**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q/A**


**(Amendment
      No. 2)**





(Mark
      One)


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





**For
      the Quarterly Period Ended April 30, 2007**





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





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





**Commission
      file number: 000-51321**







**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)





Suite
      1110, 521 - 3 Avenue SW


Calgary,
      Alberta


Canada
      T2P 3T3


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





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):


Large
      accelerated filer  ̈ accelerated filer  ̈ Non-accelerated filer x





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





As
      of May
      23, 2007, there were 35,405,292 shares of registrant’s common stock
      outstanding.











**EXPLANATORY
      NOTE**





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





Transaction
                Date
            
            Secured
              Convertible
                Debentures
              Sold
            
            Annual
              Interest
              Rate
            
            Conversion
                Price
            
            Warrants
              (one
                share
              per
                warrant)December
                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
            
            NoneJanuary
                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
            
            NoneJune
                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
      April
      11, 2008, the Company’s independent registered public accounting firm, KPMG LLP,
      Chartered Accountants (“KPMG”) notified the Company’s Chief Financial Officer
      (“CFO”) that it believed there were errors in the Company’s financial statements
      resulting from the accounting for the conversion of these convertible
      debentures. Upon conversion of the above convertible debentures, the Company
      reduced the amount recorded as a derivative liability pertaining to the embedded
      conversion feature with the offsetting amount recorded as a decrease to the
      loss
      for the period. KPMG advised the CFO that it believed that upon conversion
      of
      the convertible debenture two entries were required. First, the derivative
      liability associated with the embedded conversion feature should be adjusted
      to
      its fair value immediately prior to the conversion with the change in fair
      value
      included in the statement of operations. Second, the re-valued derivative
      liability should be transferred to additional paid in capital.





On
      April
      11, 2008, the Company’s CFO further discussed the matter with Manning Elliott
      LLP, Chartered Accountants (“Manning Elliott”), the Company’s previous auditor.





From
      April 11, 2008 to April 21,  2008,
      management of the Company, conducted an analysis of the embedded conversion
      feature associated with these convertible debentures, with a particular focus
      on
      the accounting treatment of the derivative when the convertible debentures
      are
      converted. Management considered the guidance contained in Statement of
      Financial Accounting Standards No. 133, Accounting for Derivative Instruments
      and Hedging Activities and 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.





On
      April
      21, 2008, both the CFO and KPMG agreed that these facts caused them to believe
      that the Company’s accounting for these convertible debentures at the dates of
      conversion was incorrect and the Company determined that the effect of such
      misstatements was material to the quarterly reports on Form 10-Q for the
      quarters ended April 30, 2007, July 31, 2007 and October 31, 2007 (the
“Reports”). As a result, the Company determined that the Reports should no
      longer be relied upon and that they will need to be restated. The restatements
      are required to properly reflect the Company’s financial results for certain
      non-cash and non-operational related credits to earnings associated with the
      embedded derivative liabilities. The Form 10-Q’s will be restated as follows:





2





**April
      30, 2007**





April
                30, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            April
                30, 2007
              As
                Restated
              $Consolidated
                Balance SheetStockholders’
                DeficitAdditional
                Paid-In Capital
            
            
            35,910,819
            
            
            563,064
            
            
            36,473,883Deficit
                Accumulated During the Exploration Stage
            
            
            (21,055,525
            )
            
            (563,064
            )
            
            (21,618,589
            )





Three
                Months Ended
              April
                30, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            Three
                Months Ended
              April
                30, 2007
              As
                Restated
              $Consolidated
                Statement of OperationsUnrealized
                gain on fair value of derivatives
            
            
            2,030,604
            
            
            (563,064
            )
            
            1,467,540Net
                loss for the period
            
            
            (2,862,213
            )
            
            (563,064
            )
            
            (3,425,277
            )Net
                Loss Per Share –
                Basic and
                Diluted
            
            
            (0.09
            )
            
            
            
            
            (0.11
            )





**July
      31, 2007**





July
                31, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            July
                31, 2007
              As
                Restated
              $Consolidated
                Balance SheetStockholders’
                DeficitAdditional
                Paid-In Capital
            
            
            40,050,268
            
            
            1,490,182
            
            
            41,540,450Deficit
                Accumulated During the Exploration Stage
            
            
            (26,009,114
            )
            
            (1,490,182
            )
            
            (27,499,296
            )





Six Months Ended
              July
                31, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            Six Months Ended
              July
                31, 2007
              As
                Restated
              $Consolidated
                Statement of OperationsUnrealized
                gain on fair value of derivatives
            
            
            5,045,596
            
            
            (1,490,182
            )
            
            3,555,414Net
                loss for the period
            
            
            (7,815,802
            )
            
            (1,490,182
            )
            
            (9,305,984
            )Net
                Loss Per Share –
                Basic and
                Diluted
            
            
            (0.22
            )
            
            
            
            
            (0.26
            )





3





**October
      31, 2007**





October 31, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            October 31, 2007
              As
                Restated
              $Consolidated
                Balance SheetStockholders’
                DeficitAdditional
                Paid-In Capital
            
            
            41,713,628
            
            
            1,802,063
            
            
            43,515,691Deficit
                Accumulated During the Exploration Stage
            
            
            (31,661,392
            )
            
            (1,802,063
            )
            
            (33,463,455
            )





Nine
                Months Ended
              October 31, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            Nine Months Ended
              October 31, 2007
              As
                Restated
              $Consolidated
                Statement of OperationsUnrealized
                gain on fair value of derivatives
            
            
            8,283,568
            
            
            (1,802,063
            )
            
            6,481,505Net
                loss for the period
            
            
            (13,468,080
            )
            
            (1,802,063
            )
            
            (15,270,143
            )Net
                Loss Per Share –
                Basic and
                Diluted
            
            
            (0.39
            )
            
            
            
            
            (0.44
            )





For
      the
      convenience of the reader, this Form 10-Q/A sets forth the original Form 10-Q
      in
      its entirety. However, this Form 10-Q/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-Q 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 10Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2,
      respectively.





4





**TRIANGLE
      PETROLEUM CORPORATION AND SUBSIDIARIES**





**INDEX**PART
                I.
            FINANCIAL
                INFORMATIONITEM
                1.
            Consolidated
                balance sheets at April 30, 2007 (unaudited) and January 31,
                2007
            6Consolidated
                statements of operations for the three months ended April 30, 2007
                and
                2006 and accumulated from December 11, 2003 (date of inception) to
                April
                30, 2007 (unaudited)
            7Consolidated
                statements of cash flows for the three months ended April 30, 2007
                and
                2006 (unaudited)
            8Notes
                to unaudited consolidated financial statements
            9
                –
                22ITEM
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            23-33ITEM
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            34ITEM
                4.
            Controls
                and Procedures
            35PART
                II.
            OTHER
                INFORMATIONITEM
                1
            Legal
                proceedings
            36ITEM
                1A
            Risk
                factors
            36ITEM
                2
            Unregistered
                sales of equity securities and use of proceeds
            37ITEM
                3
            Defaults
                upon senior securities
            38ITEM
                4
            Submission
                of matters to a vote of security holders
            38ITEM
                5
            Other
                information
            38ITEM
                6
            Exhibits
            38SIGNATURES
            39





5





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Balance Sheets


(Expressed
      in U.S. dollars)





April
                30,
              2007
              $
              (unaudited)
            
            January
                31,
              2007
              $(Restated
                –
              Note
                16)ASSETSCurrent
                AssetsCash
                and cash equivalents
            
            
            20,659,532
            
            
            5,798,982Prepaid
                expenses (Note 3)
            
            
            775,009
            
            
            2,519,009Other
                receivables
            
            
            943,053
            
            
            344,342Total
                Current Assets
            
            
            22,377,594
            
            
            8,662,333Debt
                Issue Costs, net
            
            
            798,644
            
            
            916,353Property
                and Equipment (Note 4)
            
            
            68,966
            
            
            67,091Oil
                and Gas Properties (Note 5)
            
            
            26,196,805
            
            
            21,101,495Total
                Assets
            
            
            49,442,009
            
            
            30,747,272LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
                LiabilitiesAccounts
                payable
            
            
            2,061,106
            
            
            4,199,961Accrued
                interest on convertible debentures
            
            
            2,478,338
            
            
            2,095,989Accrued
                liabilities (Note 6)
            
            
            2,512,979
            
            
            466,112Derivative
                liabilities (Note 9)
            
            
            13,962,253
            
            
            15,992,857Convertible
                debentures, current portion, less unamortized discount of $115,625
                and
                $515,626, respectively (Note 8(a))
            
