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

                                   FORM 10-KSB

(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                   For the Fiscal Year Ended December 31, 2007

( )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                         Commission File Number 0-23530

                               TRANS ENERGY, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified 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)

         Registrant's telephone no., including area code: (304) 684-7053

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
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)

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

         State the issuer's revenues for its most recent fiscal year. $1,519,377

         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. $3,804,818 (Based on price of $.80 per share on March 31, 2007)

         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, 2008
-----------------------------                 ----------------------------------
Common Stock, $.001 par value                           10,160,065

Transitional Small Business Disclosure Format (Check one):  Yes (  )  No (X)
<PAGE>

                               TRANS ENERGY, INC.
                                Table of Contents



                                                                            Page
                                                                            ----


                                     PART I.
Item 1.   Description of Business..............................................3

Item 2.   Description of Property..............................................9

Item 3.   Legal Proceedings...................................................11

Item 4.   Submission of Matter to a Vote of Security Holders..................12

                             PART II

Item 5.   Market for common Equity and Related Stockholder Matters............12

Item 6.   Management's Discussion and Analysis or Plan of Operation...........13

Item 7.   Financial Statements................................................17

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure............................................17

Item 8A.  Controls and Procedures.............................................18

Item 8B.  Other Information...................................................20

                            PART III

Item 9.   Directors, Executive Officers, Promoters and Control persons;
          Compliance with Section 16(a) of the Exchange Act...................21

Item 10.  Executive Compensation..............................................22

Item 11.  Security Ownership of Certain Beneficial Owners and Management......23

Item 12.  Certain Relationships and Related Transactions......................23

Item 13.  Exhibits............................................................24

Item 14.  Principal Accountant Fees and Services..............................25

          Signatures..........................................................26



                                      -2-
<PAGE>


                                     PART 1

Item 1.  Description of Business
         -----------------------

History

         Trans  Energy,  Inc.  is engaged in the  exploration,  development  and
production  of natural gas and oil, and, to a lesser  extent,  the marketing and
transportation of natural gas. We own interests in and operate approximately 271
oil and gas wells in West Virginia. We also own and operate an aggregate of over
24 miles of 4-inch,  6-inch,  and 8-inch gas  transmission  lines located within
West Virginia in the counties of Marion,  Doddridge,  Ritchie, Wetzel and Tyler.
We also have  approximately  25,638  gross acres  under  lease in West  Virginia
primarily in the counties of Wetzel, Marion, and Doddridge.

         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.

Recent Events
-------------

         Trans  Energy  began  drilling  its  first of three  exploratory  joint
venture wells located in Wetzel County,  West Virginia to an  approximate  total
depth of 7,500 feet,  with the primary  target being the  Marcellus  Shale.  The
total cost per well is estimated to be $850,000 to $1,000,000, of which Republic
Partners will pay for 100% of the cost of one  exploratory  well in 2007 and two
exploratory  wells in 2008 to earn a 50%  working  interest.  Drilling  began on
October 15, 2007 and was completed on November 14, 2007 on the first well. Also,
drilling  began on a second  2007 well in Wetzel  County,  West  Virginia  to an
approximate  total depth of 7,500 feet,  with the primary  target also being the
Marcellus  Shale,  on November 29, 2007 and was  completed on February 23, 2008.
Republic  Partners elected to obtain a 50% paid working interest in this well as
permitted by the terms in the joint venture  contract.  The two 2007 exploration
wells are expected to be completed and begin flow in May 2008.

         During  2007,  we drilled  seven new wells in  Doddridge  County,  West
Virginia to the Gordon formation of which we own a 100% working interest in each
well. In addition,  we drilled eleven new wells in Wetzel County,  West Virginia
to various  formations,  including the Gordon and Fourth Sand, of which we own a
100% working interest in each well.

         Trans Energy began the  construction  of an 8 inch pipeline  located in
Wetzel County, West Virginia which will transport gas from the new wells drilled
during the year ended  December 31, 2007,  in addition to  transporting  gas for
third  parties.  The  pipeline  was  completed on December 28, 2007 at a cost of
$1,372,149.

Business History
----------------

         Our business strategy is to economically increase reserves,  production
and the sale of natural gas and oil from existing and acquired properties in the
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.

         The  Company  has been an oil and gas  developer  for more than  twenty
years,  but began a more  aggressive  focus on  development  and growth in early
2006. At that time, the Company  reorganized  with a new CEO and installed a new
controller.  In addition,  we began an effort to leverage the company's  acreage
and  reserves to fund  development,  and have since  drilled  more than 30 wells
since early 2006 and significantly increased production and reserves. Management
intends to continue to develop and increase the production  from oil and natural
gas  properties  that we currently own. We will continue to transport and market
natural gas through our pipelines.


                                       -3-
<PAGE>



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 2008.

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
made  under  short-term  delivery  contracts  at  market  prices.  These  prices
fluctuate with natural gas contracts as posted in national  publications  and on
the New York Mercantile Exchange.

         Natural gas delivered  through our pipeline  network is transported for
third party producers  through a contract with Sancho Oil and Gas Corporation to
Dominion Hope Gas, a local utility.  Under our contract with Sancho, we have the
right to transport  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  a
transportation fee less a $.05 per Mcf marketing fee paid to Sancho.

         The natural gas from our Wetzel County wells is sold to East  Resources
or Equitable  Gas. The gas from our  Doddridge  County wells is sold to Dominion
Hope.

         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 and haul it via truck.

         Management believes that we are not dependent upon any one customer due
to the fact that we have  multiple  marketing  agreements  with many third party
purchasers.

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 Basin 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,  sometimes  enabling them to identify and acquire more
economically  desirable energy producing  properties and drilling prospects than
us. We are more of a regional  operator,  and have the  traditional  competitive
strengths of one, including long established  contacts and in-depth knowledge of
the local geography.  Additionally,  there is increasing  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. If that situation were to change, management believes the Company would
command a competitive price if it became part of a larger company.

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


                                       -4-
<PAGE>

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 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.

         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 end of our fiscal  year on  December  31,  2007,  we employed
twenty-five full-time employees, consisting of five executives and managers, six
marketing, lease acquisition and clerical persons, and fourteen field operations
employees.

         None of our employees  are members of any union,  nor have they entered
into any collective bargaining agreements. We believe 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.


                                      -5-
<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.

         In addition,  we currently  occupy  approximately  2,000 square feet of
office  space  in   Parkersburg,   West  Virginia,   which  we  share  with  our
subsidiaries,  Tyler Construction  Company and Ritchie County Gathering Systems.
This office is dedicated to our financial  operations.  We lease an aggregate of
approximately 2,000 square feet from an unaffiliated third party under a written
lease agreement for $1,450 per month, inclusive of utilities.

Industry Segments
-----------------

         We are presently engaged in the principal  business of the exploration,
development  and,  production  of natural gas and oil.  We are also  involved in
pipeline  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 may realize future losses.
----------------------------------------------------------

         Since our revenues only  increased  approximately  7% during the fiscal
year ended  December 31,  2007,  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, 2007, our net operating loss  carryforward was approximately $27 million and
our accumulated  deficit was approximately $35 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;
         * construction of gathering system infrastructure;
         * additional personnel; and
         * increased general and administrative expenses.

         Accordingly,  we will need to generate significant revenues to achieve,
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.

         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.

                                      -6-
<PAGE>

         As of December 31, 2007, we had a working  capital deficit of $686,549.
If our business 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 seek additional funding in the
future to provide sufficient working capital and funds for capital expenditures.
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 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 in
the  exploration  and  development  of  properties  and the sale of oil and gas.
Management  expects  competition  to continue to intensify  in the future.  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. If we fail to address  competitive
developments  quickly  and  effectively,  we will  not be  able to grow  and our
business will be adversely affected.

         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:

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

                                      -7-
<PAGE>

         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:

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

         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.  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  ability  to  continue  as a going  concern is  dependent  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 banks
or other forms of financing.

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 Pink Sheets, 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:

                                      -8-
<PAGE>

         * 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.  The  issuance of 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.

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.

Possible "Penny Stock" Regulation
--------------------------------------------------------------------------------

         Trading  of our  common  stock on the Pink  Sheets  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 of working and royalty interests owned by us in
various  oil and gas wells and  leases  located  in West  Virginia.  Our  proved
reserves as of December 31, 2007 and 2006 are set forth below:

                                      -9-
<PAGE>


                                                 As of December 31,
                               -------------------------------------------------
                                         2007                      2006
                               -----------------------   -----------------------

                                              Natural                  Natural
                                    Oil         Gas          Oil         Gas
                                   (BBL)       (MCF)        (BBL)       (MCF)
                               ----------   ----------   ----------   ----------
Developed Producing               182,056    4,531,463       56,567    2,340,352
Developed Non-Producing           433,232    2,602,236      274,003      969,809
Proved Undeveloped              1,566,305   16,158,889    1,010,394    9,851,193
                               ----------   ----------   ----------   ----------
Total Proved                    2,181,593   23,292,588    1,340,964   13,161,354
                               ==========   ==========   ==========   ==========



Productive Gas Wells
--------------------

         The following table  summarizes the total number of wells and undrilled
locations to which proved developed  reserves and proved  undeveloped  reserves,
respectively, are attributed. Wells are shown on a gross basis.

                                                 As of December 31,
                               -------------------------------------------------
                                         2007                      2006
                               -----------------------   -----------------------
                                              Natural                  Natural
                                    Oil         Gas          Oil         Gas
                               ----------   ----------   ----------   ----------


Producing Wells                         3          130           14           90
Non-Producing Wells                     1          137            1          140
Undrilled Well Locations              --           141          --            92
                               ----------   ----------   ----------   ----------
Total Wells and Well Locations          4          408           15          322
                               ==========   ==========   ==========   ==========


         The following  table  summarizes  the Company's  productive oil and gas
wells in which we owned an interest as of December 31, 2007 and 2006. Productive
wells are wells that are capable of producing natural gas or oil.

                             Productive Wells (a)
                             --------------------
                                Oil           Gas         Drilling Wells (b)
                             ---------     ---------      -----------------
2007
Gross                           4             267               2
Net                             4             267               1

2006
Gross                          15             230             --
Net                            15             230             --

a)  Includes  active  wells  and  wells  temporarily  shut-in.
b)  Consists  of exploratory and development wells.

Oil and Gas Acreage
-------------------

         The  following  table  summarizes  our  gross  and  net  developed  and
undeveloped oil and gas acreage under lease as of December 31, 2007 and 2006.

                   Developed Acres        Undeveloped Acres    Total
                   -------------------------------------------------------------
                   Gross      Net         Gross      Net       Gross      Net
                   -------------------------------------------------------------
West Virginia:
          2007     20,243     20,243      5,395      5,395     25,638     25,638
          2006     19,800     19,800        200        200     20,000     20,000
Kansas:
          2007       --         --        3,120      1,755      3,120      1,755

         The  estimates  for  2006  and  2007 are  based  upon  the  reports  of
Schlumberger Technology Corporation, independent petroleum consultants.


                                      -10-
<PAGE>


         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.

         The following table sets forth certain information regarding production
volumes,   revenue,   average  prices  received  and  average  production  costs
associated with our sales of oil and natural gas for the periods noted.

                                                        Year Ended December 31,
                                                      --------------------------
                                                           2007          2006
                                                      --------------------------
Net Production:
     Oil (Bbl)                                              4,022          5,758
     Natural Gas (Mcf)                                    161,281        124,302
     Natural Gas Equivalent (Mcfe)                        185,413        158,850

Oil and Natural Gas Sales:
     Oil                                               $  281,908     $  297,928

     Natural Gas                                          925,325        894,155
     Total                                             $1,207,233     $1,192,083

Average Sales Price:
     Oil ($ per Bbl)                                   $    70.09     $    51.74
     Natural Gas ($ per Mcf)                                 5.74           7.19
     Natural Gas Equivalent ($ per Mcfe)               $     6.51     $     7.50

Oil and Natural Gas Costs:
     Lease operating expenses                          $  929,224     $  534,065

Average production cost per Mcfe                       $     5.01     $     3.36


         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.

