**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
        10-QSB/A**


**(Amendment
        No. 1)**





(Mark
      One)


**xQUARTERLY
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**





**For
      the Quarterly Period Ended October 31, 2006**





**oTRANSITION
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**





**For
      the Transition Period from _________ to _________**





**Commission
      file number: 000-51321**




**TRIANGLE
      PETROLEUM CORPORATION**


(Name
      of
      Small Business Issuer in Its Charter)





**Nevada**
            
            **98-0430762**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS
                Employer
              Identification
                No.)





Suite
        1250, 521 - 3 Avenue SW


Calgary,
      Alberta


Canada
      T2P 3T3


(Address
      of Principal Executive Offices)





(403)
      262-4471


(Registrant’s
      telephone number, including area code)





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





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.





Yes
       x No 
      o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes
       o No 
      x





As
      of
      December 13, 2006, the Company had 22,197,856 shares of its par value $0.0001
      common stock issued and outstanding.





Transitional
      Small Business Disclosure Format (check one):





Yes
       oNo 
      x





**** **EXPLANATORY
        NOTE**





As
        set
        forth in the table below, between June 2005 and June 1, 2006, Triangle Petroleum
        Corporation (the “Company”) completed private placements with certain investors
        in which the Company issued convertible securities along with common stock
        purchase warrants.





Transaction
                  Date
              
              Secured
                Convertible
                Debentures
                Sold
              
              Annual
                Interest
                Rate
              
              Conversion
                  Price
              
              Warrants
                (one
                  share
                per
                  warrant)June
                  14, 2005
              
              $
              1,000,000
              
              
              8
              %
              $
              1.00
              
              
              1,000,000July
                  14, 2005
              
              $
              5,000,000
              
              
              8
              %
              $
              1.00
              
              
              5,000,000December
                  8, 2005
              
              $
              5,000,000
              
              
              5
              %
              $
              5.00
                  or 90% of the average of the lowest three intraday trading prices
                  during
                  the ten trading days immediately preceding conversion
              
              
              NoneDecember
                  28, 2005
              
              $
              5,000,000
              
              
              7.5
              %
              $
              4.00
              
              
              625,000January
                  17, 2006
              
              $
              5,000,000
              
              
              5
              %
              $
              5.00
                  or 90% of the average of the lowest three intraday trading prices
                  during
                  the ten trading days immediately preceding conversion
              
              
              NoneJanuary
                  23, 2006
              
              $
              5,000,000
              
              
              7.5
              %
              $
              4.00
              
              
              625,000June
                  1, 2006
              
              $
              5,000,000
              
              
              5
              %
              $
              5.00
                  or 90% of the average of the lowest three intraday trading prices
                  during
                  the ten trading days immediately preceding conversion
              
              
              None





On
        January 21, 2008, the Company’s independent registered public accounting firm,
        Manning Elliott LLP, Chartered Accountants (“Manning Elliott”) notified the
        Company’s Chief Financial Officer that it believed there were errors in the
        Company’s financial statements resulting from the conversion feature of
        some of the convertible debentures sold. On January 22, 2008, management
        of the
        Company, in conjunction with a valuation expert, conducted an analysis of
        the
        Company’s various financial instruments and agreements involving the convertible
        debentures accompanied by warrants, with a particular focus on the accounting
        treatment of derivative financial instruments under Statement of Financial
        Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
        Activities (“SFAS 133”), the Emerging Issues Task Force Issue No. 00-19,
        Accounting for Derivative Financial Instruments Indexed to, and Potentially
        Settled in, a Company’s Own Stock (“EITF 00-19”), and FASB Staff Position No.
        EITF 00-19-2, “Accounting for Registration Payment Arrangements” (“FSP No. EITF
        00-19-2”), (collectively, the “Derivative Accounting Pronouncements”).





On
        January 22, 2008, the Company’s Chief Financial Officer further discussed the
        matter with Manning Elliott and both parties agreed that these facts caused
        them
        to believe that the Company’s accounting for the private placements was
        incorrect and the Company determined that the effect of such misstatements
        was
        material. As a result, the Company decided to restate its previously filed
        financial statements in the annual reports for the years ended January 31,
        2006
        and 2007 filed on Form 10-KSB, together with the quarterly reports on Form
        10-QSB for the quarters ended April 30, 2006, July 31, 2006 and October 31,
        2006
        and quarterly reports on Form 10-Q for the quarters ended April 30, 2007,
        July
        31, 2007 and October 31, 2007. The restatements are required to properly
        reflect
        the Company’s financial results for certain non-cash and non-operational related
        charges or credits to earnings associated with both embedded and freestanding
        derivative liabilities.


2


Historically,
        the Company recorded the fair value of the warrants and intrinsic value of
        the
        beneficial conversion features of these convertible debentures as a credit
        to
        equity with a corresponding discount to the notes payable. The Company engaged
        a
        valuation expert who reviewed the Company’s compliance with the SEC’s
        interpretation of EITF 00-19 as it relates to these convertible securities,
        detachable warrants and registration rights. The Company has determined that
        due
        to the indeterminate number of shares which might be issued under the embedded
        convertible debt host conversion feature of the December 8, 2005 convertible
        debenture, the Company should have recorded a derivative liability equal
        to the
        fair value of both the detachable warrants and the embedded convertible feature
        for certain debentures and then marked to market these derivative liabilities
        at
        the end of each quarter and fiscal period.




For
        the
        convenience of the reader, this Form 10-QSB/A sets forth the original Form
        10-QSB in its entirety. However, this Form 10-QSB/A only amends our financial
        statements and the footnotes to our financial statements, along with the
        corresponding changes to our Management’s Discussion and Analysis. We also
        corrected typographical errors and have revised our controls and procedures
        disclosure as a result of these restatements. No other information in the
        original Form 10-QSB is amended hereby. In addition, pursuant to the rules
        of
        the SEC, Item 6 of Part II to the Initial Filing has been amended to contain
        currently dated certifications from our Principal Executive Officer and
        Principal Financial Officer, as required by Sections 302 and 906 of the
        Sarbanes-Oxley Act of 2002. The certifications of our Principal Executive
        Officer and Principal Financial Officer are attached to this Form 10QSB/A
        as
        Exhibits 31.1, 31.2, 32.1 and 32.2, respectively.


3


**TRIANGLE
      PETROLEUM CORPORATION**





Quarterly
      Report on Form 10-QSB for the


Quarterly
      Period Ending October 31, 2006




Table
      of
      Contents





PART
                  I. FINANCIAL INFORMATIONItem
                  1.
              Financial
                  StatementsConsolidated
                  Balance Sheets:October
                  31, 2006 (Unaudited) and January 31, 2006 (Audited)
              5Consolidated
                  Statements of Operations:Three
                  and Nine Months Ended October 31, 2006 and 2005 (Unaudited) and
                  Accumulated from December 11, 2003 (Date of Inception) to October
                  31, 2006
                  (Unaudited)
              6Consolidated
                  Statements of Cash Flows:Nine
                  Months Ended October 31, 2006 and 2005 (Unaudited)
              7Notes
                  to Unaudited Consolidated Financial Statements:October
                  31, 2006
              8-21Item
                  2.
              Management
                  Discussion and Analysis
              22Item
                  3.
              Controls
                  and Procedures
              32PART
                  II. OTHER INFORMATIONItem
                  1.
              Legal
                  Proceedings
              33Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              33Item
                  3.
              Defaults
                  Upon Senior Securities
              33Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              33Item
                  5.
              Other
                  Information
              33Item
                  6.
              Exhibits
              33Signatures
              34





4


Triangle
      Petroleum Corporation




(An
      Exploration Stage Company)


Consolidated
      Balance Sheets


(Expressed
      in U.S. dollars)





October 31,
                2006
                $
              
              January 31,
                2006
                $(unaudited)(Restated –
                Note
                  13)ASSETSCurrent
                  AssetsCash
                  and cash equivalents
              
              
              9,635,959
              
              
              17,394,422Other
                  current assets
              
              
              850,274
              
              
              406,356Total
                  Current Assets
              
              
              10,486,233
              
              
              17,800,778Debt
                  Issue Costs, net
              
              
              1,034,061
              
              
              903,158Property
                  and Equipment (Note 3)
              
              
              72,526
              
              
              69,266Oil
                  and Gas Properties (Note 4)
              
              
              17,209,422
              
              
              7,065,367Total
                  Assets
              
              
              28,802,242
              
              
              25,838,569LIABILITIES
                  AND STOCKHOLDERS’ DEFICITCurrent
                  LiabilitiesAccounts
                  payable
              
              
              1,563,920
              
              
              525,659Accrued
                  liabilities (Note 5)
              
              
              1,809,579
              
              
              1,116,613Derivative
                  liabilities (Note 7)
              
              
              16,229,579
              
              
              30,219,250Due
                  to related parties (Note 8)
              
              
              3,536
              
              
              1,398Total
                  Current Liabilities
              
              
              19,606,614
              
              
              31,862,920Asset
                  Retirement Obligations (Note 4)
              
              
              93,621
              
              
              33,000Convertible
                  Debentures, less unamortized discount of $15,680,294 and $20,409,674,
                  respectively (Note 6)
              
              
              12,019,706
              
              
              4,690,326Total
                  Liabilities
              
              
              31,719,941
              
              
              36,586,246Contingencies
                  and Commitments (Notes 1, 4 and 11)Stockholders’
                  DeficitCommon
                StockAuthorized:
                  100,000,000 shares, par value $0.00001 Issued: 21,340,381 shares
                  (January
                  31, 2006 – 19,182,530 shares)
              
              
              213
              
              
              192Additional
                  Paid-In Capital
              
              
              12,136,701
              
              
              7,638,741Donated
                  Capital
              
              
              11,400
              
              
              11,400Deferred
                  Compensation (Note 9)
              
              
              (1,914,167
              )
              
              (4,486,667
              )Deficit
                  Accumulated During the Exploration Stage
              
              
              (13,151,846
              )
              
              (13,911,343
              )Total
                  Stockholders’ Deficit
              
              
              (2,917,699
              )
              
              (10,747,677
              )Total
                  Liabilities and Stockholders’ Deficit
              
              
              28,802,242
              
              
              25,838,569


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


5


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Operations


(Expressed
      in U.S. dollars)


(unaudited)





Accumulated
                from
                December 11,
                2003
                (Date
                  of
                Inception)
                to
                  October 31,
              
              Three
                Months
                Ended
                October
                  31,
              
              Three
                Months
                Ended
                October
                  31,
              
              Nine
                Months
                Ended
                October
                  31,
              
              Nine
                Months
                Ended
                October
                  31,2006
              
              2006
              
              2005
              
              2006
              
              2005$
              
              $
              
              $
              
              $
              
              $(Restated
                  –
                Note
                  13)
              
              (Restated
                  –
                Note
                  13)
              
              
              
              (Restated
                  –
                Note
                  13)RevenueOil
                  and gas
              
              
              24,540
              
              
              24,540
              
              
              –
              
              
              24,540
              
              
              –Operating
                  ExpensesAmortization
              
              
              24,445
              
              
              7,590
              
              
              1,289
              
              
              19,828
              
              
              1,289Depletion
                  and depreciation
              
              
              24,375
              
              
              24,375
              
              
              –
              
              
              24,375
              
              
              –General
                  and administrative
              
              
              10,343,662
              
              
              1,643,942
              
              
              1,519,025
              
              
              6,258,066
              
              
              1,742,392Impairment
                  loss on oil and gas properties
              
              
              2,104,502
              
              
              1,041,852
              
              
              –
              
              
              1,086,789
              
              
              –Total
                  Operating Expenses
              
              
              12,496,984
              
              
              2,717,759
              
              
              1,520,314
              
              
              7,389,058
              
              
              1,743,681Net
                  Income (Loss) from Operations
              
              
              (12,472,444
              )
              
              (2,693,219
              )
              
              (1,520,314
              )
              
              (7,364,518
              )
              
              (1,743,681
              )Other
                  ExpenseAccretion
                  of discounts on convertible debentures
              
              
              (10,471,624
              )
              
              (2,766,328
              )
              
              (750,000
              )
              
              (7,463,959
              )
              
              (1,125,000
              )Amortization
                  of debt issue costs
              
              
              (345,940
              )
              
              (117,707
              )
              
              (8,125
              )
              
              (294,097
              )
              
              (12,189
              )Interest
                  income
              
              
              496,431
              
              
              166,201
              
              
              29,038
              
              
              444,957
              
              
              33,135Interest
                  on long-term debt
              
              
              (1,675,393
              )
              
              (448,248
              )
              
              (120,000
              )
              
              (1,287,136
              )
              
              (180,000
              )Unrealized
                  gain on fair value of derivatives
              
              
              28,568,389
              
              
              7,147,301
              
              
              –
              
              
              16,724,250
              
              
              –Total
                  Other Income (Expense)
              
              
              16,571,863
              
              
              3,981,219
              
              
              (849,087
              )
              
              8,124,015
              
              
              (1,284,054
              )Net
                  Income (Loss) Before Discontinued Operations
              
              
              4,099,419
              
              
              1,288,000
              
              
              (2,369,401
              )
              