            
            1,734,375
            
            
            2,234,374Total
                Current Liabilities
            
            
            22,749,051
            
            
            24,989,293Asset
                Retirement Obligations (Note 7)
            
            
            113,837
            
            
            90,913Convertible
                Debentures, less unamortized discount of $10,537,916 and $12,178,642,
                respectively (Note 8)
            
            
            11,712,084
            
            
            10,771,358Total
                Liabilities
            
            
            34,574,972
            
            
            35,851,564Contingencies
                and Commitments (Notes 1, 5 and 13)Subsequent
                Events (Note 16)Stockholders’
                Equity (Deficit)Common
                Stock
              Authorized:
                100,000,000 shares, par value $0.00001
              Issued:
                34,261,757 shares (January 31, 2007 – 22,475,866
                shares)
            
            
            343
            
            
            225Additional
                Paid-In Capital
            
            
            36,473,883
            
            
            13,077,395Donated
                Capital
            
            
            11,400
            
            
            11,400Deficit
                Accumulated During the Exploration Stage
            
            
            (21,618,589
            )
            
            (18,193,312
            )Total
                Stockholders’ Equity (Deficit)
            
            
            14,867,037
            
            
            (5,104,292
            )Total
                Liabilities and Stockholders’ Equity (Deficit)
            
            
            49,442,009
            
            
            30,747,272




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





6





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
                April 30,
            
            Three
              Months
              Ended
              April
                30,
            
            Three
              Months
              Ended
              April
                30,2007
            
            2007
            
            2006$
            
            $
            
            $(Restated
                –
              Note
                16)
            
            (Restated
                –
              Note
                16)Revenue
            
            
            150,986
            
            
            96,644
            
            
            –Operating
                ExpensesOil
                and gas production
            
            
            30,363
            
            
            30,363
            
            
            -Depletion,
                depreciation and accretion
            
            
            111,697
            
            
            75,468
            
            
            –Depreciation –
                property and equipment
            
            
            38,024
            
            
            6,780
            
            
            5,780General
                and administrative
            
            
            14,494,777
            
            
            2,228,488
            
            
            2,149,427Impairment
                loss on oil and gas properties
            
            
            2,299,212
            
            
            -
            
            
            –Total
                Operating Expenses
            
            
            16,974,073
            
            
            2,341,099
            
            
            2,155,207Net
                Loss from Operations
            
            
            (16,823,087
            )
            
            (2,244,455
            )
            
            (2,155,207
            )Other
                Income (Expense)Accretion
                of discounts on convertible debentures
            
            
            (15,498,375
            )
            
            (2,340,726
            )
            
            (2,446,917
            )Amortization
                of debt issue costs
            
            
            (581,355
            )
            
            (117,708
            )
            
            (82,291
            )Interest
                expense
            
            
            (2,478,340
            )
            
            (382,351
            )
            
            (396,630
            )Interest
                income
            
            
            741,182
            
            
            192,423
            
            
            108,726Unrealized
                gain on fair value of derivatives
            
            
            30,272,651
            
            
            1,467,540
            
            
            4,536,367Total
                Other Income (Expense)
            
            
            12,455,763
            
            
            (1,180,822
            )
            
            1,719,255Net
                Loss Before Discontinued Operations
            
            
            (4,367,324
            )
            
            (3,425,277
            )
            
            (435,952
            )Discontinued
                Operations
            
            
            (32,471
            )
            
            –
            
            
            –Net
                Loss for the Period
            
            
            (4,399,795
            )
            
            (3,425,277
            )
            
            (435,952
            )Deficit
                adjustment related to December 8, 2005 reclassification of warrants
                from
                additional paid-in capital to derivative liability
            
            
            (17,218,794
            )Deficit
                accumulated during the exploration stage
            
            
            (21,618,589
            )Net
                Loss Per Share – Basic and Diluted
            
            
            
            
            
            (0.11
            )
            
            (0.02
            )Weighted
                Average Number of Shares Outstanding
            
            
            
            
            
            30,579,000
            
            
            19,575,000




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


7





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Cash Flows


(Expressed
      in U.S. dollars)


(Unaudited)





Three
                Months
              Ended
              April
                30,
            
            Three
                Months
              Ended
              April
                30,2007
            
            2006$
            
            $(Restated –
              Note
                16)Operating
                ActivitiesNet
                loss
            
            
            (3,425,277
            )
            
            (435,952
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Accretion
                of discounts on convertible debentures
            
            
            2,340,726
            
            
            2,446,917Amortization
                of debt issue costs
            
            
            117,708
            
            
            82,291Depletion,
                depreciation and accretion
            
            
            75,468
            
            
            –Depreciation –
                property and equipment
            
            
            6,780
            
            
            5,780Stock-based
                compensation
            
            
            1,625,536
            
            
            1,597,368Unrealized
                gain on fair value of derivatives
            
            
            (1,467,540
            )
            
            (4,536,367
            )Changes
                in operating assets and liabilitiesPrepaid
                expenses
            
            
            1,744,000
            
            
            (190,675
            )Other
                receivables
            
            
            (598,711
            )
            
            (96,018
            )Accounts
                payable
            
            
            (2,138,855
            )
            
            65,724Accrued
                interest on convertible debentures
            
            
            382,351
            
            
            396,630Accrued
                liabilities
            
            
            (466,112
            )
            
            (202,725
            )Net
                Cash Used by Operating Activities
            
            
            (1,803,926
            )
            
            (867,027
            )Investing
                ActivitiesPurchase
                of property and equipment
            
            
            (8,655
            )
            
            (18,000
            )Oil
                and gas property expenditures
            
            
            (2,634,875
            )
            
            (1,191,769
            )Net
                Cash Used by Investing Activities
            
            
            (2,643,530
            )
            
            (1,209,769
            )Financing
                ActivitiesProceeds
                from issuance of common stock
            
            
            20,824,000
            
            
            –Common
                stock issuance costs
            
            
            (1,515,994
            )
            
            –Net
                Cash Provided by Financing Activities
            
            
            19,308,006
            
            
            –Increase
                (Decrease) in Cash and Cash Equivalents
            
            
            14,860,550
            
            
            (2,076,796
            )Cash
                and Cash Equivalents – Beginning of Period
            
            
            5,798,982
            
            
            17,394,422Cash
                and Cash Equivalents – End of Period
            
            
            20,659,532
            
            
            15,317,626Non-cash
                Investing and Financing ActivitiesCommon
                stock issued for conversion of debentures
            
            
            1,900,000
            
            
            700,000Supplemental
                Disclosures:Interest
                paid
            
            
            –
            
            
            –Income
                taxes paid
            
            
            –
            
            
            –


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


8





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 significant revenues from its planned operations.
      It is primarily engaged in the acquisition, exploration and development of
      oil
      and gas resource properties. At April 30, 2007, the Company had a working
      capital deficit of $371,457, and has incurred losses of $4,399,795 since
      inception on December 11, 2003. During the year ended January 31, 2006, the
      Company issued $26,000,000 of convertible debentures. During the year ended
      January 31, 2007, the Company issued an additional $5,000,000 of convertible
      debentures. During the three month period ended April 30, 2007, the Company
      issued 10,412,000 shares of common stock for net proceeds of $19,308,006. The
      Company is committed to incur approximately $8,154,068 towards oil and gas
      expenditures and has $1,850,000 of convertible debentures maturing during the
      next twelve months. As at April 30, 2007, the Company had cash and cash
      equivalents of $20,659,532.




Although
      existing cash resources are currently expected to provide sufficient funds
      through the upcoming fiscal year, the capital expenditures required to achieve
      planned principal operations may be substantial. The
      continuation of the Company as a going concern for a period longer than the
      current fiscal year is dependent upon the ability of the Company to obtain
      necessary equity financing to continue operations and to determine the
      existence, discovery and successful exploitation
      of economically recoverable reserves in its resource properties, confirmation
      of
      the Company’s interests in the underlying properties, and
      the
      attainment of profitable operations





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 U.S. 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, U.S.A. All significant
      intercompany balances and transactions have been eliminated. The Company’s
      fiscal year-end is January 31.




b)
            Interim
                Financial Statements




These
      interim unaudited consolidated financial statements have been prepared in
      accordance with accounting principles generally accepted in the United States
      for interim financial information and with the instructions to Securities and
      Exchange Commission (“SEC”) Form 10-Q. They do not include all of the
      information and footnotes required by generally accepted accounting principles
      for complete financial statements. Therefore, these financial statements should
      be read in conjunction with the Company’s audited consolidated financial
      statements and notes thereto for the year ended January 31, 2007, included
      in
      the Company’s Annual Report on Form 10-KSB filed on May 1, 2007 with the
      SEC.




