;
     o   2  equipment   operators  who  operate   various  types  of  excavating
         equipment;
     o   11 roustabouts  who perform various types of labor work associated with
         oil and gas production such as setting tank  batteries,  meter runs and
         laying or repairing gas lines;
     o   10 mechanics  that repair and  maintain  all types of trucks,  rigs and
         equipment;
     o   4 clerical employees;
     o   6 managerial persons; and
     o   2 executives.

     None of our employees or employees of Arvilla are members of any union, nor
have they entered into any collective  bargaining  agreements.  We believes that
our relationship with our employees is good. With the successful  implementation
of our  business  plan,  we may seek  additional  employees  in the next year to
handle  anticipated  potential growth. We anticipate that we may hire additional
employees  in  the  areas  of  rig  operators,   truck  drivers,  mechanics  and
roustabouts.
                                      -11-
<PAGE>

Facilities

     We currently occupy  approximately 4,000 square feet of office space in St.
Marys, West Virginia,  which we share with our subsidiaries,  Tyler Construction
Company  and  Ritchie  County  Gathering  Systems.  We  lease  an  aggregate  of
approximately  4,000 square feet from an unaffiliated third party under a verbal
arrangement for $1,400 per month, inclusive of utilities. Management anticipates
that we will move our principal  offices to Arvilla's  corporate offices in June
2005.

     Arvilla currently operates out of facilities located in or near its service
areas.  Arvilla's  corporate  headquarters  are  located at 7994 South  Pleasant
Highway,  St. Marys,  West Virginia 26170,  and consist of a leased 6,400 square
foot shop and  office  facility.  This  office  manages  work in West  Virginia,
Virginia,  and  Kentucky.  Arvilla  owns a 20,000  square  foot  office and shop
located on 39 acres in Canton, Ohio, that manages most of Arvilla's work in Ohio
and some in Western Pennsylvania.  This office reports to the main office in St.
Marys.  West  Virginia.  Arvilla  also uses a leased shop and office  located in
Cambridge,  Ohio that manages  work in Southern  Ohio and reports to the Canton,
Ohio  office.  Further,  Arvilla  maintains a leased shop and office  located in
Pleasantville,  Pennsylvania  that manages work in Pennsylvania and New York and
reports to the main office in St. Marys, West Virginia.

Industry Segments

     No  information  is presented  as to industry  segments.  We are  presently
engaged in the principal business of the exploration,  development,  production,
transportation  and  marketing of natural gas and oil.  Reference is made to the
statements of operations contained in the financial statements included herewith
for a  statement  of our  revenues  and  operating  loss for the past two fiscal
years.

Risk Factors

     You should carefully  consider the risks and uncertainties  described below
and  other  information  in  this  report.  If  any of the  following  risks  or
uncertainties  actually occur, our business,  financial  condition and operating
results,  would likely suffer.  Additional  risks and  uncertainties,  including
those that are not yet identified or that we currently  believe are  immaterial,
may also  adversely  affect  our  business,  financial  condition  or  operating
results.

     We have a history of losses and anticipate future losses
     ---------------------------------------------------------------------------
     Although our revenues  increased  approximately  26% during the fiscal year
ended  December  31,  2004,  and we may not achieve,  or  subsequently  maintain
profitability  if  anticipated  revenues do not increase in the future.  We have
experienced operating losses,  negative cash flow from operations and net losses
in each quarterly and annual period for the past several  years.  As of December
31, 2004, our net operating loss  carryforward was approximately $24 million and
our accumulated  deficit was approximately $29 million. We expect to continue to
incur significant expenses in connection with

     *   exploration and development of new and existing properties,
     *   costs of sales and marketing efforts,
     *   additional personnel, and
     *   increased general and administrative expenses.

     Accordingly,  we will need to generate  significant revenues to achieve and
attain, and eventually sustain  profitability.  If revenues do not increase,  we
may be unable to attain or sustain profitability on a quarterly or annual basis.
Any of these factors could cause the price of our stock to decline.

                                      -12-
<PAGE>

     We have a significant  working capital deficit that makes it more difficult
     to  obtain  capital  necessary  for our  operations  and  which may have an
     adverse effect on our future business.
     ---------------------------------------------------------------------------
     As of December 31, 2004, we had a working capital deficit of $2,980,431. If
our  business  when  combined  with Arvilla  does not produce  positive  working
capital in the future, our business and financial condition would most likely be
materially and negatively impacted.

     It may be necessary  for us to seek  additional  funding,  which may not be
     available on terms favorable to us, or at all
     ---------------------------------------------------------------------------
     Management  believes  that we may  need to  raise  funds  in  order to take
advantage of  anticipated  expansion of our  business.  If we cannot meet future
capital requirements through realized revenues from our ongoing business, we may
have  to  raise  additional  capital  by  borrowing  or  by  selling  equity  or
equity-linked securities, which securities would dilute the ownership percentage
of our existing  stockholders.  Also,  these  securities could also have rights,
preferences or privileges senior to those of our common stock.  Similarly, if we
raise  additional  capital by issuing  debt  securities,  those  securities  may
contain  covenants  that  restrict us in terms of how we operate  our  business,
which could also affect the value of our common stock.  If we borrow more money,
we will have to pay  interest  and may also have to agree to  restrictions  that
limit  operating  flexibility.  We may not be able to  obtain  funds  needed  to
finance  operations  at  all,  or may be  able  to  obtain  funds  only  on very
unattractive  terms.  Management may also explore other  alternatives  such as a
joint  venture  with other oil and gas  companies.  There can be no  assurances,
however, that we will conclude any such transaction.

     There are many competitors in the oil and gas industry
     ---------------------------------------------------------------------------
     We encounter  many  competitors  in the oil and gas industry  including the
exploration and development of properties,  the sale of oil and gas and oilfield
services.  Management  expects  competition  to continue  and  intensify  in the
future.  The market for the oilfield service  industry is extremely  competitive
and the barriers to entry are relatively low. Increased competition could result
in reduced operating margins,  as well as a loss of market share for our Arvilla
operations.  Many  existing and  potential  competitors  have greater  financial
resources, larger market share and more customers than us, which may enable them
to  establish  a stronger  competitive  position  than we have.  Also,  there is
considerable  competition for qualified  personnel to operate the equipment used
by  Arvilla.  If  we  fail  to  address  competitive  developments  quickly  and
effectively,  we will not be able to grow  and our  business  will be  adversely
affected.

     If Arvilla  fails to keep up with  changes  affecting  the markets  that it
     serves,  it  will  become  less  competitive,  adversely  affecting  future
     financial performance.
     ---------------------------------------------------------------------------
     In order to remain competitive and serve its customers effectively, Arvilla
must  respond on a timely  and  cost-efficient  basis to changes in  technology,
industry  standards and  procedures and customer  preferences.  Arvilla needs to
continuously  upgrade and update its  services to address new  developments  and
changing  customer  demands.  In some cases these changes may be significant and
the cost to comply with these changes may be  substantial.  We cannot assure you
that we will be able to adapt to any  changes in the future or that we will have
the financial  resources to keep up with changes in the  marketplace.  Also, the
cost of adapting  Arvilla's  services may have a material and adverse  effect on
our operating results.

                                      -13-
<PAGE>

     Our operating  results are likely to fluctuate  significantly and cause our
     stock price to be volatile  which could cause the value of your  investment
     in our shares to decline
     ---------------------------------------------------------------------------
     Quarterly   and  annual   operating   results   are  likely  to   fluctuate
significantly  in the  future  due to a variety  of  factors,  many of which are
outside of our control.  If operating  results do not meet the  expectations  of
securities  analysts and investors,  the trading price of our common stock could
significantly  decline which may cause the value of your  investment to decline.
Some of the factors that could affect quarterly or annual  operating  results or
impact the market price of our common stock include:

     o   our ability to develop properties and to market our oil and gas;
     o   the timing and amount of, or cancellation  or  rescheduling  of, orders
         for our oil and gas;
     o   our  ability  to  retain  key  management,   sales  and  marketing  and
         engineering personnel;
     o   a decrease in the prices of oil and gas; and
     o   changes in costs of exploration or marketing oil and gas.

     Due to these and other factors, quarterly and annual revenues, expenses and
results  of   operations   could  vary   significantly   in  the   future,   and
period-to-period  comparisons should not be relied upon as indications of future
performance.

     Our  business  could  be  adversely   affected  by  any  adverse   economic
     developments in the oil and gas industry and/or the economy in general.
     ---------------------------------------------------------------------------
     The oil and gas  industry is  susceptible  to  significant  change that may
influence our business  development  due to a variety of factors,  many of which
are outside our control. Some of these factors include

     o   varying demand for oil and gas;
     o   fluctuations in price; o competitive factors that affect pricing;
     o   attempts to expand into new markets;
     o   the  timing and  magnitude  of capital  expenditures,  including  costs
         relating to the expansion of operations;
     o   hiring and retention of key personnel;
     o   changes in generally  accepted  accounting  policies,  especially those
         related to the oil and gas industry; and
     o   new government legislation or regulation.

Any of the above factors or a  significant  downturn in the oil and gas industry
or with  economic  conditions  generally,  could have a  negative  effect on our
business and on the price of our common stock.

     Our future success  depends on retaining  existing key employees and hiring
     and  assimilating  new key  employees.  The  loss of key  employees  or the
     inability to attract new key  employees  could limit our ability to execute
     our growth strategy,  resulting in lost  profitability and a slower rate of
     growth.
     ---------------------------------------------------------------------------
     Our  future  success  depends,  in part,  on the  ability  to retain  Trans
Energy's and Arvilla's key employees including executive officers. Following the
acquisition of Arvilla we do not anticipate entering into employment  agreements
with  their  executives  or key  personnel.  Also,  we do not  carry,  nor do we
anticipate  obtaining,  "key  man"  insurance  on our  executives.  It  would be
difficult  for us to replace any one of these  individuals.  In addition,  as we
grow  we may  need  to  hire  additional  key  personnel.  We may not be able to
identify and attract  high quality  employees  or  successfully  assimilate  new
employees into our existing management structure.

                                      -14-
<PAGE>
     If we are unable to manage  our  growth  effectively,  our  operations  and
     financial performance could be adversely affected .
     ---------------------------------------------------------------------------
     The  ability  to  manage  and  operate  our  business  as  we  execute  our
anticipated  growth will require effective  planning.  Significant future growth
could strain our internal  resources,  leading to a lower quality of service and
other problems that could adversely affect our financial performance.  Arvilla's
efforts to grow have placed,  and we expect will continue to place,  a strain on
its personnel,  management  systems,  infrastructure  and other  resources.  Our
ability to manage future growth effectively will also require us to successfully
attract, train, motivate, retain and manage new employees and continue to update
and improve our operational,  financial and management  controls and procedures.
If we do not manage our growth  effectively,  our operations  could be adversely
affected,  resulting  in slower  growth  and a failure  to  achieve  or  sustain
profitability.

     Going concern issue
     ---------------------------------------------------------------------------
     Our independent  auditors have expressed a going concern issue. Our ability
to  continue  as a going  concern  is  dependant  upon our  ability to achieve a
profitable  level of  operations.  We may need,  among other things,  additional
capital  resources  which we will seek through loans from  shareholders or other
forms of financing.  Presently,  management anticipates that the addition of the
Arvilla  Oilfield and Cobham  Industries  operations will be sufficient to cover
our cash flow needs through fiscal 2005. However,  management cannot provide any
assurances that we will be successful in accomplishing any of our plans.

Risks relating to ownership of our common stock

     The price of our common stock is extremely  volatile and  investors may not
     be able to sell their shares at or above their purchase price, or at all.
     ---------------------------------------------------------------------------
     Our common stock is presently  traded on the OTC Bulletin  Board,  although
there is no  assurance  that a viable  market  will  continue.  The price of our
shares in the public market is highly  volatile and may fluctuate  substantially
because of:

     *   actual or anticipated fluctuations in our operating results;
     *   changes in or failure to meet market expectations;
     *   conditions and trends in the oil and gas industry; and
     *   fluctuations in stock market price and volume, which are particularly
         common among securities of small capitalization companies.

     Future sales or the potential for sale of a substantial number of shares of
     our common  stock could cause the market  value to decline and could impair
     our ability to raise capital through subsequent equity offerings.
     ---------------------------------------------------------------------------
     If we do not generate  necessary cash from our operations to finance future
business,  we may need to raise  additional  funds  through  public  or  private
financing  opportunities.  Issuing a substantial  number of our common shares to
individuals or in the public  markets,  or the  perception  that these sales may
occur,  could  cause the market  price of our common  stock to decline and could
materially  impair our ability to raise  capital  through the sale of additional
equity  securities.  Any such  issuances  would  dilute the equity  interests of
existing   stockholders.   Following  the   acquisition  of  Arvilla,   we  have
approximately  495  million  shares of common  stock  held in our  treasury  for
possible future issuance.

     We do not intend to pay dividends
     ---------------------------------------------------------------------------
     To date,  we have never  declared or paid a cash  dividend on shares of our
common stock.  We currently  intend to retain any future earnings for growth and
development of business and,  therefore,  do not anticipate paying any dividends
in the foreseeable future.

                                      -15-
<PAGE>
     Possible "Penny Stock" Regulation
     ---------------------------------------------------------------------------
     Trading of our  common  stock on the OTC  Bulletin  Board may be subject to
certain provisions of the Securities  Exchange Act of 1934, commonly referred to
as the "penny  stock" rule. A penny stock is generally  defined to be any equity
security  that has a market price less than $5.00 per share,  subject to certain
exceptions.  If our stock is deemed to be a penny  stock,  trading  in our stock
will be subject to additional  sales practice  requirements  on  broker-dealers.
These may require a broker dealer to:

     *   make a  special  suitability  determination  for  purchasers  of  penny
         stocks;
     *   receive the purchaser's written consent to the transaction prior to the
         purchase; and
     *   deliver to a prospective purchaser of a penny stock, prior to the first
         transaction,  a risk  disclosure  document  relating to the penny stock
         market.