              759,497
              
              
              (3,027,735
              )Discontinued
                  Operations
              
              
              (32,471
              )
              
              –
              
              
              –
              
              
              –
              
              
              (30,000
              )Net
                  Income (Loss) for the Period
              
              
              4,066,948
              
              
              1,288,000
              
              
              (2,369,401
              )
              
              759,497
              
              
              (3,057,735
              )Deficit
                  adjustment related to December 8, 2005 reclassification of warrants
                  from
                  additional paid-in capital to a derivative liability
              
              
              (17,218,794
              )Deficit
                  accumulated during the exploration stage
              
              
              (13,151,846
              )Net
                  Income (Loss) Per Share - BasicContinuing
                  Operations
              
              
              
              
              
              0.06
              
              
              (0.13
              )
              
              0.04
              
              
              (0.09
              )Discontinued
                  Operations
              
              
              
              
              
              –
              
              
              –
              
              
              –
              
              
              –0.06
              
              
              (0.13
              )
              
              0.04
              
              
              (0.09
              )Net
                  Income (Loss) Per Share - DilutedContinuing
                  Operations
              
              
              
              
              
              0.05
              
              
              (0.13
              )
              
              0.03
              
              
              (0.09
              )Discontinued
                  Operations
              
              
              
              
              
              –
              
              
              –
              
              
              –
              
              
              –0.05
              
              
              (0.13
              )
              
              0.03
              
              
              (0.09
              )Weighted
                  Average Number of Shares OutstandingBasic
              
              
              
              
              
              20,716,000
              
              
              18,046,000
              
              
              20,107,000
              
              
              35,000,000Diluted
              
              
              
              
              
              27,716,000
              
              
              18,046,000
              
              
              26,107,000
              
              
              35,000,000


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


6


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Cash Flows


(Expressed
      in U.S. dollars)


(unaudited)





Nine
                  Months
                Ended
                October
                  31,
              
              Nine
                  Months
                Ended
                October
                  31,2006
              
              2005$
              
              $(Restated
                  –
                Note
                  13)Operating
                  ActivitiesNet
                  income (loss) for the period
              
              
              759,497
              
              
              (3,057,735
              )Adjustments
                  to reconcile net income (loss) to net cash used in operating
                  activities:Accretion
                  of discounts on convertible debentures
              
              
              7,463,959
              
              
              1,125,000Amortization
                  of debt issue costs
              
              
              294,097
              
              
              12,189Amortization
              
              
              19,828
              
              
              1,289Depletion
                  and depreciation
              
              
              24,375
              
              
              –Donated
                  consulting services and rent
              
              
              –
              
              
              3,000Impairment
                  of oil and gas costs
              
              
              1,086,789
              
              
              –Stock-based
                  compensation
              
              
              4,670,481
              
              
              1,371,156Unrealized
                  gain on fair value of derivatives
              
              
              (16,724,250
              )
              
              –Changes
                  in operating assets and liabilitiesOther
                  current assets
              
              
              (443,918
              )
              
              (148,806
              )Accounts
                  payable and accrued liabilities
              
              
              1,731,227
              
              
              236,597Due
                  to related parties
              
              
              2,138
              
              
              (25,929
              )Net
                  Cash Used in Operating Activities
              
              
              (1,115,777
              )
              
              (483,239
              )Investing
                  ActivitiesPurchase
                  of property and equipment
              
              
              (23,088
              )
              
              (44,910
              )Oil
                  and gas property expenditures
              
              
              (11,194,598
              )
              
              (1,365,442
              )Net
                  Cash Used in Investing Activities
              
              
              (11,217,686
              )
              
              (1,410,352
              )Financing
                  ActivitiesProceeds
                  from issuance of convertible debentures
              
              
              5,000,000
              
              
              6,000,000Debt
                  issue costs
              
              
              (425,000
              )
              
              (65,000
              )Proceeds
                  from issuance of common stock
              
              
              –
              
              
              60,000Net
                  Cash Provided by Financing Activities
              
              
              4,575,000
              
              
              5,995,000(Decrease)
                  Increase in Cash and Cash Equivalents
              
              
              (7,758,463
              )
              
              4,101,409Cash
                  and Cash Equivalents - Beginning of Period
              
              
              17,394,422
              
              
              148,102Cash
                  and Cash Equivalents - End of Period
              
              
              9,635,959
              
              
              4,249,511Non-cash
                  Investing and Financing ActivitiesStock
                  issued for conversion of debenture
              
              
              2,400,000
              
              
              –Supplemental
                  Disclosures:Interest
                  paid
              
              
              –
              
              
              –Income
                  taxes paid
              
              
              –
              
              
              –


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


7


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**1.**
            **Nature
                of Operations and Continuance of
                Business**




The
      Company was incorporated in the State of Nevada on December 11, 2003 under
      the
      name Peloton Resources Inc. In December 2003, the Company purchased six mineral
      claims situated in the Greenwood Mining Division in the Province of British
      Columbia, Canada. The Company’s principal business plan was to acquire, explore
      and develop mineral properties and to ultimately seek earnings by exploiting
      the
      mineral claims. During the fiscal year ended January 31, 2006, the Company
      abandoned its mineral property as a result of poor exploration results, and
      changed the Company’s principal business to that of acquisition, exploration and
      development of oil and gas resource properties. On May 10, 2005, the Company
      changed its name to Triangle Petroleum Corporation.




The
        Company has been in the exploration stage since its formation in December
        2003
        and has not yet realized any revenues from its planned operations. It is
        primarily engaged in the acquisition, exploration and development of oil
        and gas
        resource properties. The ability of the Company to emerge from the exploration
        stage with respect to planned principal business activities is dependent
        upon
        its successful efforts to raise additional equity financing and generate
        significant revenue. The Company has a working capital deficit of $9,120,381
        as
        at October 31, 2006. During the year ended January 31, 2006, the Company
        issued
        $26,000,000 of convertible debentures. During the nine month period ended
        October 31, 2006, the Company issued an additional $5,000,000 of convertible
        debentures. Management plans to raise additional capital through equity and/or
        debt financings. There is no guarantee that the proceeds from the financings
        raised by the Company, or proceeds from any future financings, will be
        sufficient to complete any of the above objectives. These factors raise
        substantial doubt regarding the Company’s ability to continue as a going
        concern.





**2.**
            **Summary
                of Significant Accounting
                Policies**




a)
            Basis
                of Presentation




These
      financial statements and related notes are presented in accordance with
      accounting principles generally accepted in the United States, and are expressed
      in US dollars. These consolidated financial statements include the accounts
      of
      the Company and its two wholly-owned subsidiaries, Elmworth Energy Corporation,
      incorporated in the Province of Alberta, Canada, and Triangle USA Petroleum
      Corporation, incorporated in the State of Colorado, USA. All significant
      intercompany balances and transactions have been eliminated. The Company’s
      fiscal year-end is January 31.




b)
            Interim
                Financial Statements




These
      unaudited interim financial statements have been prepared on the same basis
      as
      the annual financial statements and in the opinion of management, reflect all
      adjustments, which include only normal recurring adjustments, necessary to
      present fairly the Company’s financial position, results of operations and cash
      flows for the periods shown. The results of operations for such periods are
      not
      necessarily indicative of the results expected for a full year or for any future
      period.




c)
            Use
                of Estimates




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




d)
            Cash
                and Cash Equivalents




The
      Company considers all highly liquid instruments with maturity of three months
      or
      less at the time of issuance to be cash equivalents.




e)
              Foreign
                  Currency Translation




The
      Company's functional currency is the United States dollar and management has
      adopted SFAS No. 52, “ *Foreign
      Currency Translation* ”.
      Monetary assets and liabilities denominated in foreign currencies are translated
      into United States dollars at rates of exchange in effect at the balance sheet
      date. Non-monetary assets, liabilities and items recorded in income arising
      from
      transactions denominated in foreign currencies are translated at rates of
      exchange in effect at the date of the transaction. Foreign currency transactions
      are primarily undertaken in Canadian dollars. The Company has not, to the date
      of these financials statements, entered into derivative instruments to offset
      the impact of foreign currency fluctuations.


8


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**




f) Property
      and Equipment




Property
      and equipment consists of computer hardware, geophysical software, furniture
      and
      equipment and leasehold improvements, and is recorded at cost. Computer hardware
      and geophysical software are depreciated on a straight-line basis over their
      estimated useful lives of three years. Furniture and equipment are depreciated
      on a straight-line basis over their estimated useful lives of five years.
      Leasehold improvements are depreciated on a straight-line basis over their
      estimated useful lives of five years.




g) Long-lived
      Assets




In
      accordance with SFAS No. 144, “ *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ”,
      the
      carrying value of intangible assets and other long-lived assets is reviewed
      on a
      regular basis for the existence of facts or circumstances that may suggest
      impairment. The Company recognizes impairment when the sum of the expected
      undiscounted future cash flows is less than the carrying amount of the asset.
      Impairment losses, if any, are measured as the excess of the carrying amount
      of
      the asset over its estimated fair value.




h) Asset
      Retirement Obligations




The
      Company recognizes a liability for future retirement obligations associated
      with
      the Company’s oil and gas properties. The estimated fair value of the asset
      retirement obligation is based on the current cost escalated at an inflation
      rate and discounted at a credit adjusted risk-free rate. This liability is
      capitalized as part of the cost of the related asset and amortized over its
      useful life. The liability accretes until the Company settles the
      obligation.




i) Oil
      and
      Gas Properties




The
      Company utilizes the full-cost method of accounting for petroleum and natural
      gas properties. Under this method, the Company capitalizes all costs associated
      with acquisition, exploration and development of oil and natural gas reserves,
      including leasehold acquisition costs, geological and geophysical expenditures,
      lease rentals on undeveloped properties and costs of drilling of productive
      and
      non-productive wells into the full cost pool on a country by country basis.
      When
      the Company obtains proven oil and gas reserves, capitalized costs, including
      estimated future costs to develop the reserves proved and estimated abandonment
      costs, net of salvage, will be depleted on the units-of-production method using
      estimates of proved reserves. The costs of unproved properties are not amortized
      until it is determined whether or not proved reserves can be assigned to the
      properties. Until such determination is made the Company assesses annually
      whether impairment has occurred, and includes in the amortization base drilling
      exploratory dry holes associated with unproved properties.




The
      Company applies a ceiling test to the capitalized cost in the full cost pool.
      The ceiling test limits such cost to the estimated present value, using a ten
      percent discount rate, of the future net revenue from proved reserves, based
      on
      current economic and operating conditions. Specifically, the Company computes
      the ceiling test so that capitalized cost, less accumulated depletion and
      related deferred income tax, do not exceed an amount (the ceiling) equal to
      the
      sum of: (A) The present value of estimated future net revenue computed by
      applying current prices of oil and gas reserves (with consideration of price
      changes only to the extent provided by contractual arrangements) to estimated
      future production of proved oil and gas reserves as of the date of the latest
      balance sheet presented, less estimated future expenditures (based on current
      cost) to be incurred in developing and producing the proved reserves computed
      using a discount factor of ten percent and assuming continuation of existing
      economic conditions; plus (B) the cost of property not being amortized; plus
      (C)
      the lower of cost or estimated fair value of unproven properties included in
      the
      costs being amortized; less (D) income tax effects related to differences
      between the book and tax basis of the property.