The
      consolidated financial statements included herein are unaudited; however, they
      contain all normal recurring accruals and adjustments that, in the opinion
      of
      management, are necessary to present fairly the Company’s consolidated financial
      position at April 30, 2007 and January 31, 2007, and the consolidated
      results of its operations and consolidated cash flows for the three months
      ended
      April 30, 2007 and 2006. The results of operations for the three months ended
      April 30, 2007 are not necessarily indicative of the results to be expected
      for
      future quarters or the full year.





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)




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. The
      Company regularly evaluates estimates and assumptions related to useful
      life and recoverability of long-lived assets, proved and unproved oil and gas
      expenditures, asset
      retirement obligations, stock-based compensation and deferred income tax asset
      valuation allowances. The Company bases its estimates and assumptions on current
      facts, historical experience and various other factors that it believes to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities and the
      accrual of costs and expenses that are not readily apparent from other sources.
      The actual results experienced by the Company may differ materially and
      adversely from the Company’s estimates. To the extent there are material
      differences between the estimates and the actual results, future results of
      operations will be affected.




d)
            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 financial statements, entered into derivative instruments to offset
      the
      impact of foreign currency fluctuations.




e)
            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.




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
      Company tests long-lived assets or asset groups for recoverability when events
      or changes in circumstances indicate that their carrying amount may not be
      recoverable. Circumstances which could trigger a review include, but are not
      limited to: significant decreases in the market price of the asset; significant
      adverse changes in the business climate or legal factors; accumulation of costs
      significantly in excess of the amount originally expected for the acquisition
      or
      construction of the asset; current period cash flow or operating losses combined
      with a history of losses or a forecast of continuing losses associated with
      the
      use of the asset; and current expectation that the asset will more likely than
      not be sold or disposed significantly before the end of its estimated useful
      life.




Recoverability
      is assessed based on the carrying amount of the asset and its fair value which
      is generally determined based on the sum of the undiscounted cash flows expected
      to result from the use and the eventual disposal of the asset, as well as
      specific appraisal in certain instances. An impairment loss is recognized when
      the carrying amount is not recoverable and exceeds fair value.





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)




h)
            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 proved reserves 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.




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.




i)
            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.




j)
            Debt
                Issue Costs




In
      accordance with 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 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.




k)
            Revenue
                Recognition




The
      Company recognizes oil and gas revenue when production is sold at a fixed or
      determinable price, persuasive evidence of an arrangement exists, delivery
      has
      occurred and title has transferred, and collectibility is reasonably
      assured.





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)




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.




On
      February 1, 2007, the Company adopted Financial Accounting Standards Board
      (“FASB”) Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes –**an
      interpretation of FASB Statement No. 109”* (“FIN
      48”). FIN 48 prescribes a measurement process for recording in the financial
      statements uncertain tax positions taken or expected to be taken in a tax
      return. Additionally, FIN 48 provides guidance regarding uncertain tax positions
      relating to derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure and transition. At April 30, 2007, the Company
      had
      no material uncertain tax positions.




During
      the three month period ended April 30, 2007, an income tax benefit of $324,000
      (April 30, 2006 - $325,000) and valuation allowance of $324,000 (April 30,
      2006 - $325,000) was reported. At April 30, 2007, the Company had
      $4,662,000 of unrecognized tax benefits. The Company recognizes interest and
      penalties related to unrecognized tax benefits in tax expense. However the
      Company has accrued no interest or penalties at April 30, 2007. At April 30,
      2007, the Company had five tax years that remain subject to examination by
      major
      tax jurisdictions.




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 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. Shares underlying these securities totaled
      approximately 18,394,000 as of April 30, 2007.




n)
            Financial
                Instruments




The
      fair
      values of financial instruments, which include cash and cash equivalents, other
      receivables, accounts payable, accrued interest on convertible debentures,
      accrued liabilities, and convertible debentures approximate their carrying
      values due to the relatively short maturity of these instruments. The fair
      value
      of convertible debentures are estimated to approximate their carrying values
      based on borrowing rates currently available to the Company for debt with
      similar terms.




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 does not believe that it is exposed to interest rate risk. The Company
      maintains its cash accounts in one commercial bank located in Calgary, Alberta,
      Canada. The Company's cash accounts consist of uninsured and insured business
      checking accounts and deposits maintained principally in U.S. dollars. Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist primarily of cash in excess of federally insured amounts. As at
      April 30, 2007, 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.




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 April 30, 2007 and 2006,
      the
      Company has no items that represent comprehensive loss and, therefore, has
      not
      included a schedule of comprehensive loss in the financial
      statements.





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)




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 123R. Results for prior periods have not been restated.




s)
            Recent
                Accounting Pronouncements




In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities*–*Including an Amendment of FASB Statement No. 115”* .
      This
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. Most of the provisions of SFAS No. 159 apply
      only to entities that elect the fair value option. However, the amendment to
      SFAS No. 115 *“Accounting
      for Certain Investments in Debt and Equity Securities”* applies
      to all entities with available-for-sale and trading securities. SFAS No. 159
      is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
      year that begins on or before November 15, 2007, provided the entity also elects
      to apply the provision of SFAS No. 157, *“Fair
      Value Measurements”* .
      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. 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
      did not have a material effect on the Company's financial
      statements.




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.




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 did not
      have
      a material effect on the Company's financial statements.





13





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





3.
            Summary
                of Significant Accounting Policies
                (continued)




s)
            Recent
                Accounting Pronouncements
                (continued)




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 did not 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.
            Prepaid
                Expenses




The
      components of prepaid expenses are as follows:





April
                30,
              2007
              $
            
            January
                31,
              2007
              $Prepaid
                insurance
            
            
            23,950
            
            
            151,086Prepaid
                joint-venture exploration costs
            
            
            668,392
            
            
            2,367,923Other
            
            
            82,667
            
            
            –Total
                prepaid expenses
            
            
            775,009
            
            
            2,519,009





4.
            Property
                and Equipment




Cost
              $
            
            Accumulated
              Depreciation
              $
            
            April
                30,
              2007
              Net
                Carrying
              Value
              $
            
            January
                31,
              2007
              Net
                Carrying
              Value
              $Computer
                hardware
            
            
            53,391
            
            
            21,632
            
            
            31,759
            
            
            31,906Furniture
                and equipment
            
            
            36,881
            
            
            10,390
            
            
            26,491
            
            
            25,164Geophysical
                software
            
            
            8,971
            
            
            4,551
            
            
            4,420
            
            
            5,086Leasehold
                Improvements
            
            
            7,748
            
            
            1,452
            
            
            6,296
            
            
            4,935106,991
            
            
            38,025
            
            
            68,966
            
            
            67,091





14





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





5.
            Oil
                and Gas Properties




The
      following table summarizes information regarding the Company's oil and gas
      acquisition, exploration and development activities:




April
                30,
            
            January
                31,2007
              $
            
            2007
              $Proved
                PropertiesExploration
                costs
            
            
            7,826,435
            
            
            2,965,420Less:Accumulated
                depletion
            
            
            (110,371
            )
            
            (36,229
            )Impairment
                costs
            
            
            (2,299,212
            )
            
            (2,299,212
            )5,416,852
            
            
            629,979Unproven
                PropertiesAcquisition
                costs
            
            
            14,398,663
            
            
            14,405,798Exploration
                costs
            
            
            6,381,290
            
            
            6,065,71820,779,953
            
            
            20,471,516Net
                Carrying Value
            
            
            26,196,805
            
            
            21,101,495





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 participate for a 50% working
                interest in certain prospects located in the Arkoma Basin, Arkansas
                by
                funding 66.6667% of oil and gas related expenditures to a maximum
                of
                $16,141,719. The Company has paid $6,809,319 in fiscal 2007 to fund
                its
                share of land costs and has incurred a further $2,578,332 for its
                share of
                the drilling costs relating to the first vertical well drilled on
                the
                prospect. The Company has further committed to pay an additional
                $6,754,068 for its share of additional seismic and drilling expenditures
                on the prospect.




(b)
            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 $3,355,000 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 in each prospect area, 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 $92,653 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.