         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.

         On July 28, 1999, Core  Laboratories,  Inc. obtained a judgment against
the Company for  non-payment  of an account  payable.  The  judgment  called for
monthly  payments of $351 and accrued  interest at 10.00% per annum. The balance


                                      -11-
<PAGE>

due on this judgment including the related interest in the amount of $21,312 was
paid in full on February 28, 2007.

         On July 1, 1998,  RR Donnelly  obtained a judgment  against the Company
for non-payment of accounts payable. The judgment called for monthly payments of
$3,244  and  accrued  interest  at 10.00%  per annum.  The  balance  due on this
judgment  including  the  related  interest in the amount of $96,734 was paid in
full on February 28, 2007.

         We may be engaged in  various  other  lawsuits  and  claims,  either as
plaintiff or  defendant,  in the normal  course of  business.  In the opinion of
management, based upon advice of counsel, the ultimate outcome of these lawsuits
will  not have a  material  impact  on our  financial  position  or  results  of
operations.

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

         No matters were  submitted to a vote of our  securities  holders during
the fourth quarter of the fiscal year ended December 31, 2007.

                                     PART II

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

         Our common  stock is quoted on the Pink Sheets  under the symbol  TENG.
Prior to the  effectiveness of our delisting on April 27, 2007, our stock traded
on the OTC Bulletin Board under the symbol of TENG. Set forth in the table below
are the  quarterly  high and low prices of our common stock as obtained from the
Pink Sheets and the OTC Bulletin Board for the past two fiscal years.

                                                       High              Low
                                                     ---------         --------

 2007
                  First Quarter                      $    1.90         $   0.72
                  Second Quarter                     $    1.62         $   0.70
                  Third Quarter                      $    1.15         $   0.70
                  Fourth Quarter                     $    1.05         $   0.70
 2006
                  First Quarter                      $    0.90         $   0.58
                  Second Quarter                     $    0.70         $   0.50
                  Third Quarter                      $    0.85         $   0.51
                  Fourth Quarter                     $    1.00         $   0.66

         As of March 31, 2008, there were approximately 388 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. We estimate there to be approximately 2,000 such shareholders.

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.


                                      -12-
<PAGE>


Item 6.  Management's Discussion and Analysis
         ------------------------------------

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

Business Strategy
-----------------

         Trans  Energy  is  an  independent   energy  company   engaged  in  the
exploration,   development,  and  acquisition  of  natural  gas  and  crude  oil
properties,  with  interests  in West  Virginia.  The Company  completed a major
financing and executed a major  increase in  development  activity and leasehold
acquisition  during the year ended  December 31, 2007. In addition,  we had good
success on the shallow drilling  program,  adding both natural gas and crude oil
reserves  to  the  Company's  proved  reserve  base.  Furthermore,  the  Company
established  major  interconnects  with interstate  pipelines to allow increased
access to the market.  The Company's  significant  overall  increase in reserves
combined with a  strengthening  pricing  environment  has greatly  increased the
present value of our forecasted cash flows.

         We intend to focus our development and exploration  efforts in our West
Virginia  properties  and utilize low risk drilling in the shallow zones such as
the Gordon and the Fourth Sand. We believe that our extensive  acreage  position
will  allow us to grow  through  low risk  drilling  in the near  term.  We have
attractive  opportunities to expand our reserve base through continuing to drill
higher risk/higher  reward exploratory  drilling to the Marcellus Shale for 2008
and beyond.  We will evaluate our  properties on a continuous  basis in order to
optimize  our existing  asset  base.  We plan to  employ  the  latest  drilling,
completion   and   fracturing   technology  in  all  of  our  wells  to  enhance
recoverability and accelerate cash flows associated with these wells.

         In summary,  our  strategy is to increase  our oil and gas reserves and
production  while keeping our  development  costs and operating  costs as low as
possible.  We will  implement this strategy  through  drilling  exploratory  and
development  wells  from  our  inventory  of  available  prospects  that we have
evaluated  for  geologic  and  mechanical  risk and future  reserve or  resource
potential.  Success of this strategy is  contingent on various risk factors,  as
discussed elsewhere in this 10-KSB.

         The  implementation  of our strategy requires that we continually incur
significant capital expenditures in order to replace current production and find
and  develop  new oil and gas  reserves.  In order to finance  our  capital  and
exploration  program,  we depend on cash flow from  operations  or bank debt and
equity offerings as discussed below in Liquidity and Capital Resources.

Results of Operations
---------------------

         The following  table sets forth the  percentage  relationship  to total
revenues  of  principal  items  contained  in  our  consolidated  statements  of
operations  for the two most recent  fiscal  years ended  December  31, 2007 and
2006. It should be noted that percentages discussed throughout this analysis are
stated on an approximate basis.
                                                              Fiscal Years Ended
                                                                 December 31,
                                                                2007      2006
                                                              --------   ------

Total revenues ...............................................    100%     100%
Total costs and expenses .....................................   (1965%)  (220%)
Loss from operations .........................................  (96%)   (120%)
Discontinued operations ......................................     --      (96%)
Other income (expense) .......................................    (59%)      8%
Net income (loss).............................................   (155%)   (208%)


                                      -13-
<PAGE>

         Total  revenues  of  $1,519,377  for the year ended  December  31, 2007
("2007")  increased 7% compared to  $1,420,802  for the year ended  December 31,
2006  ("2006"),  primarily  due to new  drilling,  acquisitions,  and  increased
production  from the  efforts of the  workover  program.  We focused our efforts
during 2007 on the  implementation of our drilling program in Doddridge,  Wetzel
and Marion Counties and on a workover program on our wells located in Wetzel and
Marion Counties,  West Virginia.  We expect more aggressive production increases
from  the  drilling  program,   the  workover  program  and  from  new  pipeline
connections throughout 2008.

         Production costs increased 74% for 2007 as compared to 2006,  primarily
due to expenses associated with our field production.

         Depreciation, depletion and amortization expense increased 10% for 2007
as compared to the 2006,  due to the increase in production and additions of oil
and gas properties.

         Interest expense increased 327% for 2007 as compared to 2006, primarily
due to increased borrowings for our drilling field production.

         Our loss from  operations  for 2007 was  $1,455,098  compared to a loss
from  operations  of  $1,699,442  for 2006.  This decrease is primarily due to a
decrease  in selling,  general and  administrative  expenses.  This  decrease in
selling,  general and administrative  expenses is related to the value of shares
issued  as part of the  Company's  Long-term  Incentive  Bonus  Program  for the
Company's officers and directors during 2006.

         We recorded a loss from disposal of discontinued  operations in 2006 of
$1,541,142 due to the disposal of Arvilla Oilfield  Services,  LLC. Our net loss
for 2007 was $2,349,017 compared to a net loss of $2,948,528 for 2006.

         We have  accumulated  approximately  $27 million of net operating  loss
carryforwards  as of December 31, 2007,  which may be offset  against future tax
obligations  through 2027. 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 would 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, 2007 because the
potential  tax  benefit  of the  loss  carryforward  is  offset  by a  valuation
allowance of the same amount.

Liquidity and Capital Resources
-------------------------------

         Historically,   we  have  satisfied  our  working  capital  needs  with
operating  revenues and from  borrowed  funds.  At December  31, 2007,  we had a
working  capital  deficit of $686,549  compared to a working  capital deficit of
$2,610,953  at December 31, 2006.  This decrease in working  capital  deficit is
primarily  attributed  to the sale of  wells  in  Marion  County  from  which we
realized net cash proceeds of $1,444,639,  increased  efforts from our work over
program,  as well as cash borrowed as part of our long-term  debt  financing,  a
portion of which was used to pay short-term obligations.

         During  2007,  net  cash  used by  operating  activities  was  $972,781
compared to $834,422 in 2006.  This increased  negative cash flow from operating
activities is primarily  attributable to our decision to pay off the outstanding
payables,  as well as increased expenses related to the workover program and the
exploration in Kansas.

         We expect our cash flow  provided  by  operations  for 2008 to increase
because of higher projected production from the drilling program,  workovers and
acquisitions,  combined with oil and gas prices  consistent with 2007 and steady
operating, general and administrative, interest and financing costs per Mcfe.

                                      -14-
<PAGE>

         Excluding  the  effects of  significant  unforeseen  expenses  or other
income, our cash flow from operations fluctuates primarily because of variations
in oil and gas production and prices, or changes in working capital accounts and
actual  well  performance.  In  addition,  our  oil and  gas  production  may be
curtailed due to factors  beyond our control,  such as downstream  activities on
major pipelines causing us to shut-in production for various lengths of time.

         During  2007,  net cash used by  investing  activities  was  $8,011,832
compared to net cash used of  $2,183,855  in 2006.  We used  $9,123,872  for the
purchase  of oil and gas  properties  and  $282,599  to  purchase  property  and
equipment  and  $1,444,639  was  received  from the sale of  wells  during  2007
compared to $2,624,488  for the purchase of oil and gas  properties and $511,091
to purchase  property and  equipment  and $951,724 was received from the sale of
wells during 2006.

         During 2007, net cash provided by financing  activities was $10,478,171
compared  to  $2,787,834  in 2006.  In 2007,  we  borrowed  $14,666,800,  net of
financing cost and cash discount, and repaid $3,378,140 in notes payable.

         We anticipate  meeting our working capital needs with revenues from our
ongoing operations,  particularly from our wells in Wetzel, Marion and Doddridge
Counties,  West Virginia and new  transportation of gas for third parties in our
6-inch pipeline West Virginia.  In the event revenues are not sufficient to meet
our working capital needs, we will explore the possibility of additional funding
from  either the sale of debt or equity  securities.  There can be no  assurance
such funding will be available to us or, if available,  it will be on acceptable
or  favorable  terms.  In  addition,  we have an  available  credit  facility of
$3,286,854 which we plan to use to fund our drilling program in Wetzel,  Marion,
and Doddridge Counties, West Virginia.

         Because of our continued losses,  working capital deficit, and need for
additional funding, there exists substantial doubt about our ability to continue
as a going concern. Historically, our revenues have not been sufficient to cover
operating costs. We will need to rely on increased  operating  revenues from new
development  or proceeds from debt or equity  financings to allow 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.

Inflation
---------

         In the  opinion  of our  management,  inflation  has not had a material
overall effect on our operations of Trans Energy.

Recent Events
-------------

         Trans  Energy  began  drilling  its  first of three  exploratory  joint
venture wells located in Wetzel County,  West Virginia to an  approximate  total
depth of 7,500 feet,  with the primary  target being the  Marcellus  Shale.  The
total cost per well is estimated to be $850,000 to $1,000,000, of which Republic
Partners will pay for 100% of the cost of one  exploratory  well in 2007 and two
exploratory  wells in 2008 to earn a 50%  working  interest.  Drilling  began on
October 15, 2007 and was completed on November 14, 2007 on the first well. Also,
drilling  began on a second  2007 well in Wetzel  County,  West  Virginia  to an
approximate  total depth of 7,500 feet,  with the primary  target also being the
Marcellus  Shale,  on November 29, 2007 and was  completed on February 23, 2008.
Republic  Partners elected to obtain a 50% paid working interest in this well as
permitted by the terms in the joint venture  contract.  The two 2007 exploration
wells are expected to be completed and begin flow in May 2008.

         Trans  Energy  has  constructed  an 8-inch  pipeline  located in Wetzel
County, West Virginia, which will transport gas from the new Wetzel County Wells
drilled during the year ended December 31, 2007, in addition to transporting gas
for third parties.  The pipeline was completed on December 28, 2007 at a cost of
$1,372,149.