9


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**




i)
            Oil
                and Gas Properties (continued)




For
      unproven properties, the Company excludes from capitalized costs subject to
      depletion, all costs directly associated with the acquisition and evaluation
      of
      the unproved property until it is determined whether or not proved reserves
      can
      be assigned to the property. Until such a determination is made, the Company
      assesses the property at least annually to ascertain whether impairment has
      occurred. In assessing impairment the Company considers factors such as
      historical experience and other data such as primary lease terms of the
      property, average holding periods of unproved property, and geographic and
      geologic data. The Company adds the amount of impairment assessed to the cost
      to
      be amortized subject to the ceiling test.




j)
            Debt
                Issue Costs




In
      accordance with the Accounting Principles Board Opinion 21 *“Interest
      on Receivables and Payables”* ,
      the
      Company recognizes debt issue costs on the balance sheet as deferred charges,
      and amortizes the balance over the term of the related debt. The Company follows
      the guidance in the EITF 95-13 “ *Classification
      of Debt Issue Costs in the Statement of Cash Flows”* and
      classifies cash payments for debt issue costs as a financing activity. During
      the nine month period ended October 31, 2006, the Company recognized
      amortization expense of $294,097.




k)
            Revenue
                Recognition




The
      Company recognizes oil and gas revenue when production is sold to a purchaser
      at
      a fixed or determinable price, when delivery has occurred and title has
      transferred, and if collectibility of the revenue is probable.




l)
            Income
                Taxes




The
      Company has adopted SFAS No. 109 “ *Accounting
      for Income Taxes* ”
as
      of
      its inception. Pursuant to SFAS No. 109 the Company is required to compute
      tax
      asset benefits for net operating losses carried forward. Potential benefits
      of
      income tax losses are not recognized in the accounts until realization is more
      likely than not. The potential benefits of net operating losses have not been
      recognized in these financial statements because the Company cannot be assured
      it is more likely than not it will utilize the net operating losses carried
      forward in future years.




m)
            Basic
                and Diluted Net Income (Loss) Per
                Share




The
      Company computes net income (loss) per share in accordance with SFAS No. 128,
      " *Earnings
      per Share* "
      (SFAS
      128). SFAS 128 requires presentation of both basic and diluted earnings per
      share (EPS) on the face of the income statement. Basic EPS is computed by
      dividing net income (loss) available to common shareholders (numerator) by
      the
      weighted average number of shares outstanding (denominator) during the period.
      Diluted EPS gives effect to all dilutive potential common shares outstanding
      during the period including convertible debt, stock options, and warrants,
      using
      the treasury stock method, and convertible securities, using the if-converted
      method. In computing diluted EPS, the average stock price for the period is
      used
      in determining the number of shares assumed to be purchased from the exercise
      of
      stock options or warrants. Diluted EPS excludes all dilutive potential shares
      if
      their effect is anti-dilutive.




n)
            Financial
                Instruments




The
      fair
      values of financial instruments, which includes cash and cash equivalents,
      other
      current assets, accounts payable, accrued liabilities and due to related parties
      approximate their carrying values due to the relatively short maturity of these
      instruments.




o)
              Derivative
                  Liabilities




In
        accordance with SFAS No. 133, *“Accounting
        for Derivative Instruments and Hedging Activities”* (“SFAS
        133”), as amended, and EITF Issue No. 00-19, *“Accounting
        for Derivative Financial Instruments Indexed to, and Potentially Settled
        in, a
        Company’s Own Stock”* (“EITF
        00-19”) the Company records derivatives at their fair values on the date that
        they meet the requirements of a derivative instrument and at each subsequent
        balance sheet date. Any change in fair value will be recorded as non-operating,
        non-cash income or expense at each reporting date.




p)
            Concentration
                of Risk




The
      Company maintains its cash accounts in one commercial bank located in Calgary,
      Alberta, Canada. The Company's cash accounts are uninsured and insured business
      checking accounts and deposits maintained principally in U.S. dollars. As at
      October 31, 2006, the Company has not engaged in any transactions that would
      be
      considered derivative instruments on hedging activities. To date, the Company
      has not incurred a loss relating to this concentration of credit
      risk.


10


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**




q)
            Comprehensive
                Loss




SFAS
      No.
      130, “ *Reporting
      Comprehensive Income* ,”
      establishes standards for the reporting and display of comprehensive loss and
      its components in the financial statements. As at October 31, 2006 and 2005,
      the
      Company has no items that represent comprehensive loss and, therefore, has
      not
      included a schedule of comprehensive loss in the financial
      statements.




r) Stock-based
        Compensation




Prior
      to
      February 1, 2006, the Company accounted for stock-based awards under the
      recognition and measurement provisions of Accounting Principles Board Opinion
      (“APB”) No. 25, *“Accounting
      for Stock Issued to Employees”* using
      the intrinsic value method of accounting. Effective February 1, 2006, the
      Company adopted the fair value recognition provisions of SFAS No. 123R *“Share
      Based Payments”,* using
      the modified prospective transition method. Under that transition method,
      compensation cost is recognized for all share-based payments granted prior
      to,
      but not yet vested as of February 1, 2006, based on the grant date fair value
      estimated in accordance with the original provisions of SFAS No. 123, and
      compensation cost for all share-based payments granted subsequent to February
      1,
      2006, based on the grant date fair value estimated in accordance with the
      provisions of SFAS No. 123R. Results for prior periods have not been restated.




As
        a
        result of adopting SFAS No. 123R on February 1, 2006, the Company’s loss for the
        nine month period ended October 31, 2006 is $224,068 higher than if it had
        continued to account for share-based compensation under APB No. 25. Basic
        and
        diluted loss per share for the nine month period ended October 31, 2006 would
        have remained unchanged at $0.04 and $0.03 per share.




Had
        the
        Company applied the fair value recognition provisions of SFAS No. 123 to
        the
        nine month period ended October 31, 2005, the Company’s net loss would have been
        $112,034 higher than when it accounted for share-based compensation under
        APB
        No. 25. Basic and diluted loss per share for the nine month period ended
        October
        31, 2005 would have remained unchanged at $0.09 per share.




Effective
      August 5, 2005, the Company approved an incentive stock option plan (the “2005
      Incentive Stock Plan”) to issue up to 2,000,000 shares of common stock. The 2005
      Incentive Stock Plan allows for the granting of stock options at a price of
      not
      less than fair value of the stock and for a term not to exceed five years.
      The
      total number of options granted to any person shall not exceed 5% of the issued
      and outstanding common stock of the Company.




On
      February 21, 2006, the Company granted stock options under the 2005 Incentive
      Stock Plan to a director to acquire 200,000 common shares at an exercise price
      of $4.55 per share exercisable to February 21, 2011. The fair value for options
      granted was estimated at the date of grant using the Black-Scholes
      option-pricing model and the weighted average fair value of the stock options
      granted was $3.84 per share. On March 24, 2006, the Company granted stock
      options to a consultant to acquire 100,000 common shares at an exercise price
      of
      $3.46 per share exercisable to March 24, 2011. The fair value for options
      granted was estimated at the date of grant using the Black-Scholes
      option-pricing model and the weighted average fair value of stock options
      granted was $3.48 per share. On July 27, 2006, the Company granted stock options
      to a consultant to acquire 300,000 common shares at an exercise price of $2.90
      per share exercisable to July 27, 2011. The fair value for options granted
      was
      estimated at the date of grant using the Black-Scholes option-pricing model
      and
      the weighted average fair value of stock options granted was $2.48 per share.
      On
      September 8, 2006, the Company granted stock options to an employee to acquire
      100,000 common shares at an exercise price of $2.13 per share exercisable to
      September 8, 2011. The fair value for options granted was estimated at the
      date
      of grant using the Black-Scholes option-pricing model and the weighted average
      fair value of stock options granted was $1.20 per share. During the nine month
      period ended October 31, 2006, the Company recorded stock-based compensation
      of
      $2,097,981 as general and administrative expense.




Stock-based
      compensation is recognized over the vesting period, using the straight-line
      attribution method for awards subject to graded vesting based on a service
      condition.




A
      summary
      of the Company’s stock option activity for the nine months ended October 31,
      2006 is as follows:





Number of
              Options
            
            Weighted Average
              Exercise Price
              $Balance,
                Beginning of Period
            
            
            1,330,000
            
            
            3.28Granted
            
            
            700,000
            
            
            3.34Cancelled/forfeited
            
            
            (400,000
            )
            
            3.23Balance,
                End of Period
            
            
            1,630,000
            
            
            3.31


11


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**




r)
              Stock-based
                  Compensation (continued)




Additional
      information regarding stock options as at October 31, 2006 is as
      follows:





Outstanding
            
            ExercisableExercise
                prices
              $
            
            Number
                of
              shares
            
            Weighted
              average
              remaining
              contractual
              life
                (years)
            
            Weighted
              average
              exercise
              price
              $
            
            Number
                of
              shares
            
            Weighted
              average
              exercise
              price
              $2.13
            
            
            100,000
            
            
            4.86
            
            
            2.13
            
            
            20,000
            
            
            2.132.90
            
            
            300,000
            
            
            4.74
            
            
            2.90
            
            
            60,000
            
            
            2.903.23
            
            
            730,000
            
            
            3.76
            
            
            3.23
            
            
            438,000
            
            
            3.233.46
            
            
            100,000
            
            
            4.40
            
            
            3.46
            
            
            40,000
            
            
            3.463.53
            
            
            200,000
            
            
            3.95
            
            
            3.53
            
            
            120,000
            
            
            3.534.55
            
            
            200,000
            
            
            4.31
            
            
            4.55
            
            
            80,000
            
            
            4.551,630,000
            
            
            4.14
            
            
            3.31
            
            
            758,000
            
            
            3.47




As
      at
      October 31, 2006, there was $1,611,234 of total unrecognized compensation costs
      related to non-vested share-based compensation arrangements granted under the
      2005 Incentive Stock Plan which are expected to be recognized over a period
      of
      60 months. A summary of the status of the Company’s non-vested shares as of
      October 31, 2006, and changes during the nine months ended October 31, 2006,
      is
      presented below:







**Non-vested
                  options**
              
              **Number of**
                **Options**
              
              **Weighted Average**
                **Grant Date**
                **Fair Value**Non-vested
                  at February 1, 2006
              
              
              1,054,000
              
              $
              2.67Cancelled/forfeited
              
              
              (400,000
              )
              $
              2.71Granted
              
              
              700,000
              
              $
              2.96Vested
              
              
              (482,000
              )
              $
              2.79Non-vested
                  at October 31, 2006
              
              
              872,000
              
              $
              2.69




s)
              Recent
                  Accounting Pronouncements




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 158, “ *Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans - an
      amendment of FASB Statements No. 87, 88, 106, and 132(R)* ”.
      This
      statement requires employers to recognize the overfunded or underfunded status
      of a defined benefit postretirement plan (other than a multiemployer plan)
      as an
      asset or liability in its statement of financial position and to recognize
      changes in that funded status in the year in which the changes occur through
      comprehensive income of a business entity or changes in unrestricted net assets
      of a not-for-profit organization. This statement also requires an employer
      to
      measure the funded status of a plan as of the date of its year-end statement
      of
      financial position, with limited exceptions. The provisions of SFAS No. 158
      are
      effective for employers with publicly traded equity securities as of the end
      of
      the fiscal year ending after December 15, 2006. The adoption of this statement
      is not expected to have a material effect on the Company's future reported
      financial position or results of operations.




In
      September 2006, the FASB issued SFAS No. 157, “ *Fair
      Value Measurements* ”.
      The
      objective of SFAS No. 157 is to increase consistency and comparability in fair
      value measurements and to expand disclosures about fair value measurements.
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS No. 157 applies under other accounting pronouncements
      that require or permit fair value measurements and does not require any new
      fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement is not expected to have a material effect on the
      Company's future reported financial position or results of
      operations.


12


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**




s)
              Recent
                  Accounting Pronouncements
                  (continued)




In
      June
      2006, the FASB issued FASB Interpretation No. 48, *“Accounting
      for Uncertainty in Income Taxes, an interpretation of FASB Statements No.
      109”* .
      FIN 48
      clarifies the accounting for uncertainty in income taxes by prescribing a
      two-step method of first evaluating whether a tax position has met a more likely
      than not recognition threshold and second, measuring that tax position to
      determine the amount of benefit to be recognized in the financial statements.
      FIN 48 provides guidance on the presentation of such positions within a
      classified statement of financial position as well as on derecognition, 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
      this statement is not expected to have a material effect on the Company's future
      reported financial position or results of operations.




In
      March
      2006, the FASB issued SFAS No. 156, " *Accounting
      for Servicing of Financial Assets, an amendment of FASB Statement No. 140,
      Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities* ".
      This
      statement requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable, and permits
      for
      subsequent measurement using either fair value measurement with changes in
      fair
      value reflected in earnings or the amortization and impairment requirements
      of
      Statement No. 140. The subsequent measurement of separately recognized servicing
      assets and servicing liabilities at fair value eliminates the necessity for
      entities that manage the risks inherent in servicing assets and servicing
      liabilities with derivatives to qualify for hedge accounting treatment and
      eliminates the characterization of declines in fair value as impairments or
      direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
      year
      beginning after September 15, 2006. The adoption of this statement is not
      expected to have a material effect on the Company's future reported financial
      position or results of operations.




In
      February 2006, the FASB issued SFAS No. 155, " *Accounting
      for Certain Hybrid Financial Instruments-an amendment of FASB Statements No.
      133
      and 140* ",
      to
      simplify and make more consistent the accounting for certain financial
      instruments. SFAS No. 155 amends SFAS No. 133, " *Accounting
      for Derivative Instruments and Hedging Activities* ",
      to
      permit fair value re-measurement for any hybrid financial instrument with an
      embedded derivative that otherwise would require bifurcation, provided that
      the
      whole instrument is accounted for on a fair value basis. SFAS No. 155 amends
      SFAS No. 140, " *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ",
      to
      allow a qualifying special-purpose entity to hold a derivative financial
      instrument that pertains to a beneficial interest other than another derivative
      financial instrument. SFAS No. 155 applies to all financial instruments acquired
      or issued after the beginning of an entity's first fiscal year that begins
      after
      September 15, 2006, with earlier application allowed. The adoption of this
      statement is not expected to have a material effect on the Company's future
      reported financial position or results of operations.




t)
              Reclassifications




Certain
      reclassifications have been made to the prior period’s financial statements to
      conform to the current period’s presentation.