(c)
            The
                Company, through a series of Joint Venture agreements with different
                parties, has $5,212,243 (January 31, 2007 – $6,808,802) of unproven
                oil and gas expenditures in Alberta, Canada. In respect to these
                unproven
                oil and gas expenditures, the Company has expended $398,349 (January
                31,
                2007 – $443,759) to acquire land, $2,022,477 (January 31, 2007 –
                $2,031,168) for geological and geophysical expenditures, and $2,791,417
                (2007 – $4,333,875) for drilling related costs. The Company
                anticipates these expenditures will be subject to amortization prior
                to
                January 31, 2008.




The
      Company's depletion expense is $34.04 per barrel of oil equivalent for the
      three
      months ended April 30, 2007. The
      Company's unproven acquisition and exploration costs were distributed in the
      following geographic areas:




April
                30,
              2007
              $
            
            January
                31,
              2007
              $Alberta
            
            
            5,212,243
            
            
            6,808,802Arkansas
            
            
            10,150,632
            
            
            7,569,101Rocky
                Mountains (Colorado, Montana, Wyoming)
            
            
            2,189,421
            
            
            2,187,391Texas
            
            
            3,227,657
            
            
            3,906,22220,779,953
            
            
            20,471,516





15





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





6.
            Accrued
                Liabilities




The
      components of accrued liabilities are as follows:





April
                30,
              2007
              $
            
            January
                31,
              2007
              $Oil
                and gas expenditures
            
            
            2,512,979
            
            
            466,112








7.
            Asset
                Retirement Obligations




April
                30,
              2007
              $
            
            January
                31,
              2007
              $Beginning
                asset retirement obligations
            
            
            90,913
            
            
            33,000Additions
                related to new properties
            
            
            –
            
            
            –Liabilities
                incurred
            
            
            21,000
            
            
            56,446Deletions
                related to property disposals
            
            
            –
            
            
            –Accretion
            
            
            1,924
            
            
            1,467Total
                asset retirement obligations
            
            
            113,837
            
            
            90,913





We
      are
      required to recognize an estimated liability for future costs associated with
      the abandonment of our oil and gas properties including without limitation
      the
      costs of reclamation of our drilling sites, storage and transmission facilities and access roads. We base our estimate of the liability
      on the industry experience of our management and on our current understanding
      of
      federal and state regulatory requirements. Our present value calculations
      require us to estimate the economic lives of our properties, assume what future
      inflation rates apply to external estimates and determine the credit-adjusted
      risk-free rate to use. Our estimated asset retirement obligations are reflected
      in our depreciation, depletion and amortization calculations over the remaining
      life of our oil and gas properties.




8.
            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.





16





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





8.
            Convertible
                Debentures (continued)




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 of $731,250 was charged to accretion
      expense. During the year ended January 31, 2007, debentures with a principal
      amount of $2,350,000 were converted into 2,350,000 shares of common stock.
      The
      unamortized discount on the converted debentures of $1,171,875 was charged
      to
      accretion expense. During the three month period ended April 30, 2007,
      debentures with a principal amount of $900,000 were converted into 900,000
      shares of common stock. The unamortized discount on the converted debenture
      of
      $168,750 was charged to accretion expense. The Company will record interest
      expense over the term of the remaining convertible debentures of $115,625
      resulting from the difference between the stated value and carrying value at
      the
      date of issuance. To April 30, 2007, accrued interest of $651,934 (January
      31,
      2007 - $609,140) has been included in accrued liabilities, and accumulated
      accretion expense of $5,884,375 has increased the carrying value of the
      convertible debentures to $1,734,375 (January 31, 2007 - $2,234,374) (net
      of conversions of $4,150,000).




On
      December 8, 2005, upon the issuance of the convertible debentures referred
      to in
      Note 9(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. On April 30, 2007, the Company recorded a
      gain on the change in fair value of the derivative liability of $2,377,800
      (April 30, 2006 - $4,267,800) and as at April 30, 2007, the fair value of
      the derivative liability was $8,073,600 (January 31, 2007 -
      $10,451,400).




(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.




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 was
      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 was 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 that was
      declared effective May 26, 2006.





17





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





8.
            Convertible
                Debentures (continued)




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 10 and 17) related to the convertible debentures equal to the
      fair values of the conversion feature of $7,417,339 and an equivalent discount
      on the debentures of $7,417,339. During the year ended January 31, 2007, a
      principal amount of $1,750,000 was converted into 943,336 shares of common
      stock. During the three month period ended April 30, 2007, debentures with
      a
      principal amount of $1,000,000 were converted into 473,891 shares of common
      stock. The unamortized discount on the converted debentures of $424,957 was
      charged to accretion expense. The carrying value of the convertible debentures
      will be accreted to the face value of $12,250,000 to maturity. To April 30,
      2007, accrued interest of $850,377 (January 31, 2007 - $693,699) has been
      included in accrued liabilities and $5,184,665 (January 31, 2007 -
      $4,056,724) has been accreted increasing the carrying value of the convertible
      debentures to $7,282,749 (January 31, 2007 - $7,154,808) (net of
      conversions of $2,750,000). On April 30, 2007, the Company recorded a loss
      on
      the change in fair value of the derivative liability of $910,260 (April 30,
      2006 - $622,933) and as at April 30, 2007, the fair value of the derivative
      liability was $5,888,653 (January 31, 2007 - $5,541,457).





(c)
            On
                December 28, 2005, the Company entered into a Securities Purchase
                Agreement with two accredited investors providing for the sale bythe
                Companyto
                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 ofthe
                Company’s
                common stock, exercisable at a price of $5.00 per share untilDecember
                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 bythe
                Companywith the SEC. The warrants expired in full without exercise during
                the
                fiscal year ended January 31, 2007.




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 was
      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 was not 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 that was declared effective May 25, 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.





18





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





8.
            Convertible
                Debentures (continued)




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 10 and 17) 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
      April 30, 2007, accrued interest of $976,027 (January 31, 2007 – $793,150)
      has been included in accrued liabilities, and $4,429,335 (January 31,
      2007 – $3,616,550) has been accreted increasing the carrying value of the
      convertible debentures to $4,429,335 (January 31, 2007 – $3,616,550). On
      April 30, 2007, the Company recorded a gain on the change in fair value of
      the
      derivative liability of $nil (April 30, 2006 – $891,500) and as at April
      30, 2007, the fair value of the derivative liability was $nil (January 31,
      2007
      - $nil).




9.
            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 9. 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 April
      30,
      2006 and 2007 as described in Note 17.




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 April 30,
      2007.


Volatility
            
            Risk Free Rate
            
            Dividend
              Yield
            
            Term
                in
              YearsWeighted
                Average Assumptions at:April
                30, 2007
            
            
            72
            %
            
            4.60
            %
            
            –
            
            
            1.85




The
      following table shows the assumptions used in the Black-Scholes calculation
      of
      the detachable warrants as at April 30, 2007.


Volatility
            
            Risk Free Rate
            
            Dividend
              Yield
            
            Term
                in
              YearsWeighted
                Average Assumptions at:April
                30, 2007
            
            
            72
            %
            
            4.89
            %
            
            –
            
            
            1.13




During
      the three month period ended April 30, 2007, the Company recorded a gain on
      derivatives of $2,030,604 (2006 - $4,536,367) equal to the difference in
      the fair value of the derivatives at January 31, 2007 and April 30, 2007.





19





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)





10.
            Common
                Stock




(a)
            On
                February 20, 2007, the Company issued 108,923 shares of common stock
                upon
                the conversion of convertible debentures with a principal amount
                of
                $250,000.




(b)
            On
                February 26, 2007, the Company issued 10,412,000 shares of common
                stock
                pursuant to a private placement for net proceeds of $19,308,006 after
                issue costs of $1,515,994. Pursuant to the terms of sale, the Company
                agreed to cause a resale registration statement covering the common
                stock
                to be filed no later than 30 days after the closing and declared
                effective
                no later than 120 days after the closing. If the Company fails to
                comply
                with the registration statement filing or effective date requirements,
                it
                will be required to pay the investors a fee equal to 1% of the aggregate
                amount invested by the purchasers per each 30 day period of delay,
                not to
                exceed 10%. On March 14, 2007, the registration statement was declared
                effective. In connection with the financing the Company paid the
                placement
                agents of the offering a cash fee of 6.5% of the proceeds of the
                offering.




(c)
            On
                March 6, 2007, the Company issued 900,000 shares of common stock
                upon the
                conversion of convertible debentures with a principal amount of
                $900,000.




(d)
            On
                March 7, 2007, the Company issued 106,696 shares of common stock
                upon the
                conversion of convertible debentures with a principal amount of
                $250,000.




(e)
            On
                April 11, 2007, the Company issued 129,333 shares of common stock
                upon the
                conversion of convertible debentures with a principal amount of
                $250,000.