     Consequently,  penny stock rules may restrict the ability of broker-dealers
to trade and/or maintain a market in our common stock.  Also,  many  prospective
investors  may not  want to get  involved  with  the  additional  administrative
requirements,  which may have a material  adverse  effect on the  trading of our
shares.

Item 2.       Description of Property

     Our properties  consist  essentially of working and royalty interests owned
by us in various  oil and gas wells and  leases  located  in West  Virginia.  On
December 31, 2003,  we sold our 75% working  interest  ownership in five oil and
gas wells located in Tyler County, West Virginia to Ultra-Light  Investments for
$380,000. The wells included Eastlack #1, Nolan #2, Nolan #3, Nolan #4 and Nolan
#5. Our proved reserves for the years ended December 31, 2004, 2003 and 2002 are
set forth below:
<TABLE>
<CAPTION>
                                                                December 31,
                                              2004                  2003                  2002
                                            ---------          ------------             ---------
<S>                                           <C>                                       <C>
Natural Gas (MMcf)
    Developed                                 542,955                -                  1,131,415
    Undeveloped                                -                     -                    -
                                            ---------          ------------             ---------
     Total Proved                             542,955                -                  1,131,415
                                            =========          ============             =========

Crude Oil (MBbl)
    Developed                                 106,649                99,880               113,406
    Undeveloped                                -                     -                    -
                                            ---------          -----------              ---------
     Total Proved                             106,649                99,880               113,406
                                            =========          ============             =========
</TABLE>

     These  estimates  are based  primarily on the reports of Robert L. Richards
(Wyoming),  Geologist and presently an officer and director of Trans Energy, and
Mark V. Schumacher,  PE (West Virginia). Such reports are, by their very nature,
inexact and subject to changes and  revisions.  Proved  developed  reserves  are
reserves  expected to be recovered from existing  wells with existing  equipment
and operating methods.  Proved undeveloped reserves are expected to be recovered
from new wells  drilled  to known  reservoirs  on  undrilled  acreage  for which
existence and  recoverability  of such reserves can be estimated with reasonable
certainty,  or from  existing  wells where a  relatively  major  expenditure  is
required to establish production. No estimates of reserves have been included in
any reports to any federal  agency other than the SEC. See SFAS 69  Supplemental
Disclosures included as part of our consolidated financial statements.
                                      -16-
<PAGE>

     Set forth in the following  schedule is the average sales price per unit of
oil,  expressed in barrels  ("bbl"),  and of natural gas,  expressed in thousand
cubic feet ("mcf"), produced by us for the past three fiscal years. The increase
in the cost of oil production in 2004 is attributed to expenses incurred putting
water flood into operation.
<TABLE>
<CAPTION>

                                                                   Years ended December 31,
                                               -----------------------------------------------------------
Average sales price:                            2004                       2003                      2002
-------------------                            ------                     ------                    ------
<S>                                           <C>                         <C>                      <C>
    Gas (per mcf)                             $  7.40                     $ 7.04                   $  4.73
    Oil (per bbl)                               30.24                      23.38                     17.91
Average cost of production:
    Gas (per mcf)                                --                         --                        --
    Oil (per bbl)                              $14.19                       4.58                      5.03
</TABLE>

     We have not filed any  estimates of total,  proved net oil and gas reserves
with any federal  authority  or agency  since the  beginning  of our last fiscal
year.

     The following schedule sets forth the capitalized costs relating to oil and
gas producing activities by us for the past three fiscal years.
<TABLE>
<CAPTION>

                                                                         Years ended December 31,
                                                    ----------------------------------------------------------
                                                        2004                   2003                   2002
                                                    -----------            -----------             -----------
<S>                                                 <C>                    <C>                    <C>
Proved oil and gas
  producing properties
  and related lease
  and well equipment                                $ 7,093,676            $ 3,171,426            $ 3,678,730
Unproved oil and gas
  properties                                             95,945                 99,945                 95,945
Accumulated depreciation
  and depletion                                      (3,870,874)            (2,555,878)            (1,839,295)
Net Capitalized Costs                               $ 3,318,747            $   715,493            $ 1,935,380
                                                     ==========             ==========             ===========
</TABLE>

     The following schedule  summarizes  changes in the standardized  measure of
discounted future net cash flows relating to our proved oil and gas reserves.
<TABLE>
<CAPTION>

                                                                  Years ended December 31,
                                                       2004                 2003                    2002
                                                  --------------      ---------------         ---------------
<S>                                                   <C>                <C>                       <C>
Standardized measure,
  beginning of year                                   1,864,377          $ 4,314,941               $ 3,649,994
Oil and gas sales, net
  of production costs                                (1,539,222)          (2,411,293)                 -
Sales of mineral in place                               -                    -                        -
Purchases                                             5,132,087              -                        -
Net change due to revisions
  in quantity estimates                              (1,018,406)             (39,271)                  664,947
                                                    -----------        -------------              ------------
Standardized measure,
  end of year                                        $ 4,438,836         $ 1,864,377               $ 4,314,941
                                                     ===========         ===========               ===========
</TABLE>

                                      -17-

<PAGE>

     We do not anticipate  investing in or purchasing assets and/or property for
the purpose of capital  gains.  It is our  intention to purchase  assets  and/or
property for the purpose of enhancing our primary  business  operations.  We are
not limited as to the percentage amount of our assets we may use to purchase any
additional assets or properties.

Item 3.       Legal Proceedings

     Certain  material  pending legal  proceedings to which we are a party or to
which any of our property is subject is set forth below.

     Information  concerning certain material pending legal proceedings to which
we are a party, or to which any of our property is subject, is set forth below:

     o   On September  22, 2000,  Tioga  Lumber  Company  obtained a judgment of
         $43,300 plus  interest in the Circuit Court of Pleasants  County,  West
         Virginia, against Tyler Construction Company for breach of contract. On
         February 28, 2002, we reached a negotiated  payment schedule with Tioga
         and made the initial  payment.  We believe that we have  satisfied  the
         balance owed to Tioga of $26,233.58,  although the judgment has not yet
         been released. We are proceeding to secure the release of the judgment.

     o   On January 15, 2003, a suit against us entitled Lario Oil & Gas Company
         vs. Trans  Energy,  Inc.  (Civil Action No. 24575) was initiated in the
         Sixth District Court of Campbell County, Wyoming. Lario's suit asks for
         $50,692.10  which it claims we owe for operating  fees on the Sagebrush
         #1 and #2 and the Pinon Fee #1 wells, operated by Lario and in which we
         have  working  interests.  We asked for a  complete  accounting  of all
         monies owed. Lario retained our share of monthly oil production  monies
         and applied  them to the amount  owed.  On August 23,  2004,  the court
         dismissed the action with prejudice.

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

     In connection  with the reverse stock split  effected  January 28, 2005, we
filed with the State of Nevada on the same date an  amendment to our articles of
incorporation to reflect the reverse split.  The amendment  reported the reverse
stock split and stated that our current  authorized  capitalization  will remain
unchanged at 500 million shares of common stock with a par value of $0.001.  The
reverse  stock split and  amendment  were  approved  by the  written  consent of
shareholders  holding a majority  of our common  stock by a vote of  256,287,738
shares (51.6%) voting for, and zero shares voting against.

                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters

     Our common stock is quoted on the OTC Bulletin Board under the symbol TENG.
Prior to the  effectiveness  of our reverse stock split on January 28, 2005, our
stock  traded  under the  symbol of TSRG.  Set forth in the table  below are the
quarterly  high and low prices of our common  stock as obtained  from the Nasdaq
Small-Cap  Market and the OTC  Bulletin  Board for the past two fiscal years and
adjusted for the one share for 150 shares reverse stock split.

                                          High          Low
                                          ----          ---

              2004
                  First Quarter         $   2.70     $   1.05
                  Second Quarter        $   4.50     $   0.75
                  Third Quarter         $   4.35     $   1.50
                  Fourth Quarter        $   2.55     $   1.35

                                      -18-
<PAGE>

                                          High          Low
                                          ----          ---

              2003
                  First Quarter         $   0.60     $   0.30
                  Second Quarter        $   1.05     $   0.30
                  Third Quarter         $   0.90     $   0.30
                  Fourth Quarter        $   4.20     $   0.45

                  -----------------

     As of April 15, 2005, there were approximately 406 holders of record of our
common stock,  which figure does not take into account those  shareholders whose
certificates are held in the name of broker-dealers or other nominee accounts.

Dividend Policy

     We have not declared or paid cash  dividends or made  distributions  in the
past,  and we do not  anticipate  that  we  will  pay  cash  dividends  or  make
distributions  in the  foreseeable  future.  We  currently  intend to retain and
reinvest future earnings to finance operations.

Recent Sales of Unregistered Securities

     During 2002, we issued 60,835,938 shares of common stock for cash, services
and  conversion  of debt at an  average of $.01 per share,  or an  aggregate  of
$337,250.

     During  2003,  we  issued   27,841,311  shares  of  common  stock  for  the
extinguishment  of certain debts and related  interest valued at $75,116,  or an
average  price of $.0027 per share,  and an additional  150,000  shares upon the
conversion of convertible  debt in the amount of $5,250,  or $.035 per share. We
also issued  3,500,000  shares in exchange  for services  valued at $10,500,  or
$.003 per share.

     Shares issued for cash, services and extinguishment of debt, were issued in
reliance upon the exemption from registration  under the Securities Act of 1933,
provided by Section  4(2)  thereunder.  Issuances of shares upon  conversion  of
debentures  or other debt were  pursuant  to the  exemption  provided by Section
3(a)(9) of said Act.

     In  connection  with the  acquisition  of Cobham Gas  Industries,  Inc.  on
November 4, 2004, we issued to Texas Energy Trust Company  244,633  "post-split"
shares of Trans Energy's  authorized,  but previously unissued common stock. The
shares  are  valued at  $1,485,794.  The  issuance  of the shares was made in an
isolated,  private transaction to an informed investor having knowledge of Trans
Energy and its business.  Accordingly, the transaction is considered exempt from
registration  under the  Securities Act of 1933 pursuant to Section 4(2) of that
Act.

     In connection with the closing of the merger agreement on January 31, 2005,
Trans Energy issued to the holders of Arvilla,  Inc.  capital stock an aggregate
of 1,185,024 shares of Trans Energy common stock.  These shares were distributed
as follows:  Clarence E. Smith, 531,437 shares;  Rebecca L. Smith 531,437 shares
and Howell B. Williams, 122,150 shares.

     Each  recipient  of  the  Trans  Energy  shares  is  a  sophisticated   and
knowledgeable  investor  and has  full  access  to all  pertinent  business  and
financial  information related to Trans Energy and Arvilla.  Accordingly,  Trans
Energy has relied upon the exemption from registration  under the Securities Act
of 1933  provided  by Section  4(2) of the Act that  exempts a  transaction  not
involving a public offering.
                                      -19-
<PAGE>

     On February 28, 2005,  our board of  directors  authorized  the issuance of
50,000 shares of authorized,  but previously  unissued shares of common stock to
Liberty  Consulting  International,  Inc.  The shares are in  consideration  for
services  pursuant to a Consulting  Services  Agreement  between the company and
Liberty  Consulting  International.  The shares have been issued and  constitute
less than 5% of the total  outstanding  shares of Trans Energy common stock. The
issuance  of shares  is being  made in a private  transaction  to a person  with
knowledge  of  the  company's  business  in  reliance  upon  an  exemption  from
registration under the Securities Act of 1933,  pursuant to Section 4(2) of that
Act.

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

     The  following   information   should  be  read  in  conjunction  with  the
consolidated  financial statements and notes thereto appearing elsewhere in this
Form 10-KSB.

Results of Operations

     The  following  table  sets  forth  the  percentage  relationship  to total
revenues of principal  items  contained in the  statements  of operations of the
consolidated  financial  statements  included  herewith  for the two most recent
fiscal  years  ended  December  31,  2004  and  2003 It  should  be  noted  that
percentages  discussed  throughout  this  analysis are stated on an  approximate
basis.
<TABLE>
<CAPTION>
                                                                               Fiscal Years Ended
                                                                                     December 31,
                                                                                2004            2003
                                                                               ------          ------
<S>                                                                             <C>              <C>
Total revenues........................................................          100%             100%
Total costs and expenses..............................................          112              162
Total other income (expenses).........................................           (9)             (15)
Loss before income  taxes and change in accounting principal .........          (21)             (77)
Income taxes..........................................................            -               -
Change in accounting principal........................................            -               (6)
Net (loss)............................................................          (21)             (83)
</TABLE>

     For the Year Ended  December 31, 2004  Compared to the Year Ended  December
     31, 2003
     ---------------------------------------------------------------------------
     Total  revenues of $2,390,099 for the year ended December 31, 2004 ("2004")
increased  26%  compared  to  $1,902,836  for the year ended  December  31, 2003
("2003"),  due  primarily to the increase of oil and gas prices and the addition
of the Cobham assets for the last two months of 2004.  In 2004,  oil made up 22%
of total revenues  compared to 28% in 2003, and gas  represented 76% of revenues
in  2004  compared  to  72%  in  2003.  The  changes  were  considered   minimal
representing only a slight difference in percentage points.