                                      -15-
<PAGE>


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 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:

         o    the sufficiency of existing  capital  resources and our ability to
              raise  additional  capital  to fund cash  requirements  for future
              operations;

         o    uncertainties  involved in the rate of growth of our  business and
              acceptance of any products or services;

         o    success of our drilling activities;

         o    volatility  of the stock  market,  particularly  within the energy
              sector; and

         o    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
--------------------------------

         In September  2006,  the Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards No. 157, "Fair Value Measurements"
which defines fair value,  establishes  a framework for measuring  fair value in
generally accepted  accounting  principles (GAAP), and expands disclosures about
fair value measurements.  Where applicable, SFAS No. 157 simplifies and codifies
related   guidance  within  GAAP  and  does  not  require  any  new  fair  value
measurements.  SFAS No. 157 is effective  for  financial  statements  issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years.  Earlier  adoption is encouraged.  The Company does not expect the
adoption of SFAS No. 157 to have a significant  effect on its financial position
or results of operation.

         In June 2006,  the  Financial  Accounting  Standards  Board issued FASB
Interpretation  No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes  - an
interpretation  of FASB  Statement  No. 109",  which  prescribes  a  recognition
threshold and measurement  attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also  provides  guidance  on  de-recognition,  classification,  interest  and
penalties,  accounting in interim periods,  disclosure and transition. FIN 48 is
effective  for fiscal years  beginning  after  December  15, 2006.  The adoption
of FIN 48  had no  material  impact  to  the  Company's  consolidated  financial
statements.  The Company  files tax  returns in the United  States and states in
which it has operations and is subject to taxation. Tax years subsequent to 2004
remain open to examination by U.S. federal and state tax jurisdictions.

                                      -16-
<PAGE>

Item 7.  Financial Statements
         --------------------

         Our consolidated  financial  statements as of December 31, 2007 and for
the fiscal  years  ended  December  31,  2007 and 2006 have been  audited to the
extent indicated in their report by GBH CPAs, PC, independent  registered public
accounting  firm, 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
          ----------------------------------------------------------------------

         On  September  8, 2006,  HJ &  Associates,  LLC was  terminated  as the
certifying accountant. HJ & Associates, LLC has served from the inception of the
Company as the certifying accountant. From the date on which HJ & Associates LLC
was engaged until the date HJ & Associates,  LLC was  terminated,  there were no
disagreements with HJ & Associates,  LLC on any matter of accounting  principles
or practices,  financial statement  disclosure,  or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of HJ & Associates, LLC
would have caused HJ & Associates,  LLC to make  reference to the subject matter
of the  disagreements  in connection with any reports it would have issued,  and
there were no "reportable  events" as that term is defined in Item 304(a)(1)(iv)
of Regulation S-B.

         On September 8, 2006,  the Company  entered into an  engagement  letter
with Malone & Bailey,  PC to assume the role of its new  certifying  accountant.
During the two most recent fiscal years and the subsequent interim periods prior
to the  engagement of Malone & Bailey,  PC, the  Registrant did not consult with
Malone & Bailey, PC with regard to the application of accounting principles to a
specified  transaction,  either  completed  or  proposed;  or the  type of audit
opinion that might be rendered on the  Company's  financial  statements;  or any
matter that was either the subject of a disagreement  or a reportable  event (as
described in Item 304(a)(1)(iv) of Regulation S-B).

         The decision to change principal auditors and the engagement of the new
principal  auditor was  recommended  and approved by the  Registrant's  Board of
Directors.

         On  October  1,  2007,  Malone  &  Bailey,  PC  was  terminated  as the
certifying accountant. Malone & Bailey, PC has served since September 8, 2006 as
the  certifying  accountant.  From  the date on which  Malone &  Bailey,  PC was
engaged  until  the date  Malone &  Bailey,  PC was  terminated,  there  were no
disagreements with Malone & Bailey, PC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements,  if not resolved to the satisfaction of Malone & Bailey, PC would
have caused Malone & Bailey,  PC to make  reference to the subject matter of the
disagreements  in  connection  with any reports it would have issued,  and there
were no  "reportable  events" as that term is defined in Item  304(a)(1)(iv)  of
Regulation S-B.

         On October 1, 2007, the Company entered into an engagement  letter with
GBH CPAs, PC to assume the role of its new certifying accountant. During the two
most  recent  fiscal  years  and the  subsequent  interim  periods  prior to the
engagement  of GBH CPAs, PC , the  Registrant  did not consult with GBH CPAs, PC
with  regard  to  the  application  of  accounting  principles  to  a  specified
transaction,  either  completed or proposed;  or the type of audit  opinion that
might be rendered on the Company's financial statements;  or any matter that was
either the subject of a disagreement or a reportable event (as described in Item
304(a)(1)(iv) of Regulation S-B).

         The decision to change principal auditors and the engagement of the new
principal  auditor  was  recommended  and  approved  by the  Company's  Board of
Directors.


                                      -17-
<PAGE>


Item 8A.  Controls and Procedures
          -----------------------

         Disclosure  controls and procedures (as defined in Rules  13a-15(e) and
15d-15(e)  under the Securities  Exchange Act of 1934 (the "Exchange  Act")) are
designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and  forms  and  that  such  information  is  accumulated  and  communicated  to
management,  including  the Chief  Executive  Officer and  Principal  Accounting
Officer, to allow timely decisions regarding required disclosures.

         In  connection  with the  preparation  of this  Annual  Report  on Form
10-KSB,  our management,  with the  participation of our Chief Executive Officer
and  our  Principal  Accounting  Officer,  carried  out  an  evaluation  of  the
effectiveness of our disclosure controls and procedures as of December 31, 2007,
as  required  by Rule  13a-15  of the  Exchange  Act.  Based  on the  evaluation
described above, our management,  including our principal  executive officer and
principal accounting officer,  have concluded that, as of December 31, 2007, our
disclosure controls and procedures were not effective

         Notwithstanding  the  existence  of the material  weaknesses  described
below, we concluded that the  consolidated  financial  statements in this Annual
Report on Form 10-KB present  fairly,  in all material  respects,  the Company's
financial condition, results of its operations and cash flows for the year ended
December  31,  2007  in  conformity  with  U.S.  generally  accepted  accounting
principles ("GAAP").

Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------

         Management  of  the  Company  is  responsible  for   establishing   and
maintaining adequate internal control over financial reporting,  as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the  Exchange  Act.  Internal
control over financial  reporting is a process designed under the supervision of
our principal  executive and principal  financial officers to provide reasonable
assurance  regarding the reliability of financial  reporting and the preparation
of financial statements for external purposes in accordance with GAAP.

         Due to inherent limitations,  internal control over financial reporting
may not  prevent  or  detect  misstatements  and,  even  when  determined  to be
effective, can only provide reasonable, not absolute,  assurance with respect to
financial statement preparation and presentation.  Projections of any evaluation
of  effectiveness to future periods are subject to risk that controls may become
inadequate as a result of changes in conditions or  deterioration  in the degree
of compliance.

         Under the  supervision  and with the  participation  of our management,
including our Chief  Executive  Officer and  Principal  Accounting  Officer,  we
conducted  an  evaluation  of the  effectiveness  of our  internal  control over
financial  reporting  as of December  31, 2007 based on the  criteria  framework
established in Internal  Control - Integrated  Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission ("COSO").

         As a result of the  material  weaknesses  described  below,  management
concluded that as of December 31, 2007, we did not maintain  effective  internal
control over financial  reporting based on the criteria  established in Internal
Control - Integrated Framework, issued by COSO.

         A material weakness in internal  controls is a significant  deficiency,
or a combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the financial statements would not be
prevented  or  detected  on a timely  basis by the  Company.  While our  control
deficiencies have not resulted in any material misstatements of account balances
or  disclosures  that we are aware of,  they could  result in  misstatements  or
disclosures  which  could  cause a  material  misstatement  of annual or interim
financial  statements  that would not be  prevented  or  detected.  Accordingly,


                                      -18-
<PAGE>

management has determined that these control deficiencies  constitute a material
weakness. An evaluation of entity level and process level controls was completed
during the year.  Controls and procedures were created and implemented.  Some of
these  controls  did not  execute  a  sufficient  number of times to allow for a
determination  of operational  effectiveness.  In connection  with  management's
evaluation of our internal control over financial  reporting,  we identified the
following material  weaknesses in our internal control over financial  reporting
as of December 31, 2007 that had not been fully  remedied or fully assessed as a
result of having not executed sufficient times to test:

         1.   Deficiencies in the Company's Entity Level Controls. The Company's
              entity level  control  environment  did not  sufficiently  promote
              effective internal control over financial reporting throughout the
              organization.  This  material  weakness  exists  as  a  result  of
              multiple  deficiencies  such  as  failure  to:  a)  establish  and
              maintain  delegation  of authority  regarding the  expenditure  of
              Company  funds;  b) involve  the board in a timely and  sufficient
              manner in the annual financial  reporting process; c) establish an
              effective risk assessment  process for the identification of fraud
              risks or  management  override  and d)  establish a  whistleblower
              policy or program as a testament to the  company's  commitment  to
              integrity and ethics.

         2.   Deficiencies  in Segregation of Duties.  The Principal  Accounting
              Officer is actively  involved in the  preparation  and approval of
              financial schedules,  journal entries and therefore cannot provide
              an independent  review and quality  assurance  function within the
              accounting and financial  reporting  group.  The limited number of
              accounting  personnel  results in an inability to have independent
              review and approval of financial  accounting  entries.  There is a
              risk that a  material  misstatement  of the  financial  statements
              could be caused,  or at least not be detected in a timely  manner,
              due to insufficient segregation of duties.

         3.   Deficiencies in the  documentation  and consistent  performance of
              controls  surrounding  account  balances.   We  did  not  maintain
              effective  controls  over   reconciliations.   Specifically,   our
              controls over the  preparation,  review and  monitoring of account
              reconciliations  were ineffective to provide reasonable  assurance
              that account  balances  were  accurate  and agreed to  appropriate
              supporting detail, calculations or other documentation. There is a
              risk that a  material  misstatement  of the  financial  statements
              could be caused,  or at least not be detected in a timely  manner,
              due the deficiencies in these controls

Remediation Initiatives
-----------------------

         During  fiscal  2008,  we plan to  implement  a number  of  remediation
measures  to  address   the   material   weaknesses   described   above.   These
organizational   and  process   changes  will  improve  our  internal   controls
environment.  The changes made through the date of this annual  report  includes
our retention of an outside  consulting  firm to assist us in the evaluation and
testing of our internal control system and to identify improvement opportunities
related  to our  accounting  and  financial  reporting  processes  in  order  to
streamline  and improve the  effectiveness  of these  processes.  The  Company's
remediation plans include complete  implementation and execution of controls and
procedures identified in management's  assessment of the entity level, financial
reporting and other process level controls.

         Management recognizes that many of these enhancements require continual
monitoring and evaluation for effectiveness. The development of these actions is
an  iterative  process and will evolve as the Company  continues to evaluate and
improve  our  internal  controls  over  financial  reporting.   The  results  of
management's assessment were reviewed with our Board of Directors.

         Management will review progress on these activities on a consistent and
ongoing  basis at the Chief  Executive  Officer and senior  management  level in
conjunction  with our Board of Directors.  We also plan to take additional steps
to elevate Company awareness about, and communication of, these important issues
through formal channels such as Company  meetings,  departmental  meetings,  and
training.

                                      -19-
<PAGE>

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

Item 8B.  Other Information
          -----------------

None.

Reports on Form 8-K
-------------------

         Since the beginning of our fiscal fourth quarter  commencing October 1,
2006 through the date of this report,  we have filed current reports on Form 8-K
reporting the following:

         November 23, 2007 - reporting  under item 8.01 the  announcement  of an
approved common share buy-back program.




                                      -20-
<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:
                                                         Director
Name                           Position                  Since             Age
--------------------------------------------------------------------------------

James K. Abcouwer              C.E.O., President         April 2006        54
                               and Chairman
Loren E. Bagley                Vice President
                               and Director              August 1991       65
William F. Woodburn            Secretary / Treasurer     August 1991       65
                               Chief Operating Officer
                               and Director
Robert L. Richards             Director                  September 2001    60
John G. Corp                   Director                  February 2005     47


         On January 6, 2006, our board of directors elected James K. Abcouwer as
our new President and Chief  Executive  Officer.  On April 27, 2006 Mr. Abcouwer
was elected as a member of the board of directors and its Chairman.