(f)
            On
                April 30, 2007, the Company issued 128,939 shares of common stock
                upon the
                conversion of convertible debentures with a principal amount of
                $250,000.




(g)
            On
                June 2, 2005, the Company issued 2,000,000 shares of common stock
                to the
                President of the Company’s subsidiary at $0.01 per share for cash proceeds
                of $20,000. As the shares were issued for below fair value, a discount
                on
                the issuance of shares of $2,700,000 was recorded as deferred
                compensation. During the year ended January 31, 2006, $900,000 was
                charged
                to operations. During the year ended January 31, 2007, $1,350,000
                was
                charged to operations. During the three months ended April 30, 2007,
                $337,500 was charged to operations. The remaining amount of $112,500
                in
                deferred compensation will be amortized over the remainder of the
                President of the Company’s subsidiary ‘s two year employment
                contract.




(h)
            On
                May 16, 2005, the Company issued 4,000,000 shares of common stock
                to the
                President of the Company at $0.01 per share for cash proceeds of
                $40,000.
                As the shares were issued for below fair value, a discount on the
                issuance
                of shares of $4,160,000 was recorded as deferred compensation. During
                the
                year ended January 31, 2006, $1,473,333 was charged to operations.
                During
                the year ended January 31, 2007, $2,080,000 was charged to operations.
                During the three months ended April 30, 2007, $520,000 was charged
                to
                operations. The remaining amount of $86,667 in deferred compensation
                will
                be amortized over the remainder of the President’s two year employment
                contract.





11.
            Stock
                Options




Effective
      August 5, 2005, the Company approved the 2005 Incentive Stock Plan (the “Plan”)
      to issue up to 2,000,000 shares of common stock. Pursuant to the Plan, stock
      options vest 20% upon granting and 20% every six months. As at April 30, 2007,
      the Company had 370,000 stock options available for granting pursuant to the
      Plan. The 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.




The
      weighted average grant date fair value of stock options granted during the
      three
      month periods ended April 30, 2007 and 2006 was $nil and $3.71, respectively.
      No
      stock options were exercised during the periods ended April 30, 2007 and 2006.
      During the period ended April 30, 2007 and 2006, the Company recorded
      stock-based compensation of $1,625,536 and $1,597,368, respectively, as general
      and administrative expense. A
      summary
      of the Company’s stock option activity is as follows:




Number
                of
              Options
            
            Weighted Average
                Exercise Price
              $
            
            Weighted Average
                Remaining Contractual Term
            
            Aggregate Intrinsic
                Value
              $Outstanding,
                January 31, 2007
            
            
            1,630,000
            
            
            2.78Granted
            
            
            –
            
            
            –Forfeited
            
            
            –
            
            
            –Outstanding,
                April 30, 2007
            
            
            1,630,000
            
            
            2.78
            
            
            3.64
            
            
            9,000Exercisable,
                April 30, 2007
            
            
            1,124,000
            
            
            3.41
            
            
            3.54
            
            
            3,600





20




Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(Unaudited)




11.
            Stock
                Options (continued)




The
      fair
      value of each option grant was estimated on the date of the grant using the
      Black-Scholes option pricing model with the following weighted average
      assumptions:




Three
                Months
              Ended
              April
                30,
              2007
            
            Three
                Months
              Ended
              April
                30,
              2006Expected
                dividend yield
            
            
            –
            
            
            0
            %Expected
                volatility
            
            
            –
            
            
            171
            %Expected
                life (in years)
            
            
            –
            
            
            2.5Risk-free
                interest rate
            
            
            –
            
            
            4.47
            %




As
      at
      April 30, 2007, there was $1,416,800 (January 31, 2007 - $2,187,094) of total
      unrecognized compensation costs related to nonvested share-based compensation
      arrangements granted under the Plan which are expected to be recognized over
      a
      weighted-average period of 8 months. The total fair value of shares vested
      during the periods ended April 30, 2007 and 2006 was $768,036 and $739,868,
      respectively.




A
      summary
      of the status of the Company’s nonvested shares as of April 30, 2007, and
      changes during the period ended April 30 2007, is presented below:




Nonvested
                shares
            
            Number of
              Shares
            
            Weighted-Average
              Grant-Date
              Fair Value
              $Nonvested
                at February 1, 2007
            
            
            782,000
            
            
            2.80Granted
            
            
            –
            
            
            –Forfeited
            
            
            –
            
            
            –Vested
            
            
            (276,000
            )
            
            2.78Nonvested
                at April 30, 2007
            
            
            506,000
            
            
            2.80





12.
            Share
                Purchase Warrants





As
      at
      April 30, 2007, the following share purchase warrants were
      outstanding:




Number
                of
              Warrants
            
            Exercise Price
            
            Expiry Date6,000,000
            
            $
                1.00
            
            June
                15, 2008





13.
            Commitment




During
      the three months ended April 30, 2007, the Company paid rent expense of $13,750
      (2006 - $12,959). On February 28, 2007, the Company entered into a lease
      agreement commencing May 1, 2007 for office premises for a 6 year term expiring
      May 1, 2013. Annual rent under the lease is payable at $187,082 (Cdn$207,680)
      for the first three years and $194,098 (Cdn$215,468) for the remaining three
      years. The Company must also pay its share of building operating costs and
      taxes. Future minimum lease payments over the next five fiscal years are as
      follows:





2008
            
            $
            143,0002009
            
            
            191,0002010
            
            
            191,0002011
            
            
            191,0002012
            
            
            191,000$
            907,000





14.
            Segment
                Disclosures




The
      Company operates as one operating segment which is the acquisition,
      exploration and development of oil and gas resource properties .
      The
      Chief Executive Officer is the Company’s Chief Operating Decision Maker (CODM)
      as defined by SFAS 131, “Disclosure about Segments of an Enterprise and Related
      Information.” The CODM allocates resources and assesses the performance of the
      Company based on the results of operations.




21


Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (Unaudited)


15.
            Subsequent
                Events




a)
            Subsequent
                to April 30, 2007, the Company received notices of conversion to
                issue
                1,143,535 shares of common stock for the conversion of convertible
                debentures with an aggregate principal amount of
                $1,498,000.




b)
            On
                May 1, 2007, the Company issued 150,000 stock options to two new
                employees. These stock options are exercisable at a price of $2.19
                per
                share and are subject to the standard vesting and exercise provisions
                contained in the Company’s stock option
                plan.




16.
            Restatement




The
      Company has restated its consolidated financial statements for the fiscal period
      ended April 30, 2007 to reflect additional non-operating gains and losses
      related to the classification of and accounting for convertible debentures
      issued in fiscal 2006. Upon conversion of the December 8, 2005 5% convertible
      debentures, the Company reduced the amount recorded as a derivative liability
      pertaining to the embedded conversion feature with the offsetting amount
      recorded as a decrease to the loss for the period. Upon further review, the
      Company has determined that upon conversion of the convertible debenture two
      entries were required. First, the derivative liability associated with the
      embedded conversion feature should be adjusted to its fair value immediately
      prior to the conversion with the change in fair value included in the statement
      of operations. Second, the re-valued derivative liability should be transferred
      to additional paid in capital.




The
      accompanying consolidated financial statements for the period ended April 30,
      2007 have been restated to effect the changes described above as
      follows:




April 30, 2007
              As Reported
              $
            
            Adjustment
              $
            
            April 30, 2007
              As Restated
              $Consolidated
                Balance SheetStockholders’
                DeficitAdditional
                Paid-In Capital
            
            
            35,910,819
            
            
            563,064
            
            
            36,473,883Deficit
                Accumulated During the Exploration Stage
            
            
            (21,055,525
            )
            
            (563,064
            )
            
            (21,618,589
            )







Three Months
              Ended
              April 30, 2007
              As Reported
              $
            
            Adjustment
              $
            
            Three Months
              Ended
              April 30, 2007
              As Restated
              $Consolidated
                Statement of OperationsUnrealized
                gain on fair value of derivatives
            
            
            2,030,604
            
            
            (563,064
            )
            
            1,467,540Net
                loss for the period
            
            
            (2,862,213
            )
            
            (563,064
            )
            
            (3,425,277
            )Net
                Loss Per Share – Basic and Diluted
            
            
            (0.09
            )
            
            
            
            
            (0.11
            )





Accumulated from
              December 11, 2003
              (Date of Inception) to
              April
                30, 2007
              As
                Reported
              $
            
            Adjustment
              $
            
            Accumulated from
              December 11, 2003
              (Date of Inception) to
              April
                30, 2007
              As
                Restated
              $Consolidated
                Statement of OperationsUnrealized
                gain on fair value of derivatives
            
            
            30,835,715
            
            
            (563,064
            )
            
            30,272,651Net
                loss for the period
            
            
            (3,836,731
            )
            
            (563,064
            )
            
            (4,399,795
            )




Adjustments
      related to the classification of and accounting for the convertible
      debentures and derivative liabilities for the period ended April 30, 2007 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.