     We had an  operating  loss  of  $284,127  for  2004  compared  to a loss of
$1,187,448 in 2003. Total costs and expenses decreased 13% in 2004 primarily due
to the 67% decrease in depreciation,  depletion and amortization,  attributed to
the sale of certain  assets and assets  reaching the end of their useful  lives.
Salaries and wages  decreased only slightly by 2% in 2004.  These decreases were
partially  offset  by the 13%  increase  in cost of oil and gas,  attributed  to
higher oil and gas prices and increased  pipeline costs, and the 14% increase in
selling,  general and  administrative  expenses  primarily  due to  increases in
insurance  premiums  and  travel  expenses  and  additional  labor  costs.  As a
percentage of revenues,  total costs and expenses decreased from 162% in 2003 to
112% in 2004.
                                      -20-
<PAGE>

     Other expenses as a percentage of revenues decreased from 15% in 2003 to 9%
in 2004, attributed to the decrease in interest expense from $404,336 in 2003 to
$ 193,683 in 2004 due to the  paying off  certain  debt.  We  realized a gain on
disposition of assets of $416,560 in 2004,  compared to $231,702 in 2003,  which
was offset by a loss on the  extinguishment of debt of $653,257 in 2004 compared
to a loss of $11,268 in 2003.

     Our net  loss for 2004 was  $502,848  versus a net loss of  $1,582,180  for
2003.  The decrease in net loss in 2004 is primarily  attributed to decreases in
depreciation  and depletion and increases in  miscellaneous  revenues related to
asset sales and debt settlement.

     Net Operating Losses
     --------------------

     We  have  accumulated  approximately  $24  million  of net  operating  loss
carryforwards  as of  December  31,  2004,  which may be offset  against  future
taxable  income  through  2023.  The use of these losses to reduce future income
taxes will depend on the  generation of sufficient  taxable  income prior to the
expiration  of the net  operating  loss  carryforwards.  In the event of certain
changes  in  control,  there will be an annual  limitation  on the amount of net
operating loss carryforwards which can be used. No tax benefit has been reported
in the  financial  statements  for the year ended  December 31, 2004 because the
potential tax benefits of the loss carryforward is offset by valuation allowance
of the same amount.

Liquidity and Capital Resources

     Historically,  working  capital  needs  have  been  satisfied  through  our
operating revenues and from borrowed funds. Working capital at December 31, 2004
was a negative  $2,980,431  compared with a negative  $6,359,171 at December 31,
2003. We anticipate  meeting  working  capital needs during the 2005 fiscal year
with revenues from  operations and possibly from capital raised through the sale
of either  equity or debt  securities.  We have no other  current  agreements or
arrangements  for additional  funding and there can be no assurance such funding
will be available to us, or if available,  such funding will be on acceptable or
favorable terms to us.

     As  of  December  31,  2004,  we  had  total  assets  of   $4,234,111   and
stockholders'  deficit of $1,169,886  compared to total assets of $1,292,875 and
total stockholders'  deficit of $5,430,033 at December 31, 2003. The increase in
total  assets and  decrease in  stockholders'  deficit at  December  31, 2004 is
attributed to the purchase of Cobham Gas Industries  assets.  We have recorded a
long-term liability of $1,571,749 as an asset retirement obligation that relates
to, in part, the estimated cost to plug 203 Cobham wells in the event it becomes
necessary.

     In  1998,  we  issued  $4,625,400  face  value  of 8%  Secured  Convertible
Debentures  Due March 31, 1999.  A portion of the proceeds  were used to acquire
the GCRL  properties  and interest in Wyoming.  During 2000,  all but one of the
remaining outstanding  debentures were converted into commons stock. At December
31, 2004,  we owed  $331,462 in  connection  with the  debentures  consisting of
$50,000 for a  debenture  and  $281,462  in  penalties  and  interest.  However,
following an accounting adjustment,  the amount owed has been reduced to $50,000
plus approximately $25,000 in interest.

     Because  we have  generated  significant  losses  from  operations  through
December 31, 2004 and have a working capital deficit at December 31, 2004, there
exists  substantial  doubt about our  ability to  continue  as a going  concern.
Revenues have not been  sufficient to cover  operating  costs and to allow us to
continue as a going concern.  Potential  proceeds from the future sale of common
stock, other contemplated debt and equity financing,  and increases in operating
revenues from new  development  would enable us to continue as a going  concern.
There can be no  assurance  that we can or will be able to complete  any debt or
equity financing.
                                      -21-
<PAGE>
     In the opinion of  management,  inflation has not had a material  effect on
the operations of Trans Energy.

Forward-Looking and Cautionary Statements

     This report  includes  "forward-looking  statements"  within the meaning of
Section 27A of the  Securities  Act of 1933,  and Section 21E of the  Securities
Exchange  Act of 1934.  These  forward-looking  statements  may  relate  to such
matters as  anticipated  financial  performance,  future  revenues or  earnings,
business prospects,  projected ventures, new products and services,  anticipated
market  performance  and similar  matters.  When used in this report,  the words
"may,"  "will,"  "expect,"  "anticipate,"   "continue,"  "estimate,"  "project,"
"intend,"  and similar  expressions  are  intended  to identify  forward-looking
statements  regarding events,  conditions,  and financial trends that may affect
our future  plans of  operations,  business  strategy,  operating  results,  and
financial position. We caution readers that a variety of factors could cause our
actual  results  to differ  materially  from the  anticipated  results  or other
matters expressed in forward-looking statements.  These risks and uncertainties,
many of which are beyond our control, include:

     *   the sufficiency of existing capital  resources and our ability to raise
         additional capital to fund cash requirements for future operations;
     *   uncertainties  involved  in the  rate of  growth  of our  business  and
         acceptance of any products or services;
     *   volatility  of the stock  market,  particularly  within the  technology
         sector; and
     *   general economic conditions.

     Although we believe the  expectations  reflected  in these  forward-looking
statements are reasonable,  such  expectations  cannot guarantee future results,
levels of activity, performance or achievements.

Recent Accounting Pronouncements

     On December 16,  2004,  the  Financial  Accounting  Standards  Board (FASB)
issued   Statement  of  Financial   Accounting   Standards  (SFAS)  No.  123(R),
Share-Based  Payment,  which is an  amendment  to SFAS No. 123,  Accounting  for
Stock-Based  Compensation.  This new standard  eliminates the ability to account
for share-based  compensation  transactions  using  Accounting  Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees,  and generally
requires such transactions to be accounted for using a  fair-value-based  method
and the resulting cost recognized in our financial statements. This new standard
is effective for awards that are granted, modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested  options  granted  prior to the  effective  date. We will
adopt this new standard  effective  for the fourth fiscal  quarter of 2005,  and
have not yet  determined  what impact this  standard  will have on our financial
position or results of operations.

     In  November  2004,  the FASB issued  SFAS No.  151,  Inventory  Costs - an
amendment of ARB No. 43,  Chapter 4. This  Statement  amends the guidance in ARB
No. 43, Chapter 4,  "Inventory  Pricing," to clarify the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage).  Paragraph  5 of ARB 43,  Chapter 4,  previously  stated that ". . .
under  some  circumstances,  items  such as  idle  facility  expense,  excessive
spoilage,  double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges.  . . ." This Statement  requires that those
items be recognized as  current-period  charges  regardless of whether they meet
the  criterion of "so  abnormal."  In addition,  this  Statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred during fiscal years beginning after June 15, 2005.
Management  does not  believe  the  adoption  of this  Statement  will  have any
immediate material impact on the company.

                                      -22
<PAGE>

     In December 2004, the FASB issued SFAS No. 152,  Accounting for Real Estate
Time-sharing  Transactions,  which amends FASB statement No. 66,  Accounting for
Sales of Real Estate,  to  reference  the  financial  accounting  and  reporting
guidance  for real estate  time-sharing  transactions  that is provided in AICPA
Statement  of Position  (SOP)  04-2,  Accounting  for Real  Estate  Time-Sharing
Transactions.  This statement also amends FASB Statement No. 67,  Accounting for
Costs and Initial Rental  Operations of Real Estate Projects,  to state that the
guidance  for (a)  incidental  operations  and (b) costs  incurred  to sell real
estate  projects does not apply to real estate  time-sharing  transactions.  The
accounting  for those  operations  and costs is subject to the  guidance  in SOP
04-2.  This  Statement is effective  for financial  statements  for fiscal years
beginning  after  June  15,  2005.  Management  believes  the  adoption  of this
Statement will have no impact on the financial statements of the company.

     In December  2004,  the FASB issued SFAS  No.153,  Exchange of  Nonmonetary
Assets.  This  Statement  addresses the  measurement of exchanges of nonmonetary
assets.  The  guidance  in  APB  Opinion  No.  29,  Accounting  for  Nonmonetary
Transactions,  is based on the principle that  exchanges of  nonmonetary  assets
should be measured based on the fair value of the assets exchanged. The guidance
in that Opinion,  however,  included certain exceptions to that principle.  This
Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges
of  similar  productive  assets and  replaces  it with a general  exception  for
exchanges  of  nonmonetary  assets  that do not  have  commercial  substance.  A
nonmonetrary  exchange has commercial  substance if the future cash flows of the
entity are expected to change  significantly  as a result of the exchange.  This
Statement is effective for financial statements for fiscal years beginning after
June 15, 2005. Earlier  application is permitted for nonmonetary asset exchanges
incurred  during  fiscal  years  beginning  after the date of this  statement is
issued.  Management  believes the adoption of this Statement will have no impact
on the financial statements of the company.

Item 7.        Financial Statements

     Our financial  statements as of and for the fiscal years ended December 31,
2004 and 2003 have been examined to the extent  indicated in their report by H J
& Associates,  LLC,  independent  certified  public  accountants,  and have been
prepared  in  accordance  with  generally  accepted  accounting  principles  and
pursuant  to  Regulation  S-B as  promulgated  by the  SEC.  The  aforementioned
financial statements are included herein starting with page F-1.

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

     This Item is not Applicable.

Item 8A.       Controls and Procedures

     As of the end of the period  covered  by this  report,  we  carried  out an
evaluation,  under the  supervision  and with the  participation  of management,
including  our chief  executive  officer  and chief  financial  officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  as  defined  in Rules  13a-15(e)  and  15d-15(e)  of the  Securities
Exchange Act of 1934.  Based upon that evaluation,  our chief executive  officer
and  chief  financial  officer  concluded  that  our  disclosure   controls  and
procedures  are  effective  to cause the  material  information  required  to be
disclosed  by us in the reports that we file or submit under the Exchange Act to
be  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the SEC's rules and forms.  There have been no significant  changes
in our internal  controls or in other factors which could  significantly  affect
internal controls subsequent to the date we carried out our evaluation.

                                      -23-
<PAGE>

Item  8B.      Other Information

Reports on Form 8-K

     Since the beginning of our fiscal fourth quarter commencing October 1, 2004
through  the date of this  report,  we have  filed  current  reports on Form 8-K
reporting the following:

     o   October 8, 2004 - reporting under Item 801 a preliminary agreement with
         Texas Energy Trust Company,  a Delaware  Business Trust,  whereby Trans
         Energy will acquire certain oil and gas leases and leasehold  interests
         located in Wetzel and Marion Counties, West Virginia.

     o   October  26,  2004 -  reporting  under  Item  3.02  that  Trans  Energy
         distributed an aggregate of 203 million shares of its  authorized,  but
         previously unissued common stock in exchange for the conversion of debt
         in the amount of $2,401,424 previously incurred by Trans Energy.

     o   November 11, 2004 - reporting under Item 2.01 the finalization of the
         agreement with Texas Energy Trust Company whereby our wholly owned
         subsidiary, Prima Oil Company, Inc., acquired from Texas Energy Trust
         100% of the issued and outstanding shares of Cobham Gas Industries,
         Inc., a Delaware corporation. We also reported under Item 3.02 that in
         connection with the transaction reported under Item 2.01, we agreed to
         issue to Texas Energy Trust Company 244,633 "post-split" shares of our
         authorized, but previously unissued common stock, to be issued after
         the one share for 150 shares reverse split has been finalized.

     o   December 9, 2004 - reporting unser Item 1.01 the entering into a letter
         of intent to acquire Arvilla Oilfield Services,  LLC, , a West Virginia
         limited liability  company.  The acquisition was formalize by executing
         on December 3, 2004 a merger  agreement and plan of  reorganization  by
         and among  Trans  Energy,  our wholly  owned  subsidiary  Trans  Energy
         Acquisitions,  Inc., Arvilla, Inc., and the controlling stockholders of
         Arvilla, Inc.

     o   February 2, 2004 - reporting  under Item 1.01, the entering of a merger
         agreement and plan of reorganization  dated December 3, 2004 to acquire
         Arvilla Oilfield Services with our wholly owned subsidiary Trans Energy
         Acquisitions,  Inc., Arvilla, Inc., and the controlling stockholders of
         Arvilla,  Inc.  Also  reported  (i)  under  Item  2.01that  the  merger
         agreement was finalized and closed on January 31, 2005; (ii) under Item
         3.02 that in  connection  with the closing of the merger  agreement  we
         issued  to the  current  holders  of  Arvilla,  Inc.  capital  stock an
         aggregate of 1,185,024 shares of Trans Energy common stock; (iii) under
         Item 5.02 that in connection  with the  acquisition  of Arvilla,  Inc.,
         immediately  prior to the effective time of the merger  transaction our
         board of directors unanimously appointed two new directors, Clarence E.
         Smith  and  Rebecca  L.  Smith,  effective  upon  the  closing  of  the
         transaction  on  January  31,  2005;  and (iv)  under Item 5.03 that in
         connection  with the reverse stock split effected  January 28, 2005, we
         filed  with the State of Nevada  on the same date an  amendment  to our
         articles of incorporation to reflect the reverse split.