         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.

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

         James K.  Abcouwer  became  President and C.E.O.  in January 2006.  Mr.
Abcouwer has more than 25 years of experience in the energy  industry and is the
former CEO of Columbia  Natural  Resources,  Inc.,  an  independent  natural gas
producer in the Appalachian Basin. He has also served as President and C.E.O. of
EnergyUSA,  a unit of  NiSource,  Inc.,  as well as SVP of  NiSource,  Inc.  Mr.
Abcouwer is a 1975 graduate of the United States Military Academy at West Point,
and received a Masters in Business  Administration  degree from Harvard Business
School in 1982.

         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.

                                      -21-
<PAGE>

         John G. Corp became a director on February 28, 2005.  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  served as our Vice  President  from August 1991 to
September  2001,  at which time he resigned as Vice  President and was appointed
Secretary /  Treasurer.  In January  2006,  Mr.  Woodburn was named as our Chief
Operating  Officer.  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.

         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. From 1982 to the present, he has
been President of Robert L. Richards,  Inc. a consulting  geologist firm 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.

Item 10.  Executive Compensation
          ----------------------

         We  currently  have a  long-term  incentive  and bonus  program for the
benefit of  employees  and  officers of the  company.  The program is  primarily
focused on senior officers,  but certain elements of the plan are made available
to key  managers  and to any  employee in certain  circumstances.  In  addition,
management  has  established  a 401(K) plan for  employees  and  officers of the
company,  which became  effective  July 1, 2007. We currently have an employment
contract with Mr. Abcouwer with a two year term that includes bonus compensation
for   accomplishment  of  certain  objectives  related  to  value  creation  and
enhancement.
<TABLE>
<CAPTION>
Name and Principal                                 Stock     Options  Total
     Position              Year   Salary    Bonus  Awards    Awards   Compensation
-----------------------------------------------------------------------------------
<S>                        <C>    <C>       <C>   <C>        <C>        <C>
James K. Abcouwer          2007   $132,000    --  $123,000   $ 51,620   $306,620
</TABLE>

<TABLE>
<CAPTION>
Name and Principal                                 Stock     Options  Total
     Position              Year   Salary    Bonus  Awards    Awards   Compensation
-----------------------------------------------------------------------------------
<S>                        <C>    <C>             <C>        <C>        <C>
James K. Abcouwer          2006   $120,000   --   $450,000   $ 30,972   $600,972
</TABLE>

                                      -22-
<PAGE>


         For the  fiscal  year  ended  December  31,  2007 and  2006,  our Chief
Executive   Officer  was  paid  cash  compensation  of  $132,000  and  $120,000,
respectively.  No other executive  officers received cash  compensation  greater
than $75,000 in any of the past three fiscal years.


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, 2007,  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
Virginia 26170.

Name and Address                            Amount and Nature of    Percent
of Beneficial Owner                         Beneficial Ownership   of Class (1)
-------------------                         --------------------   -----------

James K. Abcouwer*                             1,528,789               16.1%
Robert L. Richards*                              261,754                2.8%
Loren E. Bagley*                               1,191,874               12.5%
William F. Woodburn*                           1,746,626               18.4%
John G. Corp.*                                    45,000                0.5%
All directors and executive officers
  a group (5 persons)                                                  50.3%
----------------------
     *   Indicates director and/or executive officer at December 31, 2007

    (1)  Based upon 9,530,065 shares of common stock outstanding.
    (2)  Includes  1,287,500  shares  of  common  stock  held in the name of the
         Abcouwer Family Limited Partnership Trust.
    (3)  Includes 80,087 shares held in the name of Argene Richards, wife of Mr.
         Richards.
    (4)  Includes  33,543 shares held in the name of Carolyn S. Bagley,  wife of
         Mr. Bagley, over which Mrs. Bagley retains voting power.
    (5)  Includes  133,670 shares in the name of Janet L. Woodburn,  wife of Mr.
         Woodburn,  over which shares Mrs.  Woodburn  retains voting power,  and
         314,070  in the  name of a  corporation  in  which  William  and  Janet
         Woodburn are officers and shareholders.

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.

         Loren E.  Bagley is  President  of  Sancho,  a  contract  holder of the
natural  gas which we  transport.  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 transport 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 a transporation fee less a $.05 per Mcf marketing fee paid to
Sancho.

         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.

                                      -23-
<PAGE>


Item 13.  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.
10.7(7)            Asset Purchase Agreement with Texas Energy Trust Company.
10.8(8)            Definitive  Agreement to sell Arvilla Oilfield Services,  LLC
                   10.9(9) First Amendment to Definitive Agreement
21.1(6)            Subsidiaries of Registrant (Revised)
31.1               Certification   of  CEO   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 CEO 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
99.3               Reserve  Estimate and  Evaluation of oil and gas properties -
                   2007
-----------------------

     (1) Previously filed as exhibit to Form 10-KSB
     (2) Previously filed as exhibit to Form 8-K dated August 7, 1995.
     (3) Previously filed as exhibit to Form 8-K filed January 23, 2004.
     (4) Previously filed as exhibit to Form 8-K filed November 11, 2004.
     (5) Previously  filed as exhibit to the Preliminary  Information  Statement
         pursuant to Section 14C filed with the SEC on December 8, 2004.
     (6) Previously  filed as exhibit to Form 10-KSB for year ended Decebmer 31,
         2004 filed April 27, 2005.
     (7) Previously filed as exhibit to Form 8-K dated September 1, 2005.
     (8) Previously filed as exhibit to Form 8-K dated January 3, 2006.
     (9) Previously filed as exhibit to From 8-K filed April 13, 2006.


                                      -24-
<PAGE>

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.

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

         The aggregate fees billed by our independent  auditors 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, 2007 and
2006,  and for the review of  quarterly  financial  statements  included  in our
Quarterly  Reports on Form 10-QSB for the quarters  ending March 31, June 30 and
September 30, 2007 and 2006 were:

                                         2007                        2006
                                       --------                    --------

GBH CPAs, PC                           $ 48,000                    $   --
Malone & Bailey PC                       52,500                      38,500
HJ& Associates, LLC                        --                        97,249
                                       --------                    --------
Total                                  $100,500                    $145,749
                                       ========                    ========


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

         For the years  ended  December  31,  2007 and  2006,  fees  billed  for
assurance and related  services  relating to the performance of the audit of our
financial statements which are not reported under the caption "Audit Fees" above
were as follows:

                                        2007                        2006
                                      --------                    --------

GBH CPAs, PC                          $  8,000                     $    --
Malone & Bailey PC                       3,000                          --
HJ& Associates, LLC                       --                            --
                                      --------                    --------
Total                                 $ 11,000                    $     --
                                      ========                    ========

         We do not use the auditors 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 the  auditors  to
provide compliance outsourcing services.

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

                                      -25-
<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/ JAMES K. ABCOUWER
                  ----------------------------------
                  James K. Abcouwer,
                  President and C.E.O.


Dated: April 14, 2008



         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.


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

/s/ JAMES K. ABCOUWER       President, C.E.O. and Chairman       April 14, 2008
-------------------------   (Principal Executive Officer)
James K. Abcouwer


/s/ LISA A. CORBITT         Principal Financial                  April 14, 2008
-------------------------   and Accounting Officer
Lisa A. Corbitt


/s/ LOREN E. BAGLEY         Vice President and Director          April 14, 2008

-------------------------
Loren E. Bagley


/s/ JOHN G. CORP            Director                             April 14, 2008
-------------------------
John G. Corp


/s/ WILLIAM F. WOODBURN     Secretary, Treasurer,                April 14, 2008
-------------------------   C.O.O. and Director
William F. Woodburn


/s/ ROBERT L. RICHARDS      Director                             April 14, 2008
-------------------------
Robert L. Richards




                                      -26-
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                    CONTENTS


Report of Independent Registered Public Accounting Firm.....................F-2

Consolidated Balance Sheet..................................................F-3

Consolidated Statements of Operations.......................................F-5

Consolidated Statements of Stockholders' Equity.............................F-6

Consolidated Statements of Cash Flows.......................................F-7

Notes to the Consolidated Financial Statements..............................F-9






                                      -27-
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors
Trans Energy, Inc. and Subsidiaries
St. Marys, West Virginia

We have audited the  accompanying  consolidated  balance  sheet of Trans Energy,
Inc.  and  Subsidiaries  (the  Company) as of December  31, 2007 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years  ended  December  31,  2007 and  2006.  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. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
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, 2007 and the results of their  operations  and their cash flows for
the years ended  December 31, 2007 and 2006,  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 2 to the
consolidated financial statements,  the Company has generated significant losses
from operations and has a working  capital  deficit at December 31, 2007,  which
together raises  substantial  doubt about the Company's ability to continue as a
going concern. Management's plans in regards to these matters are also described
in Note 2. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/ GBH CPAs, PC
----------------
GBH CPAs, PC
www.gbhcpas.com
Houston, Texas
April 14, 2008


                                      -28-
<PAGE>



<PAGE>


<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet


                                                                         December 31,
                                                                             2007
                                                                         ------------

                                     ASSETS

CURRENT ASSETS

<S>                                                                      <C>
      Cash                                                               $  1,702,373
      Accounts Receivable, net of allowance for doubtful
           accounts of $-0-                                                   285,204
      Accounts Receivable - related parties                                   478,160
      Advances to non-operator, net                                           243,666
      Deferred Financing Costs                                                167,429
      Derivative - current                                                     43,095
      Prepaid Expenses                                                          8,000
                                                                         ------------

      Total Current Assets                                                  2,927,927
                                                                         ------------

PROPERTY AND EQUIPMENT, net of accumulated depreciation
           of $174,311                                                        664,942

OIL AND GAS PROPERTIES, USING SUCCESSFUL EFFORTS ACCOUNTING

      Proved Properties                                                    10,764,411
      Unproved Properties                                                     250,670
      Pipelines                                                             2,764,797
      Accumulated depreciation, depletion and amortization                 (1,801,262)
                                                                         ------------

      Net oil and gas properties                                           11,978,616
                                                                         ------------

OTHER ASSETS

      Deferred Financing Costs, net of amortization of $119,136               242,467
      Derivative - non-current                                                135,369
      Advances to operator                                                    557,715
      Other Assets                                                             58,334
                                                                         ------------

      Total Other Assets                                                      993,885
                                                                         ------------

      TOTAL ASSETS                                                       $ 16,565,370
                                                                         ============


                 See notes to consolidated financial statements.

</TABLE>


                                      -29-
<PAGE>

<TABLE>
<CAPTION>

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


                                                                          December 31,
                                                                              2007
                                                                          -------------

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

<S>                                                                       <C>
       Accounts Payable, trade                                            $  2,318,852
       Accounts Payable - related party                                        248,364
       Accrued Expenses                                                        929,288
       Accrued Expenses - related party                                         31,000
       Notes Payable - current portion                                          86,972
                                                                          ------------

       Total Current Liabilities                                             3,614,476
                                                                          ------------

LONG-TERM LIABILITIES

       Notes Payable, net of unamortized discount
            of $791,070                                                     14,033,528
       Asset Retirement Obligations                                            166,895
                                                                          ------------

       Total Long - Term Liabilities                                        14,200,423
                                                                          ------------

                                   Total Liabilities                        17,814,899
                                                                          ------------

STOCKHOLDERS' DEFICIT

       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;
            9,530,065 shares issued and 9,529,065 shares outstanding             9,530
       Additional paid-in capital                                           34,117,443
       Treasury Stock, at cost, 1,000 shares                                      (750)
       Accumulated deficit                                                 (35,375,752)
                                                                          ------------

       Total Stockholders' Deficit                                          (1,249,529)
                                                                          ------------

       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $ 16,565,370
                                                                          ============


                 See notes to consolidated financial statements.