**3.**
            **Property
                and Equipment**




Cost
              $
            
            Accumulated
              Depreciation
              $
            
            October
                31,
              2006
              Net
                Carrying
              Value
              $
            
            January
                31,
              2006
              Net
                Carrying
              Value
              $Computer
                hardware
            
            
            48,683
            
            
            13,379
            
            
            35,304
            
            
            32,804Furniture
                and equipment
            
            
            34,222
            
            
            7,004
            
            
            27,218
            
            
            29,573Geophysical
                software
            
            
            7,983
            
            
            3,218
            
            
            4,765
            
            
            6,889Leasehold
                Improvements
            
            
            6,083
            
            
            844
            
            
            5,239
            
            
            –96,971
            
            
            24,445
            
            
            72,526
            
            
            69,266


13


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**4.**
            **Oil
                and Gas Properties**





The
      total
      costs incurred and excluded from amortization are summarized as follows:





Acquisition
              $
            
            Exploration
              $
            
            Impairment
              Loss
              $
            
            October
                31,
              2006
              Net Carrying
              Value
              $
            
            January
                31,
              2006
              Net Carrying
              Value
              $Canadian
                properties
            
            
            443,617
            
            
            4,887,940
            
            
            (1,086,789
            )
            
            4,244,768
            
            
            3,411,226US
                properties
            
            
            10,936,750
            
            
            3,045,617
            
            
            (1,017,713
            )
            
            12,964,654
            
            
            3,654,141Totals
            
            
            11,380,367
            
            
            7,933,557
            
            
            (2,104,502
            )
            
            17,209,422
            
            
            7,065,367




All
      of
      the Company’s oil and gas properties are located in the United States and
      Canada. The Company is currently participating in oil and gas exploration
      activities in Texas and Colorado, USA, and Alberta, Canada.




(a)
            On
                September 19, 2006, the Company entered into a Development Agreement
                with
                a Texas based joint venture partner to purchase a 50% interest in
                certain
                prospects located in the Arkoma Basin, Arkansas. The Company has
                paid
                $6,809,364 in fiscal 2007 and is committed to pay an additional
                $9,332,355. During the nine month period ended October 31, 2006,
                the
                Company recorded depletion of $24,375 on capitalized costs relating
                to
                this area.




(b)
            On
                October 19, 2005, the Company entered into a Participation Agreement
                with
                a Texas based joint venture partner to earn a 30% interest in certain
                prospects located in the Southern Fort Worth Basin, Texas. The Company
                must pay $597,600, of which $300,000 has been paid, and the balance
                is
                payable on October 31, 2006.




(c)
            On
                October 28, 2005, the Company entered into a Letter Agreement with
                a
                Colorado based joint venture partner to acquire a 25% working interest
                in
                three prospects located in Colorado, Wyoming and Montana. To date
                the
                Company has paid $3,455,000 in fiscal 2006 and is committed to pay
                up to
                an additional $1,400,000. The Company must pay 33.333% of the costs
                of
                drilling the first well, and 25% of the costs thereafter. In fiscal
                2006,
                the Company recognized an impairment loss of $1,017,713 related to
                an
                evaluation well located on the Colorado acreage. This impairment
                loss
                includes $33,000 in asset retirement obligations accrued which is
                the
                Company’s estimated share of the costs to abandon and reclaim this well.
                The reclamation work is not expected to occur within the next twelve
                months.




**5.**
            **Accrued
                Liabilities**




The
      components of accrued liabilities are as follows:





October
                31,
              2006
              $
            
            January
                31,
              2006
              $Interest
            
            
            1,675,393
            
            
            388,258Oil
                and gas expenditures
            
            
            134,186
            
            
            725,855Professional
                fees
            
            
            –
            
            
            33,000Total
                accrued liabilities
            
            
            1,809,579
            
            
            1,116,613


14


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**6.**
            **Convertible
                Debentures**




(a)
              On
                  June 14, 2005, the Company entered into a securities purchase agreement
                  with a single accredited investor (*the
                  “Purchase Agreement”*)
                  pursuant to which the investor purchased an 8% convertible debenture
                  with
                  a principal amount of $1,000,000, and warrants to purchase 1,000,000
                  shares of the Company’s common stock, exercisable at a price of $1.00 per
                  share until June 15, 2008. Pursuant to the Purchase Agreement,
                  the
                  investor had the right to purchase up to $5,000,000 of additional
                  convertible debentures and warrants to purchase 5,000,000 shares
                  of common
                  stock which was exercised on July 14, 2005, in exchange for an
                  8%
                  convertible debenture with a principal amount of $5,000,000 and
                  warrants
                  to purchase 5,000,000 shares of the Company’s common stock, exercisable at
                  a price of $1.00 per share until June 15,
                  2008.




The
      total
      convertible debentures of $6,000,000 are due and payable on June 10, 2007.
      The
      principal and accrued interest on these convertible debentures may be converted
      into shares of the Company’s common stock at a rate of $1.00 per share, at the
      option of the holder. The investor has contractually agreed to restrict the
      ability to convert the convertible debentures to an amount which would not
      exceed the difference between the number of shares of common stock beneficially
      owned by the holder or issuable upon exercise of the warrant held by such holder
      and 4.99% of the outstanding shares of common stock of the Company. The
      securities were issued in a private placement transaction pursuant to Regulation
      D under the Securities Act of 1933, as amended. The Company filed an SB-2
      Registration Statement registering the resale of shares of the Company's common
      stock issuable upon conversion of these convertible debentures and exercise
      of
      the warrants.




In
        accordance with EITF 98-5 *“Accounting
        for Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios”,* the
        Company recognized the value of the embedded beneficial conversion feature
        of
        $3,141,817 as additional paid-in capital and an equivalent discount which
        will
        be expensed over the term of the convertible debentures. In addition, in
        accordance with EITF 00-27 *“Application
        of Issue No. 98-5 to Certain Convertible Instruments”,* the
        Company has allocated the proceeds of issuance between the convertible debt
        and
        the detachable warrants based on their relative fair values. Accordingly,
        the
        Company recognized the fair value of the detachable warrants of $2,858,183
        as
        additional paid-in capital and an equivalent discount against the convertible
        debentures. During the year ended January 31, 2006, a principal amount of
        $900,000 was converted into 900,000 shares of common stock. The unamortized
        discount on the converted debenture $731,250 was charged to accretion expense.
        During the nine month period ended October 31, 2006, a principal amount of
        $1,900,000 was converted into 1,900,000 shares of common stock. The unamortized
        discount on the converted debentures of $1,031,250 was charged to accretion
        expense. The Company will record interest expense over the term of the remaining
        convertible debentures of $3,200,000 resulting from the difference between
        the
        stated value and carrying value at the date of issuance. To October 31, 2006,
        accrued interest of $551,386 has been included in accrued liabilities, and
        $5,000,000 has been accreted increasing the carrying value of the convertible
        debentures to $2,200,000 (net of conversions of $2,800,000). Refer to Note
        12.




On
        December 8, 2005, upon the issuance of the convertible debentures referred
        to in
        Note 6(b), the detachable warrants no longer met the requirements for equity
        classification. As such, the Company reversed the previous fair value recorded
        on the date of issuance in additional paid-in capital of $2,858,183 and recorded
        the fair value of the warrants of $31,384,800 as a derivative liability pursuant
        to SFAS 133 and EITF 00-19. The change in the fair value of the warrants
        from
        the date of issuance to December 8, 2005 of $28,526,617 was accounted for
        as an
        adjustment to stockholders’ equity. During the nine months ended October 31,
        2006, the Company recorded a gain on the change in fair value of the derivative
        liability of $15,293,400 (October 31, 2005 - $nil) and as at October 31,
        2006,
        the fair value of the derivative liability was $8,328,000 (January 31, 2006
        -
        $23,621,400).




(b)
            On
                December 8, 2005, the Company entered into a Securities Purchase
                Agreement
                with a single investor pursuant to which the investor purchased 5%
                secured
                convertible debentures in the aggregate principal amount of $15,000,000.
                The gross proceeds of this financing will be received as
                follows:




(i)
            $5,000,000
                was received on closing;




(ii)
            $5,000,000
                was received on the second business day prior to the filing date
                of the
                SB-2 Registration Statement; and




(iii)
            $5,000,000
                was received on the fifth business day following the effective date
                of the
                SB-2 Registration Statement




The
      Company agreed to pay an 8% fee on the receipt of each installment, and a
      $15,000 structuring fee. The convertible debentures mature on the third
      anniversary of the date of issue (the “Maturity Date”) and bear interest at 5%
      per annum. The Company is not required to make any payments until the Maturity
      Date. The investor may convert, at any time, any amount outstanding under the
      convertible debentures into shares of common stock of the Company at a
      conversion price per share equal to the lesser of $5.00 or 90% of the average
      of
      the three lowest daily volume weighted average prices of the common stock,
      as
      quoted by Bloomberg, LP, of the ten trading days immediately preceding the
      date
      of conversion.


15


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**6.**
              **Convertible
                  Debentures
                  (continued)**




The
        Company, at its option has the right, with three business days advance written
        notice, to redeem a portion or all amounts outstanding under these convertible
        debentures prior to the Maturity Date provided that the closing bid price
        of the
        common stock is less than $5.00 at the time of the redemption. In the event
        of
        redemption, the Company is obligated to pay an amount equal to the principal
        amount being redeemed plus a 20% redemption premium, and accrued
        interest.




In
      connection with the Purchase Agreement, the Company also entered into a
      registration rights agreement (the “Registration Rights Agreement”) providing
      for the filing of an SB-2 Registration Statement (the “Registration Statement”)
      with the U.S. Securities and Exchange Commission (“SEC”) registering the common
      stock issuable upon conversion of the convertible debentures. The Company is
      obligated to use its best efforts to cause the Registration Statement to be
      declared effective no later than June 30, 2006 and to insure that the
      Registration Statement remains in effect until all of the shares of common
      stock
      issuable upon conversion of the convertible debentures have been sold. In the
      event of a default of its obligations under the Registration Rights Agreement,
      including its agreement to file the Registration Statement with the SEC no
      later
      than January 22, 2006, or if the Registration Statement is not declared
      effective by June 30, 2006, it is required pay to the investor, as liquidated
      damages, for each month that the Registration Statement has not been filed
      or
      declared effective, as the case may be, either a cash amount or shares of common
      stock equal to 2% of the liquidated value of the convertible debentures. The
      Company filed an SB-2 Registration Statement on January 18, 2006.




The
      investor has agreed to restrict its ability to convert the convertible
      debentures and receive shares of the Company’s common stock such that the number
      of shares of common stock held by the investor in the aggregate and its
      affiliates after such conversion or exercise does not exceed 4.9% of the then
      issued and outstanding shares of the Company’s common stock.




In
      connection with the Securities Purchase Agreement, the Company and each of
      its
      subsidiaries executed security agreements (the “Security Agreements”) in favor
      of the investor granting them a first priority security interest in all of
      the
      Company’s goods, inventory, contractual rights and general intangibles,
      receivables, documents, instruments, chattel paper, and intellectual property.
      The Security Agreements state that if an event of default occurs under the
      convertible debentures or Security Agreements, the investor has the right to
      take possession of the collateral, to operate the Company’s business using the
      collateral, and have the right to assign, sell, lease or otherwise dispose
      of
      and deliver all or any part of the collateral, at public or private sale or
      otherwise to satisfy the Company’s obligations under these
      agreements.




The
        Company classified the conversion features as derivative liabilities pursuant
        to
        SFAS 133 and EITF 00-19. As such, the Company recorded derivative liabilities
        (Refer to Notes 7 and 13) related to the convertible debentures equal to
        the
        fair values of the conversion feature of $10,151,918 and an equivalent discount
        on the debentures of $10,151,918. The carrying value of the convertible
        debentures will be accreted to the face value of $15,000,000 to maturity.
        To
        October 31, 2006, accrued interest of $519,897 has been included in accrued
        liabilities and $2,695,357 has been accreted increasing the carrying value
        of
        the convertible debentures to $7,043,439 (net of conversions of $500,000).
        During the nine month period ended October 31, 2006, the principal amount
        of
        $500,000 was converted into 257,851 shares of common stock. During the nine
        months ended October 31, 2006, the Company recorded a loss on the change
        in fair
        value of the derivative liability of $283,525 (October 31, 2005 - $nil),
        recognized a derivative liability of $2,734,579 related to the third $5,000,000
        convertible debenture installment issued June 1, 2006 and as at October 31,
        2006, the fair value of the derivative liability was $7,900,704 (January
        31,
        2006 - $4,882,606).




(c)
            On
                December 28, 2005, the Company entered into a Securities Purchase
                Agreement with two accredited investors providing for the sale by
                the
                Company to the investors of 7.5% convertible debentures in the aggregate
                principal amount of $10,000,000 of which $5,000,000 was advanced
                immediately and 1,250,000 warrants (the “Warrants”) to purchase 1,250,000
                shares of the Company’s common stock, exercisable at a price of $5.00 per
                share until December 28, 2006, of which 625,000 were issued. The
                second
                instalment of $5,000,000 and 625,000 warrants was advanced on January
                18,
                2006, upon the filing of an SB-2 Registration Statement by the Company
                with the SEC.




The
      convertible debentures mature on the third anniversary of the date of issuance
      (the “Maturity Date”) and bear interest at the annual rate of 7.5%. The Company
      is not required to make any payments until the Maturity Date. The investors
      may
      convert, at any time, any amount outstanding under the convertible debentures
      into shares of common stock of the Company at a conversion price per share
      of
      $4.00.