                                      -24-
<PAGE>

                                    PART III

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

     The  following  table sets forth the names,  ages,  and offices held by our
directors and executive officers:
<TABLE>
<CAPTION>

     Name                                   Position                        Director Since               Age
     ----                                   --------                        --------------               ---
<S>                                     <S>                                <C>                    <C>
     Clarence E. Smith                  C.E.O. and Director                January 2005                   41

     Robert L. Richards                 President and Director             September 2001                 58

     Loren E. Bagley                    Vice President and Director        August 1991                    63

     John G. Corp                       Vice President and Director        February 2005                  45

     William F. Woodburn                Secretary / Treasurer              August 1991                    63
       and Director

     Rebecca L. Smith                   Director                           January 2005                   37
</TABLE>

     All directors hold office until the next annual meeting of stockholders and
until  their  successors  have been duly  elected  and  qualified.  There are no
agreements  with respect to the election of directors.  We have not  compensated
our directors  for service on the Board of Directors or any  committee  thereof,
but directors are reimbursed for expenses incurred for attendance at meetings of
the Board and any committee  thereof.  Executive officers are appointed annually
by the Board and each  executive  officer serves at the discretion of the Board.
The Executive Committee of the Board of Directors, to the extent permitted under
Nevada  law,  exercises  all of the  power  and  authority  of the  Board in the
management of the business and affairs of Trans Energy  between  meetings of the
Board.

     On August 10,  2004 John B. Sims,  a long-time  director  of Trans  Energy,
passed  away.  Mr. Sims  served as a director  since 1988 and was  formerly  our
President and C.E.O. The board did not immediately name a successor to Mr. Sims.

     In connection with the acquisition of Arvilla,  Inc.,  immediately prior to
the effective time of the merger transaction our board of directors  unanimously
appointed two new directors,  Clarence E. Smith and Rebecca L. Smith,  effective
upon the closing of the transaction on January 31, 2005.

     On February 28, 2005, our board of directors appointed director Clarence E.
Smith to become the company's new Chief Executive Officer. Robert L. Richards, a
director, President and former Chief Executive Officer, will remain as President
and a director.  Also on February 28, the board  appointed John G. Corp as a new
director and a Vice President.

     The business experience of each of the persons listed above during the past
five years is as follows:

     Clarence E. Smith became a director of Trans Energy upon the closing of the
acquisition  of Arvilla on January 31, 2005. He started  Arvilla Well Service in
1981  providing  well location  construction  and clean-up and wellhead  hook-up
services.  Mr. Smith  expanded his business  into  pipeline  construction  which
became Arvilla Pipeline  Construction Co., operating from Bristol,  Tennessee to
Corning,  New York. This business provides  construction  services to most large
gas  companies in the area such as Dominion  Transmission,  Equitrans,  Columbia

                                      -25-
<PAGE>

Natural Resources and other smaller companies.  In the summer of 2004, Mr. Smith
and his wife Rebecca purchased Arrow Oilfield Services from the Belden and Blake
Corporation.  Arrow was renamed Arvilla Oilfield  Services,  LLC. Mr. Smith also
owns Arvilla  Rental & Equipment,  LLC and is registered  with the State of West
Virginia as an oil and gas producer. He graduated from St. Marys (West Virginia)
High School and the PRT Technical  School in 1981. Mr. Smith's wife Rebecca also
serves as a director of Trans Energy.

     Robert L. Richards became a director and was appointed President and C.E.O.
in September 2001. On February 28, 2004, Mr. Richards  relinquished his position
as C.E.O.,  but remained as a director and President.  From 1982 to the present,
he has been President of Robert L. Richards, Inc. as a consulting geologist with
27 years experience in the petroleum industry. He has also served as a geologist
with Exxon,  exploration  geologist  with Union Texas  Petroleum,  and  regional
exploration manager for Carbonit Exploration,  Inc. From 2000 to the present, he
has been President and C.E.O.  of Derma - Rx, Inc., a formulator and marketer of
skin care products.  Also,  from 1992 to August 2000, Mr. Richards was C.E.O. of
Kaire  Nutraceuticals,  Inc., a developer and marketer of health and nutritional
products.  Mr.  Richards served as Vice President of Continental Tax Corporation
from March 1989 to August 1992. He has five and one-half years experience in the
United States Air Force as an Instructor Pilot. Mr. Richards holds a B.S. degree
in geology from Brigham Young University.

     Loren E. Bagley served as our President and C.E.O.  from  September 1993 to
September  2001, at which time he resigned as President  and was appointed  Vice
President.  From 1979 to the present,  Mr. Bagley has been self -employed in the
oil  and  gas  industry  as  president,  C.E.O.  or vice  president  of  various
corporations which he has either started or purchased,  including Ritchie County
Gathering  Systems,  Inc. Mr.  Bagley's  experience  in the oil and gas industry
includes  acting as a lease  agent,  funding and  drilling of oil and gas wells,
supervising  production of over 175 existing wells,  contract  negotiations  for
purchasing  and  marketing of natural gas  contracts,  and owning a well logging
company specializing in analysis of wells. Prior to becoming involved in the oil
and gas industry,  Mr. Bagley was employed by the United States  government with
the  Agriculture  Department.  Mr.  Bagley  attended Ohio  University  and Salem
College and earned a B.S. Degree.

     John C. Corp became a director  and Vice  President  on February  28, 2005.
John G. Corp as a new director and a Vice  President.  Mr. Corp has more than 25
years of extensive  experience  in  drilling,  production  and oilfield  service
operations in the  Appalachian  Basin.  Prior to joining Trans Energy,  Inc., he
held various management  positions with Belden & Blake Corp. from 1987-2004.  He
has a BS degree in Petroleum  Engineering  from Marietta (Ohio) College and is a
member of the Society of Petroleum Engineers, the Ohio Oil & Gas Association and
is  chairman of the  Technical  Advisory  Committee  or the Ohio  Department  of
Natural Resources.

     William F.  Woodburn has served as our Vice  President  from August 1991 to
September  2001,  at which time he resigned as Vice  President and was appointed
Secretary / Treasurer. Mr. Woodburn has been actively engaged in the oil and gas
business in various  capacities  for the past twenty  years.  For several  years
prior to 1991, Mr. Woodburn supervised the production of oil and natural gas and
managed the pipeline  operations of Tyler Construction  Company,  Inc. and Tyler
Pipeline,  Inc. Mr.  Woodburn is a stockholder  and serves as President of Tyler
Construction  Company,  Inc., and is also a stockholder of Tyler Pipeline,  Inc.
which owns and operates oil and gas wells in addition to natural gas  pipelines,
and Ohio  Valley  Welding,  Inc.  which  owns a fleet of  heavy  equipment  that
services the oil and gas industry.  Prior to his  involvement in the oil and gas
industry, Mr. Woodburn was employed by the United States Army Corps of Engineers
for  twenty  four  years  and was  Resident  Engineer  on  several  construction
projects.  Mr. Woodburn  graduated from West Virginia  University with a B.S. in
civil engineering.

                                      -26-
<PAGE>

     Rebecca L. Smith graduated from Harrisville  (West Virginia) High School in
1986 and then from the Wilma Boyd Travel School in Pittsburgh, Pennsylvania. She
was then employed as a travel agent in  Philadelphia.  Mrs. Smith joined Arvilla
Well  Service as a part-time  employee  in 1995 became a full- time  employee of
Arvilla  Pipeline in 2000. Mrs. Smith is currently part owner and vice president
of Arvilla Pipeline  Construction  Co., Inc. and is part owner and acting member
of Arvilla  Rental &  Equipment,  LLC and Arvilla  Oilfield  Services,  LLC. Her
responsibilities  include  supervising  all the offices and the pipeline shop as
well as  overseeing  the pipeline bid process.  She is also active in the public
relations  business  of both  companies  and  contributed  to the design of both
Arvilla's  brochure and web site. Mrs. Smith's Husband Clarence also serves as a
director of Trans Energy.

     The following persons are considered key employees of Arvilla:

     Randy Ile. Mr. Ile is the rig  superintendent for Arvilla's Ohio region and
is primarily  responsible for the region's service and swag rig activity. He has
been with Arrow  Oilfield  Services  (which is now Arvilla)  since 1997. Mr. Ile
graduated  from high school in 1966 and served in the armed  forces from 1966 to
1969. From 1971 to 1977, he worked as a "roughneck"  (oilfield worker) for three
years  before  becoming a  driller.  Mr. Ile also  became a  toolpusher  for PEP
Drilling from 1977 to 1987 and then a drilling superintendent from 1987 to 1997.
He is a member of the Ohio Oil & Gas  Association  and completed BOP training in
1989.

     James  Hawkins.  Mr. Hawkins is the supervisor of oil and water hauling for
Arvilla's Ohio region. He has been with Arrow Oilfield Services  (Arvilla) since
1982 when he was initially  hired as a rig hand.  While with Arrow,  Mr. Hawkins
has  been a  well  tender,  treat  truck  driver,  roustabout,  heavy  equipment
operator,  oil truck  driver  and  dispatcher  of  Arrow's  Ohio  fluid  hauling
operations.

Item 10.      Executive Compensation

     We do not have a bonus, profit sharing,  or deferred  compensation plan for
the  benefit of  employees,  officers  or  directors,  nor have we entered  into
employment contracts with any of the aforementioned persons.

Cash Compensation

     For the past three fiscal years ended  December 31, 2004,  we have not paid
any cash compensation for services rendered by our executive officers.

Item 11.      Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth information, to the best of our knowledge as
December 31, 2004,  with respect to each person known by us to own  beneficially
more than 5% of our  outstanding  common stock,  each director and all directors
and  officers as a group.  Unless  otherwise  noted,  the address of each person
listed below is that of Trans Energy, 210 Second Street, St. Marys, West Virgina
26170.

Name and Address                  Amount and Nature of           Percent
of Beneficial Owner               Beneficial Ownership         of Class(1)
-------------------               --------------------         -----------
Robert L. Richards                         91,275(2)                 1.9 %
Loren E. Bagley                           239,647(3)                 5.1 %
William F. Woodburn                       419,724(4)                 8.9 %
Clarence E. Smith                         531,437                   11.2 %
Rebecca L. Smith                          531,437                   11.2 %

All directors and executive officers
  a group (5 persons)                   1,813,520                   38.3 %

                                      -27-
<PAGE>

     (1) Based upon 4,740,097 shares of common stock estimated to be outstanding
         on following  the one share for 150 shares  reverse  stock  split,  the
         acquisition of Arvilla and the transactions  contemplated  thereby, and
         the issuance of shares in connection  with  acquisition  of oil and gas
         leases  and  leasehold  interests  from  Texas  Energy  Trust  Company.
         Percentage  ownership is calculated  separately  for each person on the
         basis of the actual number of outstanding shares immediately  following
         the acquisition of Arvilla.
     (2) Includes 80,084 shares held in the name of Argene Richards, wife of Mr.
         Richards.
     (3) Includes  33,667 shares held in the name of Carolyn S. Bagley,  wife of
         Mr. Bagley,  over which Mrs. Bagley retains voting power.
     (4) Includes  133,667 shares in the name of Janet L. Woodburn,  wife of Mr.
         Woodburn,  over which shares Mrs.  Woodburn  retains voting power,  and
         133,333  in the  name of a  corporation  owned  by  William  and  Janet
         Woodburn.

Item 12.          Certain Relationships and Related Transactions

     During the past two fiscal years,  there have been no transactions  between
us  and  any  officer,  director,  nominee  for  election  as  director,  or any
shareholder owning greater than five percent (5%) of our outstanding shares, nor
any member of the above referenced  individuals' immediate family, except as set
forth below.

     (a) Loren E. Bagley is  President of Sancho,  a principal  purchaser of our
natural gas. Mr. Bagley's wife, Carolyn S. Bagley is a director and owner of 33%
of the outstanding  capital stock of Sancho.  Under our contract with Sancho, we
have the right to sell  natural  gas  subject to the terms and  conditions  of a
20-year  contract,  as amended,  that Sancho entered into with Hope Gas in 1988.
This agreement is a flexible volume supply agreement whereby we receive the full
price which Sancho  receives  less a $.05 per Mcf  marketing fee paid to Sancho.
The price of the natural gas is based upon the  greater of the  residential  gas
commodity index or the published Inside F.E.R.C.  Index, at our option,  for the
first 1,500 Mcf  purchased per day by Hope Gas and  thereafter  the price is the
Inside  F.E.R.C.  Index.  The  residential gas commodity index does not directly
fluctuate  with the overall  price of natural  gas.  The Inside  F.E.R.C.  Index
fluctuates  monthly  with the  change in the price of  natural  gas.  While such
option provides  certain price  protection for us there can be no assurance that
prices  paid by us to  suppliers  will be lower  than the  price  which we would
receive under the Hope Gas arrangement. During 2004, we paid Sancho an aggregate
of approximately $11,059 pursuant to such contract.

     (b) On May 7, 1996,  we borrowed  $100,000  from  William  Stevenson.  Such
amount is repayable in one  installment of principal and interest of $110,000 on
November  7, 1996.  Messrs.  Bagley,  William F.  Woodburn  and John B. Sims are
jointly and severally liable with us for the repayment of such obligation.  Such
obligation  is secured by the pledge of 50,000  shares of common  stock owned by
Mr. Woodburn's wife, Janet L. Woodburn.  The note was subsequently  purchased by
Culpepper  Cattle Company and converted to 173,333 shares of Trans Energy common
stock on October 4, 2004.

     We occupy  approximately  4,000 square feet of office  space in St.  Marys,
West  Virginia,  which we share  with  Tyler  Construction  and  Ritchie  County
Gathering Systems. Prior to 1997, the office space was paid for by Sancho and we
used the office space rent free. We believe that the foregoing transactions with
Sancho  were made on terms no less  favorable  to us than those  available  from
unaffiliated third parties.

     It is our  policy  that any  future  material  transactions  between us and
members of management or their  affiliates  shall be on terms no less  favorable
than those available from unaffiliated third parties.