</TABLE>


                                      -30-
<PAGE>


<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                                                For the Years Ended
                                                                    December 31,
                                                               2007            2006
                                                            -----------    -----------

<S>                                                         <C>            <C>
REVENUES                                                    $ 1,519,377    $ 1,420,802
                                                            -----------    -----------

COSTS AND EXPENSES

      Production Costs                                          929,224        534,065
      Depreciation, Depletion, Amortization and Accretion       354,895        337,115
      Exploration Costs                                         169,105           --
      Dry Hole Expense                                           89,747           --
      Selling, General and Administrative                     2,206,643      2,927,383
      Gain on Sale of Assets                                   (775,139)      (678,319)
                                                            -----------    -----------

      Total Costs and Expenses                                2,974,475      3,120,244
                                                            -----------    -----------

LOSS FROM OPERATIONS                                         (1,455,098)    (1,699,442)
                                                            -----------    -----------

OTHER INCOME (EXPENSES)

      Interest Income                                            41,382           --
      Gain on Extinguishment of Debt                            103,060        315,365
      Interest Expense                                         (944,651)      (207,084)
      Loss on Derivative Instruments                            (93,710)          --
                                                            -----------    -----------

      Total Other Income (Expenses)                            (893,919)       108,281
                                                            -----------    -----------

LOSS FROM CONTINUING OPERATIONS
      BEFORE INCOME TAXES                                    (2,349,017)    (1,591,161)

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

LOSS FROM CONTINUING OPERATIONS                              (2,349,017)    (1,591,161)
INCOME FROM DISCONTINUED OPERATIONS                                --          183,775
LOSS FROM DISPOSAL OF DISCONTINUED OPERATIONS                      --       (1,541,142)
                                                            -----------    -----------

NET LOSS                                                    $(2,349,017)   $(2,948,528)
                                                            ===========    ===========

LOSS PER SHARE - BASIC AND DILUTED

      Continuing Operations                                 $     (0.25)   $     (0.25)
      Discontinued Operations                                      --            (0.21)
                                                            -----------    -----------

      Total Loss Per Share - Basic and Diluted              $     (0.25)   $     (0.46)
                                                            ===========    ===========

BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING                           9,484,918      6,432,839
                                                            ===========    ===========
</TABLE>


                 See notes to consolidated financial statements.


                                      -31-
<PAGE>


<TABLE>
<CAPTION>


                                              TRANS ENERGY, INC. AND SUBSIDIARIES
                                   Consolidated Statement of Stockholders' Equity (Deficit)
                                        For the years ended December 31, 2007 and 2006


                                            Common Stock
                                    ---------------------------    Additional
                                                                    Paid in       Treasury       Accumulated
                                        Shares        Amount        Capital         Stock          Deficit          Total
                                    ------------   ------------   ------------   ------------    ------------    ------------
<S>                                    <C>         <C>            <C>            <C>             <C>             <C>

Balance, December 31, 2005              4,952,148         4,952     30,856,798      (286,467)    (30,078,207)        497,076

Treasury shares received for
  subsidiary                                 --            --             --       (302,418)            --          (302,418)

Treasury shares cancelled                (766,044)         (766)      (588,119)     588,885             --                --

Common stock issued for
  acquisition                           1,000,000         1,000        679,000         --               --           680,000

Common stock issued for
  services                              2,807,000         2,807      1,683,643         --               --         1,686,450

Common stock issued for
  cash                                    337,500           338        269,662         --               --           270,000

Common stock issued for debt            1,119,961         1,120        608,016         --               --           609,136

Amortization of option expense               --            --          196,159         --               --           196,159

Imputed interest on notes
  Payable to related parties                 --            --           22,521         --               --            22,521

Net loss for the year                        --            --             --           --         (2,948,528)     (2,948,528)
                                      -----------   -----------   ------------   -----------    ------------    ------------

Balance, December 31, 2006              9,450,565   $     9,451   $ 33,727,680   $     --       $(33,026,735)   $    710,396


Amortization of option expense               --            --          326,922         --               --           326,922


Shares issued for debt conversion          62,500            62         49,938         --               --            50,000


Shares issued for services                 17,000            17         12,903         --               --            12,920


Treasury shares repurchased                  --            --             --           (750)            --              (750)


Net loss for the year                        --            --             --           --         (2,349,017)     (2,349,017)
                                    -------------   ------------   ------------   ------------    ------------  ------------

Balance, December 31, 2007              9,530,065   $     9,530   $ 34,117,443   $     (750)    $(35,375,752)   $ (1,249,529)
                                    =============   ============  =============  =============  ============    ============


                                        See notes to consolidated financial statements.

</TABLE>


                                      -32-
<PAGE>


<TABLE>
<CAPTION>

                                TRANS ENERGY, INC. AND SUBSIDIARIES
                               Consolidated Statements of Cash Flows


                                                                         For the Years Ended
                                                                             December 31,
                                                                     ----------------------------
                                                                         2007            2006
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                       $ (2,349,017)   $ (2,948,528)
      Loss from discontinued operations                                      --         1,357,367
                                                                     ------------    ------------
      Loss from continuing operations                                  (2,349,017)     (1,591,161)
      Adjustments to reconcile net loss
         to net cash from operating activities:
           Depreciation, depletion, amortization and accretion            354,895         337,115
           Share-based compensation                                       339,842       1,882,609
           Gain on debt extinguishment                                   (103,060)       (315,365)
           Gain on sale of assets                                        (775,139)       (678,319)
           Amortization of financing cost and debt discount               292,243            --
           Dry hole expense                                                89,747            --
           Unrealized loss on derivative contract                         131,536            --
      Changes in operating assets and liabilities:
           Accounts receivable                                             (9,932)        551,824
           Accounts receivable - related party                             91,440            --
           Accounts receivable - non-operator                            (243,666)           --
           Prepaid expenses and other assets                               14,500          (9,620)
           Advances to operator                                          (557,715)           --
           Accounts payable and accrued expenses                        1,858,574      (1,261,236)
           Accounts payable - related party                                11,017          65,956
           Judgments payable                                             (118,046)           --
                                                                     ------------    ------------
              Net cash provided (used) in operating activities:
              Continuing operations                                      (972,781)     (1,018,197)
              Discontinued operations                                        --           183,775
                                                                     ------------    ------------
              Net cash used in operating activities                      (972,781)       (834,422)
                                                                     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of assets                                      1,444,639         951,724
      Expenditures for oil and gas properties                          (9,123,872)     (2,624,488)
      Expenditures for property and equipment                            (282,599)       (511,091)
      Cash paid for certificate of deposit                                (50,000)           --
                                                                     ------------    ------------
           Net cash used by investing activities                       (8,011,832)     (2,183,855)
                                                                     ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Cash paid for treasury shares                                           (750)           --
      Common stock issued for cash                                           --           270,000
      Cash paid for derivative contracts                                 (310,000)           --
      Proceeds from notes payable, net of financing costs and cash
          discount of $791,070 and 27,994, respectively                14,666,800       2,380,633
      Payments on notes payable                                        (3,378,140)       (291,111)
      Proceeds from related party notes payable                              --           450,000
      Payments on related party debt                                     (499,739)        (21,688)
                                                                     ------------    ------------
           Net cash provided by financing activities                   10,478,171       2,787,834
                                                                     ------------    ------------

NET CHANGE IN CASH                                                      1,493,558        (230,443)

CASH, BEGINNING OF PERIOD                                                 208,815         439,258
                                                                     ------------    ------------

CASH, END OF PERIOD                                                  $  1,702,373    $    208,815
                                                                     ============    ============

SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION

CASH PAID FOR:
     Interest                                                        $    465,870    $    214,713
                                                                     ============    ============
     Income taxes                                                    $       --      $       --
                                                                     ============    ============

Non-cash investing and financing activities
     Common stock issued for debt                                    $       --      $    609,135
     Investments purchased by the assumption of debt                 $       --      $    207,608
     Property acquired for common stock                              $       --      $    680,000
     Treasury stock cancelled                                        $       --      $    755,737
     Discount on debt for net profits interest                       $    765,000    $       --
     Conversion of related-party debt to common stock                $     50,000    $       --
     Increase in asset retirement obligation                         $     16,518    $       --
     Revision of asset retirement obligation                         $     53,966    $       --

                          See notes to consolidated financial statements.

</TABLE>



                                      -33-
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization
-------------------------------------

         Trans  Energy,   Inc.  is  an  independent   energy  company  that  was
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  been  engaged  in the  business  of oil  and  gas
exploration, development and 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.  Since  then,  Trans  Energy  has been  engaged  in the  exploration,
development,  exploitation and production of oil and natural gas. Its operations
are presently focused in the State of West Virginia.

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, and Tyler  Energy,  Inc. In
addition,  the  consolidated  financial  statements  include the Company's other
subsidiary,  Arvilla Oilfield Services, LLC which was disposed of in fiscal 2006
and has been  presented  as  "discontinued  operations"  in  these  consolidated
financial statements.  All significant  inter-company  balances and transactions
have been eliminated in consolidation.

Use of Estimates
----------------

         The  preparation  of these  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  amount of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

         The most  critical  estimate  we make is the  engineering  estimate  of
proved oil and gas  reserves.  This  estimate  affects  the  application  of the
successful  efforts  method of  accounting,  the  calculation  of  depreciation,
depletion and  amortization  of oil and gas  properties  and the estimate of the
impairment of our oil and gas  properties.  It also affects the estimated  lives
used to determine asset retirement obligations.

*****

Reclassifications
-----------------

         Certain  amounts in prior periods have been  reclassified to conform to
the 2007 financial statement presentation.

                                      -34-
<PAGE>


Cash and Cash Equivalents
-------------------------

         Cash and cash  equivalents  include cash in banks and  certificates  of
deposit  which mature  within three months of the date of purchase.  The Company
may, in the normal  course of  operations,  maintain  cash balances in excess of
federally insured limits.  At December 31, 2007,  $1,406,338 was not within FDIC
insured  limits.  Included in Other Assets is a $50,000  certificate of deposit
which is assigned  to the State of  West Virginia  Department  of  Environmental
Protection as collateral, so long as the Company operates in West Virginia.

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
collectibility  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.

Property and Equipment
----------------------

         Property and equipment are recorded at cost.  Depreciation on vehicles,
machinery and equipment is computed using the straight-line method over expected
useful lives of three to five years. Depreciation on pipelines is computed using
the  straight-line  method  over the  expected  useful  lives of fifteen  years.
Additions are  capitalized and maintenance and repairs are charged to expense as
incurred.  Gains and losses on  dispositions of equipment are reflected in total
operating costs and expenses.

Oil and Gas Properties
----------------------

         The Company uses the  successful  efforts  method of accounting for oil
and gas producing  activities.  Under the successful  efforts  method,  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 as incurred.

         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.

         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.

            In April 2005, the FASB issued Staff  Interpretation  No. 19-1 ("FSP
19-1")  Accounting  for Suspended  Well Costs,  which  provides  guidance on the
accounting  for  exploratory  well  costs  and  proposes  an  amendment  to FASB


                                      -35-
<PAGE>

Statement No. 19 ("FASB 19"),  Financial Accounting and Reporting by Oil and Gas
Producing  Companies.  The guidance in FSP 19-1 applies to enterprises  that use
the  successful  efforts  method of  accounting  as  described  in FASB 19.  The
guidance in FSP 19-1 did not have a material impact our  consolidated  financial
position,  results of operations,  or cash flows. The Company had no capitalized
exploratory well costs at December 31, 2007 and 2006.

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.

Deferred Financing Costs
------------------------

         In connection with debt  financing,  Trans Energy paid $500,000 in fees
for the year ended  December  31,  2007.  These fees were  recorded  as deferred
financing costs and are being amortized using the effective interest method over
the life of the loan.

Derivatives
-----------

         Derivative  financial   instruments,   utilized  to  manage  or  reduce
commodity  price risk related to Trans  Energy's  production,  are accounted for
under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and
for Hedging Activities",  and related interpretations and amendments. Under this
statement,  derivatives  are carried on the balance sheet at fair value.  If the
derivative is designated as a fair value hedge, the changes in the fair value of
the  derivative  and of the hedged  item  attributable  to the  hedged  risk are
recognized  in earnings.  If the  derivative is designated as a cash flow hedge,
the  effective  portions  of  changes in the fair  value of the  derivative  are
recorded  in  other  comprehensive  income  or loss  and are  recognized  in the
statement of operations when the hedged item affects earnings. If the derivative
is not designated as a hedge,  changes in the fair value are recognized in other
expense.  Ineffective  portions of changes in the fair value of cash flow hedges
are also recognized in loss on derivative liabilities.