In
        connection with the Securities Purchase Agreement, the Company also entered
        into
        a registration rights agreement (the “Registration Rights Agreement”) providing
        for the filing of a registration statement (the “Registration Statement”) with
        the SEC registering the common stock issuable upon conversion of the convertible
        debentures and Warrants. The Company is obligated to use its best efforts
        to
        cause the Registration Statement to be declared effective no later than May
        28,
        2006 and to insure that the registration statement remains in effect until
        all
        of the shares of common stock issuable upon conversion of the convertible
        debentures have been sold. In the event of a default of its obligations under
        the Registration Rights Agreement, including its agreement to file the
        Registration Statement with the SEC no later than February 26, 2006, or if
        the
        Registration Statement is not


16


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**6.**
            **Convertible
                Debentures (continued)**




declared
        effective by June 30, 2006, the Company is required pay to the investors,
        as liquidated damages, for each month that the Registration Statement has
        not
        been filed or declared effective, as the case may be, a cash amount equal
        to 1%
        of the liquidated value of the convertible debentures. The Company filed
        an SB-2
        Registration Statement on January 18, 2006.




Each
        investor has agreed to restrict its ability to convert the convertible
        debentures or exercise the Warrants and receive shares of the Company’s common
        stock such that the number of shares of common stock held by them in the
        aggregate and their affiliates after such conversion or exercise does not
        exceed
        4.99% of the then issued and outstanding shares of the Company’s common
        stock.




In
        accordance with SFAS 133 and EITF 00-19 *,* the
        Company recognized the fair value of the warrants of $3,261,250 as a derivative
        liability (Refer to Notes 7 and 13) and an equivalent discount on the
        debentures. Also, the Company recorded the residual value of the embedded
        beneficial conversion feature of $6,738,750 as additional paid-in capital
        and an
        equivalent discount on the debentures. The carrying value of the convertible
        debentures will be accreted to the face value of $10,000,000 to maturity.
        To
        October 31, 2006, accrued interest of $604,110 has been included in accrued
        liabilities, and $2,776,267 has been accreted increasing the carrying value
        of
        the convertible debentures to $2,776,267. During the nine months ended October
        31, 2006, the Company recorded a gain on the change in fair value of the
        derivative liability of $1,714,375 (October 31, 2005 - $nil) and as at October
        31, 2006, the fair value of the derivative liability was $875 (January 31,
        2006
        - $1,715,250).




**7.**
              **Derivative
                  Liabilities**




The
        Company evaluated the application of SFAS 133 and EITF 00-19 for the convertible
        debentures and related detachable warrants issued to investors as outlined
        in
        Note 6. SFAS 133 and EITF 00-19 require the Company to bifurcate and separately
        account for some conversion features of convertible debentures as embedded
        derivatives. They also require that when detachable warrants meet certain
        requirements that they need to be recorded as derivative liabilities. The
        Company concluded that the conversion features of the December 8, 2005 debenture
        issuance and all warrants outstanding on that date and subsequently issued
        were
        required to be accounted for as derivatives. Pursuant to SFAS 133, the Company
        bifurcated the conversion feature from the December 8, 2005 debentures because
        the economic characteristics and risks of the conversion features were
        determined to not be clearly and closely related to the economic characteristics
        and risks of the debentures, and the number of shares issuable pursuant to
        the
        conversion features was variable. As such, the Company determined that the
        conversion features related to the December 8, 2005 debentures and all
        outstanding warrants met the attributes of a liability and therefore recorded
        their fair values as current liabilities. The Company is required to record
        their fair value on each balance sheet date at fair value with changes in
        the
        values of these derivatives reflected in the statement of operations. Also,
        these derivative liabilities were not previously classified as such in the
        Company's historical financial statements. In order to reflect these changes,
        the Company has restated its financial statements for the period ended October
        31, 2006 as described in Note 13.




The
        Company uses the Black-Scholes valuation model to calculate the fair value
        of
        derivative liabilities. The following table shows the assumptions used in
        the
        calculation of the call value for the conversion features as at October 31,
        2006.




Volatility
              
              Risk
                  Free
                Rate
              
              Dividend
                Yield
              
              Term
                  in
                YearsWeighted
                  Average Assumptions at:October
                  31, 2006
              
              
              71
              %
              
              4.68
              %
              
              –
              
              
              2.31




The
        following table shows the assumptions used in the Black-Scholes calculation
        of
        the detachable warrants as at October 31, 2006.




Volatility
              
              Risk
                  Free
                Rate
              
              Dividend
                Yield
              
              Term
                  in
                YearsAt
                  Issuance Date for:Weighted
                  Average Assumptions at:October
                  31, 2006
              
              
              71
              %
              
              5.01
              %
              
              –
              
              
              1.37




During
        the nine month period ended October 31, 2006, the Company recorded a gain
        on
        derivatives of $16,724,250 equal to the difference in the fair value of the
        derivatives at January 31, 2006 and October 31, 2006, adjusted for the June
        1,
        2006 debenture derivatives fair value at issuance.


17





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**8.**
              **Related
                  Party Transactions**




a)
              The
                  Company paid the former Secretary of the Company $18,000 during
                  the nine
                  month period ended October 31, 2005 for consulting services provided.
                  Previously, the former Secretary provided consulting services to
                  the
                  Company valued at $250 per month. No amounts were recognized for
                  donated
                  services for the nine month period ended October 31,
                  2006.




b)
            During
                the nine month period ended October 31, 2006, the Company incurred
                $30,000
                in director’s fees.




c)
            Effective
                September 1, 2005, the Company agreed to pay $10,700 per month for
                management services provided by the President of the Company. This
                agreement was terminated January 31, 2006, and effective February
                1, 2006,
                the Company agreed to pay a salary of Cdn$12,000 per month to the
                President of the Company. During the nine month period ended October
                31,
                2006, $95,680 (Cdn$108,000) was charged to operations.




d)
            On
                June 23, 2005, the Company entered into a management consulting agreement
                with the President of the Company’s subsidiary. Under the terms of the
                agreement, the Company must pay $20,000 per month for an initial
                term of
                two years, and, unless notice of termination is given by either party,
                is
                automatically renewed for one year periods. During the nine month
                period
                ended October 31, 2006, $180,000 was charged to operations.




e)
            On
                November 14, 2005, the Company entered into a management consulting
                agreement with the Chief Financial Officer of the Company. Under
                the terms
                of the agreement, the Company must pay $10,000 per month, as well
                as an
                annual bonus based upon mutually agreed upon targets. This agreement
                terminated December 31, 2005, and effective January 1, 2006, the
                Company
                agreed to pay a salary of $12,000 Cdn per month to the Chief Financial
                Officer. During the nine month period ended October 31, 2006, $108,000
                Cdn
                was charged to operations.




f)
            As
                at October 31, 2006, the Company was indebted to the President of
                the
                Company in the amount of $3,536 (January 31, 2006 - $1,397). This
                amount
                is for reimbursable business expenses incurred on behalf of the
                Company.





**9.**
              **Common
                  Stock**





During
        the nine months ended October 31, 2006




(a)
            In
                October 2006, the Company issued 129,012 shares of common stock upon
                the
                conversion of convertible debentures with a principal amount of $250,000
                during the nine month period ended October 31, 2006.




(b)
            In
                October 2006, the Company issued 600,000 shares of common stock upon
                the
                conversion of convertible debentures with a principal amount of
                $600,000.




(c)
            In
                September 2006, the Company issued 128,839 shares of common stock
                upon the
                conversion of convertible debentures with a principal amount of
                $250,000.




(d)
            In
                August 2006, the Company issued 400,000 shares of common stock upon
                the
                conversion of convertible debentures with a principal amount of
                $400,000.




(e)
            On
                June 1, 2006, the Company issued 200,000 shares of common stock upon
                the
                conversion of convertible debentures with a principal amount of
                $200,000.




(f)
            In
                March 2006, the Company issued 700,000 shares of common stock upon
                the
                conversion of convertible debentures with a principal amount of
                $700,000.


18


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**10.**
              **Share
                  Purchase Warrants**




As
      at
      October 31, 2006, the following share purchase warrants were
      outstanding:





Number
                of
              Warrants
            
            Exercise
                Price
            
            Expiry
                Date6,000,000
            
            $
            1.00
            
            
            June
                15, 2008625,000
            
            $
            5.00
            
            
            December
                28, 2006625,000
            
            $
            5.00
            
            
            January
                23, 20077,250,000




**11.**
              **Commitment**




On
      July
      19, 2005, the Company entered into a lease agreement commencing October 1,
      2005
      for office premises for a four year term expiring September 30, 2009. Annual
      rent is payable at $32,972 (Cdn$36,816) for the first two years and $34,663
      (Cdn$38,704) for the remaining two years. The Company must also pay its share
      of
      occupancy costs, currently at an annual rate of $18,042 (Cdn$20,145). During
      the
      nine month period ended October 31, 2006, the Company paid rent expense of
      $39,680. Future minimum lease payments over the next five fiscal years are
      as
      follows:





2007
            
            $
            51,0002008
            
            $
            51,0002009
            
            $
            53,0002010
            
            $
            35,000$
            190,000





**12.**
              **Subsequent
                  Events**




a)
            On
                November 1, 2006, the Company entered into a consulting agreement
                with a
                consulting firm that will provide market management services through
                December 2006, in consideration for $250,000. The Company has the
                option
                to retain the consulting firm for an additional five months of consulting
                services for a further $250,000.




b)
              Subsequent
                  to October 31, 2006, the Company received notices of conversion
                  to issue
                  875,481 shares of common stock upon the conversion of a convertible
                  debenture with a principal amount of
                  $1,200,000.




**13.**
              **Restatement**




The
        Company has restated its consolidated financial statements for the fiscal
        period
        ended October 31, 2006 to reflect additional non-operating gains and losses
        related to the classification of and accounting for convertible debentures
        issued in fiscal 2006. The Company had previously recorded a beneficial
        conversion feature, measured using the intrinsic value method, and detachable
        warrants, measured using the Black-Scholes fair value method, and recorded
        them
        to additional paid in capital on a relative fair value basis. Upon further
        review, the Company has determined that the conversion features of the
        convertible debentures issued pursuant to the December 8, 2005 Security Purchase
        Agreement (refer to Note 6(b)) and the warrants issued pursuant to the June
        14,
        2005 and December 28, 2005 Securities Purchase Agreements (refer to Notes
        6(a)
        and (c) respectively) should have been classified as derivative liabilities
        pursuant to SFAS No. 133 and EITF No. 00-19. In addition, the Company has
        revised the fair value of the conversion features recorded with the convertible
        debentures issued pursuant to the December 28, 2005 Securities Purchase
        Agreement. The accounting treatment of derivative financial instruments requires
        that the Company record the derivatives at their fair values as of the inception
        date and at their fair values as of each subsequent balance sheet date. At
        the
        date of the conversion of each respective instrument or portion thereof,
        the
        corresponding derivative liability will be reclassified as
        equity.


19


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)





**13.**
              **Restatement
                  (continued)**




The
        accompanying consolidated financial statements for the period ended October
        31,
        2006 have been restated to effect the changes described above as
        follows:


October 31, 2006
                  As Reported
                  $
                
                Adjustment
                  $
                
                October 31, 2006
                  As Restated
                  $Consolidated
                    Balance SheetCurrent
                    LiabilitiesDerivative
                    liabilities
                
                
                –
                
                
                2,734,579
                (a)(16,724,250
                )(b)30,219,250
                (d)
                
                16,299,579Long-Term
                    LiabilitiesConvertible
                    Debentures
                
                
                17,436,706
                
                
                (2,594,635
                )(a)1,793,612
                (c)(4,615,977
                )(d)
                
                12,019,706Stockholders’
                    DeficitAdditional
                    Paid-In Capital
                
                
                32,261,014
                
                
                (139,944
                )(a)(19,984,369
                )(d)
                
                12,136,701Deficit
                    Accumulated During the Development Stage
                
                
                (22,463,580
                )
                
                16,724,250
                )(b)(1,793,612
                )(c)(5,618,904
                )(d)
                
                (13,151,846
                )




(a)
              To
                  record fair values of derivative liabilities upon issuance of convertible
                  debentures and reduction of additional paid-in capital for the
                  reversal of
                  the intrinsic value of the beneficial conversion
                  feature.




(b) To
        record
        change in fair values of derivative liabilities.




(c) To
        record
        effect of fair value of conversion features and detachable warrants on
        accretion.




(d) To
        record
        cumulative effect of prior period restatements.




Three Months Ended
                  October 31, 2006
                  As Reported
                  $
                
                Adjustment
                  $
                
                Three Months Ended
                  October 31, 2006
                  As Restated
                  $Consolidated
                    Statement of OperationsAccretion
                    of discounts on convertible debentures
                
                
                (1,918,279
                )
                
                (848,049
                )(a)
                
                (2,766,328
                )Unrealized
                    gain on fair value of derivatives
                
                
                –
                
                
                7,147,301
                (b)
                
                7,147,301Net
                    income (loss) for the period
                
                
                (5,011,252
                )
                
                (848,049
                )(a)7,147,301
                (b)
                
                1,288,000Net
                    Income (Loss) Per Share-Basic
                
                
                (0.24
                )
                
                
                
                
                0.06-Diluted
                
                
                (0.24
                )
                
                
                
                
                0.05




(a) To
        record
        effect of fair value of conversion features and detachable warrants on
        accretion.