                                      -28-
<PAGE>

Item 13.          Exhibits

     Exhibits

    Exhibit No.                    Exhibit Name
    -----------                    ------------

     2.1(1)    Stock  Acquisition  Agreement  between  Trans Energy and Loren E.
               Bagley and William F. Woodburn
     2.2(1)    Asset  Acquisition  Agreement  between Trans Energy and Dennis L.
               Spencer
     2.3(1)    Asset  Acquisition  Agreement  between  Trans  Energy  and  Tyler
               Pipeline, Inc.
     2.4(1)    Stock Exchange  Agreement between Trans Energy and Ritchie County
               Gathering Systems, Inc.
     2.5(1)    Plan and Agreement of Merger between Trans Energy,  Inc. (Nevada)
               and  Apple  Corp.  (Idaho),  to  facilitate  the  change  of  our
               corporate domicile to Nevada
     2.6(2)    Agreements related to acquisition of Vulcan Energy Corporation
     2.7(5)    Agreement and Plan of Reorganization with Arvilla, Inc.
     3.1(1)    Articles of Incorporation and all amendments  pertaining thereto,
               for Apple Corp., an Idaho corporation
     3.2(1)    Articles  of  Incorporation  for  Trans  Energy,  Inc.,  a Nevada
               corporation
     3.3(1)    Articles of Merger for the States of Nevada and Idaho
     3.4(1)    By-Laws 4.1(1) Specimen Stock Certificate
     10.1(1)   Marketing Agreement with Sancho Oil and Gas Corporation
     10.2(1)   Gas Purchase Agreement with Central Trading Company
     10.3(1)   Price Agreement with Key Oil Company
     10.4(3)   Settlement Agreement and Mutual Release
     10.5(4)   Agreement with Texas Energy Trust Company
     10.6(4)   Assignment  and  Agreement  with Texas Energy  Trust  Company and
               Cobham Gas Industries, Inc.
     21.1      Subsidiaries of Registrant (Revised)
     31.1      Certification   of  C.E.O.   Pursuant   to  Section  302  of  the
               Sarbanes-Oxley Act of 2002
     31.2      Certification of Principal Accounting Officer Pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002
     32.1      Certification  of C.E.O.  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  Principal  Accounting  Officer  Pursuant to 18
               U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
     99.1(1)   Reserve Estimate and Evaluation of oil and gas properties 99.2(1)
               Reserve Estimate and Evaluation for Dennis L. Spencer wells
---------------------------

     (1)       Previously filed as exhibit to Form 10-SB.
     (2)       Previously filed as exhibit to Form 8-K dated August 7, 1995.
     (3)       Previously filed as exhibit to Form 8-K file January 23, 2004.
     (4)       Previously filed as exhibit to Form 8-K filed November 11, 2004.
     (5)       Incorporated  by reference in the Form 8-K filed December 9, 2004
               to the Preliminary  Information Statement pursuant to Section 14C
               filed with the SEC on December 8, 2004.

Item 14.      Principal Accountants Fees and Services

     We do not  have an audit  committee  and as a result  our  entire  board of
directors performs the duties of an audit committee. Our board of directors will
approve in advance the scope and cost of the engagement of an auditor before the
auditor  renders audit and non-audit  services.  As a result,  we do not rely on
pre-approval policies and procedures.

                                      -29-
<PAGE>

     Audit Fees
     ----------

     The aggregate fees billed by our  independent  auditors,  H J & Associates,
for  professional  services  rendered  for the  audit  of our  annual  financial
statements  included  in our Annual  Reports on Form  10-KSB for the years ended
December 31, 2004 and 2003, and for the review of quarterly financial statements
included in our Quarterly  Reports on Form 10-QSB for the quarters  ending April
30, June 30 and September  30, 2004 and 2003,  were $24,119 for 2004 and $30,250
for 2003.

     Audit Related Fees
     ------------------

     For the years ended  December 31, 2004 and 2003,  there were no fees billed
for  assurance  and  related  services  by  H J &  Associates  relating  to  the
performance  of the audit of our  financial  statements  which are not  reported
under the caption "Audit Fees" above.

     Tax Fees
     --------

     For the  years  ended  December  31,  2004 and 2003,  fees  billed by H J &
Associates  for tax  compliance,  tax advice and tax  planning  were  $1,101 and
$1,250, respectively.

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

     The board of directors has  considered the nature and amount of fees billed
by H J & Associates  and believes that the provision of services for  activities
unrelated  to  the  audit  is  compatible  with  maintaining  H J &  Associates'
independence.

                                      -30-
<PAGE>


                                   SIGNATURES

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

                                           TRANS ENERGY, INC.

                                       BY:     /S/ CLARENCE E. SMITH
                                          --------------------------------------
                                           Clarence E. Smith,
                                           President and C.E.O.

Dated: April 27, 2005

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>

         Signature                                  Title                                          Date
         ---------                                  -----                                          ----



<S>                                        <C>                                                 <C>
/S/ CLARENCE E. SMITH                      C.E.O. and Director                                  April 27, 2005
----------------------------------
         Clarence E. Smith



/S/ ROBERT L. RICHARDS                     President and Director                               April 27, 2005
----------------------------------
         Robert L. Richards



/S/ LOREN E. BAGLEY                        Vice President and Director                          April 27, 2005
----------------------------------         Principal Financial Officer
         Loren E. Bagley


                                                                                                April 27, 2005
/S/  JOHN G. CORP                          Vice President and Director
----------------------------------
         John G. Corp



/S/  WILLIAM F. WOODBURN                   Secretary Treasurer/Treasurer and Director           April 27, 2005
----------------------------------         Chief Accounting Officer
         William F. Woodburn



/S/ REBECCA L. SMITH                        Director                                            April 27, 2005
------------------------------------
         Rebecca L. Smith
</TABLE>

                                      -31-
<PAGE>





                       TRANS ENERGY, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2004





                                       F-1

                                     <PAGE>


                                                   C O N T E N T S


Report of Independent Registered Public Accounting Firm ................... F-3

Consolidated Balance Sheet ................................................ F-4

Consolidated Statements of Operations ..................................... F-6

Consolidated Statements of Stockholders' Equity (Deficit).................. F-7

Consolidated Statements of Cash Flows ..................................... F-8

Notes to the Consolidated Financial Statements ............................F-10






                                       F-2

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors
Trans Energy, Inc. and Subsidiaries
St. Mary's, West Virginia

We have audited the  accompanying  consolidated  balance  sheet of Trans Energy,
Inc.  and  Subsidiaries  (the  Company) as of December  31, 2004 and the related
consolidated  statements of operations,  stockholders' equity (deficit) and cash
flows  for the years  ended  December  31,  2004 and  2003.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  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 the Company as of
December 31, 2004 and the results of their operations and its cash flows for the
year ended December 31, 2004 in conformity with United States generally accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 8 to the
consolidated financial statements,  the Company has generated significant losses
from operations, has an accumulated deficit of approximately $29,000,000 and has
a working  capital  deficit of $2,980,431 at December 31, 2004,  which  together
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's plans in regards to these matters are also described in Note 8. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.



/s/ HJ & Associates, LLC
-----------------------------------
Salt Lake City, Utah
April 16, 2005


                                       F-3

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet

                                     ASSETS

                                                                   December 31,
                                                                       2004
                                                                    ----------
CURRENT ASSETS

   Cash                                                             $   79,662
   Accounts receivable, net (Note 1)                                   653,917
   Receivable from related party (Note 4)                                8,825
   Other current assets                                                  1,223
                                                                    ----------

     Total Current Assets                                              743,627
                                                                    ----------

PROPERTY AND EQUIPMENT, NET (Note 2)                                 3,372,599
                                                                    ----------

OTHER ASSETS

   Bonds                                                                50,159
   Deposits                                                              1,400
   Life insurance, cash surrender value                                 66,326
                                                                    ----------

     Total Other Assets                                                117,885
                                                                    ----------

       TOTAL ASSETS                                                 $4,234,111
                                                                    ==========








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


                                       F-4

<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                     Consolidated Balance Sheet (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                  December 31,
                                                                      2004
                                                                  ------------
CURRENT LIABILITIES

   Accounts payable - trade                                       $  1,277,375
   Related party payables (Note 4)                                     719,199
   Accrued expenses                                                    844,858
   Judgments payable (Note 7)                                           70,379
   Debentures payable (Note 9)                                          50,000
   Notes payable - current portion (Note 3)                            762,247
                                                                  ------------

     Total Current Liabilities                                       3,724,058
                                                                  ------------

LONG-TERM LIABILITIES

   Notes payable (Note 3)                                              108,190
   Asset retirement obligation (Note 1)                              1,571,749
                                                                  ------------

     Total Long-Term Liabilities                                     1,679,939
                                                                  ------------

       Total Liabilities                                             5,403,997
                                                                  ------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT) (Note 6)

   Preferred stock; 10,000,000 shares authorized at $0.001 par
    value; -0- shares issued and outstanding
                                                                          --
   Common stock; 500,000,000 shares authorized at $0.001 par
    value; 3,555,074 shares issued and outstanding                       3,555
   Capital in excess of par value                                   27,854,647
   Accumulated deficit                                             (29,028,088)
                                                                  ------------

     Total Stockholders' Equity (Deficit)                           (1,169,886)
                                                                  ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         $  4,234,111
                                                                  ============



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


                                       F-5

<PAGE>



                                        TRANS ENERGY, INC. AND SUBSIDIARIES
                                       Consolidated Statements of Operations

                                                       For the Years Ended
                                                            December 31,
                                                    ---------------------------
                                                       2004             2003
                                                    -----------     -----------


REVENUES                                            $ 2,390,099     $ 1,902,836
                                                    -----------     -----------

COSTS AND EXPENSES

  Cost of oil and gas                                 1,736,444       1,536,434
  Salaries and wages                                    375,539         381,743
  Depreciation, depletion and amortization              321,115         961,181
  Selling, general and administrative                   241,128         210,926
                                                    -----------     -----------

    Total Costs and Expenses                          2,674,226       3,090,284
                                                    -----------     -----------

LOSS FROM OPERATIONS                                   (284,127)     (1,187,448)
                                                    -----------     -----------

OTHER INCOME (EXPENSE)

  Other income                                           12,891            --
  Gain on disposition of debt                           416,560         231,702
  Interest expense                                     (193,683)       (404,336)
  Loss on sale and valuation of assets, net                --          (266,496)
  Loss on extinguishments of debt                      (653,257)        (11,268)
  Gain on disposition of assets                         198,768         172,152
                                                    -----------     -----------

  Total Other Income (Expense)                         (218,721)       (278,246)
                                                    -----------     -----------

LOSS BEFORE INCOME TAXES,
 AND CHANGE IN ACCOUNTING PRINCIPAL                    (502,848)     (1,465,694)

INCOME TAXES                                               --              --
                                                    -----------     -----------

CHANGE IN ACCOUNTING PRINCIPAL, NET OF
 INCOME TAXES                                              --          (116,486)
                                                    -----------     -----------

NET LOSS - attributed to common shareholders        $  (502,848)    $(1,582,180)
                                                    ===========     ===========

BASIC LOSS PER SHARE

  Operations                                        $     (0.22)    $     (0.87)
  Change in accounting principal                           --             (0.07)
                                                    -----------     -----------

    Total Basic Loss Per Share                      $     (0.22)    $     (0.94)
                                                    ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING                                          2,277,486       1,687,504
                                                    ===========     ===========



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


                                       F-6

<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
       Restated Consolidated Statements of Stockholders' Equity (Deficit)

                                            Preferred Stock               Common Stock             Capital in
                                    -----------------------------   ---------------------------     Excess of    Accumulated
                                       Shares          Amount          Shares         Amount        Par Value      Deficit
                                    ------------    -------------   ------------   ------------   ------------   ------------

<S>                                 <C>            <C>                 <C>           <C>          <C>            <C>

Balance, December 31, 2002
  (Restated)                                --               --        1,583,463          1,584     23,281,719    (26,943,060)

Common stock issued for
  services                                  --               --           23,333             23         10,477           --

Common stock issued for
  conversion of convertible
  debt                                      --               --            1,000              1          5,249           --

Common stock issued for
  extinguishments of
  related party debt                        --               --          152,221            152         29,891           --

Common stock issued for
  extinguishments of debt                   --               --           33,388             33         45,040           --

Net loss for the year ended
  December 31, 2003                         --               --             --             --             --       (1,582,180)
                                    ------------    -------------   ------------   ------------   ------------   ------------

Balance, December 31, 2003
  (Restated)                                --      $        --        1,793,405   $      1,793   $ 23,372,376   $(28,525,240)

Common stock issued for
  debt and interest
  January 2004                              --               --          163,704            164        297,695           --


Common stock issued for
  debt and interest
  October 2004                              --               --        1,353,332          1,353      2,434,647           --

Common stock issued for
  Acquisition, December 2004                --               --          344,633            245        403,400          --

Contributed capital,
  December 2004                             --               --             --             --        1,346,529          --

Net loss for the year ended
  December 31, 2004                         --               --             --             --             --         (502,848)
                                    ------------    -------------   ------------   ------------   ------------   ------------

Balance, December 31, 2004                  --      $        --        3,555,074   $      3,555   $  2,854,647   $(29,028,088)
                                    ============    =============   ============   ============   ============   ============
</TABLE>