22


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





*This
      report includes certain forward-looking statements. Forward-looking statements
      are statements that predict the occurrence of future events and are not based
      on
      historical fact. Forward-looking statements may be identified by the use of
      forward-looking terminology, such as “may”, “shall”, “will”, “could”, “expect”,
“estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”,
“continue”, or similar terms, variations of those terms or the negative of those
      terms. We have written the forward-looking statements specified in the following
      information on the basis of assumptions we consider to be reasonable. However,
      we cannot predict our future operating results. Any representation, guarantee,
      or warranty should not be inferred from those forward-looking statements.*




*The
      assumptions we used for purposes of the forward-looking statements specified
      in
      the following information represent estimates of future events and are subject
      to uncertainty in economic, legislative, industry, and other circumstances.
      As a
      result, judgment must be exercised in the identification and interpretation
      of
      data and other information and in their use in developing and selecting
      assumptions from and among reasonable alternatives. To the extent that the
      assumed events do not occur, the outcome may vary substantially from anticipated
      or projected results. Accordingly we express no opinion on the achievability
      of
      those forward-looking statements. We cannot guarantee that any of the
      assumptions relating to the forward-looking statements specified in the
      following information are accurate. We assume no obligation to update any such
      forward-looking statements.*




**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 past twenty-four months, during one of the strongest 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:





Comparitive Oil Price




23




Comparitive Natural 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
      significant short term fluctuations in North American natural gas prices have
      occurred 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 five 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.





**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 20,000 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 encouraging 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 April
      30,
      2007, we had advanced approximately $6.8 million to fund our share of land
      costs
      and we have incurred an additional $2.6 million to fund our share of costs
      related to the first vertical well, which reached its targeted depth in April
      2007. The remaining capital commitment of $6.8 million is expected to be
      incurred within the next 12 to 18 months and should be used to fund $2.8 million
      of seismic expenditures and $4.0 million of drilling costs.





The
      first
      vertical test well of the Fayetteville joint venture reached its targeted depth
      of 8,300 feet on April 4, 2007. Drill cuttings and other samples were taken
      from
      the well and sent in for further lab work and analysis. Concurrent with the
      first drilling operation, a new multi-component 3-D seismic survey had also
      commenced. The seismic survey was shot over approximately half of the target
      area and sent for processing in April 2007. Depending on the results of the
      seismic program and th  e
      vertical test well, we may consider initiating a horizontal drilling
      program.




24




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





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. As of April 30, 2007, we
      have expended approximately $2.5 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 time. The operator of these wells has
      commenced voluntary bankruptcy proceedings. As a result, we have not received
      our monthly production revenue since January 2007, however the amounts owing
      to
      us have been set aside by the bankruptcy trustee in a separate bank account.
      In
      addition, we continue to receive monthly statements detailing our share of
      production revenue and related production royalties and operating expenses.
      We
      have spent approximately $1.1 million on drilling and completing these four
      wells. Our Barnett Shale plans include further drilling over the next twelve
      months which will be a combination of traditional Barnett programs and new
      opportunities.





In
      November 2006, we participated in a new joint venture with an experienced
      Texas-based operator. To date, we have participated in four Barnett Shale gas
      wells with working interests ranging between 11% and 15%. At January 31, 2007,
      the costs incurred to drill and complete these wells totaled approximately
      $1.8
      million. We have commenced production from two of the first four horizontal
      wells drilled in the fourth quarter of 2006. The first well located in Hood
      County was fracture stimulated in March 2007 and is producing from four stages.
      Peak production rates up to 1.5 mmcfpd (million cubic feet per day) have been
      realized with approximately 40% of the frac load fluid recovered to date. The
      second well in this county has peak production rates of 1.3 mmcfpd (million
      cubic feet per day) from two producing stages. Approximately 65% of the frac
      load fluid has been recovered. The other two wells located in Parker County
      have
      been drilled and are awaiting a 3,000 foot pipeline tie-in prior to completion.
      Production from these wells is expected to commence in the third quarter.





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.





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





We
      have
      embarked on a joint venture with Hunter Energy LLC of Denver, Colorado. We
      have
      made an initial commitment to participate in the drilling of three new projects.
      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 $3.4
      million dollars in land, prospect fees and drilling costs relating to this
      project.





Although
      the initial test well in Colorado was not successful, plans for this project
      include working with area operators to continue the exploration program.
      Drilling on the south west Wyoming project and the Montana project are
      anticipated to commence in 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 $1.4 million.




25





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





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.
      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 eight Deep Basin wells at a total
      cost of approximately $7.2 million net to us. These eight wells were drilled
      as
      part of four different joint ventures with varying working interests.





We
      have
      commenced production from two of three wells drilled in the last four months
      of
      2006 in the Alberta Deep Basin. The first well located in the Kakwa Area
      intersected four gas bearing zones (Cadomin, Bluesky, Falher G, Falher B) which
      have been completed in a 10,500 foot well in the Kakwa area of Northwestern
      Alberta. This well has been tested at a facility restricted rate of 3.6 mmcfpd
      or 600 BOED (barrels of oil equivalent per day) and is capable of producing
      over
      5.0 mmcfpd or 830 BOED. We paid 20% of the well costs for an 18% interest before
      payout (and 12% after payout) in this well. Due to restricted plant capacity
      this well is not expected to commence production until the fourth quarter of
      2007. The second well is located in the Wapiti Area and we have an approximate
      35% working interest in this 7,900 foot well that is located within the
      multi-township 3-D seismic area licensed by us. This well was completed in
      the
      shallow Cretaceous Dunvegan sandstone interval. Subsequent to completion, the
      well was connected to a nearby pipeline. Initial production rates range from
      0.4
      to 0.6 mmcfpd or 60 to 100 BOED. The third well was also drilled in the Wapiti
      Area and we have a 50% interest in this 9,900 foot well that was testing the
      Cadomin and Falher zones. The Cadomin zone was completed but tested wet. The
      Falher zone tested gas but at rates that were uneconomic to tie-in this past
      winter season. A potential tie-in for this well will be re-evaluated in the
      future based upon gas prices and future pipeline activity in the area.
      Accordingly, this well is currently suspended as a potential gas
      well.





Of
      the
      remaining five wells drilled by us prior to this past winter, one of the wells
      drilled in late 2005 tested fresh water, with no natural gas present. Another
      well tested gas but at rates that that were uneconomic to warrant a pipeline
      tie
      based on today’s natural gas pricing environment. The final three wells were
      taken over by a new operator during mid 2006 and we are waiting for the new
      operator to complete technical due diligence on the wells and propose a timeline
      and revised completions strategy for these wells.




26





**Eastern
      Coast Canada - Canadian Shale Gas Program**





Over
      the
      last twelve months, a multi-disciplined geoscience team has screened prospective
      basins in Eastern Canada. The screening process includes an assessment of the
      geologic history for a given area, estimates of pressure and temperature
      profiles and a determination of the ability to fracture stimulate a prospective
      shale package.





As
      a
      direct result of implementing this strategy, we have executed a farm-in
      agreement with a Canadian company to pursue a shale gas opportunity in Eastern
      Canada. The project covers approximately 68,000 acres and we believe it to
      be
      located in a favorable geological setting based on technical work performed
      to
      date. Additional laboratory measurements will be taken on core samples and
      drill
      cuttings, which are available from previously drilled conventional wells. We
      will be entitled to earn an average 70% working interest in the block subsequent
      to the acquisition and evaluation of a seismic program and then electing to
      drill a test well no later than December 31, 2008. We plan to move forward
      aggressively in the assessment of this new project areas.




In
      addition, we have committed to another project located in the Windsor Area
      of
      Nova Scotia, Canada covering approximately 516,000 acres. Based on an extensive
      screening process and technical work performed to date, this area is believed
      to
      be located in a highly favorable geological setting. Additional laboratory
      measurements will be taken on core samples and drill cuttings which are
      available from previously drilled conventional wells. We will be entitled to
      earn an average 70% working interest in the block subsequent to paying an
      $80,000 deposit to the Nova Scotia Government prior to September 15, 2007 and
      then electing to drill a test well no later than September 15, 2008. We plan
      to
      move forward aggressively in the assessment of this new project.