(b) To
        record
        gain on derivatives based upon fair values as at October 31,
        2006.


20


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


(Expressed
      in U.S. dollars, except as noted)


(unaudited)




**13.
        Restatement (continued)**




Nine Months Ended
                October 31, 2006
                As Reported
                $
              
              Adjustment
                $
              
              Nine Months Ended
                October 31, 2006
                As Restated
                $Consolidated
                  Statement of OperationsAccretion
                  of discounts on convertible debentures
              
              
              (5,670,347
              )
              
              (1,793,612
              )(a)
              
              (7,463,959
              )Unrealized
                  gain on fair value of derivatives
              
              
              –
              
              
              16,724,250
              (b)
              
              16,724,250Net
                  income (loss) for the period
              
              
              (14,171,141
              )
              
              (1,793,612
              )(a)16,724,250
              (b)
              
              759,497Net
                  Income (Loss) Per Share-Basic
              
              
              (0.70
              )
              
              
              
              
              0.04-Diluted
              
              
              (0.70
              )
              
              
              
              
              0.03




(a) To
        record
        effect of fair value of conversion features and detachable warrants on
        accretion.




(b) To
        record
        gain on derivatives based upon fair values as at October 31,
        2006.


Accumulated from
                  December 11, 2003
                  (Date of Inception) to
                  October 31, 2006
                  As Reported
                  $
                
                Adjustment
                  $
                
                Accumulated from
                  December 11, 2003
                  (Date of Inception) to
                  October 31, 2006
                  As Restated
                  $Consolidated
                    Statement of OperationsAccretion
                    of discounts on convertible debentures
                
                
                (8,433,763
                )
                
                (1,793,612
                )(a)(244,249
                )(c)
                
                (10,741,624
                )Unrealized
                    gain (loss) on fair value of derivatives
                
                
                –
                
                
                16,724,250
                (b)11,844,139
                (c)
                
                28,568,389Net
                    income (loss) for the period
                
                
                (22,463,580
                )
                
                (1,793,612
                )
                    (a)16,724,250
                (b)11,590,890
                (c)
                
                4,066,948




(a) To
        record
        effect of fair value of conversion features and detachable warrants on
        accretion.




(b) To
        record
        gain on derivatives based upon fair values as at October 31,
        2006.




(c) To
        record
        cumulative effect of prior period restatements.




Adjustments
        related to the accounting for the convertible debentures and derivative
        liabilities for the period ended October 31, 2006 did not have an effect
        on the
        Consolidated Statements of Cash Flows. Although some line items within the
        net
        cash used in operating activities changed, the net cash used
        in operating activities did not change.


21




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





The
      following discussion contains forward-looking statements that are subject to
      significant risks and uncertainties about us, our current and planned projects,
      our current and proposed marketing and sales, and our projected results of
      operations. There are several important factors that could cause actual results
      to differ materially from historical results and percentages and results
      anticipated by the forward-looking statements. The Company has sought to
      identify the most significant risks to its business, but cannot predict whether
      or to what extent any of such risks may be realized nor can there be any
      assurance that the Company has identified all possible risks that might arise.
      Investors should carefully consider all of such risks before making an
      investment decision with respect to the Company's stock. The following
      discussion and analysis should be read in conjunction with the financial
      statements of the Company and notes thereto. This discussion should not be
      construed to imply that the results discussed herein will necessarily continue
      into the future, or that any conclusion reached herein will necessarily be
      indicative of actual operating results in the future. Such discussion represents
      only the best present assessment from our Management.




**Overview**





Prior
      to
      May 2005, we were known as Peloton Resources Inc., a mining exploration company.
      Peloton was actively searching for ore bodies containing gold in British
      Columbia. A consultant was hired to assess the economic viability of exploring
      for and developing gold reserves on Peloton’s properties. Based upon his report,
      Peloton decided to abandon all mining activities and to commence shifting
      towards an oil and gas exploration company. In connection with the shift in
      operational focus, we changed our name to Triangle Petroleum
      Corporation.





The
      changeover from a mining to an oil and gas exploration company has taken place
      over the eighteen months, during one of the strongest bull markets for oil
      and
      natural gas. The average monthly price for West Texas Intermediate (WTI) crude
      oil and natural gas (Henry Hub Nymex), currently, as compared to the prior
      year,
      is as follows:





Oil Price


22





Gas Price





Although
      these strong commodity prices have resulted in extremely competitive conditions
      for the supply of products and services for exploration companies, our outlook
      remains positive. Despite these strong fundamentals, it should be noted that
      short term fluctuations in North American natural gas prices will occur based
      upon seasonal weather patterns and gas storage levels.




**Plan
      of Operations**





Since
      our
      inception, Triangle Petroleum has had the opportunity to screen various projects
      in a variety of geographic locations with numerous potential joint venture
      partners. The project areas outlined below were carefully selected based on
      our
      belief in balancing overall project risk against potential project returns
      and
      the time horizons required to achieve such returns. These four project areas
      represent unique exploration opportunities. In conjunction with our joint
      venture partners, we intend to execute our operating plan in order to realize
      the full value of the initial land base that has been established.





**Greater
      Fort Worth Basin Texas - Barnett Shale Program**





We
      believe that a major shift is unfolding in the recognition and commercialization
      of unconventional gas reservoirs. Specifically, commercial shale gas production
      in the United States is emerging as a cornerstone of the overall North American
      gas supply. In October of 2005, we successfully initiated a business
      relationship with a focused shale gas company, Kerogen Resources Inc.
      (“Kerogen”) of Houston, Texas. The principals of Kerogen and Ron Hietala, a
      director and officer of ours, have a long history of working together and
      developing new opportunities. We believe that the Kerogen team has a well
      established track record in shale gas and unconventional reservoir development.





We
      have
      acquired a 30% working interest position in a five county joint venture program
      with Kerogen. The five counties are located in the South Fort Worth Basin and
      include Johnson, Hood, Hill, Sommerville and Bosque. To date, approximately
      13,000 gross acres have been leased. One new ten square mile 3-D seismic survey
      has been shot over an acreage tract in Hill County. A suitable drilling location
      is currently being reviewed along with pooling strategies to include other
      companies in the area. As of October 31, 2006, we have expended approximately
      $2.2 million in prospect fees, land costs and, geological and geophysical
      expenditures.





We
      have
      participated in four lower working interest (approximately 6%) horizontal wells
      (One in Johnson County and three in Hill County). The four wells which are
      all
      currently producing had initial gross production rates of between 400 mcf/day
      (million cubic feet per day) and 2,800 mcf/day. These initial production rates
      should stabilize at lower levels over the next six to twelve months. We have
      spent approximately $627,000 on drilling and completing these four wells. The
      Kerogen joint venture plans further drilling over the next three to six months
      which will be a combination of traditional Barnett programs and new
      opportunities which have been identified by recent industry drilling and the
      proprietary 3-D seismic acquired by the joint venture.


23


In
      addition to the Kerogen joint venture, we plan to expand our presence in the
      Barnett through additional drilling participations in established areas of
      production. A key goal for us is to increase our initial production base by
      identifying acreage tracts that can be acquired with near-term drilling
      commitments and also to pursue drilling opportunities that result from leases
      nearing their expiry period. Our plan is to participate in at least 10 new
      Barnett Shale wells over the next twelve months, subject to raising additional
      funds.





The
      key
      considerations in the established areas of the Barnett are related primarily
      to
      operational and engineering issues **** (completion
      methods, production infrastructure, etc). **** Unless
      there is strong technical evidence of a possible major undeveloped area, we
      are
      planning on investing only in the established production areas in the Barnett.
      A
      particular focus will be given to selecting projects that have short pipeline
      connection timeframes. The working interests achieved in these new projects
      will
      vary depending on the acreage tracts available and the business risks attributed
      to each project.





**Arkoma
      Basin Arkansas – Fayetteville Shale Program**





We
      have
      committed to an initial $16 million joint venture in the Fayetteville Shale
      of
      the Arkoma Basin with Kerogen Resources. We believe that this area has the
      ability to deliver similar results to the trend setting Barnett Shale of the
      Fort Worth Basin. We and Kerogen have an equal 50% working interest position
      in
      approximately 17,000 gross acres leased to date in Conway and Faulkner Counties.
      A measured pace of additional leasing is planned to complement the 2007 drilling
      program. Based upon strong initial drilling results from major oil and gas
      companies just north of our land position, we believe that the Fayetteville
      Shale program has the potential to be a major growth initiative. As at October
      31, 2006, we had advanced approximately $6.8 million to fund our share of land
      costs incurred to date. The remaining capital commitment of $9.2 million is
      expected to be incurred within the next 12 to 18 months and will be used to
      fund
      $2.8 million of seismic expenditures and $6.4 million of drilling
      costs.





The
      first
      test well of the Fayetteville joint venture has commenced drilling through
      an
      acreage pooling arrangement with another area operator. Concurrent with the
      first drilling operation, a new multi-component 3-D seismic survey is in the
      planning and permitting phase. The seismic acquisition phase is expected to
      commence by the end of this year. A second 3-D seismic survey, on another
      acreage block, should be initiated during the first part of 2007. Once the
      seismic program has been completed and interpreted, we plan on drilling at
      least
      four wells on our existing acreage block. The first two wells will be vertical
      test wells in order to gather additional sub-surface data, whereas the second
      two wells will be horizontal wells used to establish the commercial productivity
      of the project.





The
      experience gained on the initial test wells will guide the drilling and
      completions planned for the overall 2007 drilling program. We recognize that
      there will be unique formation properties that require well by well analysis
      to
      determine the optimum horizontal well planning and fracture stimulation
      programs.





Our
      strategy is to establish commercial production from the Fayetteville in the
      joint venture controlled areas that will be capable of accessing current and
      expanded pipeline connectivity. Expectations are to participate in the drilling
      of between five and ten wells during the next twelve months. Working interests
      will vary for the joint venture as a combination of pooled and 100% joint
      venture lands will be drilled. The key business issues associated with the
      Fayetteville include optimizing drilling and completion costs in the area as
      the
      service industry matures along with assessing the optimum multi-stage
      stimulation programs in the horizontal wells.





One
      of
      our longer term objectives is to capitalize on the technical and business
      experience gained in the United States by selecting the most favorable shale
      gas
      areas in Canada and establishing an early land position in those
      areas.


24




**States
      of Colorado, Montana and Wyoming - Rocky Mountain Program**





The
      Rocky
      Mountain region of the Western United States presents opportunities that bear
      many of the positive attributes of the Alberta Deep Basin. The Rocky Mountain
      core area strategy for us has been to identify higher-risk, large **** growth
      potential projects that have low to moderate acreage costs which can also be
      readily leased.





We
      have
      embarked on a joint venture with Hunter Energy LLC (“Hunter”) of Denver,
      Colorado. Hunter has developed an extensive project inventory based on an
      analysis of each of the Western United States’ sub-basins, and the team of
      geo-scientists and engineering specialists has selected those which demonstrate
      key indicators for major new hydrocarbon accumulations. In turn, we have made
      an
      initial commitment to participate in the drilling of three new projects, each
      of
      which are anticipated to require multiple wells to evaluate the acreage
      positions currently held by the joint venture.





We
      have a
      25% working interest in the three new Hunter Energy projects. The project areas
      are geographically located in north-western Colorado, south-western Wyoming,
      and
      northern Montana. The gross acreage position in the three areas is approximately
      77,000 acres. We have advanced approximately $2.4 million dollars in land and
      prospect fees relating to this project.





An
      initial exploration test well was drilled on the north-western Colorado project
      at a cost of approximately $1.2 million net to us. Production was not
      established from this first well. Plans for the north-west Colorado project
      include working with area operators to continue the exploration program, which
      we believe should be very active. Drilling on the south west Wyoming project
      and
      the Montana project are anticipated to commence in the first half of 2007 with
      consideration being given to service industry equipment availability and
      prevailing short-term winter weather conditions. It is anticipated that our
      share of costs to drill these two wells will be approximately $1.6
      million.





The
      re-evaluation of the Rocky Mountain basins has identified significant
      opportunities which were not the prime targets at the time of previous and
      deeper drilling by the industry. The predominant issues associated with the
      shallower Rocky Mountain project areas are reservoir permeability and the
      occurrence of local fresh waters being present.





**Alberta
      Canada Deep Basin - Western Canadian Program**





As
      a
      direct result of our experienced Deep Basin team, our first exploration program
      was in this area. The Alberta Deep Basin is a long-term gas exploitation area
      located primarily in northwestern Alberta. Some of the early wells drilled
      by
      Canadian Hunter resulted in very prolific wells during the 1970’s and 1980’s.
      Since then, over 6 TCF (Trillion Cubic Feet) of gas has been produced by the
      key
      industry producers in this Basin.