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

                                       F-7

<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

                                                                 For the Years Ended
                                                                     December 31,
                                                              --------------------------
                                                                 2004            2003
                                                              -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>            <C>
   Net loss                                                   $  (502,848)   $(1,582,180)
    Adjustments to reconcile net loss to net cash used by
     operating activities:
    Depreciation, depletion and amortization                      321,115        961,181
    Loss on sale and valuation of assets                             --          266,496
    Loss on extinguishments of debt                               653,257         11,268
    Gain on disposition of assets                                (198,768)      (172,152)
    Common stock issued for services and
     beneficial conversion features                                  --           10,500
    Gain on disposition of debt                                  (416,560)      (231,702)
   Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable                   (397,761)       (60,070)
    Decrease (increase) in other receivable                        49,627           --
    (Increase) decrease in prepaid and other current assets         2,872        (62,078)
    (Decrease) increase in accounts payable                       523,519        682,320
    (Decrease) increase in advances from related parties          416,591           --
    (Decrease) increase in accrued expenses                       263,690           --
    Decrease in judgments payable                                  (2,500)      (385,697)
    Increase in environmental remediation                        (103,138)       200,000
                                                              -----------    -----------

     Net Cash Provided (Used) by Operating Activities             609,096       (362,114)
                                                              -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Proceeds from sale of property and equipment                   200,000        670,000
   Expenditures for property and equipment                           --         (152,848)
   Proceeds from sale of life insurance cash value                 53,367           --
   Payment on other non current assets                               (932)          --
                                                              -----------    -----------

    Net Cash Provided by Investing Activities                     252,435        517,152
                                                              -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Change in cash overdraft                                       (49,120)        49,120
   Principal payments to related parties                         (280,000)      (249,161)
   Proceeds from related parties                                     --          233,650
   Principal payments on notes payable                           (241,402)      (217,980)
   Principal payments on judgment payable                        (212,000)      (217,980)
   Proceeds from notes payable                                       --           17,289
                                                              -----------    -----------
   Net Cash (Used) by Financing Activities                    $  (782,522)   $  (167,082)
                                                              -----------    -----------
</TABLE>
                   The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       F-8

<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)

                                                                   For the Years Ended
                                                                       December 31,
                                                                --------------------------
                                                                   2004            2003
                                                                -----------    -----------
<S>                                                             <C>           <C>
Cash acquired in acquisition of subsidiary                      $       470   $      --
                                                                -----------   -----------

NET INCREASE (DECREASE) IN CASH                                      79,479       (12,044)
CASH, BEGINNING OF YEAR                                                 183        12,227
                                                                -----------   -----------

CASH, END OF YEAR                                               $    79,662   $       183
Bzat                                                            =============   =========
                                                                  1,234,567     1,234,567
CASH PAID FOR:

  Interest                                                      $      --     $   295,947
  Income taxes                                                  $      --     $      --
</TABLE>

NON-CASH FINANCING ACTIVITIES:

  The Company acquired 100% of Cobham Gas Industries,  Penine  Resources,  Inc.,
  and Belmont Energy, Inc. The Company issued 244,633 shares of common stock for
  net assets of $892,344  were  acquired for common stock valued at $403,645 and
  notes payable of $488,699.

  The Company issued 163,704 shares of common stock for debt relief of $297,859.
  The Company recorded a loss of $224,003 as part of this transaction.

  Various key employees and consultants of the Company contributed $1,346,530 of
  previously accrued liabilities.

  The  Company  issued  1,353,332  shares  of common  stock  for debt  relief of
  $2,436,000.  The  Company  recorded  a  loss  of  $543,913  as  part  of  this
  transaction.

  The Company  settled  $519,773  of notes  payable  and  accrued  interest  for
  $210,000.  The Company recorded at gain on settlement of debt in the amount of
  $309,773.

  The Company  disposed  net assets of $63,632 for  proceeds  of  $131,000.  The
  Company recorded a loss of $67,368 on disposal of assets.

  The Company recognized $105,395 gain on settlement of aged accounts payables.

  For the year ended December 31, 2003

  The  Company  issued  common  stock for  services  and  beneficial  conversion
  features valued at $10,500.

  The Company issued common stock for conversion of debt and interest of $80,366

  The Company issued common stock issued for  conversion of preferred  stock and
dividends.

                                       F-9

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a. Organization

         The  Company  was  originally  incorporated  in the  State  of Idaho on
         January 16, 1964. On January 11, 1988, the Company  changed its name to
         Apple Corporation. In 1988, the Company acquired oil and gas leases and
         other   assets  from  Ben's  Run  Oil   Company  (a  Virginia   limited
         partnership)  and has  since  engaged  in the  business  of oil and gas
         production.

         On November 5, 1993, the Board of Directors  caused to be  incorporated
         in the State of Nevada,  a new corporation by the name of Trans Energy,
         Inc.,  with the  specific  intent of effecting a merger  between  Trans
         Energy,  Inc. of Nevada and Apple Corp. of Idaho,  for the sole purpose
         of changing  the  domicile  of the  Company to the State of Nevada.  On
         November 15, 1993, Apple Corp. and the newly formed Trans Energy,  Inc.
         executed a merger  agreement  whereby the  shareholders  of Apple Corp.
         exchanged  all of their issued and  outstanding  shares of common stock
         for an equal number of shares of Trans Energy, Inc. common stock. Trans
         Energy,  Inc.  was  the  surviving  corporation  and  Apple  Corp.  was
         dissolved.

         b. Principles of Consolidation

         The  consolidated  financial  statements  include  the  Company and its
         wholly owned  subsidiaries,  Prima Oil Company,  Inc.,  Ritchie  County
         Gathering Systems, Inc., Tyler Construction Company, Inc, Tyler Energy,
         Inc., Cobham Gas Industries,  Inc., Penine Resources, Inc., and Belmont
         Energy,  Inc. All significant  intercompany  accounts and  transactions
         have been eliminated.

         c. Accounting Method

         The Company uses the  successful  efforts  method of accounting for oil
         and gas producing activities. Costs to acquire mineral interests in oil
         and gas  properties,  to drill and equip  exploratory  wells  that find
         proved  reserves,   and  to  drill  and  equip  development  wells  are
         capitalized.  Costs to drill  exploratory wells that do not find proved
         reserves,  geological and geophysical  costs, and costs of carrying and
         retaining unproved properties are expensed.

         Unproved oil and gas properties that are  individually  significant are
         periodically assessed for impairment of value, and a loss is recognized
         at the time of impairment by providing an impairment  allowance.  Other
         unproved properties are amortized based on the Company's  experience of
         successful  drilling and average holding period.  Capitalized  costs of
         producing  oil  and  gas  properties,   after   considering   estimated
         dismantlement and abandonment  costs and estimated salvage values,  are
         depreciated  and  depleted by the  unit-of-production  method.  Support
         equipment and other property and equipment are  depreciated  over their
         estimated useful lives.

         On the sale or retirement of a complete unit of a proved property,  the
         cost and related accumulated depreciation,  depletion, and amortization
         are eliminated  from the property  accounts,  and the resultant gain or
         loss is  recognized.  On the  retirement  or sale of a partial  unit of
         proved  property,  the cost is  charged  to  accumulated  depreciation,
         depletion, and amortization with a resulting gain or loss recognized in
         income.
                                      F-10
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         c. Accounting Method (Continued)

         On the sale of an entire  interest in an unproved  property for cash or
         cash  equivalent,  gain or loss on the sale is recognized,  taking into
         consideration the amount of any recorded impairment if the property had
         been assessed individually.

         If a partial  interest  in an  unproved  property  is sold,  the amount
         received  is  treated  as a  reduction  of the  cost  of  the  interest
         retained.  During  the  year  ended  December  31,  2003,  the  Company
         recognized  an  impairment  loss of $87,040 on one of its  natural  gas
         wells.

         The Company has elected a December 31 year-end.

         d. Basic Loss per Share of Common Stock

         The  basic  loss per  share of  common  stock is based on the  weighted
         average  number of shares  issued  and  outstanding  at the date of the
         consolidated  financial  statements.  Fully  diluted  loss per share of
         common  stock is not  disclosed  as the common  stock  equivalents  are
         antidilutive  in nature.
<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,
                                                                2004              2003
                                                            --------------   --------------
<S>                                                         <C>              <C>
                    Numerator:
                     Loss from operations                  $     (502,848)   $   (1,465,694)
                     Change in accounting principal                  --            (116,486)
                                                            -------------    ---------------
                         Net Loss                           $    (502,848)   $   (1,582,180)
                                                            =============    ===============
                    Denominator - weighted average shares       2,277,486          1,687,504
                                                            =============    ===============
                    Net loss per share:
                     Change in accounting principal         $       (0.00)   $         (0.07)
                      Loss from operations                          (0.22)             (0.87)
                                                            -------------    ---------------
                         Total Basic Loss Per Share         $       (0.22)   $         (0.94)
                                                            =============    ===============
</TABLE>
         At December  31,  2004,  the Company had a  convertible  debenture  and
         accrued  interest which could have been  converted  into  approximately
         33,000 shares of common  stock,  which have been excluded from loss per
         share because the effect would be anti-dilutive.

         e. Provision for Taxes

         Deferred taxes are provided on a liability  method whereby deferred tax
         assets  are  recognized  for  deductible   temporary   differences  and
         operating   loss  and  tax  credit   carryforwards   and  deferred  tax
         liabilities are recognized for taxable temporary differences. Temporary
         differences are the differences  between the reported amounts of assets
         and liabilities and their tax bases. Deferred tax assets are reduced by
         a valuation  allowance  when, in the opinion of management,  it is more
         likely  than not that some  portion or all of the  deferred  tax assets
         will not be realized.
                                      F-11
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         e. Provision for Taxes (Continued)

         Deferred  tax assets and  liabilities  are  adjusted for the effects of
         changes in tax laws and rates on the date of enactment.

         Net  deferred  tax assets  consist of the  following  components  as of
         December 31, 2004 and 2003:


                                               2004           2003
                                           -----------    -----------

               Deferred tax assets:
                 NOL carryover             $ 9,747,505    $ 8,183,500
                 Accrued expenses              246,200           --

               Deferred tax liabilities:
                 Accrued Wages                    --         (493,900)

               Valuation allowance          (9,993,705)    (7,689,600)
                                           -----------    -----------

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

               The income tax  provision  differs  from the amount of income tax
               determined by applying the U.S.  federal  income tax rates of 39%
               to pretax income from  continuing  operations for the years ended
               December 31, 2004 and 2003 due to the following:


                                               2004           2003
                                           -----------    -----------

               Book income                 $  (196,110)   $  (573,300)
               Other                                50        (16,831)
               Penalties                          --            5,370
               Officer Insurance                 1,460          6,645
               Stock for Services                 --            4,095
               Accrued Wages                      --          115,810
               Loss on debt                    299,490           --
               Impairment Loss                    --           33,945
               Accrued Interest/Payroll          2,198        424,265
               Valuation allowance            (107,088)          --
                                           -----------    -----------

                                           $      --      $      --
                                           ===========    ===========


         At December 31, 2004, the Company had net operating loss  carryforwards
         of approximately  $24,000,000 that may be offset against future taxable
         income  from  the year  2004  through  2024.  No tax  benefit  has been
         reported in the December  31, 2004  consolidated  financial  statements
         since the potential  tax benefit is offset by a valuation  allowance of
         the same amount.

         Due to the  change in  ownership  provisions  of the Tax  Reform Act of
         1986, net operating loss carryforwards for Federal income tax reporting
         purposes  are  subject  to  annual  limitations.  Should  a  change  in
         ownership occur, net operating loss  carryforwards may be limited as to
         use in future years.

                                      F-12

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


         f. Asset Retirement Obligation

         The  following is a description  of the changes to the Company's  asset
         retirement obligation from January 1 through December 31, 2004:

            Reclamation obligation (asset retirement obligation)
             as reported at December 31, 2003                       $   200,000
            Impact of adopting SFAS No. 143                                --
            Acquisition of subsidiary                                 1,474,887
            Accretion expense:
            Revision in reclamation cost estimates                     (103,138)
            Accretion expense - January 1, 2004 through
             December 31, 2004                                             --
                                                                    ------------

            Reclamation obligation at December 31, 2004             $ 1,571,749
                                                                    ============

         g. Presentation

         Certain  2003  balances  have  been  reclassified  to  conform  to  the
         presentation of the 2004 consolidated financial statements.

         h. Depreciation

         Fixed assets are stated at cost.  Depreciation  on vehicles,  machinery
         and equipment is provided  using the straight line method over expected
         useful  lives  of  five  years.  Depreciation  on  pipelines  and  well
         equipment is provided using the straight-line  method over the expected
         useful lives of fifteen years.  Wells are being  depreciated  using the
         units-of-production  method  on the basis of total  estimated  units of
         proved reserves.

         i. Estimates

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         management to make estimates and  assumptions  that affect the reported
         amounts of assets and liabilities  and disclosure of contingent  assets
         and  liabilities  at the  date  of the  financial  statements  and  the
         reported amounts of revenues and expenses during the reporting  period.
         Actual results could differ from those estimates.

         j. Long Lived Assets

         The Company  reviews  long-lived  assets and  identifiable  intangibles
         whenever events or circumstances  indicate that the carrying amounts of
         such assets may not be fully  recoverable.  The Company  evaluates  the
         recoverability  of long-lived  assets by measuring the carrying amounts
         of the assets against the estimated  undiscounted cash flows associated
         with  these  assets.  At the time such  evaluation  indicates  that the
         future  undiscounted  cash flows of certain  long-lived  assets are not
         sufficient  to  recover  the  assets'  carrying  value,  the assets are
         adjusted to their fair values (based upon discounted cash flows).