**Results
      of Operations**





For
      the
      three months ended April 30, 2007, we realized $96,644 in revenue from natural
      gas sales, as compared to $nil for the comparable period in 2006. This revenue
      was the result of our realizing production from six small working interest
      wells
      located in the Barnett Shale in Texas and two wells located in the Deep Basin
      of
      Alberta. Royalties and production expenses related to this revenue totaled
      $30,363 for the three months ended April 30, 2007 as compared to $nil for the
      three months ended April 30, 2006.





General
      and administrative expenses for the three months ended April 30, 2007 totaled
      $2,228,488 as compared to $2,149,427 for the same period in 2006. The largest
      component of general and administrative expenses was stock based compensation
      expense which totaled $1,625,536 for the three months ended April 30, 2007
      and
      $1,597,368 for the comparable period in 2006. Also included in the above totals
      were salaries, wages and consulting fees of $273,826 and $238,826 for the three
      months ended April 30, 2007 and 2006, respectively. The remaining $329,126
      and
      $313,233 of general and administrative expenses for the three months ended
      April
      30, 2007 and 2006, respectively, is comprised of travel and other office related
      expenses. ****





**Liquidity
      and Capital Resources**





As
      at
      April 30, 2007, we had a working capital deficit of $371,457 resulting primarily
      from a $13,962,253 non-cash derivative liability and $4,574,085 of payables
      offset our cash and cash equivalents of $20,659,532. For the three months ended
      April 30, 2007, we had net cash outflow from operating activities of $1,803,926.
      Cash used in investing activities totaled $2,643,530 for the three months ended
      April 30, 2007, which was used to fund Triangle USA’s share of costs relating to
      the first vertical well drilled in Fayetteville Shale Project in the Arkoma
      Basin, as well as remaining capital commitments for the three Deep Basin gas
      wells drilled in Alberta during the winter of 2007. Cash provided by financing
      activities totaled $19,308,006 for the three months ended April 30,
      2007.  On
      February 26, 2007, we sold an aggregate of 10,412,000 shares of our common
      stock
      to 24 accredited investors in a private placement transaction for aggregate
      proceeds of $20,824,000.





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 balance of 2007. If additional financing is required, there can be
      no
      assurance that it will be available in amounts or on terms acceptable to us,
      if
      at all.





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.




27





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 2, 2007, that we are an early exploration company, have not generated
      significant revenues from operations and has incurred significant losses since
      inception. These factors among others 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 April 30, 2007, all
      of
      the warrants remained outstanding and were marked to market with a fair value
      of
      $8,073,600 (January 31, 2007 - $10,451,400), 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 May 23, 2007, $1,102,000 of the issued debentures were
      outstanding and $4,898,000 had been converted. As of April 30, 2007, $1,850,000
      (January 31, 2007 - $2,750,000) of the issued debentures were outstanding and
      $4,150,000 (January 31, 2007 - $3,250,000) 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 April 30, 2007 has been accreted
      to $1,734,375 (January 31, 2007 - $2,234,374).





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.




28




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 May 23,
      2007, 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 $2.08
      and, therefore, the conversion price for the secured convertible notes was
      $1.872. Based on this conversion price, the $11,500,000 in secured convertible
      debentures remaining outstanding, excluding interest, were convertible into
      6,143,163 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
      May
      23, 2007, $3,500,000 of the debenture had been converted into 1,812,762 shares
      of common stock and $11,500,000 remained outstanding. As of April 30, 2007,
      $12,250,000 (January 31, 2007 - $13,250,000) of the issued debentures were
      outstanding and $2,750,000 (January 31, 2007 - $1,750,000) 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 April 30, 2007
      has
      been accreted to $7,282,749 (January 31, 2007 - $7,154,808). As of April 30,
      2007, the conversion features were marked to market with a fair value of
      $5,888,653 (January 31, 2007 - $5,541,457), 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. **** In
      addition, the investor is restricted from converting more than $1,500,000 in
      principle amount of the debenture in any thirty day period, with no more than
      $1,000,000 of such amount at the variable market conversion price.





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.





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.




29





***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 January 31, 2007, all of the warrants had expired.





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
      April 30 and May 23, 2007, 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
      at April 30, 2007 has been accreted to $4,429,335 (January 31, 2007 -
      $3,616,550).




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.





***February
      26, 2007 Private Placement***





On
      February 26, 2007, we sold an aggregate of 10,412,000 shares of our common
      stock
      to 24 accredited investors in a private placement transaction for aggregate
      proceeds of $20,824,000. Pursuant to the terms of sale, we agreed to cause
      a
      resale registration statement covering the common stock to be filed no later
      than 30 days after the closing and declared effective no later than 120 days
      after the closing. If we fail to comply with the registration statement filing
      or effective date requirements, we will be required to pay the investors a
      fee
      equal to 1% of the aggregate amount invested by the purchasers per each 30
      day
      period of delay, not to exceed 10%. We paid the placement agents of the offering
      a cash fee of 6.5% of the proceeds of the offering. The registration statement
      was declared effective on March 14, 2007.




30


**Critical
      Accounting Policies**





*Use
      of Estimates*





The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles requires us 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. We regularly evaluate estimates and
      assumptions related to useful life and recoverability of long-lived assets,
      asset retirement obligations, stock-based compensation and deferred income
      tax
      asset valuation allowances. We base our estimates and assumptions on current
      facts, historical experience and various other factors that we believe to be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities and the
      accrual of costs and expenses that are not readily apparent from other sources.
      The actual results experienced by us may differ materially and adversely from
      our estimates. To the extent there are material differences between the
      estimates and the actual results, future results of operations will be
      affected.





*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 January
      31,
      2007, we had one property with proven reserves. For our 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. If the future exploration of unproved properties
      is
      determined uneconomical, the amounts of such properties are added to the
      capitalized cost to be amortized.




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.





*Long-lived
      Assets*





In
      accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets”, we test long-lived assets or asset groups for recoverability
      when events or changes in circumstances indicate that their carrying amount
      may
      not be recoverable. Circumstances which could trigger a review include, but
      are
      not limited to: significant decreases in the market price of the asset;
      significant adverse changes in the business climate or legal factors;
      accumulation of costs significantly in excess of the amount originally expected
      for the acquisition or construction of the asset; current period cash flow
      or
      operating losses combined with a history of losses or a forecast of continuing
      losses associated with the use of the asset; and current expectation that the
      asset will more likely than not be sold or disposed significantly before the
      end
      of its estimated useful life.





Recoverability
      is assessed based on the carrying amount of the asset and its fair value which
      is generally determined based on the sum of the undiscounted cash flows expected
      to result from the use and the eventual disposal of the asset, as well as
      specific appraisal in certain instances. An impairment loss is recognized when
      the carrying amount is not recoverable and exceeds fair value.





*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.




31




*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.




*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.




*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.





**Recently
      Issued Accounting Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      Amendment of FASB Statement No. 115”* .
      This
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. Most of the provisions of SFAS No. 159 apply
      only to entities that elect the fair value option. However, the amendment to
      SFAS No. 115 *“Accounting
      for Certain Investments in Debt and Equity Securities”* applies
      to all entities with available-for-sale and trading securities. SFAS No. 159
      is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
      year that begins on or before November 15, 2007, provided the entity also elects
      to apply the provision of SFAS No. 157, *“Fair
      Value Measurements”* .
      The
      adoption of this statement is not expected to have a material effect on our
      future reported financial position or results of operations.





In
      September 2006, the 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
      did not have a material effect on our financial statements.





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 our
      future reported financial position or results of operations.




32





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 did not
      have
      a material effect on our financial statements.





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 did not have a material effect on our future reported financial
      position or results of operations.




33


**ITEM
      3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





**Commodity
      Price Risk**





Because
      of our relatively low level of current oil and gas production, we are not
      exposed to a great degree of market risk relating to the pricing applicable
      to
      our oil and natural gas production. However, our ability to raise additional
      capital at attractive pricing, our future revenues from oil and gas operations,
      our future profitability and future rate of growth depend substantially upon
      the
      market prices of oil and natural gas, which fluctuate widely. We expect
      commodity price volatility to continue. We do not currently utilize hedging
      contracts to protect against commodity price risk. As our oil and gas production
      grows, we may manage our exposure to oil and natural gas price declines by
      entering into oil and natural gas price hedging arrangements to secure a price
      for a portion of our expected future oil and natural gas production.