There
      are
      three new conditions which should generate new production for companies
      committed to a long-term strategy in the Deep Basin. The first significant
      development is the co-mingling of gas from a variety of the possible seventeen
      separate geologic horizons in the Deep Basin. The co-mingling of these multiple
      productive zones greatly improves the economics of a project. The second
      significant development is the downspacing from one well per section (640 acres)
      down to four wells per section which provides a more efficient recovery of
      the
      resources. The third significant development is the availability of extensive
      3-D seismic data covering multiple townships of the Deep Basin. We have licensed
      a 120 square mile seismic data set, at a cost of approximately $1.3 million,
      to
      assist in the generation of the most prospective drilling sites.





Two
      controlling factors that influence the development of new drilling locations
      are
      land availability and increasing costs of placing a well on production. Access
      to land has improved and completion costs appear to have peaked. To date, we
      have access to thirty-one sections of land (approximately 20,000 gross acres),
      which are in various stages of earning with a number of joint venture
      partners.





We
      have
      participated in drilling and/or completing six Deep Basin wells at a total
      cost
      of approximately $2.7 million net to us. In addition, one well is currently
      drilling. Of the six wells, three are waiting on completion, two wells tested
      gas at rates lower than economic for pipeline connections and one well tested
      fresh water. The well currently being drilled is the first location to combine
      both shallow and deep exploration targets. Our operating subsidiary Elmworth
      Energy Corporation has a 20% working interest in this well and has advanced
      $417,000 to a joint venture partner to fund its share of the anticipated
      drilling costs for this well.


25


Our
      strategy is to participate in drilling opportunities at a working interest
      of
      between 20% and 35%. The multi-horizon Deep Basin area provides improved
      financial returns to companies that plan, and execute, multi-well programs
      which
      reduce geologic risk and individual well costs. We currently have a strong
      inventory of drilling locations and the focus will be to appropriately access
      the land and create a multi-well program.





**Results
      of Operations**





For
      the
      nine months ended October 31, 2006, we realized $24,540 in revenue from natural
      gas sales, as compared to $nil for the comparable period in 2005. This revenue
      was the result of our realizing initial production from four small working
      interest wells located in the Barnett Shale in Texas that began producing in
      early August.





General
      and administrative expenses for the three and nine months ended October 31,
      2006
      totaled $1,643,942 and $6,258,066 respectively. Included in these amounts were
      $1,108,336 and $4,670,481 of stock based compensation expense for three and
      nine
      months ended October 31, 2006 respectively. Also included in the above total
      were salaries, wages and consulting fees of $166,627 and $691,385 for the three
      and nine months ended October 31, 2006. The remaining $368,979 and $896,200
      of
      general and administrative expenses for the three and nine months ended October
      31, 2006, respectively, is comprised of travel and other office related
      expenses. **** For
      the
      three and nine month periods ended October 31, 2005, general and administrative
      expenses totaled $1,643,942 and $1,742,392 respectively. The majority of the
      total general and administrative expenses for the three and nine months ended
      October 31, 2005 relates to stock based compensation expense. For the three
      and
      nine months ended October 31, 2005 stock based compensation totaled $1,278,031
      and $1,371,156 respectively. The remaining $365,911 and $371,236 for the three
      and nine months ended October 31, 2005 relate to consulting fees and general
      office expenses. General and administrative expenses have increased
      significantly from the corresponding periods in the prior year primarily due
      to
      increased stock based compensation expense but also due to an increase in the
      size and scope of the our activities. Our shift to oil and gas exploration
      from
      mining has necessitated the an increase in staffing levels as well as an
      increase travel and other administrative expenses in order to properly oversee
      our geographically diverse operations.





During
      the three and nine months ended October 31, 2006 we recognized $1,041,852 and
      $1,086,789 respectively of impairment on our oil and gas properties. This
      impairment relates primarily to our 38.5% working interest in a well located
      in
      the Deep Basin of Alberta which failed to produce economic quantities of natural
      gas. We recognized no impairment expense during the comparable periods in
      2005.





**Liquidity
      and Capital Resources**





As
        at
        October 31, 2006, we had a working capital deficit of $9,120,381, resulting
        primarily from a non-cash deriviative liability of $16,229,579 offset by
        our
        cash and cash equivalents of $9,635,959. For the nine months ended October
        31,
        2006, we had net cash outflow from operating activities of $1,115,777. Cash
        used
        in investing activities totaled $11,217,686 for the nine months ended October
        31, 2006, of which $6,809,319 was used to fund Triangle USA’s share of costs
        relating to the land acquisition portion of the Fayetteville Shale Project
        in
        the Arkoma Basin. Another $1,040,595 was used to fund Elmworth’s share of
        drilling and completion costs for two Deep Basin wells and the remainder
        was
        deployed in the Barnett Shale Project, Rocky Mountain region and Alberta
        Deep
        Basin to fund various land, geological and geophysical expenditures as drilling
        costs. Cash provided by financing activities totaled $4,575,000 for the nine
        months ended October 31, 2006. On June 1, 2006 we received the final $5 million
        installment relating to the December 8, 2005 Secured Convertible Debenture
        Financing ** detailed
        below. The receipt of this final installment will provide us with the liquidity
        to fully execute our fiscal 2007 budget.





We
      expect
      significant capital expenditures during the next 12 months for seismic data
      acquisitions, land and drilling rights acquisitions, drilling programs, overhead
      and working capital purposes. We have sufficient funds to conduct our operations
      for the next few months, but not for the next 12 months, we will therefore
      be
      required to seek additional financing very shortly. There can be no assurance
      that additional financing will be available in amounts or on terms acceptable
      to
      us, if at all.


26





By
      adjusting our operations to the level of capitalization, we believe we have
      sufficient capital resources to meet projected cash flow deficits. However,
      if
      during that period or thereafter, we are not successful in generating sufficient
      liquidity from operations or in raising sufficient capital resources, on terms
      acceptable to us, this could have a material adverse effect on our business,
      results of operations liquidity and financial condition.





We
      presently do not have any available credit, bank financing or other external
      sources of liquidity. Due to our brief history and historical operating losses,
      our operations have not been a source of liquidity. We will need to obtain
      additional capital in order to expand operations and become profitable. In
      order
      to obtain capital, we may need to sell additional shares of our common stock
      or
      borrow funds from private lenders. There can be no assurance that we will be
      successful in obtaining additional funding.





We
      will
      still need additional investments in order to continue operations until we
      are
      able to achieve positive operating cash flow. Additional investments are being
      sought, but we cannot guarantee that we will be able to obtain such investments.
      Financing transactions may include the issuance of equity or debt securities,
      obtaining credit facilities, or other financing mechanisms. However, the trading
      price of our common stock and a downturn in the U.S. stock and debt markets
      could make it more difficult to obtain financing through the issuance of equity
      or debt securities. Even if we are able to raise the funds required, it is
      possible that we could incur unexpected costs and expenses, fail to collect
      significant amounts owed to us, or experience unexpected cash requirements
      that
      would force us to seek alternative financing. Further, if we issue additional
      equity or debt securities, stockholders may experience additional dilution
      or
      the new equity securities may have rights, preferences or privileges senior
      to
      those of existing holders of our common stock. If additional financing is not
      available or is not available on acceptable terms, we will have to curtail
      our
      operations.





To
      date,
      we have generated minimal revenues and have incurred operating losses in every
      quarter. Our registered independent auditors have stated in their report dated
      April 10, 2006, that we are an early exploration company and have not generated
      revenues from operations. These factors among others may raise substantial
      doubt
      about our ability to continue as a going concern.





***June
      14, 2005 Convertible Debenture Financing***





On
        June
        14, 2005, to obtain funding for our ongoing operations, we entered into a
        securities purchase agreement with a single accredited investor pursuant
        to
        which the investor purchased an 8% convertible debenture with a principal
        amount
        of $1,000,000, and a warrant to purchase 1,000,000 shares of our common stock,
        exercisable at a price of $1.00 per share until June 15, 2008. Pursuant to
        the
        securities purchase agreement, the investor had the right during the next
        60
        days, but not the obligation, to purchase up to $5,000,000 of additional
        convertible debentures and warrants to purchase 5,000,000 shares of common
        stock. The investor exercised the purchase right and invested the additional
        $5,000,000 on July 14, 2005, in exchange for an 8% convertible debenture
        with a
        principal amount of $5,000,000 and a warrant to purchase 5,000,000 shares
        of our
        common stock, exercisable at a price of $1.00 per share until June 15, 2008.
        Accordingly, we have received a total of $6,000,000 pursuant to the securities
        purchase agreement and issued 6,000,000 warrants. As of October 31, 2006,
        all of
        the warrants remained outstanding and were marked to market with a fair value
        of
        $8,328,000 (January 31, 2006 - $23,621,400), which was recorded as a non-cash
        derivative liability on the balance sheet under current liabilities .





The
        convertible debenture is due and payable on June 10, 2007. The principal
        and
        accrued interest on the convertible debenture may be converted into shares
        of
        our common stock at a rate of $1.00 per share, at the option of the holder.
        The
        investor has contractually agreed to restrict its ability to convert or exercise
        its warrants and receive shares of our common stock such that the number
        of
        shares of common stock held by it and its affiliates after such conversion
        or
        exercise does not exceed 4.99% of the then issued and outstanding shares
        of our
        common stock. As of December 11, 2006, $2,750,000 of the issued debentures
        were
        outstanding and $3,250,000 had been converted. As of October 31, 2006,
        $3,200,000 (January 31, 2006 - $5,100,000) of the issued debentures were
        outstanding and $2,800,000 (January 31, 2006 - $900,000) had been converted.
        Due
        to the embedded beneficial conversion feature and detachable warrants issued,
        we
        recognized a discount of $6,000,000 against the convertible debenture liability
        on the balance sheet, with $3,141,817 being recorded to additional paid in
        capital and $2,858,183 being recorded to additional paid in capital at the
        time
        the convertible debentures were issued, which was reclassified to derivative
        liabilities on December 8, 2008. The carrying value of the convertible
        debentures liability on the balance sheet as at October 31, 2006 has been
        accreted to $2,200,000 (January 31, 2006 - $1,593,750).


27





In
      connection with the private placement, we granted the investor registration
      rights. Pursuant to the registration rights agreement, if we did not file the
      registration statement by August 18, 2005, or if we did not have the
      registration statement declared effective within 120 days thereafter, we are
      obligated to pay liquidated damages in the amount of 1.0% for each 30-day period
      or pro rata for any portion thereof following the date by which such
      registration statement should have been filed for which no registration
      statement is filed. We did not file the registration statement until October
      7,
      2005, however, the investor orally agreed to waive any liquidated
      damages.





***December
      8, 2005 Secured Convertible Debenture Financing***





To
      obtain
      funding for our ongoing operations, we entered into a Securities Purchase
      Agreement with Cornell Capital Partners L.P., an accredited investor, on
      December 8, 2005 for the sale of $15,000,000 in secured convertible debentures.
      They provided us with an aggregate of $15,000,000 as follows:





● 
       $5,000,000 was disbursed on December 8, 2005;





● 
       $5,000,000 was disbursed on January 17, 2006; and





●  
      $5,000,000 was disbursed on June 1, 2006





The
        secured convertible debentures bear interest at 5%, mature three years from
        the
        date of issuance, and are convertible into our common stock, at the selling
        stockholders' option, at the lower of (i) $5.00 or (ii) 90% of the average
        of
        the three lowest daily volume weighted average prices of our common stock,
        as
        quoted by Bloomberg, LP, of the 10 trading days immediately preceding the
        date
        of conversion. Accordingly, there is in fact no limit on the number of shares
        into which the secured convertible debentures may be converted. As of December
        11, 2006, the average of the three lowest intraday trading prices for our
        common
        stock during the preceding 10 trading days as quoted by Bloomberg, LP was
        $2.0533 and, therefore, the conversion price for the secured convertible
        notes
        was $1.84797. Based on this conversion price, the $13,750,000 in secured
        convertible debentures remaining outstanding, excluding interest, were
        convertible into 7,440,597 shares of our common stock. The sale of such a
        large
        number of shares of common stock could significantly deflate the market price
        of
        our common stock, which would have the further effect of requiring us to
        issue
        additional shares upon conversion of the secured convertible debentures.
        Depending on our stock price, the conversion of the secured convertible
        debentures could lead to the sale of potentially controlling amounts of shares
        of common stock. As of October 31, 2006, $14,500,000 of the issued debentures
        were outstanding and $500,000 had been converted. Since the conversion feature
        had a fair value of $10,151,918 at the time the convertible debentures were
        issued, we recognized a discount of $10,151,918 against the convertible
        debenture liability and recorded an equivalent amount to derivative liabilities
        on the balance sheet. The carrying value of the convertible debentures liability
        on the balance sheet as at October 31, 2006 has been accreted to $7,043,439
        (January 31, 2006 - $2,813,470). As of October 31, 2006, the conversion features
        were marked to market with a fair value of $7,900,704 (January 31, 2006 -
        $4,882,600), which was recorded as a non-cash derivative liability on the
        balance sheet under current liabilities.