                                      F-13

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         k. Accounts Receivable

         Accounts  receivable are carried at the expected net realizable  value.
         The allowance for doubtful accounts is based on management's assessment
         of the  collectibilitiy  of specific customer accounts and the aging of
         the  accounts  receivables.  If there were a  deterioration  of a major
         customer's  creditworthiness,  or  actual  defaults  were  higher  than
         historical  experience,  our  estimates  of the  recoverability  of the
         amounts  due to us could be  overstated,  which  could  have a negative
         impact on operations.

         l. New Accounting Pronouncements

         On  December  16, 2004 the FASB  issued  SFAS No.  123(R),  Share-Based
         Payment,  which  is an  amendment  to  SFAS  No.  123,  Accounting  for
         Stock-Based  Compensation.  This new standard eliminates the ability to
         account for  share-based  compensation  transactions  using  Accounting
         Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
         Employees, and generally requires such transactions to be accounted for
         using a  fair-value-based  method and the resulting cost  recognized in
         our  financial  statements.  This new standard is effective  for awards
         that are  granted,  modified  or settled in cash in interim  and annual
         periods  beginning after June 15, 2005. In addition,  this new standard
         will apply to unvested  options granted prior to the effective date. We
         will adopt this new standard effective for the fourth fiscal quarter of
         2005, and have not yet  determined  what impact this standard will have
         on our financial position or results of operations.

         In November  2004, the FASB issued SFAS No. 151,  Inventory  Costs - an
         amendment of ARB No. 43, Chapter 4. This Statement  amends the guidance
         in  ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
         accounting  for abnormal  amounts of idle  facility  expense,  freight,
         handling costs, and wasted material (spoilage).  Paragraph 5 of ARB 43,
         Chapter 4,  previously  stated  that ". . . under  some  circumstances,
         items  such  as  idle  facility  expense,  excessive  spoilage,  double
         freight,  and  rehandling  costs  may  be so  abnormal  as  to  require
         treatment as current period  charges.  . . ." This  Statement  requires
         that those items be recognized as current-period  charges regardless of
         whether they meet the  criterion of "so  abnormal."  In addition,  this
         Statement requires that allocation of fixed production overheads to the
         costs of conversion be based on the normal  capacity of the  production
         facilities.  This  statement is effective for inventory  costs incurred
         during fiscal years beginning after June 15, 2005.  Management does not
         believe the adoption of this Statement will have any immediate material
         impact on the Company.

                                      F-14

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         l. New Accounting Pronouncements (Continued)

         In December  2004,  the FASB issued SFAS No. 152,  Accounting  for Real
         Estate Time-sharing  Transactions,  which amends FASB statement No. 66,
         Accounting  for  Sales  of Real  Estate,  to  reference  the  financial
         accounting  and  reporting   guidance  for  real  estate   time-sharing
         transactions  that is provided  in AICPA  Statement  of Position  (SOP)
         04-2,  Accounting  for  Real  Estate  Time-Sharing  Transactions.  This
         statement also amends FASB  Statement No. 67,  Accounting for Costs and
         Initial Rental  Operations of Real Estate  Projects,  to state that the
         guidance for (a)  incidental  operations and (b) costs incurred to sell
         real  estate  projects  does  not  apply  to real  estate  time-sharing
         transactions.  The accounting for those operations and costs is subject
         to the guidance in SOP 04-2.  This Statement is effective for financial
         statements for fiscal years beginning  after June 15, 2005.  Management
         believes  the  adoption  of this  Statement  will have no impact on the
         financial statements of the Company.

         In December 2004, the FASB issued SFAS No.153,  Exchange of Nonmonetary
         Assets.  This  Statement  addresses  the  measurement  of  exchanges of
         nonmonetary  assets. The guidance in APB Opinion No. 29, Accounting for
         Nonmonetary  Transactions,  is based on the principle that exchanges of
         nonmonetary  assets  should be measured  based on the fair value of the
         assets  exchanged.  The  guidance in that  Opinion,  however,  included
         certain exceptions to that principle.  This Statement amends Opinion 29
         to  eliminate  the  exception  for  nonmonetary  exchanges  of  similar
         productive  assets  and  replaces  it  with  a  general  exception  for
         exchanges of nonmonetary assets that do not have commercial  substance.
         A  nonmonetrary  exchange has  commercial  substance if the future cash
         flows of the entity are expected to change significantly as a result of
         the exchange.  This Statement is effective for financial statements for
         fiscal years  beginning  after June 15, 2005.  Earlier  application  is
         permitted for nonmonetary asset exchanges  incurred during fiscal years
         beginning  after  the  date of this  statement  is  issued.  Management
         believes  the  adoption  of this  Statement  will have no impact on the
         financial statements of the Company.

         The  implementation of the provisions of these  pronouncements  are not
         expected to have a  significant  effect on the  Company's  consolidated
         financial statement presentation.

         m. Stock Split

         On November 29, 2004 the board of directors and stockholders  holding a
         majority of  outstanding  common  stock of the  Company  approved a one
         share for 150 shares reverse split of the common stock.  All references
         to per share data and common  stock have been  restated  to reflect the
         effect of this reverse split.

                                      F-15

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 2 - PROPERTY AND EQUIPMENT

         At December 31, 2004, property and equipment consisted of:

         Vehicles                              $103,118
         Machinery and equipment                  1,600
         Furniture and Fixtures                   1,848
         Pipelines                            1,387,440
         Well equipment                         280,155
         Leasehold acreage                       95,945
         Acumulated depreciation             (1,241,745)
                                            ------------

              Total Fixed Assets            $   628,361
                                            ============

         Depreciation expense for the year ended December 31, 2004 was $195,150.

         At December 31, 2004 the Company's proved  properties  consist of costs
         in the following:


               Wells, Wyoming                $   3,079,481
               Wells, West Virginia              2,346,600
               Less: accumulated depletion      (2,681,843)
                                             --------------

                                             $   2,744,238

         Depletion expense for the year ended December 31, 2004 was $125,965.

         Productive Gas Wells

         The following  summarizes the Company's productive oil and gas wells as
         of December 31, 2004.  Productive  wells are producing  wells and wells
         capable of  production.  Gross  wells are the total  number of wells in
         which  the  Company  has an  interest.  Net  wells  are  the sum of the
         Company's fractional interests owned in the gross wells.
<TABLE>
<CAPTION>
                                                             Gross           Net
                                                      ---------------  ---------------
<S>                                                            <C>             <C>
                 Productive oil wells, Wyoming                  6               2
                 Oil and gas wells, West Virginia             203             203
                                                      ---------------  ---------------

                                                              209             205
                                                      ===============  ===============
</TABLE>

         The Company  operates its West Virginia  wells and does not operate its
         Wyoming wells.


                                      F-16

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 2 - PROPERTY AND EQUIPMENT (Continued)

         Oil and Gas Acreage

         The following table sets forth the undeveloped  leasehold  acreage,  by
         area,  held by the Company as of December 31, 2004.  Undeveloped  acres
         are acres on which wells have not been  drilled or completed to a point
         that would permit the  production of  commercial  quantities of oil and
         gas,  regardless  of  whether  or  not  such  acreage  contains  proved
         reserves.  Gross  acres  are the  total  number  of acres in which  the
         Company has a working interest.  Net acres are the sum of the Company's
         fractional  interests owned in the gross acres. In certain leases,  the
         Company's  ownership  varies at different  depths;  therefore,  the net
         acres in  these  leases  are  calculated  using  the  lowest  ownership
         interest at any depth.

                                                          Gross        Net
                                                       ----------   --------

                  Wyoming, approximately                   11,418     10,763
                  West Virginia, approximately             15,000     13,125
                                                       ----------   --------

                                                           26,418     23,888
                                                      ===========   ========

NOTE 3 - LONG-TERM DEBT
<TABLE>
<CAPTION>

         The Company had the following debt obligations at December 31, 2004:
<S>                                                                                 <C>
              Note payable to an individual,  due on demand, bearing interest at
               New York prime +1%, interest payments due monthly, secured by
               equipment.                                                           $   292,078

              Union Bank of Tyler County, interest at 10% due quarterly,
               renewable, due on demand, unsecured                                       19,683


              New York Life, 5.87% interest rate, due upon demand,
               secured by life insurance cash value                                      63,340

              Union Bank of Tyler County, $332 due monthly, 10% interest
               rate, due November 20, 2005, secured by a vehicle.                         3,521

              BB&T Bank, bank's prime + 1.25%, due October, 17, 2008,
               secured by well equipment                                                 98,979

              Ford Motor Credit, $247 due monthly, 7.90% interest rate,
               due October 1, 2007, secured by a vehicle                                  7,098

              Ford Motor Credit, $245 due monthly, 8.99% interest rate,
               due August 28, 2007, secured by a vehicle                                  7,062
                                                                                    -----------

                                            Balance forward                             491,761
                                                                                    -----------
</TABLE>


                                      F-17

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003
<TABLE>
<CAPTION>

NOTE 3 -      LONG-TERM DEBT (Continued)
<S>                                                                                 <C>
                                            Balance forward                         $   491,761

              Ford Motor Credit, $277 due monthly, 8.99% interest rate,
               due September1, 2007, secured by a vehicle                                 8,675

              Ford Motor Credit, $491 due monthly, 5.90% interest rate,
               due February 1, 2007, secured by a vehicle                                10,453

              Wesbanco, interest payable quarterly, prime +1%, due on demand,
               secured by officers' personal assets.                                    285,417

              Union Bank of Tyler County, principal and interest payments of
               $326 due monthly, interest at 5.0%, secured by a vehicle.                 13,357

              Note due to a private individual, due on demand with interest
               at 7.00%, due upon demand                                                 60,774
                                                                                    -----------

                          Total                                                         870,437


                          Less Current Portion                                          762,247
                                                                                    -----------

Total Long-Term Debt                                                                $   108,190
                                                                                    ===========

              Future maturities of long-term debt are as follows:

                          2005                                                      $   762,247
                          2006                                                           40,542
                          2007                                                           36,402
                          2008                                                           31,246
                          2009                                                                -
                          2010 and thereafter                                                 -
                                                                                    -----------

                              Total                                                 $   870,437
                                                                                    ===========
</TABLE>

         At December 31, 2004, total interest accrued for these debt obligations
         was $21,388.

NOTE 4 - RELATED PARTY TRANSACTIONS

         a. Marketing Agreement - Sancho

         Natural gas delivered  through the Company's  pipeline  network is sold
         either  to  Sancho  Oil  and  Gas  Corporation  ("Sancho"),  a  company
         controlled  by the Vice  President  of the Company,  at the  industrial
         facilities  near  Sistersville,  West  Virginia,  or to Dominion Gas, a
         local  utility,  on an on-going basis at a variable price per month per
         Mcf.

                                      F-18

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

         a. Marketing Agreement - Sancho (Continued)

         Under its  contract  with  Sancho,  the  Company  has the right to sell
         natural gas subject to the terms and conditions of a 20-year  contract,
         as amended,  that Sancho  entered into with Dominion Gas in 1988.  This
         agreement is a flexible  volume  supply  agreement  whereby the Company
         receives the full price which Sancho  charges the end user less a $0.05
         per Mcf marketing fee paid to Sancho.

         b. Well Drilling and Operating Agreement

         In June 2000,  the Company  entered into a well  drilling and operating
         agreement  with Sancho Oil and Gas  Corporation  ("Sancho"),  a company
         controlled by the Vice President of the Company,  on an on-going basis.
         Sancho provided seven  drill-down  wells located in Tyler County,  West
         Virginia  and the Company  was to pay 100% of the cost of drilling  and
         completing  the well including any topside  equipment  needed and other
         related equipment. The Company will receive 75% of the working interest
         in each of the wells competed.

         c. Receivables and Payables

         The Company has various  payables to the officers and  companies of the
         officers.  These amounts have been grouped  together with a net payable
         of $719,199 and  receivable of $8,825 at December 31, 2004. At December
         31, 2004,  total interest  accrued in the net related party payable was
         $14,017, which is included in the total owed to the related parties.

NOTE 5 - ECONOMIC DEPENDENCE AND MAJOR CUSTOMERS

         The  Company's   marketing   arrangement   with  Sancho  accounted  for
         approximately  82% and 82% of the Company's revenue for the years ended
         December 31, 2004 and 2003, respectively in Tyler Construction Company.
         This marketing  agreement is in effect until December 1, 2008.  Another
         customer also  generated  sales of 99% and 99% of Ritchie  County total
         sales in 2004 and 2003, respectively.

NOTE 6 - STOCKHOLDERS' EQUITY

         Preferred Stock -The Company has authorized  10,000,000 shares of $.001
         par value preferred stock. The preferred stock shall have preference as
         to dividends and to liquidation of the Company.

         Common Stock - The Company has authorized  500,000,000  shares of $.001
         par value common stock.

         In January  2003,  the Company  issued  23,333  shares of common  stock
         valued at $.45 per share for total cash consideration of $10,500.

                                      F-19

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 6 - STOCKHOLDERS' EQUITY (Continued)

         In March 2003,  the Company  issued 1,000 shares of common stock valued
         at $5.25 per share for the conversion of convertible debt of $5,250.

         In June 2003, the Company issued 152,221 shares of common stock for the
         extinguishment of related party debt valued at $30,043.

         In December  2003, the Company issued 33,388 shares of common stock for
         the extinguishment of debts valued at $33,805.

         In January 2004,  the Company issued 163,704 shares of common stock for
         debt relief of $297,859.

         In December 2004, the Company issued  1,353,332  shares of common stock
         for debt relief of $2,436,000.

         In December 2004, key employees of the Company  contributed  $1,346,529
         of accrued payroll and services.

         In December 2004, the Company issued 244,633 shares of common stock for
         an acquisition of a subsidiary valued at $403,645.

NOTE 7 - JUDGMENTS PAYABLE

         Core Laboratories, Inc.
         -----------------------

         On July 28, 1999,  Core  Laboratories,  Inc. (Core) obtained a judgment
         against  the  Company  for  non-payment  of an  accounts  payable.  The
         judgment calls for monthly  payments of $351 and is bearing interest at
         10.00% per annum.  At  December  31,  2004,  the  Company had accrued a
         balance of $13,587  including  interest of $4,720  which is included in
         judgments payable and accrued expenses, respectively.