Asset Retirement Obligations
----------------------------

         The Company  follows  SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations,"  which  requires  entities to record the fair value of a liability
for legal  obligations  associated  with the retirement  obligations of tangible
long-lived assets in the period in which it is incurred. The fair value of asset
retirement obligation  liabilities has been calculated using an expected present
value technique.  When the liability is initially recorded, the entity increases
the carrying amount of the related long-lived asset. Over time, accretion of the
liability is recognized each period,  and the capitalized cost is amortized over
the useful life of the related  asset.  Upon  settlement  of the  liability,  an
entity either settles the obligation for its recorded amount or incurs a gain or
loss upon settlement.  This standard  requires the Company to record a liability
for the fair value of the  dismantlement  and  plugging and  abandonment  costs,
excluding salvage values.

Debt
----
         The Company  accounts  for debt at fair value and  recognizes  interest
expense for accrued interest payable under the terms of the debt.  Principal and
interest  payments  due  within  one year are  classified  as  current,  whereas
principal and interest  payments for periods  beyond one year are  classified as
long term.

                                      -36-
<PAGE>


Provision for Taxes
-------------------

         We account for income taxes  pursuant to SFAS No 109,  "Accounting  for
Income Taxes," which requires recognition of deferred income tax liabilities and
assets  for the  expected  future  tax  consequences  of  events  that have been
recognized in our financial  statements or tax returns.  We provide for deferred
taxes on temporary differences between the financial statements and tax basis of
assets using the enacted tax rates that are expected to apply to taxable  income
when the temporary differences are expected to reverse.  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.

         In July 2006,  the FASB issued  "Accounting  for  Uncertainty in Income
Taxes," an interpretation  of FAS 109 ("FIN 48"),  effective for years beginning
after December 15, 2006. FIN 48 establishes a more-likely-than-not threshold for
recognizing  the benefits of tax return  positions in the financial  statements.
Also, FIN 48 implements a process for measuring  those tax positions  which meet
the recognition  threshold of being ultimately sustained upon examination by the
taxing  authorities.  The  adoption  of FIN 48 had  no  material  impact  to the
Company's  consolidated  financial statements.  The Company files tax returns in
the  United  States  and  states in which it has  operations  and is  subject to
taxation.  Tax years  subsequent  to 2004  remain  open to  examination  by U.S.
federal and state tax jurisdictions.

Revenue and Cost Recognition
----------------------------

         The Company uses the sales method to account for sales of crude oil and
natural gas. Under this method,  revenues are recognized based on actual volumes
of oil and gas sold to purchasers.  The volumes sold may differ from the volumes
to which the Company is entitled based on our interest in the properties.  These
differences  create imbalances which are recognized as a liability only when the
imbalance  exceeds  the  estimate  of  remaining  reserves.  The  Company had no
imbalances as of December 31, 2007 and December 31, 2006.  Costs associated with
production  are  expensed in the period  incurred.  The Company  recognizes  gas
revenues upon delivery of the gas to the customers'  pipeline from the Company's
pipelines  when  recorded  as  received  by the  customer's  meter.  The Company
recognizes oil revenues when pumped and metered by the customer.

Share-Based Compensation
------------------------

         As  permitted by FASB  Statement  No. 123  "Accounting  for Stock-Based
Compensation",  the  Company  elected to measure  and record  compensation  cost
relative to employee stock option costs in accordance with Accounting Principles
Board  ("APB")  Opinion 25,  "Accounting  for Stock  Issued to  Employees,"  and
related  interpretations  and make  pro  forma  disclosures  of net  income  and
earnings per share as if the fair value method of valuing stock options had been
applied. 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.

         On January 1, 2006, the Company  adopted the provisions of Statement of
Financial  Accounting  Standards No. 123(R).  Under FASB Statement  123(R),  the
Company estimates the fair value of each stock option award at the grant date by
using the Black-Scholes option pricing model. During the year ended December 31,
2006, stock options were valued with the following weighted average  assumptions
used for grants; dividend yield of zero percent;  expected volatility of 68.35%;
risk-free interest rate of 5.00% and expected lives of 10 years. During the year
ended  December 31, 2007 no stock  options were  granted.  Compensation  expense
related to options granted in 2006 was $196,159 and $326,922 for the years ended
December 31, 2007 and 2006, respectively.

Loss per Share of Common Stock
------------------------------

         Basic loss per share is calculated based on the weighted average number
of shares of common stock outstanding during each period. Diluted loss per share
is based on the weighted  average numbers of shares of common stock  outstanding
for the periods,  including  the  dilutive  effects of stock  options.  Dilutive


                                      -37-
<PAGE>

options that are issued during a period or that expire or are canceled  during a
period are  reflected  in the  computations  for the time they were  outstanding
during the periods being reported.

                                                      For the Years Ended
                                                         December 31,
                                                      2007           2006
                                                  -----------    -----------
          Numerator:
          Loss from continuing operations         $(2,349,017)   $(1,591,161)
          Discontinued operations                        --       (1,357,367)
                                                  -----------    -----------

          Net Loss                                $(2,349,017)   $(2,948,528)
                                                  ===========    ===========

          Denominator - weighted average shares     9,484,918      6,432,839
                                                  ===========    ===========


          Net loss per share:
          Continuing operations                   $     (0.25)   $     (0.25)
                                                  ===========    ===========
          Discontinued operations                 $         0    $     (0.21)
                                                  -----------    -----------

          Total loss per share                    $     (0.25)   $     (0.46)
                                                  ===========    ===========

Recent Accounting Pronouncements
--------------------------------

         The  Company  does not  expect  the  adoption  of any  recently  issued
accounting pronouncements to have a significant effect on its financial position
or results of operations.

NOTE 2 - 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, 2007 of $35,375,752 and has a
working capital deficit at December 31, 2007 of $686,549.

         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 3 - DISCONTINUED OPERATIONS

         On January 3, 2006 the Company  entered into a definitive  agreement to
sell its well servicing and maintenance  business,  Arvilla  Oilfield  Services,
LLC, a West Virginia limited liability company, to Clarence E. Smith and Rebecca
L.  Smith,  both  directors  of the  Company.  As a result of  consummating  the
definitive agreement, Clarence and Rebecca Smith returned to the Company 521,411
shares of Trans Energy common stock. Clarence and Rebecca Smith also conveyed to
the  Company all of their  interest in and to five oil and gas wells  located in
Tyler  County,  West  Virginia.  Upon  execution  of the  definitive  agreement,
Clarence  Smith  resigned as our Chief  Executive  Officer,  but remained on our
board of directors  until the closing  effective on March 31, 2006.  On April 7,
2006 both Clarence and Rebecca Smith resigned from the board of directors.

                                      -38-
<PAGE>

         The  Company  has  accounted  for  Arvilla  Oilfield  Services,  LLC as
discontinued  operations  and recorded a loss from  discontinued  operations  of
$1,541,142,  which is included in the statement of operations for the year ended
December 31, 2006.

NOTE 4 - PROPERTY AND EQUIPMENT

         At December 31, 2007, property and equipment consisted of:

                  Vehicles                                 $      346,973
                  Machinery and equipment                         402,587
                  Furniture and Fixtures                           38,618
                  Leasehold improvements                            7,075
                  Land                                             44,000
                  Accumulated depreciation                       (174,311)
                                                          ---------------
                               Total Fixed Assets          $      664,942
                                                           ==============

NOTE 5 - ASSET RETIREMENT OBLIGATIONS

         The  following is a description  of the changes to the Company's  asset
retirement obligations for 2007 and 2006:
                                                       2007        2006
                                                    ---------   ---------

Asset retirement obligations at beginning of year   $ 190,364   $ 799,393
Acquisition of oil and gas properties                    --       312,963
Exploratory and Development drilling                   16,518        --
Accretion expense                                      13,979      15,144
Revision in cost estimates                            (53,966)   (937,136)
                                                    ---------   ---------


Asset retirement obligations at end of year         $ 166,895   $ 190,364
                                                    =========   =========

NOTE 6 - PROVISION FOR TAXES

         At December 31, 2007, the Company had net operating loss  carryforwards
of  approximately  $27 million that may be offset  against future taxable income
from the year  2008  through  2027.  No tax  benefit  has been  reported  in the
December 31, 2007  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.

Net deferred tax assets  consist of the following  components as of December 31,
2007:

                                                          2007
             Deferred tax assets:
                 NOL carryover                        $11,844,000
                 Unrealized loss on derivative
                   contract                                57,000
                 Other                                     25,000
                                                      -----------

               Total deferred tax assets               11,926,000
               Valuation allowance                    (11,926,000)
                                                      -----------
               Net deferred tax asset                 $      --
                                                      ===========



         The  income  tax  provision  differs  from the  amount  of  income  tax
determined  by applying  the U.S.  federal and state  income tax rates to pretax
income from continuing operations for the years ended December 31, 2007 and 2006
primarily  due to expense  related to stock and options  issued for services and
the valuation allowance.

                                      -39-
<PAGE>


NOTE 7 - 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 April 2006, the Company  received 521,411 shares of the common  stock
of the Company in return for the sale of certain assets of the Company at a cost
basis of  $469,270.  The  Company  then  cancelled  the  766,044  shares held in
treasury.

       In August 2006, the  Company  issued 1,000,000 shares of common stock for
an acquisition of oil and gas properties valued at $ 680,000.

       In October 2006, the Company issued  2,807,000 shares of common stock for
consulting  services  valued at  $1,686,450,  337,500 shares of common stock for
cash of $270,000 and 1,119,961 shares of common stock for debt of $609,136.

       In June 2007,  the Company  issued  62,500 shares of common stock for the
conversion of a promissory note valued at $50,000.

       In December  2007,  the Company  issued 17,000 shares of common stock for
employee compensation valued at $12,920.

       In December  2007,  the board elected to award  630,000  shares of common
stock valued at $516,600 as part of the Long-Term  Incentive and Bonus  Program.
As of December 31, 2007, these shares were recorded as stock payable included in
accrued expenses in the balance sheet and were issued in February 2008.

       In December 2007, we purchased 1,000 shares of common stock for  treasury
at a cost of $750.

                                      -40-
<PAGE>



NOTE 8 - STOCK OPTIONS

         A summary of the status of the options granted under various agreements
at  December  31,  2007 and 2006,  and  changes  during  the years then ended is
presented below:

<TABLE>
<CAPTION>
                                                   December 31, 2007        December 31, 2006
                                               -----------------------   ----------------------
                                                       Weighted                 Weighted
                                                  Average Exercise          Average Exercise
                                                 Shares       Price        Shares       Price
                                               ---------   -----------   ---------   ----------
<S>                                            <C>         <C>             <C>       <C>
Outstanding at beginning of year               1,503,324   $      1.13     553,324   $     1.95
Granted                                             --            --       950,000         0.65
Exercised                                           --            --          --            --
Forfeited                                           --            --          --            --
Expired                                             --            --          --            --
                                               ---------   -----------   ---------   ----------

Outstanding at end of year                     1,503,324   $      1.13   1,503,324   $     1.13
                                               =========   ===========   =========   ==========

</TABLE>


         A summary of the status of the options granted under various agreements
at December 31, 2007 is presented below:
<TABLE>
<CAPTION>


                                            Options Outstanding                  Options Exercisable
                                            ---------------------------------------------------------------------

                                            Weighted-          Weighted-         Weighted-
                                            Average            Average           Average
          Range of          Number          Remaining          Number            Exercise        Exercise
       Exercise Prices      Outstanding     Contractual Life   Exercisable       Price           Price
       ---------------------------------------------------------------------------------------------------------

<S>            <C>              <C>             <C>                 <C>           <C>            <C>
               $ .065           950,000         3.63 years          $ 0.65        950,000        $0.65
               $ 1.95           553,324         6.75 years          $ 1.95        553,324        $1.95

                  --          1,503,324            --                --         1,503,324
                              =========                                         =========
</TABLE>

The intrinsic value of options outstanding at December 31, 2007 was $161,500.