The
      investor has contractually
      agreed to restrict its ability to convert the debentures and receive shares
      of
      our common stock such that the number of shares of common stock held by it
      and
      its affiliates after such conversion does not exceed 4.9% of the then issued
      and
      outstanding shares of common stock. ****





We
      have
      the right, at our option, with three business days advance written notice,
      to
      redeem a portion or all amounts outstanding under the secured convertible
      debentures prior to the maturity date provided that the closing bid price of
      our
      common stock, is less than $5.00 at the time of the redemption. In the event
      of
      a redemption, we are obligated to pay an amount equal to the principal amount
      being redeemed plus a 20% redemption premium, and accrued interest.





In
      connection with the Securities Purchase Agreement dated December 8, 2005, we
      granted the investor registration rights. We were obligated to use our best
      efforts to cause the registration statement to be declared effective no later
      than June 30, 2006 and to insure that the registration statement remains in
      effect until all of the shares of common stock issuable upon conversion of
      the
      secured convertible debentures have been sold. In the event of a default of
      our
      obligations under the Registration Rights Agreement, including if the
      registration statement is not declared effective by June 30, 2006, we are
      required pay to Cornell, as liquidated damages, for each month that the
      registration statement has not been filed or declared effective, as the case
      may
      be, either a cash amount or shares of our common stock equal to 2% of the
      liquidated value of the secured convertible debentures. The registration
      statement was declared effective on May 25, 2006.


28





In
      connection with the Securities Purchase Agreement dated December 8, 2005, we
      and
      each of our subsidiaries executed security agreements in favor of the investor
      granting them a first priority security interest in all of our goods, inventory,
      contractual rights and general intangibles, receivables, documents, instruments,
      chattel paper, and intellectual property. The security agreements state that
      if
      an event of default occurs under the secured convertible debentures or security
      agreements, the investors have the right to take possession of the collateral,
      to operate our business using the collateral, and have the right to assign,
      sell, lease or otherwise dispose of and deliver all or any part of the
      collateral, at public or private sale or otherwise to satisfy our obligations
      under these agreements.





***December
      28, 2005 Convertible Debenture and Warrants Financing***





To
      obtain
      funding for our ongoing operations, we entered into Securities Purchase
      Agreements with two accredited investors on December 28, 2005 for the sale
      of
      (i) $10,000,000 in convertible debentures and (ii) warrants to purchase
      1,250,000 shares of our common stock. The two accredited investors, Bank
      Sal.
      Oppenheim Jr. & Cie., (Schweiz) AG and Centrum Bank each subscribed
      for 50% of the total offering.





The
      investors provided us with an aggregate of $10,000,000 as follows:





● 
       $5,000,000 was disbursed on December 28, 2005; and





● 
       $5,000,000 was disbursed on January 23, 2006.





Pursuant
        to the Securities Purchase Agreements, we issued to each investor 625,000
        warrants to purchase shares of common stock on December 28, 2005 and January
        23,
        2006 exercisable at a price of $5.00 per share. Accordingly, we issued a
        total
        of 1,250,000 warrants. As of October 31, 2006, all of the warrants remained
        outstanding and were marked to market with a fair value of $875 (January
        31,
        2006 - $1,715,250), which was recorded as a non-cash derivative liability
        on the
        balance sheet under current liabilities.





The
        convertible debentures bear interest at 7.5%, mature three years from the
        date
        of issuance, and are convertible into our common stock, at the selling
        stockholders' option, at a rate of $4.00 per share. The
        investors have contractually
        agreed to restrict their ability to convert its debentures or exercise its
        warrants and receive shares of our common stock such that the number of shares
        of common stock held by it and its affiliates after such conversion or exercise
        does not exceed 4.99% of the then issued and outstanding shares of common
        stock. **** As
        of
        October 31 and December 11, 2006, all $10,000,000 of the issued debentures
        were
        outstanding and none had been converted. Due to the embedded beneficial
        conversion feature and detachable warrants issued, we recognized a discount
        of
        $10,000,000 against the convertible debenture liability on the balance sheet,
        with $6,738,750 being recorded to additional paid in capital and $3,261,250
        being recorded to derivative liabilities. The carrying value of the convertible
        debentures liability on the balance sheet as October 31, 2006 has been accreted
        to $2,776,267 (January 31, 2006 - $283,106). ****





In
      connection with the Securities Purchase Agreement dated December 28, 2005,
      we
      granted the investors registration rights. Pursuant to the registration rights
      agreement, if we did not have the registration statement declared effective
      on
      or before May 27, 2006, we were obligated to pay liquidated damages in the
      amount of 1.0% for each 30-day period or pro rata for any portion thereof
      following the date by which such registration statement should have been filed
      for which no registration statement is filed or should have been declared
      effective. The registration statement was declared effective on May 25,
      2006.





**Critical
      Accounting Policies**





*Investment
      in Oil and Gas Properties*





We
      utilize the full cost method to account for our investment in oil and gas
      properties. Accordingly, all costs associated with acquisition and exploration
      of oil and gas reserves, including such costs as leasehold acquisition costs,
      interest costs relating to unproved properties, geological expenditures and
      direct internal costs are capitalized into the full cost pool. As of July 31,
      2006, we had no properties with proven reserves. When we obtain proven oil
      and
      gas reserves, capitalized costs, including estimated future costs to develop
      the
      reserves and estimated abandonment costs, net of salvage, will be depleted
      on
      the units-of-production method using estimates of proved reserves. Investments
      in unproved properties and major development projects including capitalized
      interest, if any, are not amortized until proved reserves associated with the
      projects can be determined.


29




The
      capitalized costs included in the full cost pool are subject to a “ceiling
      test”, which limits such costs to the aggregate of the estimated present value,
      using an estimated discount rate, of the future net revenues from proved
      reserves, based on current economic and operating conditions and the estimated
      value of unproven properties.




*Derivative
        Liabilities*




We
        record
        derivatives at their fair values on the date that they meet the requirements
        of
        a derivative instrument and at each subsequent balance sheet date. Any change
        in
        fair value will be recorded as non-operating, non-cash income or expense
        at each
        reporting date.




*Asset
        Retirement Obligations*




We
        recognize a liability for future retirement obligations associated with our
        oil
        and gas properties. The estimated fair value of the asset retirement obligation
        is based on the current cost escalated at an inflation rate and discounted
        at a
        credit adjusted risk-free rate. This liability is capitalized as part of
        the
        cost of the related asset and amortized over its useful life. The liability
        accretes until we settle the obligation.




*Stock-Based
        Compensation*





Prior
        to
        February 1, 2006, we accounted for stock-based awards under the recognition
        and
        measurement provisions of Accounting Principles Board Opinion (“APB”) No. 25,
“Accounting for Stock Issued to Employees” using the intrinsic value method of
        accounting. Effective February 1, 2006, we adopted the fair value recognition
        provisions of SFAS No. 123R “Share Based Payments”, using the modified
        prospective transition method. Under that transition method, compensation
        cost
        is recognized for all share-based payments granted prior to, but not yet
        vested
        as of February 1, 2006, based on the grant date fair value estimated in
        accordance with the original provisions of SFAS No. 123, and compensation
        cost
        for all share-based payments granted subsequent to February 1, 2006, based
        on
        the grant date fair value estimated in accordance with the provisions of
        SFAS
        123R. Results for prior periods have not been restated.




*Revenue
        Recognition*




We
        recognize oil and gas revenue when production is sold to a purchaser at a
        fixed
        or determinable price, when delivery has occurred and title has transferred,
        and
        if collectibility of the revenue is probable.




30




**ITEM
        3. CONTROLS AND PROCEDURES**





*(a)
      Evaluation of disclosure controls and procedures.*





The
        Company, under the supervision and with the participation of its management,
        including the principal executive officer and recently appointed principal
        financial officer, has evaluated the effectiveness of the design and operation
        of its disclosure controls and procedures as defined in Rule 13a-15(e) of
        the
        Securities Exchange Act of 1934, as amended (the “Act”) as of the end of the
        period covered by this report (the “Disclosure Controls”). Based upon the
        Disclosure Controls evaluation, the principal executive officer and principal
        financial officer have concluded that the Company’s disclosure controls and
        procedures were not effective in connection with preparing this Quarterly
        Report
        on Form 10-QSB due to a material weakness in the Company’s internal control over
        financial reporting, mainly its financial closing, review and analysis process.
        The Company determined that a restatement of its financial statements was
        necessary due to the issuance of convertible debentures and warrants
        (collectively, the “Securities”) in various private placements over the last two
        years. This restatement is required to properly reflect the Company’s financial
        results for certain non-cash, and non-operational related charges or credits
        to
        earnings associated with both embedded and freestanding derivative liabilities,
        and the accounting for certain derivatives under the control of the issuer
        due
        to the revised interpretation and implementation under Statement of Financial
        Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
        Activities, the Emerging Issues Task Force issued EITF Issue No. 00-19,
        Accounting for Derivative Financial Instruments Indexed to, and Potentially
        Settled in, a Company’s Own Stock, and FASB Staff Position
        No. EITF 00-19-2, “Accounting for Registration Payment Arrangements.”





The
        Company believes that the issues surrounding the restatement of this report,
        mainly the internal controls related to the financial closing, review, and
        analysis process has been addressed and the Company has taken additional
        steps
        to avoid the reoccurrence of this condition by adding an additional qualified
        person with SEC experience in the financial reporting and analysis area.
        The
        Company has instituted a policy requiring the Chief Financial Officer, at
        the
        end of each quarter, to reconcile the accounting records to the securities
        issuance report prepared and maintained by the corporate secretary to ensure
        that all issuances have been properly recorded and that appropriate adjustments
        to previously issued securities are recorded, if necessary. The Company believes
        that these additional efforts taken by new management since the end of fiscal
        2008 to strengthen the Company’s internal controls will be effective in future
        periods.





A
        control
        system, no matter how well conceived and operated, can provide only reasonable,
        not absolute, assurance that the objectives of the control system are met.
        Further, the design of a control system must reflect the fact that there
        are
        resource constraints, and the benefits of controls must be considered relative
        to their costs. Because of the inherent limitations in all control systems,
        no
        evaluation of controls can provide absolute assurance that all control issues
        and instances of fraud, if any, within the Company have been detected. Because
        of the inherent limitations in a cost-effective control system, misstatements
        due to error or fraud may occur and not be detected.





The
        Company’s internal control over financial reporting has been modified during the
        Company’s most recent fiscal quarter by adding additional resources to address
        deficiencies in the financial closing, review and analysis process, which
        has
        materially improved the Company’s internal control over financial reporting.




*(b)
        Changes in internal control over financial reporting.*





We regularly
      review our system of internal control over financial reporting and make changes
      to our processes and systems to improve controls and increase efficiency, while
      ensuring that we maintain an effective internal control environment. Changes
      may
      include such activities as implementing new, more efficient systems,
      consolidating activities, and migrating processes.





We
        made
        the changes as
        specified above in
        our
        internal control over financial reporting that occurred during the period
        covered by this Quarterly Report on Form 10-QSB that have materially affected,
        or are reasonably likely to materially affect, our internal control over
        financial reporting.


31




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings.**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have, individually
      or in the aggregate, a material adverse affect on our business, financial
      condition or operating results.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**





On
      May
      29, 2006, we issued 200,000 shares of common stock upon conversion of $200,000
      of a previously issued convertible debenture. The shares were issued pursuant
      to
      an exemption under Section 4(2) of the Securities Act of 1933





On
      August
      3, 2006, we issued 400,000 shares of common stock upon conversion of $400,000
      of
      a previously issued convertible debenture. The shares were issued pursuant
      to an
      exemption under Section 4(2) of the Securities Act of 1933





On
      September 22, 2006, we issued 128,839 shares of common stock upon conversion
      of
      $250,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      October 2, 2006, we issued 129,012 shares of common stock upon conversion of
      $250,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      October 6, 2006, we issued 600,000 shares of common stock upon conversion of
      $600,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      November 13, 2006, we issued 132,584 shares of common stock upon conversion
      of
      $250,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      November 16, 2006, we issued 150,000 shares of common stock upon conversion
      of
      $150,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      November 22, 2006, we issued 274,891 shares of common stock upon conversion
      of
      $500,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





On
      November 27, 2006, we issued 300,000 shares of common stock upon conversion
      of
      $300,000 of a previously issued convertible debenture. The shares were issued
      pursuant to an exemption under Section 4(2) of the Securities Act of
      1933





**Item
      3. Defaults Upon Senior Securities.**





None.




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





None.


32


**Item
      5. Other Information.**





None.




**Item
      6. Exhibits**





31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended





31.2
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended





32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Chief Executive
                Officer)





32.2
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Chief Financial
                Officer)


33




**SIGNATURES**




In
      accordance with requirements of the Exchange Act, the registrant caused this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**TRIANGLE
                PETROLEUM CORPORATION**Date:
                  March 6, 2008
              By:
              /s/
                  MARK GUSTAFSONMark
                GustafsonPresident
                (Principal Executive Officer)Date:
                  March 6, 2008
              By:
              /s/
                  SHAUN TOKERShaun
                TokerChief
                Financial Officer (Principal Financial Officer and Principal Accounting
                Officer)


34