**Operating
      Cost Risk**





We
      have
      experienced rising operating costs which impacts our cash flow from operating
      activities and profitability. We recognize that rising operating costs could
      continue and continued rising operating costs would negatively impact our oil
      and gas operations.




**Interest
      Rate Risk**





All
      of
      our debt has fixed interest rates, so consequently we are not exposed to cash
      flow or fair value risk from market interest rate changes on this debt.





**Financial
      Instruments**





The
      fair
      values of financial instruments, which include cash and cash equivalents, other
      receivables, accounts payable, accrued interest on convertible debentures,
      accrued liabilities, and convertible debentures approximate their carrying
      values due to the relatively short maturity of these instruments. The fair
      value
      of convertible debentures are estimated to approximate their carrying values
      based on borrowing rates currently available to us for debt with similar terms.





**Inflation
      and Changes in Prices**





The
      general level of inflation affects our costs. Salaries and other general and
      administrative expenses are impacted by inflationary trends and the supply
      and
      demand of qualified professionals and professional services. Inflation and
      price
      fluctuations affect the costs associated with exploring for and producing oil
      and natural gas, which has a material impact on our financial performance.




34


**ITEM
      4. 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-Q 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-Q
      that have materially affected, or are reasonably likely to
      materially affect, our internal control over financial
      reporting.




35


**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
      1A. Risk Factors.**





There
      have been no material changes from the risk factors previously disclosed in
      Part I, “Risk Factors,” of the Company’s Annual Report on Form 10-KSB for
      the year ended January 31, 2007, other than to update certain financial
      information as of and for the three months ended April 30, 2007 regarding the
      following risk factors.





**We
      Have a History Of Losses Which May Continue, Which May Negatively Impact Our
      Ability to Achieve Our Business Objectives.**





We
      incurred a net loss of $4,281,969 for the year ended January 31, 2007. For
      the
      three months ended April 30, 2007, we incurred a net loss of $3,425,277. We
      cannot assure you that we can achieve or sustain profitability on a quarterly
      or
      annual basis in the future. Our operations are subject to the risks and
      competition inherent in the establishment of a business enterprise. There can
      be
      no assurance that future operations will be profitable. Revenues and profits,
      if
      any, will depend upon various factors, including whether we will be able to
      continue expansion of our revenue. We may not achieve our business objectives
      and the failure to achieve such goals would have an adverse impact on
      us.





**There
      Are a Large Number of Shares Underlying Our Convertible Debentures and Warrants
      That May be Available for Future Sale and the Sale of These Shares May Depress
      the Market Price of Our Common Stock.**





As
      of May
      23, 2007, we had 35,405,292 shares of common stock issued and outstanding,
      convertible debentures issued in July 2005 outstanding that may be converted
      into 1,102,000 shares of common stock, secured convertible debentures issued
      on
      December 8, 2005, January 17, 2006 and June 1, 2006 outstanding that may be
      converted into 6,143,163 shares of common stock based on current market prices,
      convertible debentures issued on December 28, 2005 and January 23, 2006
      outstanding that may be converted into 2,500,000 shares of common stock, and
      outstanding warrants to purchase 6,000,000 shares of common stock. All of the
      shares, including all of the shares issuable upon conversion of the convertible
      debentures and upon exercise of our warrants, may be sold without restriction.
      The sale of these shares may adversely affect the market price of our common
      stock.





**The
      Continuously Adjustable Conversion Price Feature of Our Secured Convertible
      Debentures Could Require Us to Issue a Substantially Greater Number of Shares,
      Which Will Cause Dilution to Our Existing
      Stockholders.**





Our
      obligation to issue shares upon conversion of our secured convertible debentures
      issued to Cornell Capital Partners on December 8, 2005, January 17, 2006 and
      June 1, 2006 is essentially limitless. The following is an example of the amount
      of shares of our common stock that are issuable, upon conversion of our
      $11,500,000 remaining of secured convertible debentures (excluding accrued
      interest), based on market prices 25%, 50% and 75% below the market price,
      as of
      May 23, 2007 of $2.10.





With
            
            Number
            
            %
                of%
                Below
            
            Price
                Per
            
            Discount
            
            of
                Shares
            
            OutstandingMarket
            
            Share
            
            at
                10%
            
            Issuable
            
            Stock25%
            
            $
            1.575
            
            $
            1.4175
            
            
            8,112,875
            
            
            18.64
            %50%
            
            $
            1.05
            
            $
            0.945
            
            
            12,169,313
            
            
            25.58
            %75%
            
            $
            0.525
            
            $
            0.4725
            
            
            24,338,625
            
            
            40.74
            %




36




As
      illustrated, the number of shares of common stock issuable upon conversion
      of
      our secured convertible debentures will increase if the market price of our
      stock declines, which will cause dilution to our existing stockholders.





**If
      We Are Required for any Reason to Repay Our Outstanding Convertible Debentures,
      We Would Be Required to Deplete Our Working Capital, If Available, Or Raise
      Additional Funds. Our Failure to Repay the Convertible Debentures, If Required,
      Could Result in Legal Action Against Us, Which Could Require the Sale of
      Substantial Assets.**





In
      June
      2005, we entered into a securities purchase agreement for the sale of $1,000,000
      principal amount of convertible debentures, with an option to purchase up to
      $5,000,000 in additional convertible debentures, which option was fully
      exercised. The $6,000,000 in convertible debentures, of which $1,102,000
      remained outstanding as of May 23, 2007, are due and payable, with 8% interest,
      two years from the date of issuance, unless sooner converted into shares of
      our
      common stock.





In
      December 2005, we entered into three securities purchase agreements for the
      sale
      of an aggregate of $25,000,000 principal amount of convertible debentures,
      secured and unsecured. The $15,000,000 in secured convertible debentures, of
      which $11,500,000 remained outstanding as of May 23, 2007, are due and payable,
      with 5% interest, three years from the date of issuance, unless sooner converted
      into shares of our common stock. Additionally, the $10,000,000 in convertible
      debentures, which all remained outstanding as of May 23, 2007, are due and
      payable, with 7.5% interest, three years from the date of issuance, unless
      sooner converted into shares of our common stock. In addition, any event of
      default such as our failure to repay the principal or interest when due, our
      failure to issue shares of common stock upon conversion by the holder, our
      failure to timely file a registration statement or have such registration
      statement declared effective, breach of any covenant, representation or warranty
      in the Securities Purchase Agreements or related convertible debentures, the
      assignment or appointment of a receiver to control a substantial part of our
      property or business, the filing of a money judgment, writ or similar process
      against our company in excess of $50,000, the commencement of a bankruptcy,
      insolvency, reorganization or liquidation proceeding against our company and
      the
      delisting of our common stock could require the early repayment of the
      convertible debentures, secured and unsecured, including default interest rate
      on the outstanding principal balance of the debentures if the default is not
      cured with the specified grace period. We anticipate that the full amount of
      the
      convertible debentures, secured and unsecured, will be converted into shares
      of
      our common stock, in accordance with the terms of the convertible debentures.
      If
      we were required to repay the convertible debentures, secured and unsecured,
      we
      would be required to use our limited working capital and raise additional funds.
      If we were unable to repay the debentures when required, the debenture holders
      could commence legal action against us and foreclose on all of our assets to
      recover the amounts due. Any such action would require us to curtail or cease
      operations.





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





On
      February 14, 2007, we issued 108,923 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
      February 26, 2007, we sold an aggregate of 10,412,000 shares of common stock
      to
      24 accredited investors for aggregate proceeds of $20,824,000. The shares were
      issued in a private placement transaction pursuant to Section 4(2) under the
      Securities Act of 1933.





On
      March
      6, 2007, we issued 900,000 shares of common stock upon conversion of $900,000
      of
      a previously issued convertible debenture. The shares were issued pursuant
      to an
      exemption under Section 4(2) of the Securities Act of 1933.




37





On
      March
      7, 2007, we issued 106,696 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
      April
      9, 2007, we issued 129,333 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
      April
      30, 2007, we issued 128,939 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
      May 8,
      2007, we issued 748,000 shares of common stock upon conversion of $748,000
      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
      May
      11, 2007, we issued 130,494 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
      May
      21, 2007, we issued 265,041 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. ****





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





None.




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





None.





**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)




38




**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:
                April 30, 2008
            By:
            /s/
                MARK GUSTAFSONMark
                GustafsonPresident
                (Principal Executive Officer)Date:
                April 30, 2008
            By:
            /s/
                SHAUN TOKERShaun
                TokerChief
                Financial Officer (Principal Financial Officer and
              Principal
                Accounting Officer)




39