NOTE 9 - SIGNIFICANT EVENTS

         Effective   January  9,  2007,  Trans  Energy  completed  the  sale  to
Leatherwood  Inc. for net cash  proceeds of $667,000 of six oil and/or gas wells
located in West  Virginia.  Trans  Energy  assigned  all of its  rights,  title,
operating  rights and  interest  including  the right to  produce,  operate  and
maintain the wells. No gain or loss was recorded on this sale.

         Effective  January 10, 2007,  Trans Energy  acquired from National Gulf
Production,  Inc. 75% of National  Gulf's  rights and interest in and to certain
oil and gas leases  covering the oil and gas in and under certain tracts of land
containing approximately 3,120 acres located in Trego County, Kansas for cash of
$146,250.  In addition,  cash of $138,750 was paid in advance for Trans Energy's
proportionate   75%   share  of  the   seismic   acquisition,   processing   and
interpretation  cost,  which was subsequently  expensed.  As of October 1, 2007,
Trans  Energy's  share was  reduced to 56.25% upon sale to a third party.

         Effective February 7, 2007, Trans Energy entered into an agreement with
P.D. Farr to purchase all rights,  title and interests in the 384 acre Ezra Hays
Lease in West Virginia  including oil and gas wells,  associated well equipment,
interest  in the natural gas sales  pipeline,  all rights to Dominion  Gas sales
meter and all pertinent  rights-of-way for $138,000. On December 16, 2006, Trans
Energy  paid the sum of $10,000 as a down  payment  to be  applied  against  the
purchase  price,  with the  unpaid  balance of  $128,000  which was paid in full
during the first six months of 2007.

         Effective  April 4, 2007,  Trans  Energy  farmed  out  11,200  acres of
unproven leases in Wetzel County to Republic Partners VI, LP. Under the terms of
the farm out  agreement,  Trans  Energy  and  Republic  Partners  will drill one
exploratory  well in 2007 and two exploratory  wells in 2008. The total cost per
well is expected to be $850,000 to $1,000,000,  of which Republic  Partners will
pay  for  100% of the  cost to earn a 50%  working  interest.  Trans  Energy was
permitted  by the terms of the joint  venture to drill two  additional  wells in
2007,  of  which  Republic  Partners  can  elect to  obtain  a 50% paid  working
interest. One additional well was drilled in 2007.

                                      -41-
<PAGE>

         Effective June 19, 2007, Trans Energy completed the sale to Leatherwood
Inc. of three  non-producing  well bores  located in West  Virginia for net cash
proceeds of $774,505.  Trans Energy assigned all of its right, title,  operating
rights and interest,  including  the right to produce,  operate and maintain the
wells. Trans Energy recorded a gain on sale of the property of $774,505.

         Effective  June 20, 2007,  Trans Energy  completed the purchase of 3.75
acres located in Wetzel County, West Virginia for cash in the amount of $44,000.
This acreage was purchased  for the purpose of installing a tap into  Dominion's
transmission line to create an additional point of sale for future wells drilled
in Wetzel County, West Virginia.

         Effective July 1, 2007,  Trans Energy  implemented  an employee  401(k)
plan whereby Trans Energy will make basic safe-harbor matching  contributions to
those employees electing to participate in the plan.

         Effective  July 13, 2007,  as required by the CIT  Creditor  Agreement,
Trans Energy purchased a commodity put option for $310,000 in cash. The terms of
the option  establish a floor price of  $7.35/MMBTU,  Settlement  Date Henry Hub
price of Natural  Gas as quoted by the NYMEX,  for  volumes  ranging  from 8,241
MMBTU per month to 5,244 MMBTU per month, beginning settlement on August 2, 2007
and ending  settlement  on December 1, 2011.  This put option places no limit on
the upside price for Trans Energy's gas production. If the monthly closing price
of Henry Hub gas  index is below the floor  price  then  Trans  Energy  receives
proceeds equal to the difference  between the floor price and the closing price.
The cost of the put option and proceeds,  if any, as well as changes in the fair
market value of the put options,  are charged to other income  (expense) as gain
(loss) on derivative  instruments.  As of December 31, 2007,  Trans Energy had a
total loss on the  derivative  instrument  of  $93,710,  of which  $37,826 was a
realized gain and $131,536 was an unrealized loss.

         On October 25, 2007, the CIT Capital debt agreement dated June 15, 2007
was amended to provide the Company  additional  time,  until March 31, 2008,  to
meet various financial statement ratio covenants.

         On April 11, 2008, the CIT Capital debt  agreement  dated June 15, 2007
was again amended to provide the Company  additional  time,  for fiscal year end
2007, to meet various covenants.

NOTE 10 - JUDGMENTS PAYABLE

         On July 28, 1999, Core  Laboratories,  Inc. obtained a judgment against
the Company for  non-payment  of an account  payable.  The  judgment  called for
monthly  payments of $351 and accrued  interest at 10.00% per annum. The balance
due on this judgment including the related interest in the amount of $21,312 was
paid in full on February 28, 2007.

         On July 1, 1998,  RR Donnelly  obtained a judgment  against the Company
for non-payment of accounts payable. The judgment called for monthly payments of
$3,244  and  accrued  interest  at 10.00%  per annum.  The  balance  due on this
judghment  including  the related  interest in the amount of $96,734 was paid in
full on February 28, 2007.

NOTE 11 - NOTES PAYABLE

         On January 10, 2007,  Trans Energy  repaid a short-term  related  party
note,  dated September 11, 2006,  bearing interest at the rate of 10% per annum,
with cash in the amount of $270,000 plus accrued  interest,  for a total paid of
$278,951.

         On June 18, 2007, Trans Energy repaid a short-term  related party note,
dated September 11, 2006,  bearing  interest at the rate of 10% per annum,  with
cash in the  amount of  $100,000  plus  accrued  interest,  for a total  paid of
$107,589.

         On June 18, 2007, Trans Energy repaid a short-term  related party note,
dated September 11, 2006,  bearing  interest at the rate of 10% per annum,  with
cash in the  amount  of  $30,000  plus  accrued  interest,  for a total  paid of
$36,027.  In  addition,  62,500  shares  of common  stock  were  issued  for the
remaining balance due of $50,000.

                                      -42-
<PAGE>

         For the year ended December 31, 2007,  Trans Energy also repaid various
other related party notes in the principal amount of $115,116.  On June 22, 2007
Trans Energy finalized a financing agreement with CIT Capital USA Inc. Under the
terms of the agreement,  CIT Capital USA Inc. will lend up to  $18,000,000  (the
"Borrowing  Base"),  to Trans Energy in the form of a senior  secured  revolving
credit facility.  Trans Energy has the ability,  at additional cost, to increase
the  credit  facility  to  $30,000,000  in the  future,  with  increases  in its
reserves.  Trans  Energy  gave CIT Capital  USA Inc. a  promissory  note for all
borrowings under the terms of the agreement. The note contains customary default
provisions and additional financial covenants. Funds realized from the financing
agreement have been used to facilitate Trans Energy's 2007 drilling program.  As
part of the financing agreement, Trans Energy conveyed to CIT Capital USA Inc. a
first  priority  continuing  security  interest  in, lien on and right of setoff
against, all property,  assets,  security interests,  related books and records,
and any  proceeds  from the sale of or  revenue  generated  from the  foregoing,
whether  now owned or  acquired at anytime in the  future.  In  addition,  Trans
Energy  conveyed to CIT Capital  USA Inc. a 2% Net Profits  Interest,  valued at
$765,000,  in and to  all  oil  and  gas  properties  currently  owned  and  any
additional oil and gas properties  acquired in the future through to the date of
maturity.  Under the terms of the financing agreement,  CIT Capital USA Inc. can
elect after June 22,  2008,  but on or prior to June 22, 2009 to sell the 2% NPI
to Trans Energy at a value equal to 2% of Trans  Energy's  total reserve  report
value at the time.  Trans Energy can elect after June 22, 2009,  but on or prior
to June 22, 2010 to buy the 2% NPI from CIT Capital USA Inc. at a value equal to
3% of Trans Energy's  total reserve  report value at the time.  Trans Energy can
elect  after June 22,  2010,  to buy the 2% NPI from CIT  Capital  USA Inc. at a
value equal to 2% of Trans  Energy's total reserve report value at the time. The
reserve  report  value is to be based on proved  reserves  and to be  calculated
using a 10% discount,  no inflation adjustment for expenditures and differential
adjusted  market  pricing  for  revenues.  The fair value of  $765,000  has been
recorded as a  reduction  of oil and gas  properties  and a discount on the note
payable to CIT Capital USA Inc., with no gain recognized.  The discount is being
amortized using the effective  interest method over the term of the note.

         Trans  Energy  also  agreed  to enter  into the  commodity  put  option
positions over the next five years on natural gas production volumes.  Under the
terms of the agreement Trans Energy can elect varying interest payment terms and
a variable interest rate based on different posted rates, at no additional cost.

         Borrowings under the note bear interest at either LIBOR plus a variable
margin based on the  utilization  of the Borrowing  Base,  ranging from 1.75% to
5.25%;  or at the  Prime  Rate  plus the  Federal  Funds  Rate  plus 0.5% plus a
variable  margin based on the  utilization  of the  Borrowing  Base ranging from
1.75% to 5.25%.

         Interest  payment  due dates are elected at the time of  borrowing  and
range from monthly to six months. Principal payments are due at maturity on June
15, 2010 for all borrowings  outstanding  on that date.  Trans Energy shall have
the right at any time to prepay any  borrowing  in whole or in part,  before the
date of  maturity.  Trans Energy also must pay CIT Capital USA Inc. a commitment
fee for any  unused  commitments,  including  related  letters  of  credit.  The
commitment   fees  range  from  0.5%  to  0.75%  per  annum  of  unused  average
commitments.  Trans Energy paid $500,000 in financing fees to a placement  agent
in securing the CIT Capital USA Inc. financing  agreement.  These financing fees
are being deferred and amortized  using the effective  interest  method over the
term of the note.  Trans  Energy  paid  $200,000  to CIT  Capital  USA Inc. as a
structuring fee in securing the note. The structuring fee has been recorded as a
discount on the note and is being amortized using the effective  interest method
over the term of the note. For the year ended December 31, 2007,  Trans Energy's
total  borrowings  from CIT amount to $14,713,146,  leaving an unused  available
credit facility of $3,286,854.

For the year ended December 31, 2007, Trans Energy had additional  borrowings in
the amount of $654,671  to fund  workover  programs  and  various  property  and
equipment  purchases.  The  interest  rates  vary  from  6.75% to  13.24%,  with
principal and interest payments due monthly. Total repayment terms range from 36
to 48 months  maturity.  The collateral  securing the notes includes the related
assets purchased.

                                      -43-
<PAGE>

On June 22, 2007,  Trans Energy also repaid the following notes payable balances
as they were on at that date:

                                      Principal       Interest
                                      ---------       --------
Wesbanco                             $  240,226       $  1,218
United Bank                           1,817,952         24,719
Huntington National                     932,255          9,458
Karla Spencer                           292,078         - 0 -

NOTE 12 - DERIVATIVE FINANCIAL INSTRUMENTS

         Trans Energy entered into a derivative contract to provide a measure of
stability in the cash flows associated with Trans Energy's gas production and to
manage  exposure to commodity  prices.  None of the derivative  contracts  Trans
Energy  entered  into have been  designated  as cash flow  hedges or fair  value
hedges.  Trans Energy recorded a total loss of $93,710 related to its derivative
instruments  for the year  ended  December  31,  2007,  of which  $37,826  was a
realized gain and $131,536 was an unrealized loss.