         RR Donnelly
         -----------

         On July 1, 1998,  RR  Donnelly  (RR)  obtained a judgment  against  the
         Company for  non-payment  of accounts  payable.  The judgment calls for
         monthly payments of $3,244 and is bearing interest at 10.00% per annum.
         At  December  31,  2004,  the  Company has accrued a balance of $56,792
         including interest of $29,704 which is included in judgment payable and
         accrued expenses, respectively.

NOTE 8 - GOING CONCERN

         The Company's  consolidated  financial  statements  are prepared  using
         United States generally accepted accounting  principles applicable to a
         going  concern  which   contemplates  the  realization  of  assets  and
         liquidation  of  liabilities  in the  normal  course of  business.  The
         Company has incurred  cumulative  operating losses through December 31,
         2004 of approximately $29,000,000, and has a working capital deficit at
         December 31, 2004 of $2,980,431.

                                      F-20

<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 8 - GOING CONCERN (Continued)

         Revenues have not been  sufficient to cover its operating  costs and to
         allow it to continue as a going  concern.  The potential  proceeds from
         the  sale  of  common  stock,  sale of  drilling  programs,  and  other
         contemplated  debt and equity  financing,  and  increases  in operating
         revenues from new  development and business  acquisitions  would enable
         the Company to continue as a going  concern.  There can be no assurance
         that the  Company  can or will be able to  complete  any debt or equity
         financing.  The  Company's  consolidated  financial  statements  do not
         include  any  adjustments  that might  result  from the outcome of this
         uncertainty.

NOTE 9 - CONVERTIBLE DEBENTURES

         On  September  10,  1998,  the Company  completed a debenture  issue of
         $4,625,400  face value of 8% Secured  Convertible  Debentures due March
         31, 1999 (the  "Debentures").  Pursuant to the terms of the Debentures,
         the  Company  had  agreed  to file a  registration  statement  with the
         Commission  to register the shares of the  Company's  Common Stock into
         which  the  Debentures  may be  converted.  Upon  effectiveness  of the
         registration  statement,  the  shares  of the  Company's  Common  Stock
         underlying  the  Debentures,  when  issued,  will be deemed  registered
         securities  and  will  not be  restricted  as to  the  resale  of  such
         securities.

         If the  Company  failed  to  file  its  registration  statement  within
         forty-five  (45) days from the closing of the Debenture  offering,  the
         Company  would be obligated to increase by up to fifteen  percent (15%)
         the number of shares  issuable  upon  conversion  to each  holder.  The
         Company failed to obtain an effective registration statement.

         At  December  31,  2004,  the Company  owed a remaining  $52,500 on the
         debentures  consisting  of $50,000 for a debenture,  $24,853 in accrued
         Interest, and $2,500 in penalties.
<TABLE>
<CAPTION>
<S>                                                                                    <C>
              A convertible  debentures  dated 2001 bearing  interest at 10% with
               interest and principal due upon demand; unsecured; convertible
               into the Company's common stock at  $0.035 per share                    $50,000
                                                                                       -------

              Less current portion                                                      50,000
                                                                                       -------

              Long-term portion                                                        $  --
                                                                                       =======
</TABLE>

NOTE 10 - BUSINESS SEGMENTS

         The Company has adopted SFAS No. 131,  "Disclosure about Segments of an
         Enterprise  and  Related   Information."   The  Company   conducts  its
         operations  principally  as oil and gas sales with Trans Energy,  Prima
         Oil, and Cobham Gas & Oil, Inc.,  Penine  Resources,  Inc., and Belmont
         Energy,  inc. and pipeline  transmission  with Ritchie County and Tyler
         Construction.

                                      F-21

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 10 - BUSINESS SEGMENTS (Continued)

              Certain financial information  concerning the Company's operations
              in different industries is as follows:
<TABLE>
<CAPTION>

                                                For the
                                               Years Ended      Oil and Gas            Pipeline          Corporate
                                               December 31,        Sales             Transmission        Unallocated
                                               ------------     -----------          ------------        -----------

<S>                                              <C>           <C>                   <C>                   <C>
              Oil and gas revenue                2004          $   986,220           $ 1,403,879           $ --
                                                 2003              535,278             1,367,558             --

             Operating loss applicable to
              industry segment                   2004              523,857                68,155             --
                                                 2003              994,005               193,443             --

              Interest expense                   2004             (156,277)              (37,407)            --
                                                 2003             (344,923)              (59,413)            --

              Other income (expenses)            2004                 --                    --               --
                                                 2003               20,386               105,704             --

              Assets
                (net of intercompany accounts)   2004            2,033,346               680,956             --
                                                 2003              766,733               638,316             --

              Depreciation and amortization      2004              220,836                74,043             --
                                                 2003              870,537                90,644             --

              Property and equipment
               acquisitions                      2004            2,613,460                  --               --
                                                 2003              152,848                  --               --
</TABLE>

NOTE 11 - OUTSTANDING STOCK OPTIONS

         The Company  applies  Accounting  Principles  Board ("APB") Opinion 25,
         "Accounting for Stock Issued to Employees," and related Interpretations
         in  accounting  for all  stock  option  plans.  Under APB  Opinion  25,
         compensation  cost is recognized for stock options granted to employees
         when the option price is less than the market  price of the  underlying
         common stock on the date of grant.

         FASB Statement 123,  "Accounting for Stock-Based  Compensation"  ("SFAS
         No.  123"),  requires  the  Company  to  provide  proforma  information
         regarding net income and net income per share as if compensation  costs
         for the  Company's  stock  option plans and other stock awards had been
         determined in accordance with the fair value based method prescribed in
         SFAS No. 123. The Company  estimates the fair value of each stock award
         at the grant date by using the Black-Scholes option pricing model.

         The Company had no options  granted or outstanding at December 31, 2004
         and 2003.
                                      F-22

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2004 and 2003

NOTE 12- SUBSEQUENT EVENTS

         Acquisition  -  On  January  31,  2005,   the  Company   finalized  the
         acquisition of Arvilla Oilfield Services, LLC., a West Virginia limited
         liability  company,  and  have  assumed  all  operations,   assets  and
         liabilities of Arvilla. Arvilla provides well servicing,  work over and
         related  transportation  services  to  independent  oil and natural gas
         producers  in the  northeast  region  of the  United  States.  It  also
         performs ongoing  maintenance and major overhauls necessary to optimize
         the level of  production  from  existing  oil and natural gas wells and
         provides certain ancillary  services during the drilling and completion
         of new wells.

         Stock  Issuance - Subsequent to December 31, 2004,  the Company  issued
         50,000  shares of  common  stock to a  consultant  for  services  to be
         rendered.

NOTE 13- RESTATEMENT

         The accompanying  December 31, 2003 Statement of  Stockholders'  Equity
         has  been  restated  to  reflect  changes  from  previously   published
         financial statements as follows:


                                  As originally
                                    published       Restated
                                      2003            2003           Change
                                ---------------  ---------------  ------------

          Balance sheet data:
             Accrued expenses     $    954,749    $     675,787     $   278,962
             Retained deficit     $ 28,804,202    $  28,525,240     $  (278,962)

         The Company  had  accrued  penalties  associated  with the  issuance of
         convertible  debentures.  The  Company  failed  to file a  registration
         statement and accrued penalties.  Many of the debentures converted into
         common stock as full satisfaction of liabilities. The Company failed to
         reverse the accrual at the time of conversion. During 2004, the Company
         recorded  this  transaction  as  a  prior  period  adjustment  and  has
         accordingly restated the accounts affected.

                                      F-23

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2004 and 2003
                                   (Unaudited)

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES

         (1)            Capitalized Costs Relating to Oil
                          and Gas Producing Activities
<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                2004           2003
                                                                             -----------    -----------
<S>                    <C>                                                  <C>            <C>
                       Proved oil and gas producing properties and related
                        lease and well equipment                             $ 7,093,676    $ 3,171,426
                       Unproved oil and gas properties                            95,945         99,945
                       Accumulated depreciation and depletion                 (3,870,878)    (2,555,878)
                                                                             -----------    -----------

                       Net Capitalized Costs                                 $ 3,318,747    $   715,493
                                                                             ===========    ===========
</TABLE>
               (2)           Costs Incurred in Oil and Gas Property
                      Acquisition, Exploration, and Development Activities
<TABLE>
<CAPTION>
                                                                          For the Years Ended
                                                                              December 31,
                                                                       2004                2003
                                                                ----------------    ----------------
<S>                    <C>                                     <C>                  <C>
                       Acquisition of Properties
                          Proved                                $  2,346,600        $      --
                          Unproved                                      --                 --
                       Exploration Costs                                --                 --
                       Development Costs                                --                 --
</TABLE>
               The Company does not have any  investments  accounted  for by the
               equity method.


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)

               (3)          Results of Operations for
                              Producing Activities
<TABLE>
<CAPTION>
                                                                            For the Year Ended
                                                                               December 31,
                                                                         ----------------------
                                                                            2004         2003
                                                                         ---------    ---------

<S>                                                                      <C>          <C>
               Sales                                                     $ 557,765    $ 535,278

               Production costs                                           (198,000)    (299,851)
               Depreciation and depletion                                 (220,837)    (841,250)
               Income tax expenses                                            --           --
                                                                         ---------    ---------

               Results of operations for producing activities
                (excluding the activities of the pipeline transmission
                operations, corporate overhead and interest costs)       $(137,928)   $(605,823)
                                                                         =========    =========
</TABLE>

                                      F-24
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2004 and 2003
                                   (Unaudited)

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)

         (4) Reserve Quantity Information

                                                           Oil         Gas
                                                           BBL         CF
                                                        --------    --------

         Proved developed and undeveloped reserves

         End of the year 2003                            99,880        --

         Revisions of previous estimates
         Improved recovery                                 --          --
         Purchases of minerals in place                  23,506     550,866
         Extensions and discoveries                        --          --
         Production                                    (16,287)      (7,911)
         Sales of minerals in place                        --          --
                                                       --------    --------

         End of the year 2004                           106,649     542,955
                                                       ========    ========
         Proved developed reserves:
                                                          Oil         Gas
                                                          BBL         CF
                                                       --------    --------

         End of the year 2003                            99,880        --
         End of the year 2004                           106,649     542,955


         During the years  ended  December  31,  2004 and 2003,  the Company had
         reserve studies and estimates prepared on its various  properties.  The
         difficulties and  uncertainties  involved in estimating  proved oil and
         gas reserves makes comparisons between companies difficult.  Estimation
         of reserve  quantities  is subject to wide  fluctuations  because it is
         dependent on judgmental  interpretation  of geological and  geophysical
         data.


                                      F-25

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2004 and 2003
                                   (Unaudited)

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)

        (5)            Standardized Measure of Discounted
                         Future Net Cash Flows Relating
                         to Proved Oil and Gas Reserves


                              At December 31, 2004
                                                                    Trans Energy
                                                                        and
                                                                    Subsidiaries
                                                                    ------------

         Future cash inflows                                        $ 6,996,464
         Future production and development costs                     (1,539,222)
         Future income tax expense                                         --
                                                                    -----------
         Future net cash flows                                        5,457,242
         Discounted for estimated timing of cash flows               (1,018,406)
                                                                    -----------

         Standardized measure of discounted future net cash flows   $ 4,438,836
                                                                    ===========


                                 At December 31, 2003


         Future cash inflows                                        $ 3,220,287
         Future production and development costs                       (740,666)
         Future income tax expense                                         --
                                                                    -----------
         Future net cash flows                                        2,479,621
         10% annual discount for estimated timing of cash flows        (615,244)
                                                                    -----------

         Standardized measure of discounted future net cash flows   $ 1,864,377
                                                                    ===========


         Future income taxes were  determined  by applying the statutory  income
         tax rate to future pre-tax net cash flow relating to proved reserves.



                                      F-26

<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2004 and 2003
                                   (Unaudited)

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)

         (5)           Standardized Measure of Discounted
                        Future Net Cash Flows Relating to
                     Proved Oil and Gas Reserves (Continued)

         The following schedule  summarizes changes in the standardized  measure
         of  discounted  future  net cash flow  relating  to proved  oil and gas
         reserves:
<TABLE>
<CAPTION>

                                                                 For the Years Ended
                                                                    December 31,
                                                                 2004           2003
                                                              -----------    -----------

<S>                                                           <C>            <C>
          Standardized measure, beginning of year             $ 1,864,377    $ 4,314,941
          Oil and gas sales, net of production costs                 --             --
          Sales of mineral in place                              (125,966)    (2,411,293)
          Purchases                                             2,375,205           --
          Net change due to revisions in quantity estimates       325,220        (39,271)
          Accretion of discount items                                --             --
                                                              -----------    -----------

          Sandardized measure, end of year                    $ 4,438,836    $ 1,864,377
                                                              ===========    ===========
</TABLE>

         The  above   schedules   relating  to  proved  oil  and  gas  reserves,
         standardized measure of discounted future net cash flows and changes in
         the standardized measure of discounted future net cash flows have their
         foundation  in  engineering  estimates of future net revenues  that are
         derived from proved reserves and prepared using the prevailing economic
         conditions. These reserve estimates are made from evaluations conducted
         by independent geologists,  of such properties and will be periodically
         reviewed based upon updated  geological and production data.  Estimates
         of proved  reserves are inherently  imprecise.  The above  standardized
         measure  does not  include  any  restoration  costs due to the fact the
         Company does not own the land.

         Subsequent  development  and production of the Company's  reserves will
         necessitate  revising the present estimates.  In addition,  information
         provided in the above schedules does not provide definitive information
         as the results of any particular  year but,  rather,  helps explain and
         demonstrate the impact of major factors affecting the Company's oil and
         gas producing activities.  Therefore,  the Company suggests that all of
         the aforementioned  factors concerning  assumptions and concepts should
         be  taken  into   consideration   when  reviewing  and  analyzing  this
         information.

                                      F-27