Natural Gas Derivatives

         Trans  Energy  entered  into  participating  commodity  put  options on
natural gas whereby Trans Energy  receives a floor price.  The  following  table
shows the monthly volumes and the floor price.

                                                                    Average
Start                   End                   Volume                Floor
Month                   Month                 MMBTU/Month           $/MMBTU
-----                   -----                 -----------           -------
Jul `07                 Dec `07               8,241                 $ 7.350
Jan `08                 Dec `08               6,915                 $ 7.350
Jan `09                 Nov `09               6,370                 $ 7.350
Jan `10                 Dec `10               5,560                 $ 7.350
Jan `11                 Dec `11               5,244                 $ 7.350


NOTE 13 - BUSINESS SEGMENTS

         Trans Energy's  principal  operations consist of oil and gas sales with
Trans Energy,  and pipeline  transmission  with Ritchie County Gathering Systems
and Tyler Construction Company.

         Certain financial  information  concerning Trans Energy's operations in
different segments is as follows:

<TABLE>
<CAPTION>
                                        For the
                                         Year
                                         Ended      Oil and Gas         Pipeline
                                      December 31,    Sales           Transmission         Corporate             Total
                                      -----------  ------------       ------------       ------------       ------------

<S>                                     <C>         <C>                 <C>                 <C>                 <C>
Revenue                                  2007      $  1,207,233       $    182,007       $    130,137       $  1,519,377
                                         2006         1,157,957            227,063             35,782          1,420,802

Income (Loss) from                       2007          (148,784)          (123,729)        (2,076,504)        (2,349,017)
continuing operations                    2006         1,178,221            121,006         (2,890,388)        (1,591,161)

Depreciation, depletion,                 2007           329,333             25,562               --              354,895
amortization and accretion               2006           220,403            116,712               --              337,115

Property and equipment                   2007         8,034,322          1,372,149               --            9,406,471
acquisitions, including                  2006         3,982,661               --                 --            3,982,661
oil and gas properties

        Total assets, net of intercompany accounts:

        December 31, 2007                          $ 14,502,036       $  2,063,334       $       --         $ 16,565,370
        December 31, 2006                             5,514,899            736,510               --            6,251,409

</TABLE>

                                      -44-
<PAGE>


NOTE 14 - 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. 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.  The Company has an
accrued  related  party  receivable  from Sancho of $478,160 as of December  31,
2007.

b. Receivables and Payables
The Company has various  payables to the officers and companies of the officers.
These  amounts  are  reported  in the balance  sheet as related  party  accounts
payable and accrued expenses.


NOTE 15 - ECONOMIC DEPENDENCE AND MAJOR CUSTOMERS

The Company's marketing arrangement with Sancho accounted for approximately 100%
of Tyler  Construction  Company's  revenue for the years ended December 31, 2007
and 2006.  Another  customer also generated 100% of Ritchie County sales in 2007
and 2006. Trans Energy, Inc. has five customers that represent 100% of its gross
oil and gas sales for the years ended December 31, 2007 and 2006.


NOTE 16 - SUBSEQUENT EVENTS

         On April 11, 2008 the CIT Capital  debt  agreement  dated June 15, 2007
was again amended to provide the Company  additional  time,  for fiscal year end
2007, to meet various covenants.


NOTE 17 - SUPPLEMENTARY INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
          (UNAUDITED)

         There are numerous  uncertainties  inherent in estimating quantities of
proved  crude oil and  natural gas  reserves.  Crude oil and natural gas reserve
engineering is a subjective process of estimating  underground  accumulations of
crude oil and natural gas that cannot be precisely measured. The accuracy of any
reserve  estimate  is a  function  of  the  quality  of  available  data  and of
engineering and geological interpretation and judgment.

         The  Company  retained   Schlumberger   Data  &  Consulting   Services,
independent  third-party reserve engineers, to perform an independent evaluation
of proved  reserves as of December  31, 2007.  Results of drilling,  testing and
production  subsequent to the date of the estimates may justify revision of such
estimates.   Accordingly,   reserve  estimates  are  often  different  from  the
quantities of crude oil and natural gas that are  ultimately  recovered.  All of
the Company's reserves are located in the United States.

         The  following   supplemental   unaudited   information  regarding  the
Company's  oil  and gas  activities  is  presented  pursuant  to the  disclosure
requirements of SFAS No. 69. The standardized  measure of discounted  future net
cash flows is computed by applying  fiscal year-end prices of oil and gas to the
estimated  future  production  of proved oil and gas  reserves,  less  estimated
future   expenditures   (based  on  fiscal  year-end  cost  estimates   assuming
continuation of existing  economic  conditions) to be incurred in developing and
producing the proved reserves,  less estimated future income tax expenses (based
on fiscal year-end statutory tax rates) to be incurred on pre-tax net cash flows
less  tax  basis  of  the  properties  and  available   credits,   and  assuming
continuation  of existing  economic  conditions.  The estimated  future net cash
flows are then  discounted  using a rate of 10 percent  per year to reflect  the
estimated timing of the future cash flows.

Capitalized Costs and Accumulated Depreciation, Depletion and Amortization

         Aggregate  capitalized  costs  relating to the Company's  crude oil and
natural gas producing  activities,  including asset retirement costs and related
accumulated depreciation, depletion, and amortization are as follows:

                                              As of December 31, 2007
                                            ---------------------------

Proved oil and gas producing properties
   and related lease, wells and equipment         $ 13,529,208

Unproved Oil and Gas Properties                        250,670
Accumulated Depreciation, Depletion
    and Amortization                                (1,801,262)
                                                  ------------

Net Capitalized Costs                             $ 11,978,616
                                                  ============

All of the Company's operations are in the United States.

                                      -45-
<PAGE>
Costs Incurred in Oil and Gas Activities
----------------------------------------

         Costs incurred in connection  with the Company's  crude oil and natural
gas acquisition,  exploration and development activities for each of the periods
shown below:

                                              For the Year Ended December 31,
                                              -------------------------------
                                                     2007           2006
Acquisition of Properties:                      ----------       ----------

     Proved                                     $   16,355       $1,848,740

     Unproved                                      240,514           10,156

Exploration Costs                                  258,852             --

Development Costs                                9,123,877          984,359
                                                ----------       ----------
Total Costs Incurred                            $9,639,598       $2,843,255
                                                ==========       ==========



Results of Operations for Oil and Gas Producing Activities
----------------------------------------------------------

         Aggregate results of operations, in connection with the Company's crude
oil and natural gas producing activities, for each of the periods shown below:

                                         For the Year Ended December 31,
                                         -------------------------------
                                               2007           2006
                                           -----------    -----------
Sales                                      $ 1,207,233    $ 1,157,957
Production Costs (a)                          (929,224)      (534,065)
Depreciation, Depletion and Amortization      (329,333)      (220,403)
Income Tax Expense                                --             --
                                           -----------    -----------
Total Results of Operations for
     Producing Activities (b)              $   (51,324)   $   403,489
                                           ===========    ===========

     (a) Production costs consist of oil and gas operations expense,  production
         and  ad  valorem  taxes,  plus  general  and   administrative   expense
         supporting the Company's oil and gas operations.

     (b) Excludes the activities of pipeline transmission operations,  corporate
         overhead and interest costs

Estimated Quantities of Proved Oil and Gas Reserves
---------------------------------------------------

         The Company's  proved oil and natural gas reserves have been  estimated
by independent petroleum engineers. Proved reserves are the estimated quantities
that geologic and engineering data  demonstrate with reasonable  certainty to be
recoverable in future years from known  reservoirs  under existing  economic and
operating  conditions.  Proved developed reserves are the quantities expected to
be recovered  through  existing  wells with  existing  equipment  and  operating
methods.  Due to the inherent  uncertainties and the limited nature of reservoir
data,  such  estimates are subject to change as additional  information  becomes
available. The reserves actually recovered and the timing of production of these
reserves may be substantially  different from the original  estimate.  Revisions
result  primarily from new information  obtained from  development  drilling and
production history;  acquisitions of oil and natural gas properties; and changes
in economic factors.

         The following  schedule  sets forth the proved  reserves of the Company
during each of the periods presented:


                                      -46-
<PAGE>

<TABLE>
<CAPTION>

                                                            As of December 31,
                                         --------------------------------------------------------
                                                    2007                          2006
                                         --------------------------    --------------------------

Proved Reserves as of:                       Oil            Gas            Oil             Gas
                                            (BBL)          (MCF)          (BBL)           (MCF)
                                         -----------    -----------    -----------    -----------
<S>                                        <C>           <C>               <C>          <C>
Beginning of the period                    1,340,964     13,161,354        230,780      2,856,564
Revisions of previous estimates               64,040        788,619        535,724      5,941,466
Extensions and discoveries                   807,430      9,767,123           --        1,047,619
Improved recovery                               --             --             --             --
Production                                    (4,022)      (161,281)        (5,758)      (124,302)
Purchases of minerals in place                  --             --          580,218      3,440,007
Sales of minerals in place                   (26,819)      (263,227)          --             --
                                         -----------    -----------    -----------    -----------
End of period                              2,181,593     23,292,588      1,340,964     13,161,354
                                         ===========    ===========    ===========    ===========


Proved Developed Reserves, End of Year       182,056      4,531,463         56,567      2,340,352
                                         ===========    ===========    ===========    ===========
</TABLE>

Standardized  Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
--------------------------------------------------------------------------------

         The following  information  is based on the Company's  best estimate of
the required data for the  Standardized  Measure of  Discounted  Future Net Cash
Flows  as of  December  31,  2007  and  2006  in  accordance  with  SFAS  No 69,
"Disclosures About Oil and Gas Producing Activities" which requires the use of a
10% discount rate.  This  information is not the fair market value,  nor does it
represent  the  expected  present  value of future  cash flows of the  Company's
proved oil and gas reserves.

                                                    As of December 31,
                                     ------------------------------------------
                                          2007                      2006
                                     -------------              -------------
Future Cash Inflows                  $ 399,271,719              $ 166,383,422
Future Production Costs (a)            (55,506,445)               (34,891,269)
Future Development Costs               (42,293,774)               (23,508,739)
Future Income Tax Expense             (120,671,129)               (39,740,080)
                                     -------------              -------------

Future Net Cash Flows                $ 180,800,371              $  68,243,334
                                     =============              =============

Discounted for Estimated Timing
    of Cash Flows                    $(127,712,969)             $ (50,941,802)
                                     -------------              -------------

Standardized Measure of Discounted
    Future Net Cash Flows            $  53,087,402              $  17,301,531
                                     =============              =============

(a)      Production costs include oil and gas operations expense,  production ad
         valorem  taxes,  transportation  costs and general  and  administrative
         expense supporting the Company's oil and gas operations.

                                      -47-
<PAGE>

Summary of Changes in  Standardized  Measure of Discounted  Future Net Cash Flow
Relating to Proved Oil and Gas Reserves
--------------------------------------------------------------------------------

         Principal changes in the aggregate  standardized  measure of discounted
future net cash flows attributable to the Company's proved crude oil and natural
gas reserves, as required by SFAS No. 69, at year end are set forth in the table
below:

                                                 For the Year Ended December 31,
                                                      2007            2006
                                                  ------------    ------------
Standardized Measure, Beginning of Year           $ 17,301,531    $ 17,645,538
Oil and gas sales, net of production costs            (278,009)       (658,018)
Changes in prices and future production              4,524,643      (5,345,481)
Extensions, discoveries and improved                63,996,549       1,528,645
   recovery, net of costs
Sales of Minerals in place                            (346,381)           --
Change in estimated future development costs       (24,247,420)    (20,157,035)
Previously estimated development costs incurred      8,743,845       3,501,938
Revisions of previous quantity estimates              (416,497)     26,059,401
Accretion of Discount                                2,737,672       2,304,424
Net change in income taxes                         (25,356,803)     (4,676,482)
Timing and Other                                     6,428,272      (2,901,397)
                                                  ------------    ------------

Standardized Measure, End of Year                 $ 53,087,402    $ 17,301,531
                                                  ============    ============


                                      -48-
<PAGE>